Apparently the Debit Tax is an Australian invention (http://debittax.com/). Its basic premise is to tax withdrawals from banks and financial institutions. This is done electronically each time a transaction occurs, so you won’t even feel it. The suggested amount is 0.33% of the total amount withdrawn. Why would we want to do this? If we had a Debit Tax of 0.33% in place we could scrap all other taxes. Imagine all the people living life in peace: no income tax, no GST, no sales tax, no capital gains tax, no stamp duty, no hassles. If you made and extracted $100,000 each year your total annual tax bill would come to $330. How does that compare with your current tax bill?
You are probably wondering how the government could function on such a miserly amount? How would the politicians fund their first class flights, pay for their drivers and afford their life time pensions?
It is estimated that each working day, in Australia, $200 billion is withdrawn from banks and financial institutions as a result of ordinary business and trading. A Debit Tax of 0.33% would raise approximately $660 million dollars for the government’s coffers each day. That sounds like a lot, but is it enough?
It is estimated that the Australian government needs $150 billion each year to function. If that daily Debit Tax amount is multiplied by 250 (approximately the number of working days in a year) it comes to about $165 billion, more than enough for the government’s operating needs with sufficient left over to pay off any outstanding debts.
So, if it’s so great, why don’t we have a Debit Tax? The usual reason i.e. the multinationals wouldn’t like it because it would force them to pay their fair share of tax. It has been estimated that about 90% of Australia’s current Gross National Product turnover is due to the activity of multinationals, who contribute only about 10% of the total tax take. As multinationals make significant political contributions it will come as no surprise that the politicians are not exactly falling over themselves to implement it.
More information can be found in this document from New Zealand: http://crash.ihug.co.nz/~tonycook/nzsdp/debittax.htm. If the Kiwis like it then it must be good.
Dr. F. Bunny