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Wednesday, 3 November 1976
Page: 2265

Mr ARMITAGE (CHIFLEY, NEW SOUTH WALES) - My question is directed to the Treasurer. Does the honourable gentleman agree with the report of the Taxation Review Committee- the Asprey report- that in Australia indirect taxation consists mainly of excise duties and wholesale taxes which, in the words of the report, weigh heavily upon only a restricted range of goods and services? Does he accept that such taxes discriminate against Australian manufacturing industries? Will he agree that in the present circumstances a temporary cut in such taxes would lead to an increase in demand for the output of such industries, which would be particularly valuable when retail sales are declining? Will he also agree that such a demand increase would have no inflationary consequences?

Mr LYNCH - The House should be aware that the Asprey report is the subject of detailed examination by the Government at the present time. Therefore I will not seek to pre-empt that examination by making any deliberative judgment as Treasurer in this House until such time as the examination has been completed. So far as suggestions of reducing any form of indirect taxation are concerned, the honourable gentleman should be very much aware that that would add considerably to the size of the overall Budget deficit. In itself, it would be inflationary because of the Government's problems of financing that deficit in a non-inflationary form, which necessarily would drive the Government into the market place to sell government paper to the nonbank public, thereby creating pressure on interest rates, which is not helpful to the business community in general or any section of it.

I might say to the honourable gentleman, to give some indication of the quantum of finance to which he is referring, that if one sought to move the consumer price index by 1 per cent, as I recall the figure without having had notice of the question, one would be thinking of a figure of around $400m. If the honourable gentleman can tell me how the Government can provide that amount out of its financial resources at the present time without adding to the problem of inflation and thereby the problems of the business community I would be very interested to speak with him.

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