One purpose of a taxation system is to fund government expenditures. It is compulsorily levied upon the taxpayer even though they may not be the entity that receives the benefit of the government services to which the money is applied. Taxation is also used as an instrument of fiscal policy either by offering incentives to behave in a certain way (e.g. health insurance tax offset) or to discourage certain behaviour (e.g. tobacco excise). Another purpose is to redistribute wealth by taxing the rich to give to the poor (social security programmes). There are many different forms of taxes used through history and different countries. They have a common structure in that it only applies to certain taxpayers and only in respect of a certain tax base. The tax rates are generally proportional to the tax base or have progressive rates, i.e. the rate increases. The economic burden may be borne by a different person where the cost can be passed on to customers such as in GST and VAT systems which are called indirect taxes. There are generally accepted features of a good tax system such as simplicity, equity in treatment of different taxpayers, and neutrality by not distorting commercial decisions. Required: Your assignment is to compare the structures of the Australian income tax system with the GST system using broad principles. Your research report should consider: 1) Commonwealth expenditures which give rise to the need to raise taxes and the breakdown of the tax revenues raised. 2) Who are the taxpayers and what are the tax bases and rates. Are they direct or indirect taxes? 3) Is each system a good design considering simplicity, efficiency, equity, etc? 4) The government is currently examining how to raise further taxes such as by proposing a rise in the rate of GST. It has already introduced a temporary deficit levy on high income individuals but is looking for a more permanent arrangement. What do you propose would be a good and fair solution