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GST is inevitable, says Taxation Institute of Australia

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Media ReleaseIssued by the Taxation Institute of Australia 64 Castlereagh Street. Sydney 2000. Tel 02 232 3422 Fax 02 221 6953GST is in e v ita b le , says T axatio n In s titu te of A u s tra liaIssued Mon, 24 Jun 1996Australia’s leading professional tax body, the Taxation Institute of Australia, believes the introduction of a goods and services tax is inevitable and has offered to play a leading role in educating tax practitioners and the public about the implications of such a tax.National president of the 10.000 member institute. Mr Jonathan llbery. said today there was no doubt that a GST was a fait accompliThe questions is when not 'if it will be introduced Mr llbery said"The TIA as Australia s largest and oldest ta ation body will play its part in contributing to an education programme particularly among tax professionals and commerce and industryMr llbery s comments reflects those e pressed by leading ta.··. professionals and business leaders in the latest edition of the institute s journal Taxation In Australia which carries a series of GST articlesFor a number of years the TIA has supported the introduction of a GST Mr llbery said we believe it is the only effective way to simplify our very comple.-. taxation system and it seems to us that in recent weeks the push for sucn a tax has been growing■ ‘While we believe that a GST is still politically unacceptable calls for it's introduction from leading industry groups including the Business Council of Australia the Australian Chamber of Commerce and Industry and the National Farmers Federation, cannot be ignored“Indeed, the Assistant Treasurer Mr Jim Short, has \ο\ύ Taxation in Australia"that he is aware of the revived interest in a GST, particularly within the business community“We are one of the very few OECD countries without a GST and our politicians must seriously consider whether it is Australia that is out of step or countries which currently have much stronger economies than our s and far less complicated taxation systems“The hysteria and hype that seems to accompany the mention of GST is generally ill informed and that is partly because there has never been an effective e-planation of how such a tax would be implemented as part of a restructured tax system and what it would mean particularly to the average Australian“We are slowly but surely reaching the point where the majority of goods are covered by a tax, so switching to a GST would really require only a minor adjustment Unless confronted head on, the present political'no go' area will give, by stealth, a GST in all but name It will simply be an extension of the present inefficient wholesale sales tax system.2/

TIA: GST page 2

"A broad-based consumption tax levied at a uniform rate has the advantage of not discriminating between goods and services and types of goods it also has the advantage of being sisible ta compared to the current invisible wholesale sales tax

“Certainly anyone who deals in cash can still bypass the system so it would not spell the end of the so-called black economy. but those who do indulge in getting around the system will not be able to escape paying a GST on the goods and services they purchase so there is a significantly better chance the Government will get a fair share of the current black' money

"The TIA in raising this issue, is not seeking to push the Government to introduce a GST but offering to assist in creating a broader community awareness of the fact that there are significant advantages in Australia replacing the existing unwieldy taxation system including the wholesale sales tax. with an effective and fair consumption ta·

"By educating our members about a GST we are opening the way for them to. in turn educate their clients and the general public

"Only by adopting a long term education programme will the Federal Government ever be able to overcome the political problems currently associated with the introduction of such a ta -

"People will thus be able to understand how a GST will make us more competitive internationally while providing our workforce with greater incentives to become more productive It will allow a greater degree of personal productivity through a reduction in income ta rates in a restructured ta - regime

Brought down to its most basic element, who - in their right mind - really wants to work overtime when the boss asks them to and they know full well that income ta- will see fifty percent of the money they earn going straight into the Treasurer's coffers'?

Further information

TIA National President, Jonathan llbery 0411 214 420 (mobile) or 02 232 3422 (w). TIA Technical Director, Annamaria Carey 02 232 3422 (w) 02 560 5396 (h).