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Tuesday, 23 November 1999
Page: 12366


Mr CREAN —My question is to the Treasurer. Treasurer, your original GST package with all food taxed claimed an inflation impact of just 1.9 per cent. Now, even though you have taken some food out, you are claiming a 50 per cent increase in the inflation impact, lifting the rate to 5.25 per cent. What specific price categories have you revised upwards, and when will you release this information?


Mr COSTELLO (Treasurer) —Obviously the question was written. The answer was given just a moment ago and he did not think to change the written question. As I said, the comparable CPI figure has been revised down, not up—down to 1¾. The figure was 1.9. It is no revision upwards if it comes down to 1¾. To put it in decimals, just so you understand, 1¾ is 1.75, and 1.75 is less than 1.9; 1.9 is greater than 1.75 so if you revise it from 1.9 to 1.75 you are revising it down. As I also said in answer to the last question—but of course that was written by one of your staff before they heard the last question, and you asked it notwithstanding—one of the principal reasons for that was the exclusion of food. It came down from 1.9 to 1¾, principally because of the exclusion of food. That is the effect of the package—1¾.

There is another point which we have also always made clear. Again, I made it clear in a speech last week which you may have missed because you were in Paris at the Socialist International meeting with French socialists who have a value added tax and German socialists who have a value added tax and British socialists who have a value added tax. In the speech I made last week which you may have missed and which may not have been reported at the Socialist International conference in Paris—although I am surprised Jospin did not get up and refer to the support in Australia for a GST—I also made the point that with the impact of a GST the full price impact takes effect and then, as the embedded taxes are removed in relation to wholesale sales tax and others, the reductions flow through. So you have the cost impact flowing through initially and then over a period of time embedded taxes coming back. As was always made clear in the ANTS package and in the Senate inquiry, after the full package has taken effect the comparable figure to the 1.9 is 1¾.