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Taxation reform - the business council

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The Opposition Leader, Mr Andrew Peacock, said today the Government's preferred tax option would dramatically increase the business tax burden and hit investment and employment.

. Mr Peacock said he basically supported the broad thrust of the Business Council of Australia's criticisms of the Government's tax proposals.

"If anything they do not go far enough," he said.

"The Opposition believes the new capital gains tax in the Hawke-Keating preferred option would also have serious implications for the business community and investment.

Mr Peacock said the Liberal-National Party opposition was completely opposed t

"But I also share the Business Council's concern over the likely impact on business, investment., employment and economic growth of other aspects^of the proposed tax package," he said.

. "I air not in a position to confirm the Business Council's view that the proposed package would add 2 0 to 30 per cent to the burden of tax. on the corporate sector.

"But it is clear that the tax proposals now being pushed by both the Prime Minister and the Treasurer would add significantly to the costs of business. „ '

"The proposed taxing of fringe benefits through the employer ' is not only a reversal of current practice, it would lead . ' to increased costs and some potential anomalies," he said.

"For example, in some cases, the employer could end up paying 45c in the dollar for an employee's fringe benefits ■ when the employee's marginal tax'rate was lower than that. "

" Mr Peacock said he also understood the Business Council's concern over likely higher company tax rates, the foreign tax credit proposals, and certain elements of double taxing likely under the consumption tax proposal.

"Like the Business Council, I am also concerned that the ,Government did not examine seriously the role of payroll taxes in the investment-employment linkage," he said.

"But the Government did not seriously examine fundamental issue of tax indexation in its White Paper, yet it has been ' thrown in to the discussion pot since then," he said.

Inquiries: 0 6 2 - 7 2 6 9 9 4 17 JUNE 1985