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Thursday, 27 March 2003
Page: 13785


Mr COX (12:38 PM) —I move opposition amendment (1):

(1) Schedule 1, page 4 (line 1) to page 9 (line 31), omit the Schedule.

This amendment would delete schedule 1, which provides foreign expatriates with a series of tax concessions. I listened very carefully to the parliamentary secretary's defence of that measure. I point out that, while it was recommended by the Ralph Review of Business Taxation, the Ralph review was undertaken on the basis that the reforms it contained would be revenue neutral. The government made certain commitments to the opposition to secure passage of many of the reforms. These involved the government enacting certain legislation to deal with the tax treatment of trusts and to remove abuses of trusts for the purposes of tax avoidance and evasion. The government subsequently reneged on that agreement and, as a result, the Ralph Review of Business Taxation reforms were very far from being revenue neutral.

The measures before us that are now contained in the review of international tax arrangements—and they are in the discussion paper that has been circulated by Treasury to assist the Board of Taxation in its consultations—have been considered by the professional tax community in the context of that review. This is despite the minister's denials, the parliamentary secretary's denials and the minister's suggestions that the review assumes that they would be passed. The government may have assumed that they would be passed, but the opposition does not assume that they would be passed.

The review of international tax arrangements does not come with any caveat that the reforms will be revenue neutral. In fact, most of the substantial reforms in the review would have a significant negative effect on the budget bottom line. It is for that reason that the opposition believes that all of the measures, including the tax treatment of foreign expatriates, should be considered as a part of a package so that the parliament considers the costs and the benefits of all those measures together.

At the moment the government is proposing to cherry-pick foreign expatriates at a cost of about $40 million or $50 million per year. If the government were really serious about international tax reform, it would be a lot tighter with the rest of its budget and it would have much more fiscal capacity to provide reforms which would increase Australia's international tax competitiveness, and it would also have the fiscal flexibility to provide meaningful tax relief to Australian taxpayers.

At the moment, because of the government's profligacy and lack of fiscal discipline, it has dissipated its fiscal flexibility. It is my very great fear that it will be able to provide neither significant reforms to Australia's international tax regime nor tax relief for ordinary Australians to compensate them for the large amount of additional revenue it is collecting as a result of bracket creep. According to Access Economics, this additional revenue will amount to an extra $6.2 billion a year in 2005-06. I commend the amendment to the House. I do not anticipate that the amendment will succeed here but I am optimistic that the amendment will succeed in the Senate.