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Democrats equivocal on tax

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Leader of the Opposition



Senator Chipp has belatedly changed his tune on the ' impact of the Government's fringe benefits tax.

When the tax package was first announced Senator Chipp said his party would support it.

As the inevitable backlash from the restaurant and entertainment industry has developed Senator Chipp has changed his line and is now talking about amendments.

The Opposition has consistently criticised the . Government's approach on fringe benefits.

It has said it is wrong in principle to tax the employer. It has also said that it is wrong in principle to deny all entertainment expenses as entertainment can often be a legitimate expense

incurred in earning business income.

If Senator Chipp wishes to stop the obnoxious provisions in the tax package he should forget about negotiating with the Government on the capital gains tax. Rather he should join the Opposition in opposing the introduction of a

capital gains tax.

The Opposition has said repeatedly that it is against a capital gains tax and that if one is introduced the Coalition would upon re-election seek its repeal.

The capital gains tax can be defeated now if the Democrats join the Opposition in voting against it.

We have made our position clear. It is up to Senator Chipp and his colleagues to demonstrate their concern for the adverse impacts of a capital gains tax on small business and farmers throughout


Senator Chip is playing at the edges in calling for discussions on capital gains. He should come out strongly against the new tax.

··· Attached is a transcript of Senator Chipp's initial response to the Government's tax package.

Canberra 14 October 1985

Parliament House, Canberra, A.C.T. 2600 Phone 72 6994


A. As the Government has presented this package we think its very smart that they've used the employer as a shock absorber so that the original shock of paying the tax on the fringe benefit would be felt by the employer and eventually passed on to the

employee. No matter who pays it whether the employer or employee pays it eventually it will filter down to the employee. Now if you give it straight to the employee, the onus straight to the employee you’d have a wages explosion the like of which has never happened in this country since Malcolm Fraser. But because

don’t lets forget there's something like a thousand million dollars extra is going to be extracted from the community over the next 3 years now its got to going on to cost somewhere. Now if you put them straight on at the source you’re going to have a wages explosion, there's going to be the destruction of the Accord and you're going to put many of our export industries in

peril. I think the way the Government has done it is very clever.

Q. Do you have any qualms about passing most of this in the Senate?

A, In principle the answer to that is no. No qualms at all but there's a long way between a general statement like this thats made by Mr. Keating and 8 or 9 different bills going into hundreds of pages of legislation with very fine print on them. We'll be

looking at that fine print very closely before we give a total commitment but in principle I think its first class. A first class and genuine effort.

Q. What do you reckon Mr. Keating's chances are of getting political electoral approval for this? «·

A. Oh look I'm the worst person to ask about it. The Assets Test was I think something that was logically morally and inequity and yet they lost marks over that because the Liberals Went round the country frightening little old ladies and yet its

Liberal policy to means test welfare. How gullible is the public. This package will restore some commonsense in our taxing system. It will remove a lot of inequities and injustices.

Will help the ordinary person. Now I would think that if they do sell it properly and if the electorate is receptive to^logic rather than emotion which the Liberals will whip up then it is saleable. .

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AM: Friday, September 20, 1985 - Don Chipp - Tax Package

Q. Whats your reaction to the tax on capital gains and fringe benefits?

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