If you give it to your relatives, friends, or associates then they will receive it as income and it will be taxed when they receive it. Usually the first $10,000 or so of a gift may be tax free (as it is in Australia) but the rest is taxed as regular income.
You are rather assuming people are going to follow the law to the letter. If people give money away to avoid paying tax they aren't going to declare it. If I've got $100m kicking around (wishful thinking I know, but roll with me here) and decide that I want to give my children a good chunk of cash before I die there are all sorts of things I can do. I can buy them expensive gifts, I can give them cash advances, I can leave a safe in my home for each of them and give them all a key to their own safes and periodically just leave valuable items in there. You can hold $10,000 worth of gold coins in your fist without it even being obvious you're holding anything, so you don't even need a big safe to to hide six figures worth of precious metals.
If you exempt food and essentials from a goods and services tax then the wealthy also receive the exemption and if the goods and services tax applies only to luxuries then the wealthy can avoid them very easily by spending their share on luxuries in their off shore estates. Many very wealthy people have homes in tax havens.
... which highlights the problem of excessive taxation very nicely. If tax is considered excessive (by whatever standards the individual considers) those who can avoid paying it will avoid paying it. There's nothing you can do about that. And we really need to stop worrying that rich people will gain from a program. Otherwise you end up spending more to make a regime more complicated out of nothing more than spite against the nasty rich people, and creating another loophole in the process. In the UK a few years back there was a big fuss because the children who received free school meals (a program for low income families) faced some stigma as a result of receiving them. There was a proposal to use a payment card system but give the kids on free school meals a card that was cosmetically the same but functionally different, so that every child would insert their card to "pay" for their meal, but the free meals card didn't need any money loaded onto it. It would have been an expensive system to introduce, to the point it would probably have made more sense to just give everybody a free school meal and be done with it.
But the point of high taxes on high income is not to capture wealthy individuals' incomes for tax purposes as much as it is to capture corporate income. Goods and services taxes do not hit the income of companies that produce goods and services since they pass on the tax amount to the purchaser of the goods or services and then claim back whatever they paid and this process is repeated down the line until the final purchaser pays the full tax. In this kind of tax arrangement it is individuals who pay taxes while companies become almost tax free. This in one of the main reasons why government incomes have fallen despite corporate profits rising.
The trouble is that capturing corporate income is even harder than capturing individual income. The corporation can move to another location with nothing more than a stroke of a pen. An individual needs to uproot, sell their home and move away from family and friends and local network. Whatever structure is put into place the brutal reality is that companies don't pay taxes, individuals do. Even when you can manage to extract an increased percentage of corporate profits, what do you think happens next? The corporation is unlikely to simply shrug and figure they just became less profitable, they put their prices up so the consumer pays in the end anyway.
Just look at the fuss made over companies like Amazon and Starbucks in the UK, following the revelation that they paid very little in corporation tax to the UK government. People complain that they should pay "their fair share", overlooking the fact that it appears they fully complied with UK tax law. It's interesting to note that people are quite happy to benefit from lower prices but as soon as they think Someone Else is getting away with paying less tax they howl about it. If Amazon paid 20% corporation tax (that's the small company rate, I forget what it is for larger companies) on all the profits notionally derived from UK trading and put their prices up by 20% to cover the costs you can bet people would be howling about them profiteering.
Fixing the broken tax laws is not going to be an easy task but relying on blunt instruments like goods & services taxes will drive the buying public further and further into difficulty.
The key question we need to ask is why government believes it has an automatic right to a percentage of every piece of economic activity that happens. At present we've got a system that hands out more and more money to more and more causes, then runs out of money because it promised too much, then seeks to squeeze more and more income out of more and more forms of economic activity. Perhaps we need to take a big step back and reconsider just what government should be doing.
What is fundamentally broken is the system whereby government can essentially buy votes by promising freebies to all and sundry and then has to scrabble around trying to extract ever-more money from ever-more sources to keep the promise it shouldn't have made in the first place.
