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Wednesday, 7 September 1983
Page: 512


Mr HOWARD(6.12) —This legislation, which forms part of a package of Budget Bills, corrects a number of anomalies and inconsistencies in the sales tax law and makes a number of structural changes. It taxes some items at a higher rate and exempts others. Other items are to be taxable at lower rates and other previously exempt items will become taxable. The Opposition will not oppose this legislation. In saying that I observe that the sales tax changes do contradict some of the rhetoric of the Australian Labor Party about indirect taxes.

Whilst not opposing the legislation, I do take the opportunity of observing that these measures, and a number of other indirect tax measures contained in the Budget, contradict the rhetoric of the Labor Party about indirect taxes. It is worth observing that in the last Budget indirect taxes rose by three times the amount that direct taxation rose. Although I would be the last to condemn a shift to a greater reliance on indirect taxation, these changes do sit rather oddly with the rhetoric of the Labor Party on this particular subject.

I understand that the Treasurer (Mr Keating) will foreshadow some amendments to this legislation during the debate. He was kind enough to warn me in advance of the changes. There will be some changes in the rate to be applied to swimming pools. They confirm information that had been brought to my attention; namely, that there had been some revenue underestimates of taxation collections on swimming pools. It is also worth observing that the effect of this legislation will be to impose a tax on building materials, not at a rate of 2 1/2 per cent, but at a rate of 20 per cent. On a typical commerical building project air- conditioning is 10 per cent of the building cost, and of this 10 per cent some 20 per cent is the cost of ducting. As I understand it, the decision of the Government to maintain the proposal announced on Budget night for ducting of air -conditioning will have the effect that I have just outlined.

The tax on building materials is contradictory to the stance taken by the Labor Party in another place when sales tax legislation of the former Government was thrown out of the Senate because, inter alia, it included a tax on building materials. In the debate on this legislation, I wonder whether the Government would be kind enough to explain the rather extraordinary decision that was announced by the Prime Minister (Mr Hawke) during his recent visit to Queensland to the effect that he was going to exempt tourist vessels on a retrospective basis going back a couple of years. It seems to sit very strangely at odds with other announcements that the Government has made in this area. I have also been reminded by my colleague the honourable member for Higgins (Mr Shipton), who is the Opposition spokesman on small business matters, that the legislation that the Government is proposing in this area also involves a sales tax problem with lubricating oils and greases used in the manufacturing process.

Whilst the Opposition will not, for very obvious reasons, oppose these measures I do, nonetheless, point out that their introduction, in company with a number of other indirect tax changes contained in the Budget, lies directly counter to the rhetoric of the Government on the issue of indirect taxation and sits very strangely at odds with some of the declarations made by the Government on this subject before the election and the terms and conditions in some areas of the prices and incomes accord.