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Democrats must deliver better taxes not worse



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M EDIA RELEASE Friday 28 May 1999

AUSTRALIAN FOOD AND GROCERY

- COUNCIL

DEM OCRATS M U ST DELIVER BETTER TAXES N O T W O R S E 3a ^ * * * cT ( J u f

The Australian Food and Grocery Council (AFGQ, meeting in Canberra yesterday, implored the Australian Democrats to accept the offer o f a 5% GST across all food as a reasonable concession to their demands for improvements to the Government’s Package o f tax reforms.

The AFGC Executive Director, Mr Mitchell K Hooke, said “a 5% GST on all food, including restaurants and take-away, will meet the Democrat's objective to exclude food from the price effects o f tax changes.

“The price impact of the direct and indirect effect o f the hidden wholesale sales taxes is equivalent to a GST in the order o f 4.5%.

“With a 5% GST, you simply won't be able to detect price changes in a shopping trolley of food products with the “naked eye".

"There is no question that a 5% GST will meet three of the Democrat’s key objectives: ■ exclusion of food from the GST, in that all food products, not just the narrow definition under the Irish model, will be excluded from the price effects of the tax changes; ■ concessional treatment o f in-bound tourism exports, in that tourists will not be paying full “tote

odds” on food; ■ the concessional treatment o f so-called health products, in that the definition o f food can be broadened at the margin to indude such supplementary products.

“And critically, a 5% across the board rate is consistent with our headline principles o f tax reform: ■ it is simpler than the Irish m odd, even though there will still be some administrative complexities in applying two rates for manufacturers and retailers involved in food and non-food; ■ it is fairer - all food is treated the same, irrespective o f the manner or form in which it is prepared,

distributed or sold; ■ it will go a long way to meeting competitive neutrality and is more economically efficient — it removes tax induced distortions to food choices, to product devdopment and resource allocation; • it will reduce scope for sodal engineering - surely we do not want politidans influencing our dietary

behaviour using taxes to differentiate food on the spurious grounds o f "good foods" and “bad - foods"?

"As importantly, it will provide the revenue necessary to efficiendy and effectively compensate the needy for the impact of a broad-based GST, not just on food.

“The integrity of the Democrat’s desire to assist the poor and make the Package fairer is not at issue with us. But the means by which they propose to do it certainly is.

"Their proposal to partially exclude only some food from a 10% GST is no more than political symbolism. It is a token gesture to the dcctorate under the guise o f compensating lower income and disadvantaged people.

“It will not achieve this target But it will create an administrative nightmare for business, disproportionately borne by small business and retailers.

“The AFGC Council meeting yesterday unanimously dedared it could not support tax reform that ioduded a “bastardised" definition o f food in the GST base", Mr Hooke said.

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The AFGC represents Australia’s largest manufacturing industry producing consumer food, drink and grocery products

lap Contact; Mr Mitchell H Hooke or Lina Meleto Ph 02 62731466 or 0417 667169