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Speaker 1: Welcome to ask fear and greed. Well, we take your

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Speaker 1: questions and do our very best to answer them. I'm

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Speaker 1: Michael Thompson and good afternoon, Sean Aylmer Hi, Michael, Sean.

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Speaker 1: This question today came from Brian via Facebook, and it

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Speaker 1: actually came in response to a discussion that we had

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Speaker 1: about how unfair interest rates are as a mechanism for

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Speaker 1: tackling inflation, that it hits certain parts of the economy

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Speaker 1: and society more than others. But Brian asked off the

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Speaker 1: back of that, he said, instead of the Reserve Bank

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Speaker 1: varying interest rates, why not scrap that and vary the GST. Accordingly, Yes,

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Speaker 1: he says it would be tricky to navigate initially, but

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Speaker 1: once implemented, would be smooth. Look at petrol prices. They

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Speaker 1: go up and down all the time and no one

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Speaker 1: riots doing this. Everyone is affected, not just people with loans,

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Speaker 1: including those boomers. What do you reckon?

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Speaker 2: Wow? In theory, I like the idea and practice, anyone

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Speaker 2: wanting to get elected wouldn't go for it. But the

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Speaker 2: idea behind the comment is that tax policy or fiscal

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Speaker 2: policy should do more of the work. Now, Montree policy

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Speaker 2: is blunt. It whacks everyone. Interest rates rise, Everyone gets

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Speaker 2: hit with it, and sometimes those that can at least

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Speaker 2: afford it. Think of a first home buyer, they get

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Speaker 2: hit much harder than well, as Brian said, the boomers,

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Speaker 2: people who maybe own their own home, they may have wealth,

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Speaker 2: they're not repaying loans. So monetary policy sometimes hits the

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Speaker 2: people that can least afford it. The idea of fiscal

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Speaker 2: policy doing some of that work is a great idea

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Speaker 2: if we take the GST. Just to physically do it,

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Speaker 2: you need state agreement, I mean by law. This is

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Speaker 2: something that would take years to change once. Another idea

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Speaker 2: with the GST is to broaden the base so it

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Speaker 2: captures more things. I'm not sure that that's actually a

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Speaker 2: practical solution. Let's say that was a practical solution. The

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Speaker 2: only thing about that then, so let's say you broaden

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Speaker 2: the base, or you lift the GST from ten percent

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Speaker 2: to twelve percent, everyone, the rich and poor still have

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Speaker 2: to pay the extra, so it actually disproportionately hits the

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Speaker 2: poor more than it does the rich. So I'm not

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Speaker 2: quite sure that that's going to get to where Brian

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Speaker 2: wants to get to. There are things like the Stage

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Speaker 2: three tax cuts, that's an example where fiscal policy. The

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Speaker 2: government tried to use fiscal policy to even out things

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Speaker 2: a bit more. So. Originally those Stage three tax cuts,

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Speaker 2: middle income, high income earners, we're going to get more.

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Speaker 2: The alban Easy government changed it so all taxpayers got something.

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Speaker 2: Higher income earners they ended up getting less than they

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Speaker 2: were going to. Low income earners definitely got something which

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Speaker 2: they weren't. There's also stuff around, you know, mining royalties

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Speaker 2: and stuff like that, which I suppose isn't personal. So

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Speaker 2: I won't go there. Smokes, alcohol, excise, those sorts of things.

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Speaker 2: I mean, there's certainly hugely there's no doubt studies show

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Speaker 2: that lower income people smoke more, and so is it

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Speaker 2: fair that there's such a large excise duty on cigarettes.

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Speaker 2: I don't know there's a health issue in that one.

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Speaker 2: I like what Brian's suggesting that text policy should do

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Speaker 2: more of the heavy lifting, because I think mounted policy

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Speaker 2: is really unfair. It's just really difficult to implement.

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Speaker 1: Yeah, I was just thinking about kind of the logistics

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Speaker 1: of this, and so say, he's basically proposing quite a

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Speaker 1: dynamic system here, isn't it. You could almost see it

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Speaker 1: working as though for every kind of one percent that

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Speaker 1: inflation went above the Reserve Banks target band. So for

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Speaker 1: every percent it went above the two to three percent

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Speaker 1: target band, that suddenly it would then add one percent

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Speaker 1: on to the GST. So you still have your standard

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Speaker 1: based attempts. But can you imagine then the logistics of

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Speaker 1: doing and that also then removes kind of the decision

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Speaker 1: making out of it. It's kind of almost a default

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Speaker 1: kind of thing. But the logistics of that and having

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Speaker 1: to manually adjust this each time, and think about all

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Speaker 1: the small businesses that we then need to go. Okay,

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Speaker 1: so now we're currently adding twelve percent on and all

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Speaker 1: it would be a nightmare.

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Speaker 2: Yeah, I mean I don't think it could do it logistically,

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Speaker 2: but like I suppose if you just pretended you could,

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Speaker 2: I'm still not sure that you know the extra percent.

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Speaker 2: The rich person still has to pay the extra percent,

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Speaker 2: as does the poor person, so it remains regressive even

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Speaker 2: if you could do it. But I think you're right,

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Speaker 2: you couldn't actually do it physically and I mean practically.

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Speaker 1: And you know what I like about this though it

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Speaker 1: is a big picture idea. It is kind of it

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Speaker 1: is thinking outside the box, isn't it?

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Speaker 2: Yeah? Totally. And the idea that user pay so people

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Speaker 2: who are spending the money should actually get hit with

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Speaker 2: the cost. I kind of like that as a genuine

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Speaker 2: idea as well. And GFT. Think about the GST debate.

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Speaker 2: When that was introduced, it became a real user pays tax.

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Speaker 2: It's like VAT in the UK, and I think that's

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Speaker 2: fair enough. And so I think where the Bryan's idea

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Speaker 2: is not a bad one. I just think implementing might

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Speaker 2: be very, very difficult.

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Speaker 1: Is it time for another tax summit, Sean to discuss

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Speaker 1: some of these big picture.

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Speaker 2: I have reported on take summits before. Oh my gosh,

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Speaker 2: you still havn't recovered no, exactly right, hard work.

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Speaker 1: Well, anyway, what a question. Thank you very much, Brian.

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Speaker 1: You certainly got us talking about this one. And if

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Speaker 1: you have a question that you would like to put

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Speaker 1: to us, anything that you would like to know, then

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Speaker 1: send it through on LinkedIn or Instagram or Facebook or

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Speaker 1: at fearangreed dot com dot au. Thank you, Sean, Thank you.

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Speaker 2: Michael.

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Speaker 1: I'm Michael Thompson and this is ask Fear and Greed.