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Food for thought on GST - but not enough



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Australian Catholic Social Welfare Commission A C o m m i s s i o n o f t h e A u s t r a l i a n Ca t h o l i c B i s h o p s

02/99

Food for Thought on GST - But Not Enough

The Australian Catholic Social Welfare Commission today commented on the First Report of the Senate Select Committee on A New Tax System.

Mr Toby O'Connor, National Director, stated "The Government should stop playing the tune that the GST is the be all and end all of tax reform.

"The political preoccupation with point-scoring on the issue of a GST evident throughout the inquiry and in the Report must stop.

"The continued lack of information on the expected impact of reforms and the politicised nature of public debate continues to cloud the public's ability to assess the pros and cons of the reform proposals. The Report does nothing to clarify the impacts of the Government's tax reform proposal on the Australian community.

"We are no better informed about who will be the winners and the losers under a tax mix switch which relies heavily on increasing regressive taxes." Mr O'Connor said.

"So far, the Government has not demonstrated that low - and middle-income families will not shoulder the burden of tax reform. Nothing in the Senate's First Report allays concerns that the cost of essential items such as food will not severely disadvantage the poorest families. These families spend a greater proportion of their

income on these goods and services.

"A regressive GST that adds significantly higher costs to everyday items for the poorer sections of the community can hardly be regarded as fair. The Commission remains far from convinced about the integrity of the proposed compensation

measures which can only be regarded as transitory in the long-term.

"At this stage of the Senate Inquiry, the Commission supports the Australian Democrats' position that food must be exempted from the GST on the grounds of equity. The Commission also agrees with the Democrats that there is no justification to include food on the grounds of efficiency. Evidence has been

presented to indicate the exemption will have only a negligible effect on the economic impact of the package if progressivity is restored to the income tax system" he said.

19 February, 1999