Re: Rail & the GST.

[Jonathon Kirkby <kirkby.jonathon@fin.gc.ca>]

No, hold on, GST doesn't work that way.  The cost to railways of
their inputs will not go up by 10%.  GST is not a tax on business,
it's a tax on the final consumer.  GST will be added to each sale in
the production and distribution chain, but businesses will be able to
claim a full rebate of the GST they pay on their business purchases -
ie, a company will pay $1.1m for maintenance services that cost $1m
before GST, but it'll get a rebate of $100k.  It's the final
consumer who ends up paying the tax, not businesses. Businesses will
face some new compliance costs - setting up accounting procedures etc -
but in general, business (particularly larger businesses) is in favour
of a GST because the current sales tax system involves a whole bunch of
different rates and exemptions, and doesn't provide for rebates on
business inputs and so leads to some tax cascading (ie, tax being
charged on tax).

The real GST issues relate to the new tax burden on consumers and
whether compensation is adequate - but that's not relevant to this
newsgroup of course.

JK

In article <mauried.325.37438CFB@commslab.gov.au>,
  mauried@commslab.gov.au (Maurie Daly) wrote:
> Whilst most people are aware of the Diesel Fuel Excise debate and the
GST
> I have been wondering about the other costs which Rail will have to
pay.
[snip]


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