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Democrats tax package a bonanza for the rich



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SOCIETY OF ST VINCENT DE PAUL

EMBARGOED TILL 4.00PM FRIDAY, 4 JUNE 1999

k Democrats Taxj^ackage a Bonanza for the Rich In a letter to all Senators, Mr Terry McCarthy said today that it is possible to have a just GST, but the Democrats Tax Package was a “new bonanza for the wealthy and the concentration on exempting food in exchange for a reasonable compensation package on all the essentials of life was a cruel hoax on millions of Australians”.

“The simple fact is that of the $3.6b set aside for exempting food, only $1.2b will go to the poor. The other $2.4b goes to the rich - a 200% compensation for the $ 1.1 b shaved from income tax cuts for the rich.” He added - “The wealthy now benefit from a minimum tax cut of $2,500 per annum, a saving of about $3,000 per annum on reduced cost of big ticket items such as cars and electronic equipment and now a shared benefit of $2.2b for GST free food. The poor have no such luxuries,” Mr McCarthy said. “In simple terms a person on $25,000 pays a full 10% on all the essentials of life (excluding some basic food) such as clothing, utilities, services and transport. This means he will pay about $1,850 per annum in GST on the other 73% of the income and receive a tax cut of about $700. He is therefore $1,150 per annum worse o ff’.

Mr John Wicks, a member of the Society’s Public Affairs Committee said - “All the compensation which the Democrats and Government refer to as ‘already substantial’ is based on false assumptions such as a 1.3% CPI increase which is irrelevant to the spending patterns of the poor. If the impact of the GST on prices is kept to only 1.9%, 73% of the income of low income earners will face a 10% increase on the remaining essentials of life.”

“There are millions of losers under the Democrats GST including self-funded retirees, superannuants, those outside both the welfare and tax systems and pensioners. It is true that this is one of the biggest increases in pensions in years, but this has to be seen alongside the simple fact that these rises won’t compensate for even bigger price increases,” he added.

“It is clear that under the Democrats Tax Package only the wealthy are overcompensated. Some of the poor are only partially compensated, some are grossly undercompensated and some not at all," Mr McCarthy said.

Contrary to the impression given, there is no relief for Charities which will pick up those who fall through the net. What is agreed is the provision of a bureaucracy to ensure Charities understand the new taxes and know how to comply with them. “It is a bit like promising relief to an innocent condemned man by assuring him you will show him where to stand on the trap door before you pull the lever,” Mr McCarthy added.

Mr McCarthy concluded: “It is possible to have a just system, but it will be a tragedy if Australia entered the next millenium having lost the opportunity of providing a just and equitable Australia, by enshrining a system that will provide an unegalitarian and unfair Australia by locking millions of Australians into a cycle of poverty, just as has been achieved by similar systems in Canada and New Zealand. The myth of a fair go for Aussie battlers would become another casualty in our search for what we are told is ‘good for the economy’.”

For further information and contact:

Terry McCarthy Mr John Moore

Chairman National President

National Public Affairs Committee Society of St Vincent de Paul

(h) (02)6281 1673 or (w) (02) 6282 2722 (02) 9572 6044 during office hours