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Wednesday, 22 August 1984
Page: 196

(Question No. 931)


Senator Kilgariff asked the Minister representing the Treasurer, upon notice, on 1 June 1984:

(1) Is there a discrepancy in the implementation of sales tax with confectionery currently being levied at a rate of 20 per cent while other snack foods, such as potato crisps, are exempt.

(2) Does the Government have any intention of rectifying this matter by either:

(a) exempting confectionery from sales tax; or

(b) providing some form of tax relief for the industry.

(3) Is this sales tax an unfair burden on the industry considering the confectionery industry in Australia has not relied on extensive Government assistance or protection to survive.

(4) Does the Government acknowledge that the tax has appreciably limited the growth of the industry and the subsequent employment it would have generated.


Senator Walsh —The Treasurer has provided the following answer to the honourable senator's question:

(1) It is true that confectionery is subject to sales tax while snack foods such as potato crisps are exempt. Division VI of the First Schedule to the Sales Tax (Exemptions and Classifications) Act exempts from sales tax a wide range of foodstuffs, some referred to by name, others by category. Foods for human consumption are exempt. Potato crisps come within that category. Confectionery is expressly excluded from exemption and, as a general class of goods, is taxable at the 20 per cent rate.

(2) The Government has received representations from the confectionery industry to have confectionery exempted from sales tax. The matter will be considered in the coming Budget deliberations.

(3) There are many industries which produce products that bear sales tax and which do not receive extensive Government assistance or protection. The implication in the question that the incidence of wholesale sales tax falls heavily upon producers of the goods is open to question.

(4) Confectionery has been subject to the general rate of sales tax for many years. There is no persuasive evidence available to the government to support the view that the imposition of sales tax has appreciably limited the growth of the industry or limited additional employment that it might otherwise have generated. A general point that is often overlooked is that, for a given revenue requirement, a reduction in the tax burden borne by a particular group requires, other things being equal, an increase in the tax burden borne by another group. In this light, arguments for tax concessions which are based on economic growth/ employment advantages but which are not explicit about how the revenue is to be made up lack a certain cogency.