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Sales tax backdown adds to confusion



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Senator Jim Short Deputy Leader of the Opposition in the Senate Shadow Minister for Finance &

Assisting the Leader on Commonwealth/State Relations

SMF 69/92

SALES TAX BACKDOWN ADDS TO CONFUSION

Today's announcement by Treasurer Dawkins of major changes to the Government's proposed Sales Tax "simplification" legislation is a monumental reflection of this Government's gross incompetence, the Deputy Chairman of the Senate Select Committee on Sales Tax Bills, Senator Jim Short, said this evening.

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The Treasurer's statement adds to the confusion already surrounding the proposals. It also reveals an arrogant disregard for proper Parliamentary processes.

It does nothing to allay the serious concerns of the large number of organisations and individuals that have made submissions to the Select Committee.

The only real opportunity to publicly review the Government's legislation has been thrown into disarray by today's announcements.

The Government first announced in its 1990 Budget that it would undertake a major simplification of its Wholesale Sales Tax regime. It took almost 2 years to conduct the review. There was no meaningful consultation with industry, or practitioners, about the proposals.

The legislation was introduced into the House of Representatives on 26 May 1992. The Government prevented any meaningful debate on the highly complex package of proposals by the brutal application of the guillotine in the House of Representatives.

The Government then tried to pull a similar stunt in the Senate but the Coalition forced the Government to establish a Senate Select Committee to examine the legislation. That committee meets over the next 2 days to hear public submissions.

So illconceived and flawed is the "simplification" package that the Senate Select Committee has received no less than 150 submissions raising concerns about all aspects of the legislation. If the Coalition had not forced the establishment of the Select Committee, the original legislation would now be law.

COMMONWEALTH PARLIAMENTARY LIBRARY MICAH

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The Government has today admitted the massive faults in the legislation by being forced to withdraw or redraft many of the major provisions.

In doing so, however, it has added to the confusion and uncertainty, and completely undermined the work of the Senate Committee.

That Committee was established to examine the Bills containing the Government's proposals. Those Bills are now to be massively amended, yet the Government has produced no amendments for the Committee to examine.

Many other issues have been left vague. For example, the Government is now proposing merely to "further examine" several of the important issues raised by industry and practitioners. When will this examination be completed? When will amendments be drafted? Will industry be consulted on these? All these important questions, and others,

remain unanswered.

The Sales Tax "simplification" exercise has always been nothing other than a cowardly political exercise. The Government has attempteQ to give a cloak of respectability to the existing iniquitous, inequitable, discriminatory and inefficient Wholesale Sales Tax regime

because it has lacked the courage to do what it knows to be right, namely to introduce a Goods and Services Tax.

Today's capitulation still leaves Australians and Australian business with an inefficient, ineffective, incompetent and uncompetitive indirect tax system. Serious problems still exist with the Government's proposals. These include the taxing of exports, double taxation, illconceived and anomalous registration provisions, inconsistent and illogical exemption classifications, costly and confusing administration, and seemingly unnecessary anti-avoidance provisions.

These uncertainties and confusions will continue to be the order of the day so long as the Government persists with a Wholesale Sales Tax regime. No amount of "simplification" or patching up will ever address the fundamental flaws and inconsistencies inherent in the WST regime.

The Treasurer claims today's statement should help ensure the legislation is passed in August, ie in practical terms next week. That is nonsense. Today's charade means that the Parliament would be negligent if it passed the legislation next week in the face of the chaos today's amendments have added to an already totally confused and unsatisfactory

situation.

The Government must not proceed with this legislation at this time. Treasurer Dawkins in his press statement today says that the Government will not proceed with the major item of external costs "in order to allow a further examination of the issues identified." If this isn't the clearest indication that the Government can't get it right then I don't know what is. The Government should put the entire legislative package on hold until further

thorough consultation is undertaken.

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Even if all the existing uncertainties were resolved, we are now far too close to the next Federal Election for the Government to embark on the introduction of these proposals. They necessitate major changes on the part of many existing Sales Tax payers, and will bring several hundred thousand new businesses and organisations into the Sales Tax net.

If the Government had any sense of responsibility, it would await the outcome of the next Federal Election before embarking on such costly adventures.

Australians face a clear choice at the next Federal Election - between a Keating Government determined, ostrich like, to refuse to face the reality that our taxation system requires fundamental overhaul, and a Coalition equally determined to provide Australia with a modem, simple, equitable, efficient and competitive tax system.

Canberra 11 August 1992

For further information contact Senator Short on (W) 06-277 3119 or (H) 06-295 3841.

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