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Reportable payments system to go under proposed Tax Reform

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Judith Troeth Parliamentary Secretary to the Minister for Primary Industries and Energy

DPIE98/45T 25 A ugust 1998


"Horticulture industries are set to gain from the Government's proposed tax reform package," Senator Judith Troeth, Parliamentary Secretary to the Minister for Primary Industries and Energy said.

Under the proposed plan, which includes broadening the indirect tax base by replacing Wholesales Sales Tax (WST) with a Goods and Services Tax (GST), nine State taxes will be abolished.

Senator Troeth said, "The Reportable Payments System, which currently operates in the fruit and vegetable industry, along with provisional tax and company tax instalments will also go and will be replaced by one new, comprehensive pay as you go (PAYG) system.

Some of the State taxes that will be abolished include Financial Institutions Duty, or FID tax and Bank Account Debits, or BAD tax."

"For small businesses, the proposed system will provide greater flexibility and reduce the burden of administrative processes.

Businesses (whether company, sole trader or other) will pay quarterly instalments, based on income actually received, after the end of the quarter. At the same time businesses will remit their GST payments or claim a GST refund."

Senator Troeth said, "Exports will be GST free, while all businesses will be able to claim input tax credits for the GST paid on purchases of business inputs."

"Producers and the transport sector will benefit from the new diesel fuel credit scheme that will effectively reduce diesel excise for all off-road users from 43 cents per litre to zero, and for larger transport users from 43 cents per hire to 18 cents per litre.

This is on top of savings of 7 cents per litre for business users of petrol and diesel through their access to a credit of the GST paid on fuel. This will reduce exporters costs by a total of $4.5 billion."

Parliament House C anberra ACT 2600 Tel: (02) 6277 3002 Fax: (02) 6277 3205

Unit 1, 322-352 St Kilda Rd St Kilda VIC 3182 Tel: (03) 9593 9511

Fax: (03) 9593 9971

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To ensure that businesses adjust their prices charged to customers in a way that is consistent with the changes in tax rates, legislation will be passed to provide the Australian Competition and Consumer Commission with transitional powers to monitor retail prices and impose penalties on businesses that try to take advantage of customers.

Senator Troeth said, "The tax changes will mean that all food items will be competing for the consumer's dollar oh an equal footing and be taxed at the same rate."

Under the current hidden tax system, consumers are often unaware of what items are taxed and what is tax free. For example, snack foods are taxed at 12 per cent, while fresh fruit and vegetables carry no tax.

Senator Troeth said, "Producers of fresh foods, such as fruit and vegetables, should see this as an opportunity to promote the quality and nutritional value of their product to consumers."

The Government estimates that business costs will be reduced by more than 3 per cent as a result of the indirect tax reform package.

Further inquiries:

Alex Staples (02) 6277 3002/0417 449 921

Internet: edia_releases/troeth/index.htm l