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Passage of GST: some low income wins, but overall package is unfair

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A acoss

Media Release Media Contact:

Ian Wilson Mob 0419 626 155.

Australian Council of Social Service

Level 2

619 Elizabeth St Redfern

Locked Bag 4777 Strawberry Hills NSW 2012

Ph [02] 9310 4844 Fax [02] 9310 4822

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ACOSS Media Release Issued: 4.30pm Monday 28 June 1999

Passage of GST: some low income wins, but overall package is unfair

In response to the imminent passage of the GST legislation, the Australian Council of Social Service has acknowledged some important wins for low income Australians, although, the overall package is still unfair. J— /< · jt * -f-Λ. ^

ACOSS President Michael Raper said: “At least basic foods will be exempted from the GST, family payments will increase, and the States have access in the future to a more secure funding base for vital expenditure on health, education and welfare sen/ices."

"The food exemption, successfully negotiated by the Democrats, means that most low-income households should be better off in the short term. However, despite this change and some improvements to compensation, we are concerned many unemployed people and low wage earners without children are still at risk."

"The ACOSS objection to this package however is that it is not enough to simply ensure that poorer Australians are no worse off. Tax reform is also a test of the fairness of our society. Regrettably, the revised package fails that test. The small income gains offered to most low-income households are overshadowed by the

$62 per week tax cuts given to the better-off."

"Also of concern to ACOSS is a $7 billion a year funding gap in this package that will put enormous pressure on funding for government benefits and services if the economy does not continue to grow strongly. This package also threatens to weaken the capacity of charitable and community organisations to meet pressing

social needs."

"Overall, the tax package to be passed by the Senate is a disappointment It falls short of the goals we set for tax reform when we jointly organised a tax reform conference with ACCI two years ago. W e have argued from the outset that tax reform is not spelt GST and it is not spelt TAX-CUT. W e want a tax system that is based on people's ability to pay and is capable of raising enough revenue to fund social security, health, education and welfare services for all Australians. This

means giving priority to fixing our progressive income tax system — the fairest way to raise public revenue — by closing down rorts, shelters and loopholes."

"The fundamental flaw in the package lies on the income tax side. People on high incomes will receive a $5 billion windfall from tax cuts, but those who avoid tax will continue to be able to do so. This leaves a large revenue hole in the package with low and middle-income households footing the bill in two ways: regressive taxes on consumption will rise by $5 billion a year and governments will have $7 billion less to fund essential social services."

"The tax debate is not over. ACOSS will continue to press for stronger action to curb income tax avoidance. This would provide an opportunity to redress the worst inequities and inefficiencies on the consumption tax side of the package: the retention of Bank Account Debits Tax and the complicated tax that will still fall

on many food items regularly purchased by low income Australians," concluded Michael Raper.

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