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Thursday, 21 March 1985
Page: 569

Senator PARER —I refer the Minister for Community Services to the speech delivered in Canberra last night by his colleague the Minister for Social Security in which Mr Howe spoke strongly against an increased emphasis on indirect taxation. Given his overall responsibility for social welfare policy, does the Minister share the concerns expressed by Mr Howe about the impact of a consumption tax on the less well-off members of the community? Does he agree with his colleague that, even if the tax threshold were doubled by way of compensation for a 10 per cent consumption tax, the two million workers below the new threshold would be worse off? Can the Minister tell the Senate whether he believes there should be extensive exemptions from any extension of indirect taxation and, if so, in what areas?

Senator GRIMES —I have read the Press report of my colleague's speech last night. I understand from a conversation I had this morning that what Mr Howe said was that, if indirect taxes were applied without consideration for the incomes of pensioners or others, the taxes would be regressive and would cause difficulties. That is what the Prime Minister has said, what the Treasurer has said, and what the Minister for Finance, Senator Walsh, has said. I can only repeat what all my colleagues have said in this situation.

In approaching the reform of the taxation system in this country and in approaching the tax summit, we will consider, with the rest of the community, a whole lot of options. One of those options, quite clearly, is a change in direction to indirect taxes, which is an option I first heard suggested in this country by the previous Treasurer, Mr Howard. If such a change were made, any Minister for Social Security, any Minister for Veterans' Affairs, any Minister for Community Services, or any honourable senator in this place, would have to ensure that low income earners, including pensioners and beneficiaries, were protected from the impact of such taxes. That could be done by excluding certain goods and services, or it could be done by ensuring that the money collected from those taxes was redirected to those groups in sufficient sums to ensure that they were compensated by those increased tax receipts. There are many ways in which that can be done; there are many ways in which it is done overseas. I understand that all Mr Howe was saying was that if we moved to a greater reliance on indirect taxation, and we have made no such decision, then low income people, including the people to whom he pays pensions and benefits, would have to be protected. I would have thought that was a perfectly reasonable statement.