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LoginWill raisingGST to offset income tax really increase growth?
2 posts
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There has been too much hype about the need to reduce corporate taxes in order to attract investors. While to a certain degree it may be too high income taxes may deter investments.
However what about raising GST too high without understanding the real problems that may be caused. GST deter consumption and many companies at the end may pay just as high taxes overall due to paying too much taxes on process materials or resources before they even produce the final marketable products.
So it is just as bad as high income tax if GST is raised too high to replace income tax. Companies will not be attracted here also if income tax is low while GST is high as there will be reduced consumption here because GST will deter consumption. Under a high-GST economy, companies will therefore try to import as little raw materials or semi-processed materials as they will have to pay GST on these materials which incur higher operating costs as much as paying higher income taxes.
It will come back to square one if our ministers fail to understand the trade off of GST and instead insist on raising GST. If they are our true talents let them show us they understand at least such problems in greater depth and perspective.<!-- / message -->
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