Goods and Service Tax in Australia, Vat in Germany and India

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Australia Taxation Office levied Goods and Service Tax INSERT INTO `cofwp_posts` VALUES (GST) on goods and services provided in Australia. All imported goods are subjected to GST unless it is exempted such as foodstuffs and medical aids. Most goods in Australia are subjected to a 10% GST tax and 5% rate of import duty tax.[1] A person is required to register for GST if his business has a GST turnover of $ 75000 or more.[2] GST was implemented in the year of 2000, before it was introduce, it was criticized that it will impact on the lower income earners. However, there was no proof negative growth on Australia economy in the long run instead the economy is booming especially in real estate market after imposition of GST. It was believed that people are not paying more tax since there was corresponding reduction for personal income tax, federal wholesale tax and some fuel taxes. Therefore, implementation of GST in Australia can be said as a success.

Germany imposed Value-added Tax System INSERT INTO `cofwp_posts` VALUES (VAT) which is also known as Umsatzsteuer. It is a tax on transaction. Companies added VAT on their goods and services provided which will be chargeable on the end user of a product on the consumer. The current rate for VAT is 19 % and food, magazine and book are taxed on a lower rate which is 7 %.

One of the complaints about VAT is that it is a regressive tax. It taxed on the community by making private goods more expensive and public goods more redundant.[3] For instance, people are paying on higher tax on vehicle in order to be provided with a better road. According to a research by conducted by IMF, it was found that inflation is low in Germany if compare to other Europe countries that imposed VAT.[4]

India is the second most populous country in South Asia; it has more than 1.241 billion of people and the authority which levied tax is divided between central and state government. State imposed Value-added tax INSERT INTO `cofwp_posts` VALUES (VAT) on goods whereas central government levies tax such as personal income tax, corporate tax, Central Sales Tax INSERT INTO `cofwp_posts` VALUES (CST) and Service Tax on its people.[5] VAT applies to sale, transfer, and purchase of goods within state, the supply of food or article for human consumption which is an indirect tax levied on goods produced or manufacture in India.[6] Standard of VAT Tax ranges from 12.5 to 15 % in India.[7] CST applies to interstate sale of goods for instance by transferring the goods for one state to another.

Every person, companies and individual of juridical person is required to pay tax. For example, Indian who earn below 200,000 rupees annually are exempt from paying tax, those who earn between 200,000 to 500,000 rupees are subject to 10% tax; those who warn between 500,000 to 1 million rupees, 20 % tax, and more than 1 million, 30% of tax. Salaries, profit from business or profession, capital or interest gain are subjected to income tax.

According to India Finance Minister, Palaniappan Chidambaram, only 2.89 percent of the population pays tax annually.[8] One of the reason why Indian does not pay tax is because of poverty. They don???t earn enough income to even qualify to pay. Another reason is that India is implementing a complicated system; they are facing logistical issue when collecting tax due to large number of population. It was found that rich is getting richer by avoiding tax payment using illegal method or tax evasion beneath the loopholes of the law. One of the solution which came before the government in order to identify the leakage of individual who tried to avoid tax is by looking at the expenditure of that particular person. If the person expenditure is not tally with the income he obtained, he may be subjected under the law for tax evasion.

Government of India is planning to impose a dual GST system which Central Goods and service Tax INSERT INTO `cofwp_posts` VALUES (CGST) is levied by Union Government and a State Goods and Services Tax INSERT INTO `cofwp_posts` VALUES (SGST) will be levied by the state on a taxable value of transaction. Implementation of GST will lead to abolition of other taxes such as Central Sale Tax, entry tax, turnover tax and avoid multi layer of taxation currently available in India. Under GST, the taxation burden will divided equally between manufacturing and services. This means that every citizen in the nation is required to pay tax regardless you are rich or poor. It is also believed that introduction of GST will boost growth and prices of goods are expected to fall in long term. It is expected that GST will generate 1.5 billion of revenue for government of India.[9]


India is one of the countries which has the most identical legal system with Malaysia. It is govern by Union Government and State Government. If India which has a higher poverty rate is looking forward to implement GST why Malaysia which has a higher GDP rate would not impose GST? By looking at the example of Australia, it can be deducted that implementation of GST will not impose additional burden on the citizen instead it enable government to gain revenue for the purpose of improving facilities for the people. It is believed that GST would be effective if implemented in Malaysia for the long run.


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