Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
 Download Current HansardDownload Current Hansard   

Previous Fragment    Next Fragment
Friday, 20 February 1987
Page: 382

Senator ROBERTSON —Is the Minister representing the Treasurer aware that there is considerable interest among organisations representing small business in the introduction of a VAT-type consumption tax in Australia? How would a VAT-type consumption tax affect the operations of a small business such as a small shop?

Senator WALSH —May I at the outset offer an apology for the length of this answer. The procedures with which a small business, like a shop, would have to comply if a value added tax were introduced are so horrendous that it would take a very long time to give an account of them.

Senator Chaney —Mr President, I rise on an anticipatory point of order.

The PRESIDENT —Are you taking a point of order, Senator Chaney?

Senator Chaney —Yes, I am taking a point of order, Mr President. The Minister has been asked a very wide question on VAT and has indicated, I think very sensibly, that to answer the question and to describe VAT in detail would take a very long time. I would suggest to him that, if he wants to aid public understanding on this complex tax matter, the appropriate thing would be to make a statement. That statement could be then debated and discussed in this place in the normal way. I would ask you, Mr President, to direct the Minister to give a brief answer to this question and, if possible, to make the paper available for further consideration by the Senate.

The PRESIDENT —Order! I have no power to direct the Minister how to answer the question. However, I draw the Minister's attention to standing order 100, which deals with debating a question. I would ask him, therefore, to keep his answer to an appropriate length.

Senator WALSH —Mr President, I certainly will not be debating the question. I will be setting out a series of facts. I am, of course, aware that Andrew Hay and Peter Boyle, among others, are advocating a value added tax and they purport to represent small business. The procedures which would have to be complied with if a VAT were introduced are as follows: Each business enterprise would have to register with the VAT authorities and obtain a VAT number; every registered trader would have to pay tax on all inputs and charge tax on output; and each business would have to hand over to the VAT authorities the difference between the output tax and the input tax at prescribed intervals, together with appropriate supporting documentation. For a small shopkeeper, VAT would have to be paid on all goods bought from wholesalers, on the electricity, phone bills, repairs to equipment, advertising bills and so on. In addition, the shopkeeper would have to keep track of all invoices and keep records of the VAT numbers of all his or her suppliers. Where the VAT is paid on something that was used for partly private and partly business purposes-such as electricity and phone bills-if the shopkeeper lived on the premises, there would have to be a division of the VAT into claimable and non-claimable parts. Records would have to be kept to substantiate that.

In the United Kingdom, the VAT is administered by the Department of Customs and Excise. That Department is separate from the Internal Revenue Department-the equivalent of the Australian Taxation Office-which administers income tax. Both departments, of course, employ substantial numbers of inspectors, the VAT inspectors having quite substantial powers to police compliance with the tax. As I have said earlier in the Senate, the costs of compliance imposed on business enterprise by VAT are far from trivial and proportionately fall far more heavily on small business than on big business.

Finally, in view of the time, I have not gone through a completely exhaustive list of compliance measures that will be put in place. It used to be said that inside every small business person was a big business person waiting to get out. These days, it looks as though inside some of the so-called spokespeople for small business is a Liberal Party politician waiting to get out.