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Thursday, 25 March 1999
Page: 3296

Senator FERGUSON (3:15 PM) —Senator Sherry gives the game away when he commences his answer and says, `Tax reform means the introduction of a GST.' Senator Schacht in his question referred to a submission to the GST inquiry, and that is where the Labor Party has got it totally wrong. What we are talking about is the introduction of a new tax system, and Senator Sherry ought to have been around this place long enough to know that, when you introduce a new tax system, there is far more to it than just the introduction of a GST.

He selectively quoted comments that are made overseas in relation to the black economy, but in fact this government is totally committed to measures that combat tax avoidance and minimisation. The black economy is one of those areas where this government is totally committed. So the sooner the Labor Party, in all their discussions about what is happening in relation to tax reform, of which one part is the introduction of a GST, come to their senses and realise that what we are introducing is a total overhaul of the taxation system for the benefit of the nation, perhaps the arguments they are trying to put forward might appear to be more sound to those people who are trying to promote them.

We have done an enormous amount in the last three years in making sure that people who are cheating the system, who are avoiding the system, are in fact being caught. The social security system is just one area. Something like $40 million a week, I think, is being saved from social security fraud alone. So do not say that this government is soft on tax minimisation and tax avoidance because it has done all it can in those three years to make sure that people who are not paying their proper dues by way of taxation will have to in the future.

Some of the actions that have already been implemented are, for instance, the closing of the abuse of the research and development tax concession. We got tremendous opposition from the Labor Party when we were trying to make changes in the area of R&D, but in fact we closed the research and development tax concession syndication arrangement because they had been focused on tax minimisation rather than on genuine research and development, and so the definition of a concession was also tightened.

So do not talk about this government going soft on tax minimisation or tax avoidance. We have stopped the abuse of luxury car leasing. You had 13 years to try to stop that, and what did you do? Nothing at all.

Senator Cook —That is not true.

Senator FERGUSON —You had 13 years to stop that abuse, Senator Cook, and you know it. We closed the infrastructure borrowing scheme for new applications because the tax concession was being exploited increasingly for tax minimisation by financiers and high income investors. Without this action, if pending applications had been certified, the revenue cost could have been over $4 billion over a period of three years. So don't you talk about this government being soft on tax minimisation or other measures of tax avoidance.

There are a number of measures that are currently in place, including things like extending the general anti-avoidance provisions of the taxation system to combat withholding tax avoidance, to prevent the trafficking in trust losses. There was no mention or any credit from the opposition about the measures this government has taken in order to try to catch people who are not paying their fair share of taxation. All we have is people like Senator Sherry coming in here and saying, `We have some reports of the black economy in other countries of the world increasing with the introduction of a goods and services tax.' Let me tell you: goods and services taxes has been in place in many of those countries for in excess of 30 years, and many in excess of 25 years.

If you would like to go through the list of all of those countries, you will find that there are very few countries that will complain that the black economy is greater after you have a goods and services tax. There is a whole range of other measures and a whole range of other reasons as to why people will try to avoid tax through the black economy. But, as I said, do not let the Labor Party talk about this government being soft on tax avoidance because, ever since we came to government, we have tried to close some of those loopholes which the Labor Party left in place for a period of 13 years without trying to do anything to close them. (Time expired)