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Tuesday, 8 December 1998
Page: 1634


Mr CHARLES (9:25 PM) —I am delighted to talk tonight on the government's tax reform package. May I say to the House assembled that these are measures that I have supported for a very long time. In 1993, when we tried to take a tax reform package, including a broad based consumption tax—a GST—to the electorate. the electors of La Trobe said yes. In fact, my primary vote increased; so did my absolute majority increase after distribution of preferences. That was in 1993 when the Labor Party took an unfair, untruthful scare campaign to the electorate, and they did not like it much in my patch, I can tell you. But the Labor Party dishonestly stayed in government in 1993 and we wore—the Australian public wore, my electors wore—the lies, the deceits and the cheating of Paul Keating's l-a-w tax cuts that we never got. We never got the lower tax scales. So let us just continue to bleed the public and all of us pay higher and higher marginal rates on the incomes that we earn, taking away discretional spending from us.

In 1998, once again I took tax reform to the electors in my electorate. I gave it to them honestly and told them the program that the government had set out and which it wanted to put in place. They said, `Yes please, we'll have that.' They said, `We'd like you to come here and argue for it.' They did not tell the Labor Party to come in and obstruct. They did not tell the Labor Party, `We're going to vote against everything you want to do.' They said, `We want tax reform.' I will tell you some of the reasons why my people support it.

Before the election, I went to see 700 small businesses in the electorate of La Trobe. I knocked on 700 doors and gave them information about what the government was ultimately going to take to an election and what the government was proposing for the Australian public. I have to say to you honestly that out of those 700, two individuals in two shops said, `I hope you lose.' The majority said, `Thank you very much for the information. We are hungry for information. We want to know what the government plans to do to fix up the tax mess that we have.'

Of those who wanted to talk, the majority had a simple, single clear message. They said, `Bob, the tax system is broke. We've got to fix it. I may not like everything you are planning to do, but please get on with it.' That is what we are debating tonight and will be debating again tomorrow—getting on with what the government took to the people and was elected to implement. All this talk of the Senate obstructing and the Labor Party voting against it is all a heck of a lot of nonsense. We went to the people and the people decided.

Our wholesale sales tax is so outdated and so antiquated that all of us know that it cannot survive into the next century, regardless of the Botswanas and Swazilands and all that emotional stuff. The fact is that our tax base on consumption is shrinking. That is because we have a 1930s style tax on consumption.

I think it was in 1936 that the wholesale sales tax was introduced at two per cent. It was to raise some funds. It has now got to the ridiculous point where there are about seven different rates of up to 45 per cent, depending on the goods supplied. Do you know that if you go into a shop to buy a laptop computer the proprietor cannot tell you what the wholesale sales tax rate is or how many dollars it will be until you tell him what programs you want loaded into the computer? That is a fact. Some software programs are free and some are at a very low percentage. It depends on the value of software that you have loaded into your computer as to how much wholesale sales tax you will pay and the overall rate that you will pay.

I have never understood why the Labor Party wanted to tax toothpaste but not toothbrushes—you buy the toothbrush and it is tax free, but if you buy the toothpaste you pay 22 per cent. Likewise, I never understood the logic behind caviar being tax free but champagne to go with it being taxed. It did not seem very logical to me. The whole basis of the system was that some things were luxury items and other things were not. As it has turned out, things such as orange juice and most of the things that we buy in a supermarket, except for fresh fruit, vegetables, plain milk and meat, are in one way or another taxed—and some of them at fairly high rates. The base is far too small to allow us to have reasonable income tax rates. The wholesale sales tax discriminates between various items of goods and leaves services untaxed—discriminating in favour of services, hurting the manufacturing industry and hurting exports.

Because the wholesale sales tax feeds into the cost of production—and there is no way to isolate many of the items that are taxed from your general business expenses—those costs get fed into your business costs and wind up in the costs of products that we try to export to other countries. Treasury has estimated that there is about $4.5 billion worth of benefit to business by being able to shift from a wholesale sales tax system to a broad based consumption tax, which will effectively exempt exports. It will zero rate exports. It will make them GST free, and that is good for business. If it is good for business, it is good for jobs, it is good for the Australian economy and it is very good for Australian people. We want more people in more jobs, expanding the tax base, paying a lower rate of tax and being able to exercise their own discretion with the use of their income for themselves and for their families.

Many times in this place I have heard the Australian Labor Party talk about the GST being an unfair tax. What is unfair about it? Almost every nation on the earth—in any decent sized economy—including almost all of Asia, has a broad based consumption tax regime. Why? Because it is fair and because people can make decisions for themselves. If people have disposable income, they can decide whether or not they will pay tax, rather than everyone being taxed at various and discriminatory rates depending on what level of theoretical income one has. There are varying rates between individuals, between partnerships, between companies and between trusts depending on the legal identity of a taxpaying individual or institution.

I maintain that a GST is fair. It has a broad base and it will help give us revenue to run this country and to pay for the services that we need—for the hospitals, for the schools, for the roads, for the transport, for all the government services that we will need into the next century and for more aged care for Australians that we as a society aid. The uniform rate makes it easy. As I explained to my businesses, it is simple for small business. One simply says, `My expenses for the last three months were X dollars. If I divide that by 11, that tells me how much tax I paid on everything I bought and all the services that my company consumed. Then I take my total sales for that same three months and I divide that by 11, which tells me what my total sales were. It tells me how much GST I collected on my total sales. I then subtract the first figure from the second figure and send the government the difference. If I built for stock during that period, and if I were a farmer and all I grow is wheat and I get only one cheque a year, then three times a year I will get a rebate from the government for the tax that I paid on my inputs. Once a year I will pay the difference between what I spent in tax and what I collected on the government's behalf.'

User choice is important. If we allow individuals to decide whether or not they spend, then they decide whether they pay tax. If they decide not to pay tax by not spending, then they become savers. Is there anyone in this House or anyone in the gallery who wants to tell me today that we do not need to do something to improve Australia's propensity to save—or lack thereof? If so, they would be wrong—we need to do more to encourage Australians to save. We have become a consumption society and we need to increase our savings rate if we want to help address our debt problems with the rest of the world. If we want to be able to finance our own businesses and our own industries, we need to increase our savings. Reducing income tax rates, scrapping 10 taxes altogether, providing more than adequate compensation for those in society who might temporarily be disadvantaged by the shift in consumption tax from goods to goods and services and increasing family assistance are all positive issues. Consolidated and simplified business reporting and repayments will help business and give us more jobs. I support the package of bills.