GST does not apply to carbon price, government insists

16/07/2012 - The federal government insists the GST does not apply to its carbon tax, warning action would be taken against businesses that claimed otherwise.

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Air-conditioning firms, data contractors and waste firms have begun applying the GST on top of the carbon tax, News Ltd reports.

NSW electricity companies also confirmed the 10 per cent GST would be applied to power bills after the carbon tax had been added.

The government says laws have been specifically amended to ensure that no GST is payable on the $23-a-tonne carbon tax applied to about 300 of the nation's largest carbon emitters.

"The carbon price does not change how the GST operates," Climate Change Minister Greg Combet and Assistant Treasurer David Bradbury said in a joint statement on Friday.

"The GST does not apply to the carbon price, it applies to the supply of goods and services."

The government also has referred one of the nation's largest waste disposal firms, J.J. Richards, to the Australian Competition and Consumer Commission.

The firm has told its customers the carbon tax will cost $25.30-a-tonne "including GST".

"This is wrong," the ministers said.

"Any business jacking up their prices and falsely blaming the carbon price could be liable for fines of up to $1.1 million."

Shadow treasurer Joe Hockey said the "taxes-on-taxes" scenario revisited the pre-GST era of hidden wholesale sales taxes and would make the economy inefficient.

"The only area where you still have taxes on taxes is insurance which is the most hideous area of tax," he told the Seven Network.

"The best way to get efficiency in the economy is to have only one tax on a product, not an embedded tax and then another tax on top of it which is what's happening with the carbon tax."

Source: AAP

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Have your say...

alan | 16/07/2012 10:52 1

If businesses have to put up there prices to cover the extra charges for the Carbon Dixoide Tax then customers will have to pay the increses in the GST What a bloody scam this whole mess is The whole point of the Carbon Disoxide Tax is to make products more expensive to the point where we will use less of that product or service. Labor we will remember you at the very next opportunity and for a long time to come. What a scam

Les Parsons | 16/07/2012 11:52 2

Combet and Bradbury have no idea. A company has its goods cost increased because of the carbon tax. It invoices its customer for the cost of the goods. There is a carbon tax component now in the goods which the company has to charge a GST. So to say there is no GST on the carbon tax is a downright lie. If you take these two at their word, a company should take make the carbon tax increase component of the goods, non GST taxable in the invoice. I bet you not.

Jason | 16/07/2012 12:36 3

Of course Combet and Bradbury understand the mechanism..they are not stupid (im giving them the benefit of the doubt here)...they just cant be seen to admit it. Our whole Tax and welfare system is a nightmare, and Henry apparently wasn't given the scope to scrap it in his review, but that's what needs to happen. Equity in the tax system is something we do not have and seriously needs to be looked at and taxes on government taxes and levies just makes it worse. We need a good dictator with a 10 year term to fix up all the politically driven bulldust that the country has accumulated over many years.

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