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Monday, 9 December 2002
Page: 7386


Senator REID (2:41 PM) —My question is to the Minister representing the Treasurer, Senator Minchin. Will the minister advise the Senate of the fall in the level of income tax and the overall tax burden paid by Australian taxpayers since this government was first elected? How have the Howard government's policies contributed to the fall in the tax burden, and is the minister aware of any alternative policies?


Senator MINCHIN (Minister for Finance and Administration) —I thank Senator Reid for her question; I appreciate it. I wish her well in her last few weeks in this chamber. The recent midyear update on the budget does show the strength and resilience of our economy. But the midyear update also shows that Australians are now paying a lower level of tax to GDP than when we came to office in 1996. Since we came to office, total income tax as a share of GDP has fallen from 17.1 per cent to 16.4 per cent in 2001-02. Looking at personal income tax, it has fallen from 12.7 per cent of GDP when we came to office to 11.8 per cent in 2001-02.

Of course, that is a reflection of the fact that we gave the biggest income tax cuts in the history of this country—$12 billion worth of tax cuts, which are reflected in those figures which show the ratio of income tax to GDP. Our total Commonwealth tax revenue this year is actually less as a proportion of GDP than it was a decade ago, and it is going to stay that way well into the forward years. Of course, as part of our efforts to ease the tax burden on Australians we have provided things like the private health insurance rebate, a tax cut and family tax assistance. We cut Labor's fuel excise by 1½c a litre, and we abolished Labor's petrol indexation. Our policy is to keep tax as low as possible, commensurate with providing Australians with the services which they expect and, of course, with budget responsibility.

It is the opposition's desire to get up the sort of line that Labor are actually not the party that believes in high taxes and high spending but that it is the coalition party. Of course, not even the Labor Party believe that. If you look at some of their high-spending promises, they will inevitably lead to higher taxation if they ever do get back into office. The highest tax burden on individuals ever recorded in this country was in 1986-87 under the then Labor government when tax was 14.2 per cent of GDP compared with 11.8 per cent now under us. Labor's record on tax is abominable. You should never believe anything they say on this subject. The nation will never forget the l-a-w law tax cuts before the 1993 election which, of course, Labor never delivered. They have no credibility.

They are also trying to perpetrate the nonsensical idea that the GST is a Commonwealth tax. The GST is not a Commonwealth tax; it is a tax that is paid entirely to the state premiers. It is not available for spending by the Commonwealth; it is a tax that we collect for the states and territories. Every single Labor premier is very grateful that we collect that tax for them and they spend it, not the Commonwealth. Even if, for the purpose of debate, you hypothetically assumed that the GST was a Commonwealth tax, which I hasten to add it is not, then to make a comparison you have to deduct all the state taxes that the GST replaced—and of course they were numerous. If you do that, then the tax to GDP ratio still falls as a result of the new tax system, with total tax revenue at 22.6 per cent in 2002-03, down from 23.5 per cent of GDP in 1996-97. So we are responsible for the biggest tax cuts ever in Australian history. We are about easing the tax burden on Australians. We want to keep managing this economy well, managing the budget well, and delivering further tax cuts to Australians.