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Labor's low tax claims lack credibility



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TREASURER

no. iifr

EMBARGO

STATEMENT BY THE TREASURER, THE HON JOHN HOWARD, MP

Labor's Low Tax Claims Lack Credibility

No promise by the Labor Party deserves closer scrutiny during this

election campaign than its promise of lower taxation.

No claim lacks as much credibility, hot only because of what Labor

spokesman have been saying over the last few years about taxation

but also because of Labor's record when last in office.

Labor wishes us to believe it can increase expenditure but, at the

same time, lower taxation, lower interest rates and lower inflation.

Such a commitment cannot be achieved.

But Labor faces a further difficulty. For two years or more its

spokesmen have been, listing an impressive r-rnge of tax increases to be implemented on gaining office. ,

But Labor spokesmen have suddenly become sensitive to claims that

Labor would increase taxes in Government. Last week, Mr Hawke on a

morning radio program, for example, denied that taxes would rise.

We have heard little in recent months of Labor proposals for a

capital gains tax, a wealth tax, a possible re-introduction of

death and gift duties, higher marginal rates on upper income levels,

and increases in tax rates on income of dependent children.

2 .

Last week Mr Hawke even suggested that the Labor Party would not

abolish the investment allowance, although Mr Willis has since

clarified that it would be abolished - raising taxes by over

$300 million. /

The Opposition has tried to veil their proposal for a tax on capital

by saying that an enquiry would b^ held first.

But Mr Willis has said on a number of occasions that if there was

no wealth or capital gains tax, Labor would re-introduce estate '

duty. .

In any case, Mr Hayden made it clear in an address to the National

Press Club in March 1979 that there would be a tax on capital:

"We're in the process of refining this proposal but

I say quite bluntly that we won't retreat from it."

It suits the Labor Party's purposes to go quiet about its tax on

capital for the duration of the election campaign.

Away from the. heat of an election campaign both Mr Willis and "

Mr Hayden have· been more expansive about their attitude to taxation and the size of Government. .

In his 1979 F E Chamberlain lecture Mr Hayden referred to a "number

of deeply dispiriting doctrines" which were a "challenge to traditional democratic socialism". .

He went on to identify one of these so-called "deeply dispiriting . doctrines":

"One example is the rapid spread of philosophies based on lower taxes and smaller government ...

This sort of approach strikes directly at the conventional

democratic socialist notion that equality and equity can

only be assured by a stronger public sector."

Mr Willis expressed similar sentiments in his address to the 1978

Conference of Labor Economists:

"If Labor does not gain office next election then by

1983, when we could next hope to gain office, we would

face a mammoth task in rebuilding the public sector -

- and maybe an equally mammoth task in convincing the

electorate that it should pay a higher level of tax to

enable us to do so."

Four days ago, Mr Willis conceded under questioning on the PM

radio program that the Labor Party believed in a bigger public

sector.

Labor's proclaimed belief in lower taxation must also be measured

against its performance in office.

In the three years of the Whitlam Government, personal taxation "collections rose by an average of 31.4 per cent per annum.

Because of the high inflation rates of these days, this was an

average real increase of 14.2 per cent per annum. By contrast,

the increase in real terms in the five years since 1975/76 will only be 3.0 per cent a year. ' .

In 1973, when the Labor Party assumed office, taxation was 19.8

per cent of GDP. By the time the Whitlam Government was .defeated it had resen to 23.2 per cent.

By its actions in office, statements since, and the cost of its

promises for this election, the Labor Party loses all credibility

for its claims to be a Party of lower taxation.

The level of taxation is ultimately determined by the size of government.

Taxation cannot be lowered and the size of government increased,,

without an acceleration in the rate of inflation.

The Labor Party lacks both the philosophical commitment to and

the understanding of those policies which will ultimately produce

lower levels of taxation.

■ . . 4 .; ■ .

MELBOURNE . .

30 September 1980 :

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