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Tuesday, 8 December 1998
Page: 1643


Ms HALL (10:06 PM) —The member for Parramatta lives in a very different world from the world I live in. He lives in an economy; I live in a community. I live in a community with real people that have real problems and have said that, no, they do not want a GST. The government introduced A New Tax System (Goods and Services Tax) Bill 1998 and associated bills into this House last week, a proposal that will radically change our tax system—or, as the Treasurer put it, the legislation creates a new tax system. It is a tax system that will make second-hand cars taxable for the first time and make new cars cheaper. It is a tax system that taxes sheltered workshops and children's sport. It is a tax system that taxes ordinary Australians disproportionately. And this new tax system is to be rushed through the House with indecent haste and with only 20 hours of debate.

The question I would like to ask is: why? Is it because the legislation will not stand up to scrutiny? If the government is so convinced that a GST will benefit Australians, then it should be committed to maximum consultation and extensive debate. The government should welcome debate, because if the GST is going to be so effective and beneficial to everyone in Australia it would be proven in debate. Obviously the government knows that debate will only weaken the standing of the GST and show just how inequitable it is. There is no group, no person, no section of the community and no business that will not feel the effect of a GST.

One of the best descriptions I have read of the GST was sent to me by an accountant, who defined the GST as, `A tax that is payable by all, collected by small business and redistributed to the rich.' It is a tax that is paid at the same level by all people. No thought is given to a person's ability to pay. It does not matter whether you earn $100,000 a year or $10,000 a year, you will still have to pay the GST on your milk, fruit, vegetables, meat and electricity.

Members on the other side of the House may think that it is fair to impose this tax on the necessities of life, increasing their prices whilst at the same time reducing the price of luxury goods, but I do not. This is a harsh tax that falls disproportionately on those people who can least afford to pay it. It hurts low and middle income households, especially those with children. The compensation package has no compensation for dependent children over the age of 17 years. At the same time, the Howard government's changes to the youth allowance have forced young people back into the care of their parents. So they just keep on taking and taking.

The package is based on all the wrong assumptions. It assumes that all people have the same spending patterns and the same ability to maintain those spending patterns. The package does not take into account those differences. It is a long established fact that the proportion of household income spent on the basics of life—things like food, housing, electricity and clothing—decreases as the household's income increases. The household that has an income of $100,000 a year, as compared with the household that has an income of $10,000 a year, will spend a substantially lower proportion of its disposable income on fresh food, housing, electricity and clothing. It will not consume the total amount of its income as a lower income family will.

For the household earning $10,000 a year the GST is a disaster. It means that these households will have less money to spend and will be penalised because they have less money. If you are wealthy you will be rewarded. But, if you are an average Australian family, a pensioner or a person who is unemployed through no fault of your own, you will be punished and life will be made much harder if a GST is introduced. The GST is a regressive tax. It is a tax which hits the most vulnerable in the community hardest. It is an unfair tax; a tax that must be opposed.

This government has argued that the tax system in Australia is outdated and unworkable. It is really hard to support this conten tion when Australia currently has a five per cent growth rate in gross domestic product, low inflation and low interest rates. We have a tax system that is fair, a tax system that works. It is a tax system that has contributed to Australia's continued economic growth and stability. It is not a tax system that is haemorrhaging or a tax system that is placing a disproportionate burden on average Australian families or on the most vulnerable people in our society.

This government has waged an attack on wholesale tax, portraying it as the worst kind of tax and the most unfair tax imaginable. In actual fact, wholesale tax is fairer and easier to administer than a GST. Most importantly, a wholesale tax is paid by a wholesaler, not at the point of retail, as a GST will be. This means that the tax is not paid on the retailer's profit and small businesses are not required to administer the scheme.

Currently retailers are not involved in the administration of wholesale tax. It does not impact on the retailers as they do not impose the tax. They do not collect the tax and they do not have dealings with the Australian Taxation Office. It will be a very different situation with the GST. All the complexities of the transitional provisions, the classification anomalies and the need to understand and administer the GST fall on all businesses. The greatest impact is on small businesses—small businesses that those on the other side of the House say they are here to protect. It will increase the accounting and administration costs of all small businesses and they will become the government's tax collectors.

By making the GST payable at the point of retail the government is increasing its tax base. The GST will be imposed on the retailer's profit and not on the actual goods that a person purchases. The argument that the GST will decrease the price of some goods currently attracting a wholesale tax is very misleading. Simply removing the wholesale tax from an item does not guarantee that the item will cost less. This is because the retailer's profit is added to the price of the item before the GST is imposed, thereby increasing its price.

Therefore, by arguing that a GST will reduce the cost of all goods attracting a wholesale sales tax, the government is misleading Australians. It is not telling the truth. The government has assured us that its 10 per cent GST can be increased only if all the states agree to an increase and that this is enshrined in the legislation. Once again, the government is misleading us. All it takes to change the rate of the GST is an amendment to the legislation.

It is interesting to note that, of the 26 countries that had a GST as at May 1998, all but three have increased the rate of their GST. The increases have ranged from 150 per cent in Denmark, which had a rate of 10 per cent—the same rate that Australia is looking at imposing—and that rate has now increased to 25 per cent. France is at the other end of the scale with a three per cent increase in the rate of its GST, increasing from 20 per cent to 20.6 per cent. It appears that the countries that start with the lowest rate of GST have increased their GST by the greatest percentage.

This government argues that the GST will stop the black market. How I do not know. Experience in the European Union has shown that the black economy has grown by about 16 per cent of the gross domestic product. Wealthy members of the community do not pay the tax because they can afford to pay cash for their goods and services. In Britain, it has been estimated that the black market is about 10 per cent of GDP. That denies the Treasury of about $A60 billion per year—money that could be spent on schools, hospitals and basic government infrastructure.

This is the tax that this government wants to impose on all Australians. It is an unfair tax. It is a tax that you can avoid if you have money. It is a tax that affects middle and low income earners to a much greater extent than the wealthy. The GST is a bad tax and a tax that we do not want in Australia.