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GST-free food survey a 'no brainer'

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22 December 1998

GST-free food survey a ‘no brainer’ 9 ^ ^

'Hie Government should not create populist tax reform policy by dropping the GST on food, the Australian Society o f Certified Practising Accountants (CPAs) said today. ' *3

Mr Paul Drum, ASCPA Senior Tax Counsel said the study by the Melbourne Institute of Applied Economics and Social Research which found that two thirds o f respondents opposed food on GST, is a ‘no brainer’.

“The survey result is hardly surprising given the general lack o f information in the wider community about the implications o f ‘GST-free’ food. If you ask most people i f they support lax on a particular item, particularly one o f the ’necessities of life’, it is fairly obvious what the result is going to be,” M r Drum said.

“To make it even more political wc could perhaps ask survey respondents if they think food should be GST free and the gaping $4 billion hole in the tax base created by this concession, should come from the rich? It doesn’t take a rocket scientist to work out what sort o f results you

will get. But this docs not make i t good policy nor create an accurate picture of the complexities o f the tax system.

“Calls for GST-free food often ignore the facts. Making food GST-free would create a veritable compliance nightmare for small business.

“For example, the legislation required for health to be exempted shows the complications that arise when Governments base policy on what is palatable to the voting public. There arc 119 classes of items listed as ‘aids and appliances’ related to the GST-free health area alone. Exemptions create complexity that is ultimately paid by the community through increased compliance and administration costs.

“If the country is concerned about the impact of the GST on low income earners, then we should be reviewing the compensation package. It is not only a simpler option but also the most equitable,” Mr Drum said.


Contuct: Paul Drum, Senior Tax Counsel, 03 9606 9701 (bh), 0414 760 385 (mob), or Lisa Armstrong, PR Manager - NSW, 02 9375 6205 (bh), 0414 834 700 (mob).


Australian Society of Certified Practising Accountants 170 Queen Street, Melbourne, Victoria 3000 T el: 03 9606 9606 Fax: 03 9602 1163 ACN 008 392 452