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Thursday, 21 March 1985
Page: 669

Mr HOWARD —My question is addressed to the Minister for Social Security.

Mr Duffy —He made 100 between lunch and tea. What do you want?

Mr SPEAKER —Order! I ask the Minister for Communications to cease interjecting.

Mr HOWARD —No, he might run into a period of bad light. I refer the Minister to the interesting speech he delivered to the Australian Capital Territory Council of Social Service last night and in particular to his claim that a broad indirect tax on goods and services could trigger a financial crisis among Australia's low income households. Is it not a fact that a properly structured broad-based consumption tax applying to, inter alia, discretionary services such as restaurant meals would be less regressive in its impact than the existing narrowly based indirect tax system which can have such a regressive effect on some low income earners?

Mr HOWE —I am not sure that the honourable member has grasped all of what I said last night. Essentially, I was pointing to the need in relation to any system of indirect taxation to look at the whole question of compensation. Of course, at this stage we are not talking about specific schemes, so one's comments tend to be of a general nature. The reality is that associated with indirect taxation is the need-I do not think the Treasurer would have any quarrel with this; I think it is recognised-to look at the whole question of compensation for people on very low incomes.

I think the Opposition perhaps does not recognise to the extent it should the situation of so many low income people within the Australian community. We talk a great deal in this Parliament about incentives, and so we should because it is important that people have incentives to invest in productive enterprises and to contribute to building the wealth of the Australian community. I think we have to look at the situation at the moment. I do not want to talk about the future structure of the taxation system but its structure at the moment in terms of some of the problems with the overlapping nature of the social security and taxation systems are such that many low income people pay extraordinarily high marginal tax rates. They are a disincentive to those people to work and to become independent. I think that is an important and a central issue which needs to be looked at within any overall restructuring or tax reform.