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GST: Keating wrong again

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ALEXANDER DOWNER Member for Mayo, Shadow Minister for Trade & Trade Negotiations

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The Federal Opposition said today that Prime Minister Keating's suggestion that the rate of the Coalition's proposed Goods and Services Tax would increase in the future misrepresented the facts in an attempt to mislead the general public.

The Shadow Minister for Trade, Alexander Downer, said that Mr Keating had, in his attack, concentrated on what had happened with the GST in Britain and disregarded the fact that the rates of the GST in the majority of countries did not increase.

Mr Downer said a study last year by the International Monetary Fund of Goods and Services Taxes around the world* has revealed that more than half the countries which have introduced a GST have not increased the tax during its life and that in three cases the tax rate has actually come down.

Mr Downer said, "Of the 57 countries in the world which had goods and services taxes, 33 had not increased the standard rate of tax since its introduction.

"Indeed, in three cases, Peru, Chile and Costa Rica, the rate of GST has actually fallen since they introduced a GST."

Mr Downer said that the Government would be aware of the IMF study because it received a great deal of publicity when it was released last year.

"Indeed, the Prime Minister seems to be using very selective material from the study for political purposes. His failure to refer to te study as a whole smacks of intellectual dishonesty.

"The IMF study refutes once and for all one of the central

aspects of the Labor Party's scare campaign against the GST - that once a GST is introduced it will automatically be increased.

"The Labor Party should not judge others by its own standards; Labor has increased the revenue from the Wholesale Sales Tax by 190% in nominal terms or 77% in real terms since the Hawke

Government was elected in 1983".

Mr Downer said that some of the GSTs which had not increased since their introduction had been in place for many years.

"For example, Chile introduced a GST in March 1975, Indonesia in April 1985, Korea in July 1977, Norway in January 1970, Peru in

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July 1976 and Colombia in January 1975, yet none of these

countries has increased the standard rate of GST.

"The reason that more than half the countries which have a GST have not increased its rate since introduction is that the tax is highly visible and to increase the tax could be politically suicidal.

"The Australian Labor Party need only ask their Labour mates across the Tasman in New Zealand what political price they paid for increasing the New Zealand GST from 10 to 12.1/2%; they were thrown out of office in one of the biggest landslides in New

Zealand history.

"The Coalition will, over the next few months, be continuing to reveal the vacuous and dishonest nonsense emanating from the Australian Labor Party.

"Given that Mr Keating tried to introduce a broadly based

consumption tax in 1985, his scare campaign against tax reform will go down in history as a campaign of shameful half-truths and bold-faced lies."

Value Added Tax: Administrative and Policy Issues, October 1991

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ends. Canberra, 3 March 1992

For further information contact Alexander Downer 06 277 4720