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Thursday, 11 March 1999
Page: 2749

Senator SHERRY (1:46 PM) —In commencing my contribution on the Taxation Laws Amendment Bill (No. 5) 1998 and the General Interest Charge (Imposition) Bill 1998 , I would indicate that the Labor opposition will be supporting this legislation, which amounts to the fifth omnibus tax bill for 1998. It covers areas relating to reforming the tax penalty arrangements, the alteration of aligned remittance dates, the introduction of running balance accounts and tax avoidance—foreign tax credit schemes.

The first three proposals are all related, as together they allow a significant streamlining and simplification of the administration and compliance—and I will have a little more to say about the administration and compliance—with taxpayer, and especially employer, obligations under taxation law. The tax office will, as a result of this legislation, become more efficient and effective in collecting outstanding tax debts, and tax compliance will be much simpler for employers.

While these initiatives are being undertaken in the preparation for the introduction of the goods and services tax—and I stress that there is no doubt that one of the central tenets of this legislation is the preparation of the introduction of the goods and services tax—they are, in their own right, significant and worthy. Therefore, the opposition supports them. These initiatives, Labor believes, prove the election position that Labor took, that significant administrative and compliance simplification is possible without a goods and services tax.

On the issue of compliance and administrative issues relating to the wholesale sales tax that is being replaced by a goods and services tax, Labor observes that what is known as the ANTS document, the government's tax propo sals, on page 8, says that the current tax system is ineffective and provides a crumbling base from which to deliver the necessary revenue to fund essential government services. It goes on to say that the indirect tax base would continue to decline, rates would need to be increased again, and this debilitating cycle would continue.

There is a range of mantras that have been uttered, assertions made, by the government—the Prime Minister, the Treasurer, the Assistant Treasurer—the head of Treasury, Mr Ted Evans, and a range of other people who have put submissions to, for example, the select committee considering Australia's new tax system, that the tax system is broken. That is an assertion that Labor strongly rejects, at least in the context of the wholesale sales tax.

Let us look at the ANTS document. It is interesting that the revenue measures table in relation to the wholesale sales tax abolition, which appears on page 33, in part proves our case. The estimated loss of revenue as a result of the GST replacing the WST—in part, at least, in the name of administrative efficiency—in 2000-01 is $15.3 billion; in 2001-02, $17.75 billion; and in 2002-03, $18.75 billion. In other words, the revenue that is being forgone as a result of the replacement of the WST by the GST is increasing. What is interesting also in the ANTS document is that there is no data or analysis in respect of the continual assertions made that the revenue from the WST is collapsing or has collapsed.

It is interesting in this context to look at the definition of the words `broke' and `broken' in the Shorter Oxford Dictionary. The word `broke' is defined as `without money, penniless, ruined, bankrupt'. In respect of `broken', the definition is `financially ruined, bankrupt'. I think in the context of the current policy debate about tax reform, those definitions in the Shorter Oxford Dictionary would be in accord with the common understanding in the general community of the meaning of the words `broke' and `broken'.

It is also interesting to note that, in the recent modelling that was provided to the Senate select committee from two sources, Professor Dixon and Professor Murphy, certainly Professor Dixon seriously questioned the assertions that are made that the revenue from the wholesale sales tax is declining. He provided long-run estimates of the impact of retaining the current tax system, particularly the wholesale sales tax system. I will speak more about that on another occasion.

I want to conclude my remarks by pointing to a recent press release put out on 4 February 1999 by the Minister for Finance and Administration, Mr John Fahey. Again, this relates to the issue of the revenue being generated from the current tax system, and I refer here to the Commonwealth government's statement of financial transactions—CFT—of December 1998. In this press release, I think Minister Fahey quite rightly and proudly points to revenue collections for the cumulative six months to December 1998-99 compared with the revenue collections for the six-month period up to 1997-98. He indicates that total revenue collections were up 10.3 per cent.

It is more interesting to look at the breakdown of revenue collections for that six-month period. As I said earlier, we have had the continual assertion that the wholesale sales tax system is broke or broken. What do we see in the revenue collections put out in this press release? The collections of the wholesale sales tax in that six-month period went up—and I stress `went up'—by some 9.1 per cent over the previous six months. That is hardly evidence that the wholesale sales tax system, at least in terms of revenue collection, is broke or broken.

What was even more interesting was that, on the same day that Minister Fahey put out this press release—I do not know the location—the Treasurer, Mr Costello, was continuing to assert in public statements that the tax system was broken. I think his words were that anyone who asserted the tax system was not broken must be living on another planet. I do not know what planet Mr Fahey was on that day. On the one hand, you had Mr Fahey boasting about the increase in revenue collections—including an increase in wholesale sales tax collection of 9.1 per cent—and on the same day, you had the Treasurer, Mr Costello, continuing to assert that the tax system is broke or broken.

I also do not know what planet this government is on because they continue—and there are a range of other materials that we will refer to at another time—to tell us that the wholesale sales tax system is broke or broken, when clearly in terms of revenue collection it is not. We had a 9.1 per cent increase in revenue collection of wholesale sales tax and there is a range of other evidence on this issue. As I say, we will be referring to it at another time.

To conclude my remarks, I reiterate that the Labor opposition does support this omnibus tax bill, even though, certainly in our view, it is being presented, at least in part, in preparation for the introduction of the GST. The reforms in their own right are significant and worthy and are indicative of the approach to taxation reform that the Labor opposition took to the last election. We believe they should be supported for that reason but certainly not on the basis of the continually misleading claims that are made about the current status of the tax system in this country.