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Thursday, 25 March 1999
Page: 3298


Senator GIBSON (3:25 PM) —I rise on this matter of taxation and the questions that were asked in the Senate here today. I agree with my colleague Senator Ferguson that the Labor Party is obsessed with the GST and is avoiding the fact that we have put a total package before the Australian community—our new tax system. Why is the Labor Party avoiding everything else? Because it wants to avoid talking about the fact that people are going to get substantial income tax cuts—$13 billion of income tax cuts.

Why is the government doing this? The government is doing this because it identified—in fact I chaired a committee that looked at this last year and part of the year before—that one of the key impediments in the Australian economy for ordinary folk was that the marginal tax rates were too high. This applies to lots of people and lots of small businesses. Marginal tax rates were just too high and people would not do the overtime, they would not work at weekends and they did not want to do the extra yards. Hence our proposal to reduce the marginal tax rates so that, with our new tax scales, 80 per cent of taxpayers will face a marginal tax rate of 30 cents in the dollar—a huge difference from the 43c and 34c which currently applies in those rates.

But again I return to the Labor Party. What has it been on about? The Labor Party is in favour of staying with the current mess of indirect taxes. The Labor Party is in favour of staying with the wholesale sales tax.


Senator Sherry —Yes.


Senator GIBSON —Of course you are; that is quite right. As the budget documents make plain, the federal indirect tax take of the economy is coming down. Estimates prepared by Access Economics clearly show that the average for federal indirect taxes for the last 10 years has been 5.64 per cent, coming down from about 6½ per cent about 10 years ago. Access Economics have done projections of the economy for the next 10 years. Their estimate is that, with those existing tax rates, the federal income tax take of indirect taxes will drop to 4.8 per cent—so 5.64 per cent down to 4.8 per cent—which leaves a deficiency in dollar terms of over $5 billion. That $5 billion is one-third of the wholesale sales tax of about $15 billion. So the Labor Party, by implication, is in favour of increasing wholesale sales taxes by 30 per cent—by one-third. We all remember what happened in the 1993-94 budget when the Labor Party put up taxes—both excise and indirect taxes with the wholesale sales tax—and increased the tax take from the Australian community by 30 per cent over those Keating years.

We are in favour of tax reform which gives incentive to people to work, to save and to invest. The tax system we have proposed will favour exports. The tax system that we have proposed will favour all businesses. The tax system we have proposed will make costs lower for all business, but one I want to particularly single out is the transport industry. The Treasury estimate is that costs will go down by 6.7 per cent for all road transport.


Senator Sherry —Madam Deputy President, I raise a point of order. We have been pretty patient with Senator Gibson, but the point goes to relevance. The two questions that I moved that we take note of—Nos 4 and 6—relate to a goods and services tax and the black economy, not the other issues that Senator Gibson has been talking about. I think he has had fairly reasonable go but, in terms of relevance, I think he should be drawn to the issues of a GST and the black economy. They were the issues.


The DEPUTY PRESIDENT —Only questions four and six related to the black economy. Senator Gibson, I am sure that you can be relevant when you address those issues.


Senator GIBSON —Thank you, Madam Deputy President. They were part of questions about the application of GST, which is part of the government's ANTS package, a new tax system. That is why it is relevant. Just one final point about transport: the Australian Road Transport Forum, when appearing before our Senate committee a few weeks ago in Sydney, stressed that they expected road transport costs for heavy transport to go down by between 15 and 19 per cent.

With regard to evasion, we all know that there is a cash economy in this economy right now. What did the Labor Party do about that over the past 13 years? Yesterday, we had a visitor here in this parliament, Professor Cnossen, who is a world expert on VAT and GST. His estimate was that in fact the evasion in Europe is nowhere near the numbers that have been quoted by the Labor Party. He said, `Please use your commonsense. The VAT in Europe is about eight per cent of the economy, eight per cent of GDP. As it is effective and is growing, how can it possibly be that evasion is serious in Europe?' He is quite correct. (Time expired)