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Hurford compounds confusion on payroll tax

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NO. 147

Λ5 t'^ooey^W 77



The latest comments by the Shadow Treasurer> Mr Hurford, regarding

tax indexation have further confused the Labor Party's already

confused position and compounded its dilemma.

CT j Mr Hurford now says that the Labor Party supports full tax indexation.

He does not know when a future Labor Government would introduce such

a policy.

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Not only is this statement vague and inconsistent with the

commitments on cost made by Mr Whitlam when he announced the payroll

tax proposal but worse it demonstrates Mr Hurford's ignorance of

the present situation.

£ Automatic tax indexation operates at present under legislation passed

by the last Parliament. - . .

Is Mr Hurford saying that a Labor Government would repeal that

legislation and then at some future time re-introduce it?

Alternatively, is he saying that the present tax indexation

legislation will be left untouched? If this is the case would he

please explain how payroll tax abolition will be paid for without

increasing the deficit or introducing other forms of taxation?

His problem, and indeed the problem of the Labor Party, is that

Hr Whitlam in his policy speech falsely implied that payroll tax

abolition could be financed merely by Abolition of'the Government's

personal tax cuts to become effective on 1st February next.

If the Labor Party is saying that neither the deficit will be

increased nor fresh taxes introduced to pay for payroll tax

abolition and as Mr Whitlam would never exercise expenditure ■

restraint,there seems no way in which it can be paid for other

than to ask the average wage earner in Australia to forego more "

than the 1st of February cuts. Something more like the $6.00 per

week taxation concessions from the last taxation indexation .

adjustment and the 1st February cuts combined would be needed.

The situation is this. . "

Assuming that payroll tax is suspended from 1st January 1978

(Mr Whitlam has yet to specify the commencement date) and. .

assuming thatpayroll tax is fairly evenly distributed within, a _ " "

fiscal, year,-the cost in the first six months of 19 78 could be— " j

something over $700 million and perhaps as high as $850 ztillibn. .r .

depending on the terms of arrangements with the States.

However, abolition of the tax cuts due to begin on 1st February

would only save a little over $400 million by the middle of 1978.

There is therefore, a short fall of at'least $300 million and possibly

as high as $450 million. . .

It is not too surpirsing that additional saving might be made

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by abolishing tax indexation*. · - . . . '

This would mean that the average wage earner would have to forego

the benefits of tax indexation as well as the benefits of this .

Government's February tax cuts - that is about $6.00 per week.

The public is therefore driven to the conclusion that once again

the Labor Party is in a hopeless muddle on economic policy.

Once again Labor has misled the electorate by not accurately costing

its proposals. . .

I again ask Mr Whitlam, or indeed Mr Hayden, Mr Hurford, Mr Uren .

or in fact anyone on the front bench of the Labor Party to please

answer - preferably not all at once because that will be even more

confusing - the following questions.

Precisely how will abolition of payroll tax running at a rate of

approximately $1700 million in gross terms in 1977/78 be paid for?

What would a future Labor Government do about existing tax laws

which provide cumulative tax benefits of about $6.00 per week

for the average wage earner? ' :

In particular what would a future Labor Government do about full

tax indexation and when would it do it and how much would it cost?

If a future Labor Government continues full tax. indexation how will

it pay for the short fall of over $300 million in the first half

of 19 78?

Perhaps Mr Hurford will tell us at his Sydney press conference

tomorrow. . ;