Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Treasurer discusses the GST on first anniversary of its introduction.



Download PDFDownload PDF

Transcript No. 2001/086

TRANSCRIPT of

HON PETER COSTELLO Treasurer

Interview on AM Radio

with Katherine McGrath

Friday, 29 June 2000

SUBJECTS: GST, Rollback, tax cuts, small business

McGRATH:

Mr Costello thanks for joining us this morning.

TREASURER:

Thank you.

McGRATH:

It has been a rollercoaster of a year for you trying to sell this GST. There was first of all anger over the BAS. It has dominated the political agenda. Do you have any regrets about the way it was designed or the way it was sold?

TREASURER:

Well, you have got to bear in mind that we weren’t able to implement the policy as we took it to the election and that various changes were made in the Senate which complicated things. But all that tells you, is, any further changes will just complicate things further and you would have seen in the papers, today 84 per cent of Australians don’t believe the Labor Party on Rollback and why would you, because that’s just a recipe for further complication. But working within the parameters, as enacted, we are now a year into the New Tax System. I pay tribute to the businesses of Australia which overwhelmingly have adjusted. It has been a…

McGRATH:

Do you wish though you had made it less complicated, you had moved on the BAS more quickly.

TREASURER:

Well, I wish that it had been less complicated, in the sense that we had been able to implement our policy. But you have got to bear in mind that there is a Senate and the Labor Party opposed all tax reform. So we had to negotiate with the Democrats in the Senate. But I pay tribute to the small businesses of Australia. We have come through the first year. Overwhelmingly, they have shown goodwill and adjusted. People said 150 other countries in the world could have a GST but Australia couldn’t do it. We can do it, we did it, and now further benefits will come…

McGRATH:

Yes.

TREASURER:

…cuts in company tax, abolition of Financial Institutions Duty, abolition of stamp duties on shares.

McGRATH:

Yet, small business are the group that are still yelling. The CPA found that most businesses are angry and expect the pain to continue - 59 per cent found negative cash flows, 58 per cent said they expect it to go on. Now that concern is still there, you have got to convince them, you know, it doesn’t look as though they are convinced yet?

TREASURER:

Well it depends where you are in small business. If you are selling to consumers you are actually getting a cash flow benefit. That is, you get GST and you hold it for three months. There is a lot of businesses that have actually benefited very considerably from that. If you are further up the production chain, you don’t get that benefit depending on your terms of trade. But let’s look where we have come from. We have abolished Wholesale Sales Tax. Nobody in Australia wants a Wholesale Sales Tax. Now, a year ago Labor wanted a Wholesale Sales Tax. They have given up the fight. We have cut income taxes, we have cut company taxes, we have followed 150 countries in the world, we could do it, and we did, we now have a GST, and from here on in what do we do? We abolish company tax on Sunday, sorry we abolish Financial Institutions Duty on Sunday, we cut company tax by another 4 per cent, we abolish stamp duties on shares, and in addition to that we have reductions in capital gains.

McGRATH:

But look where we are 12 months down the track. You know, you’re saying that, you know, small business are doing well and if they don’t realise it then they should be, and small business is saying to you no, we are not happy. So you have got to still convince them haven’t you, you have still got some work to do.

TREASURER:

No. As I said, I am saying that we acknowledge the work that small business has done over the last 12 months. It has been a magnificent effort. The first 12 months were always going to be the hardest as you go to a new tax system. But 150 countries in the world have done it and this is the critical point. Is there anybody in Australia who now says GST should be abolished and we should re-introduce Wholesale Sales Tax? Now, even the Labor Party, which apart from Swaziland, was the last political party left standing in the world in favour of Wholesale Sales Taxes has given up the fight. It now says GST is a better tax system than Wholesale Sales Tax.

McGRATH:

Well, when will you tell the community how much more money is coming in? There are more ABN numbers, we know that, how much more money are you getting?

TREASURER:

Well, in the Budget we showed that the New Tax system has obviously led to additional compliance. You have seen it with a lot of barristers, for example, in Sydney. The estimate of additional compliance was about two or three billion dollars, and it was out of that that pensioners were able to be paid a bonus. The prisoners of war of the Japanese were given long overdue compensation last week, and for the self-funded retiree there will be further in additional tax refunds coming from 1 July.

McGRATH:

Treasurer Costello thanks for speaking to AM this morning.

TREASURER:

Thanks very much.