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Australian Council of Social Service spokesperson says the Government's tax mix shift will result in political reform, not tax reform.



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PETER CAVE:   The Australian Council of Social Service says the Federal Government is placing its tax reform program in jeopardy by signalling that personal income taxes will be funded by a GST.  ACOSS tax spokesman, Robert Fitzgerald, says it’s a slap in the face for business and welfare groups who want any GST to replace other consumption taxes.  Mr Fitzgerald told Phillip Lasker that the Government has betrayed its key tax reform supporters.

 

ROBERT FITZGERALD:  If the Government proceeds on this course, what it has done is basically slapped in the face all of those that have supported tax reform in this country over the last 18 months.  Basically, there are now no economic arguments at all for a change in the balance between direct and indirect taxes; more importantly than that, it creates enormous equity problems.  And the Federal Government has only one reason to adopt such a strategy, and that is a political reason.

 

PHILLIP LASKER:  So ACOSS is now going to campaign against a GST?

 

ROBERT FITZGERALD: No, ACOSS will continue to campaign to the Federal Government not to introduce a tax package that has in fact major problems.  It must be remembered that in both 1985 and 1993, the major reason why tax reform failed was that, in both of those attempts at tax reform, there was major tax mix shift.  In other words, there was a major shift from the burden on income to the burden on consumption taxes.  Now, why in 1998 would we be proceeding on the same path?  Why would we be going against all of the advice provided by those who are genuinely concerned about tax reform?  Why would we be deliberately putting at risk low-income Australians, and why would we be going against the interests of business to do this?  There can only be one reason, and that is we’re back to the bad old days of my income tax cuts have got to be bigger than yours.  The argument goes very simply, that Labor will introduce income tax cuts without a GST, and the Coalition will have to introduce even bigger income tax because of a GST.  Now, this is not tax reform, this is a political reform, not tax reform.

 

PHILLIP LASKER: So if the Government persists with this line, will ACOSS oppose the introduction of a GST?

 

ROBERT FITZGERALD: ACOSS is going to totally oppose this tax mix shift and we would use all of our endeavours, together with those in the business community and those in other parts of the sector, to convince the Government that this approach is wrong.  Now, at this stage, the Government has not announced a package, but let me be very clear:  if it is foolish enough to want a tax mix shift, if it is foolish enough to put at risk the position of low-income Australians in particular, with no advantage to the economy or the economic efficiencies of this community, then I believe that it is going down a path where tax reform, once again, is being put in jeopardy.

 

PETER CAVE: ACOSS spokesman, Robert Fitzgerald.