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Thursday, 10 March 2005
Page: 72


Senator MACKAY (3:14 PM) —I acknowledge the comments of my colleague Senator Wong, who did point out the very useful leak from the cabinet about the fact that the government is not going to do anything about effective marginal tax rates. I find myself wondering where Senator Fifield is today in this debate. I know he has an interest in reducing effective marginal tax rates. I thought he might have chosen to enter into this debate, given that we do read about him extensively these days in relation to being a member of the new ginger group

Our contention that this government is the highest taxing government in Australia’s history is correct. Mr Costello gets away with it by saying, ‘Ah yes, but the GST is not a federal tax; it is a state tax.’ It is time to put something on the record here in relation to the GST. The new tax, the GST, collects around $30 billion-odd per annum, recurrent. It replaced the old wholesale sales tax, which was collected by the Commonwealth and was worth about $16 billion per annum. The GST, in fact, grows at twice the rate of the old wholesale sales tax. The Commonwealth no longer has to reimburse the states through general purpose payments, so there it is saving itself around $14 billion net. As it no longer has to pay that sum to the states and with the period of the IGA—the intergovernmental agreement on the GST—having expired, the Commonwealth is now $14 billion in the black, recurrent, per annum—because of the GST. That is a fairly simple concept I would have thought. This is in addition to the bracket creep, to which Senator Wong referred, which is the second point, resulting in an even bigger tax take.

The GST is a growth tax, so it just keeps growing and growing, and that $14 billion gain that the Commonwealth is getting direct to its coffers just keeps getting bigger and bigger. But there is more. Way back in the nineties, the High Court determined that it was unconstitutional for the states to collect tobacco, liquor and petrol excise; I do not know if many senators will recall that. At that point, to ensure that this situation did not disadvantage the states, the Commonwealth correctly took over the collection of those taxes and reimbursed the states for the lost revenue of tobacco, liquor and petrol excise. Fair enough so far; that is fine. But that is not the end of this story.

Since the GST was brought in and the minimum guarantee on the GST to the states has finished, the Commonwealth has not reimbursed the states for petrol, alcohol and tobacco excise. But guess what? The Commonwealth—on my calculations, and I am getting some work done—is now around $8 billion better off per year. I have not heard Mr Costello talking about that. Why hasn’t Mr Costello abolished petrol excise, for example? If you look at the amount of money the Commonwealth is saving from the expiration of the IGA, the intergovernmental agreement on GST, you are looking at $14 billion per annum recurrent plus this $8 billion, which Mr Costello never talks about. The Commonwealth, as a result of the GST alone, is now $22 billion per year better off, recurrent.

I notice that Senator Brandis also wants to speak in this debate and I will be happy and interested to hear his response. Nobody is talking about this particular aspect. Anyway, that is the reality of the situation: this is the highest taxing government that Australia has ever had. The GST is not a state tax; it is a Commonwealth tax. The Commonwealth benefits to the tune of $14 billion per annum and it is adding up, and there is this mystery $8 billion. (Time expired)