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Broad based indirect tax



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N O . 8

BROAD BASED INDIRECT TAX

The Treasurer, the Kon. John Howard, MP, today announced that

the Government had decided not to proceed further with

consideration of the introduction of a broad based indirect

tax. '

Mr Howard said that in June 1978 he had announced an inquiry by

. the.Government into the indirect tax system. Ά - major part of ■

this inquiry was an investigation by the Commissioner of

Taxation of the practical aspects of introducing a broad based

indirect tax at the retail level.

The Government received the Commissioner's Report shortly

before Christmas and that Report, together with other aspects

of the indirect tax system, had been under study by the Government

in recent weeks. ■

Mr Howard emphasised that at no stage had the Government decided

in principle to introduce a broad based indirect tax. The process,

commenced in June of last year, was designed to put the Government

. in a position to take an informed decision on the subject.

2 .

This process had now resulted in the Government - after careful

examination of the subject - deciding not to proceed further.

Mr Howard said that in reaching its decision the Government had

to balance strong arguments both for and against a change in

the taxation base. . . .

He said there were considerable advantages, particularly in the

longer term, in placing rather less reliance on direct taxation

and correspondingly greater emphasis on indirect taxation.

On.the other hand,, any significant move towards a broad based

indirect tax would have had a direct effect, upon consumer ' ""

prices and thus inflationary expectations. As well it would have,

involved an inevitable period of uncertainty and some confusion

as both traders and consumers adjusted themselves to the new

system. ,

In the final result the Government had decided that, steadiness

in economic management and minimal disturbance at a time when

the fruits of the Government's economic policies were becoming

apparent was a dominant consideration.

CANBERRA .

24 January 1979