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Shadow cabinet discusses tax reform debate

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The Federal Opposition Shadow Cabinet which met today reviewed the Labor Government's mismanagement of the tax issue and progress of the debate over the Government's White Paper o tax.

At the meeting, the Shadow Cabinet:

- Re-confirmed the Coalition's tax policy contained in the statement of policy issued last year (including reduced Government spending, reduced personal income tax, family income-splitting, the

introduction of a child care rebate, the introduction of a broad based indirect tax and opposition to a capital gains tax, etc).

- Re-endorsed the Coalition's opposition to the “ Government's preferred option (Option 'C') for tax reform contained in the White Paper.

- Decided that the Coalition Policy and Implementation Committee would continue the detailed development of the alternative Government's expenditure reductions and tax relief.

Commenting on the decisions of the Shadow Cabinet, the Opposition Leader, Mr Andrew Peacock, said the Coalition was completely opposed to the preferred tax reform option of the Government.

"The fact is that there can be no true tax reform and true reductions in the tax burden without reductions in Government spending being addressed first," Mr Peacock said.

"The, Government has completely ruled out any discussion of Government spending as part of the tax debate and has said its White Paper is 'not about the overall burden of taxation'."

Mr Peacock said the Tax Policy issued by the Coalition during last year's Election campaign contained the basis for real reform of the taxation system.

"We said that we would restrain Government spending, and offer income tax relief, particularly to families, through income-splitting and the introduction of a child care rebate," he said.

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"We also said we were in favour of a gradual and predictable broadening of the indirect tax base, and against the introduction of any new capital gains taxes, death duties and gift duties.

"Those basic principles for reform of the tax system remain in place," he said.

Mr Peacock said the Coalition partners rejected the preferred option put forward by the Government in Option 'C ' of the White Paper on tax reform.

"We are opposed to the introduction of an onerous new capital gains tax proposed by the Government with its hidden elements of death duties and gift duties," he said.

"We are opposed to the Government's proposed across-the-board 12.5 per cent consumption tax as being too high in itself.

"This particular proposal is causing widespread fear and uncertainty in the community, not only because of its impact on individuals but because of its potential harm to the * economy and on the rate of inflation.

"We are also concerned about the administrative and other difficulties, and the costs, associated with the introduction of such a large consumption tax," he said.

"The overall impact of an indirect tax on input costs must be carefully considered. In particular, the inter-relationship between this and other revenue raising measures such as fuel taxes must receive close scrutiny."

Mr Peacock said the Coalition was also concerned about the introduction of the fringe benefits tax, particularly as it discriminates against private employers.

"The fact that it is to be paid by the employer completely turns upside down the existing provisions of the tax legislation relating to taxes on fringe benefits," he said.

25 June 1985