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GST legislation - is there time to get it right



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St V incent de P au l Society National Council o f Australia

All Correspondence to: PO Box 373 Summer Hill NSW 2130

IB Thomas Street Lewisham NSW 2049 Telephone: 02 9572 6044 Facsimile: 02 9572 6081 Donation Hotline: 13 18 12

; EMBARGOED TELL 4.00PM SUNDAY, 9 MAY 1999

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GST LEGISLATION - IS THERE TIME TO GET IT RIGHT?

“Political expediency, in making ‘deals’ to rush the current unjust GST proposals through the Senate, must not be allowed to override the principle of ensuring ajiist and equitable outcome for all Australians - poor as well as the rich”, Mr Terry McCarthy, Chairman of the St Vincent de Paul Society Public Affairs Committee said today.

“There is no sound reason why the 30th June deadline is so important. It is vital that efforts be made to get such legislation right, rather than make bad decisions in haste”, he added.

If the Government, as it consistently asserts, has learnt nothing from the submissions and hearings during the Senate Inquiries into a GST, then it must have known from the outset that the current proposals:

• will further widen the gap between rich and poor, and the not so poor; • will make many people - as many as 5 million of them - worse off; • the compensation package for pensioners will dissipate after a few years; • will not compensate the approximate one million people who are not in either the tax or welfare

system; • will strongly disadvantage low and middle income families; • will force some groups such as superannuants and self-funded retirees into a poorer situation; • will severely reduce the finances of the many church, charitable and welfare groups which—

provide services to the needy and disadvantage. Plainly, many of them will reduce services and others could even cease to exist.

“The Government and its advisers have achieved this unjust and un-Australian result by averaging the effect of the GST across the whole Australian population, using the false assumption that everyone has the same spending pattern,” said John Wicks, a member of Vinnies Committee. “The only thing they did not average were the benefits which are skewed in favour of the wealthy, resulting in a TRANSFER OF WEALTH FROM POOR TO RICH”, he added.

“The simple facts are that the GST package:

- gives big tax cuts of $3,000 p.a. or more to the wealthy and small tax cuts of $600 or less to low income-earners.

- gives big product tax gains, through the abolition of WST, to the wealthy on goods they purchase (new cars, jewellery, electronic and white goods - as much as a $5,000 gain on a car alone), but little if anything to the poor who largely buy second-hand goods and purchase the essentials of life. ®

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- imposes a relatively greater GST tax penalty on necessities, which form the bulk of expenditure for the poor (food, rents, power, repairs and maintenance which are not currently subject to WST), than it does on the rich.

- the package increases pensions and allowances which, initially, only partially offset the burden of a GST and are then by Treasury’s own admission soon ended. .

- taxes charitable institutions and reduces their capacity to assist the poor.

Yet, the Government begrudgingly suggests that no person or group will be worse o ff’, Mr Wicks added.

“Guaranteed compensation that meets the actual level of burden suffered by the poor and disadvantaged from a GST is the key. This will require more than tinkering at the edges - major surgery is required”, Mr McCarthy said.

Mr Wicks added - “We originally said that any compensation package would require three . principles : adequacy, simplicity and certainty. We now add a fourth - TRANSPARENCY”.

“Several organisations, including Vinnies, have provided various methods for having a GST while, at the same time, making it fair and Australian. Rather that deriding these suggestions, it is now appropriate that they be examined properly. Again, this will take time, time which in the long term interests of Australia would be well spent. With changes to the tax system, Australians deserve to be given the opportunity to ensure they understand the real effect on the fabric of our society,” Mr

McCarthy said.

“Egalitarianism and ‘a fair go for all’ underpins the fabric of Australian society. A vital part of this ethic was compassion for those doing it tough. There is no compassion in the current proposals. The current proposals come at too high a price!” = —

“There is an additional point which is being lost in the current debate,” Mr. McCarthy added. “All the church, charitable and welfare groups which provide services to those who fall through the net or are disadvantaged will be severely punished by the current proposals. Again, this is unnecessary as it can be avoided by maintaining the current system of tax exemption for them”.

For further information and comment contact:

Mr. Terry McCarthy, Chairman - National Public Affairs Committee (02) 6281 1673 (home) or (02) 6282 2722 (office hours)

Mr. John Wicks, Deputy Chairman - National Public Affairs Committee (02) 6286 1442--

Mr. John Moore, National President (02) 9572 6044 (office hours)

CANBERRA - 7 MAY 1999