Question:

Surely a debit tax, as suggested, would result in a larger "cash economy", where people would prefer to not make bank deposits (and the necessary withdrawals, thereby reducing their tax liability)? If the amount of withdrawals (and hence tax receipts) are less than they are currently, then surely this would affect your ability to balance budgets?

Answer from the ASP:

Under our current system, most people make some effort to re-arrange their business transactions in order to reduce their "tax obligations". Consequently, it is reasonable to expect that if the Debit Tax is introduced, people will act likewise and try and reduce their "tax outflow". During the initial transition phase, the actual debit tax rate may alter slightly - but we believe that it will not rise significantly due to the following:

• If you bought a new home and wanted to avoid the debit tax, you would have to draw the money from the bank in the form of cash. On withdrawal, the debit tax gets deducted/paid. Also the bank may start instituting "cash handling fees" to cover their expenses in handling such large amounts. Consequently, there is no saving at all. Also, there is a personal risk of handling such a huge amount of money.

• For smaller amounts - the actual debit tax amount is so small (i.e. $7 on a new TV of $1,000), that it is really immaterial. Our question is - would you be prepared to pay the $7 debit tax in return for not paying income tax. Individuals will be so much better off that they will hardly notice.

• The way the Debit Tax works - means that no company will "experience" the impact of the debit tax in the same way that they currently experience GST. In order to account for their company tax and the GST, companies have to hire an accountant and a tax expert. We have had numerous small companies tell us that they would in fact hire more productive staff if they could just do away with the overhead of administering their GST.

• For individuals - the Debit tax is really an "invisible tax", since the 0.7% gets added onto the total amount of their weekly shopping basket and it shows on the payment receipt as a single item. Our question is - have you ever noticed if someone actually puts back an item onto the shelf because it did attract GST, and then select a different item and put it into their basket since it didn't attract GST. Personally - I have never seen this happen. So if GST is 10% and no-one seems to alter their purchasing patterns, why would they suddenly change their buying patterns for 0.7%.

• With no income tax or company tax - Australia will see a massive increase in new ventures (from small businesses to major firms). Most major companies make decisions on which projects to initiate based on small differences of "projected after tax" returns. With the Debit Tax, the Australian business environment will be seen as providing a major competitive environment - and firms will relocate to take advantage.
   
• The concepts of Tax Avoidance (which is legal) and Tax Evasion (which is illegal) are well recognized in law and the business community. The ASP intends that these principles remain within our body of law, to ensure that neither individuals or companies rort the tax system.

The last, and definitely the most important reason, we at the ASP do not have any doubt that we will be able to have sufficient money to balance the budget, is that our Tax Policy and our Monetary Policy are but 2 sides of the same coin. In order to follow this logic - please read our Monetary Policy carefully, and then the following will become obvious:

• As "debt money" is eliminated from our system - new "government created money" will be introduced on which no interest has to be paid. In fact we have calculated that in the absolute worse case scenario, the Federal Budget can be fully funded for a period of 4 years - with absolutely ZERO tax being collected. If you don't fully understand this, please read our comments and documents on monetary policy and banking.

Supporting our argument is a report by Professor Yamaguchi from the Doshisha Business School (Doshisha University), where his research shows that having an "honest money system" (as advocated by the ASP), results in the following:

• Higher Gross Domestic Product.
• Lower inflation.
• Lower taxes.
• The elimination of government debt.
• An environment-friendly and sustainable economy.

Click on the icon for the report from Professor Yamaguchi, or go to our summary provided here.

So, to answer your question - "no", we do not foresee any problem in having sufficient revenue to fund the Federal Budget. To fully understand our position, you need to read both our Tax Policy and also our Monetary Policy. They are different sides of the same coin. It is for this very reason that these 2 policies are the core policies of the ASP. By implementing these 2 simple policies alone - we will be able to transform our economy and provide prosperity to all working Australians.