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Wednesday, 20 March 1985
Page: 482


Senator PETER RAE —Does the Minister for Finance agree with the Prime Minister and the Treasurer, and indeed with the Opposition, that a major part of reform of the tax system should be a move towards more emphasis on indirect taxation? If so, does the Minister favour any particular form of indirect tax? Further, does the Minister endorse the Australian Labor Party Centre Left faction's present position that any move to place greater reliance on indirect tax should be part of a package including death duties, gift duties and capital gains tax?


Senator WALSH —Certain views were ascribed to the Treasurer and the Prime Minister at the beginning of the question, that they favour an extension of indirect taxation. I was reading in the Australian Financial Review that the Prime Minister only yesterday had said that neither he nor the Treasurer was inexorably wedded to any particular tax or any particular mix of taxes at all, and I share that view.

The question of a more broadly based consumption tax is certainly one that has been widely canvassed. It was widely canvassed by, among others, the discredited former Treasurer in 1981, I believe it was. He failed to carry the Sydney faction of the Liberal Party and he failed to carry the Melbourne faction of the Liberal Party in a policy move in that direction. Indeed, the Sydney faction of the Liberal Party and the Melbourne faction of the Liberal Party still do not seem to be able to get their acts together or to get them synchronised.

The Leader of the Opposition said that any tax Bill which is associated with the Budget and which this Government may introduce into the Senate would be passed. Within three days he was contradicted by the leader of the Sydney faction of the Liberal Party, the discredited former Treasurer, who said: 'Maybe it would and maybe it would not; it would all depend on what it was like'. The deputy leader of the rural rump faction of the coalition, Mr Hunt, said: 'Not under any circumstances'.

So we have three of the different factions of the Opposition speaking with a triple tongue, a double forked tongue, about what they would do on tax reform. Of course, the Crichton-Browne faction of the Liberal Party does not believe in paying tax at all. So we have at least four views. There are the three views of the different factions of the Liberal Party-the Perth faction, the Melbourne faction and the Sydney faction-as well as the country faction of the coalition, all speaking with discordant voices and not having the faintest idea of what they want to do.

On the question of an extension towards, and a greater reliance on, a more broadly based consumption tax, like the Treasurer and the Prime Minister, I am not firmly committed to or firmly committed against it. One stipulation I would make, which is relevant to an interjection made by Senator Chaney some time ago, is that I believe that any such movement which had significant consumer price index effects ought not to be contemplated unless there were an agreement that that CPI effect would not be passed on to wages through wage indexation.

When the discredited former Treasurer, representing the Sydney faction of the Liberal Party, tried to broaden the taxation base in that way a few years ago, that was a crucial agreement which he failed to secure. Therefore, the Melbourne faction of the Liberal Party, which cut him off at the knees when he tried to push that policy, was not so much in error as some people may have thought at the time.


Senator PETER RAE —I have a supplementary question. The further part of my question, to which the Minister did not address himself, is this: Does he endorse the position that a move to place greater reliance on indirect tax should be part of a package including death duties, gift duties and capital gains tax? I ask his view as to whether it should be part of a package which includes those other taxes I have stipulated.


Senator WALSH —I have already said that I am not inexorably wedded-and I share this view with the Prime Minister, as he was reported as saying yesterday-to any particular tax or any particular package of taxes.