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Let them eat cake: plus 15 per cent GST



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PRIME MINISTER

STATffiMETT BY THE PRIME MINISTER, THE HON P J KEATING HP

LET THEM EAT CAKE - PLUS 15 PER CENT GST

I refer you to my media statement of earlier today on the Complexities and absurdities of the Goods and Services Tax regarding take-away food, especially pies.

Ditto cakes.

See attached transcripts.

NOWRA 4 March 1993

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MMONWEALTH A MENTARY LIBRARY MICAH

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Yes, but it's a big change. I mean, we are calling for 3 A ustralia. Now most people agree there has to be a change. And what thepressure is to d

emonstrate that our change (s the way that we ou h sl6nlflcant.shift (n

win b demons people will s h e that as the on!Y g roup with 8 credlblo In alternative

tho is on us win becaus to tell the truth and tha for tchange.

Ought to go. And I think In the end we'll alternative, who are for the sake of winning elections. I don't want to be Prime Minister `toust be iPrlmm elections It Is a means to an end. And that and is the betterment of the people of Australia.Prime Minister. ,S uggestion that I'm somehow running on a platform that's going to make peole w And the doesn't make sense. I mean. would I seriously run to an electron promising to m the aka electorate worse oft- of course I wouldn't. And that's really what we'vepeoplese offWILLESEE: Butpot to get through. a lot of your own supporters are scared of the GST, Perhaps It's not Paul Keating standing between you and the Prime Ministership? Perhaps It's the GSTHEwso N ; ? Well. we're not changing. We've made the change In response to Community opinion last year. And the GST stays as an essential pa rt of the packa e, because it equals jobs. It's fundamental 10 creating jobs. g WIL LESEE: Is It a comp lex tax?HEWSON: No, it's a very simple tax.WILLESEE: Why an't you explain it simply?HEWSON: Wel! a lot of people don't have a very detailed knowle It's never very easy to explain a tax change, and we've seen on several times before. ta I me na in 1985 the G overnment had hardly explained it at all, and got Close to Implementing It.WILLESEE: You were criticised after your appearance on the John Laws program y esterday for your handling of some detailed questions. Doesn't that Just underline that it's complex and people don't understand it? And they think that you don't understand all of it.HEWSON: No well, I do underst it. But the questions that were being asked were Y Very genuine people with very genuine concerns about how the tax change would impact on them. And what I've done for 15 or 16 months Is refrain from telling tfreni just a quick, sharp glib answer, I rather would deal with the detail of their position. And If I don't un derstand their position, I Could give them the wrong Inf ormation, And the examples in those questions yesterday were questions where it wasn't clear what position that person was !n. And what I've said to them is always, stay on the line, well pick up the detail, we'll give you the answer you want. Because I don't think It does anybody any good for me to give a quickglib answer rather than took at the person's position genuinely. 1 mean, take the example In that interview of the butcher shop. Make sure that he just owns the butcher shop and not the abattojro and eve rything else. And then give him a dear answer, which I did on the program. But I won't mislead people.WILLESEE: Can I ust ask ou a sim !e ueation, as exa m to of thla? It blrth^avcgjCal _ e` er k n T Ian ! r! ss for that bH EWSON: Well It will depend whether cakes today, In that shop, are subject to sales tax or they're not, firstly, And they may have a sales tax on their,. Let's assume that they don't have a sales tax on and that that birthday cake Is going to be sales tax free. Then of course, you wouldn't pay, It would be exempt. There would be no GST on It under our system. It It was one with a sales tax today, It would attract the GST, and then difference would be the difference between the two taxes. Whatever the sales tax rate is on birthdayi

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cakes. ' HOW It's decorated, because there will be sales tax perhaps on some of the decorations as well. And then of course, the price will reflect that accordingly. But the key point Is that, the average Australian will have more money In their pocket...

WILLESEE: No, but just on the birthday cake, because I tried to pick a simple example, You tell us In what you've published that the cost of cake goes down, the Cost of confectiona ry goes up...

HEWSON: That's right.

WILLESEE. ... there's Icing and maybe ice cream, and then there's candles on top of It.

HEWSON: That's right. Now that's the difficulty, that's what I'm addressing in the question. To give you an accurate answer, I need to know exactly what type of cake, to give a detailed answer, I mean, If It's just a cake, from a cake shop that Is not presently subject to sales tax, It will not attract the GST.

WILLESEE: Yes, okay, but Isn't that ...

HEWSON: But if It is a cake shop, a cake from a shop that has sales tax, and It's decorated and candles as you say, that a ttracts sales tax. Then of course, we scrap the sales tax before the GST Is imposed.

WILLESEE: Yes, okay, but It's just an example. If the answer to a birthday cake Is so complex - you do have a problem with the overall GST don't you?

HEWSON: Well the difficulty we've got In that example, Is people don't know how much tax they already pay on some of the decorations that might be assoclated with that birthday cake. That's our difficulty. The fact that the Government, It doesn't tell people about its taxes. Sales tax under this Government has gone up over 200%, and people don't know that, and they've never been compensated for It. But the essence of our approach is to scrap Sales tax completely, which Is built into the price of so many of the things we consume on a dally basis Irrespective of whether It's charged on them. And that lowers the cost of producing that cake, and therefore the GST is then imposed.

WILLESEE: Dr Hewson, do you think the Australian peoplo know you?

HEWSON; Well, it's a constant question I guess, because I've only been In politics a bit over five years. But they probably do know. Mike, much more about me as a person than they do about my competitor • he's been around 25 years, but I've been subject to an enormous amount of scrutiny In the last three years since I've been Leader, But It's always a question of perceptions In this business. It doesn't matter how much fact there Is ...

WILLESEE: ... that's rignt.

HEWSON: ... because they may not know enough about me.

WILLESEE: What do you think If someone asked an average Australian what sort of a bloke Is John Hewson? What's the reply?

HEWSON: I hope they see me as a genuine person committed to solving our problems because that is really all I'm promising to do Is solve our problems.

WILLESEE:.. 'I hey might want to know more than that?

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DAVID CONNOLLY ON "MA

E & OE - PROOF ONLY

ABRAHAM: David Connolly, before we lose you on the satellite, I'm just trying to work Out about this birthday cake. Because I have actually, coincidentally, ordered a birthday cake for my wife's birthday today. It's going to be a cream sponge and It's going to have a message written on the top of it - it's going to cost me $11.80. What will It cost me under a Coalition Government?

CONNOLLY: Well, I don't know the exact price of a cake either way, frankly. All I can toll you Is this: the basic rule (6 that cake's are net subject to the ,ST where the cake( made and to be consumed b y an Individual ne son. But If the cake is ...

ABRAHAM: ... no, this Is made by a shop. This Is made by a shop.

CONNOLLY: If a commercial exercise, JQn the add-on value of making that cake

ooula bf s ubje ct tQ the c , T but acaln y ou're talkinn about n few cents. I mean, the example that we put up on the screen earlier for that person, I think at the end of the week what they were affected by was something like 9 cents on their weekly purchases. This whole thing has got to be taken Into context. You're getting 25% reduction at least in your direct Income tax, you've got more money in your pocket - where there are some changes in the price and we've said that Is so - equally there are a lot of areas where there's reductions In prices. So It's a game of swings and roundabouts.

ABRAHAM: David Connolly thank you and thank you for being generous with your time and your computer.

CONNOLLY: Thank you.

ABRAHAM: Coalition frontbencher David Connolly talking to us from Sydney with his computer and spreadsheet program worked out by an ANU post-graduate student. And Is being used throughout Australia by the Liberal Party at Its offices - people ringing In on the hotline number. But as you know, some questions can't be answered such as how much extra I'll pay for my birthday cake.

ENDS