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Tuesday, 17 September 1985
Page: 625

Senator BLACK —My question is directed to the Minister representing the Treasurer. Has the Minister's attention been drawn to proposals, supported yesterday by the Queensland Premier and by former Treasury Secretary, Mr John Stone, for a flat rate income tax system? Can the Minister provide the Senate with any information on those likely to benefit and those likely to be disadvantaged by a flat rate tax?

Senator WALSH —I have seen reports, including one in the Age this morning which was headed `Stone slams new tax plan before seeing it'. Perhaps to be fair, I should say that I do not believe that headline was entirely compatible with the substance of the story, but when I saw it the thought ran through my head, `What is new?'. For a long time Mr Stone has not been averse to stating conclusions without knowledge of the evidence and even sometimes in conflict with the evidence or, at least, selectively culling out all evidence which does not support his predetermined conclusion.

I did see a report in the Canberra Times that Mr Stone was advocating a 25 per cent flat tax. This is further sad evidence of Mr Stone's progressive cerebral decay. The fact that he now shares a platform with Sir Joh Bjelke-Petersen, who also believes that cars can be made to run on water, leads one to suspect that before long Mr Stone might be reported as asserting that cars will run on water. However, Mr Stone has not entirely lost contact with the disciplined approach to mathematical questions which he once adopted and he appears to concede that a flat tax system which raised an equivalent amount of revenue would leave taxpayers in the $17,000 to $23,000 income range worse off. In fact, on average weekly earnings, which is about mid-point in that range, they would be $3 a week worse off. But what has either not been acknowledged or not reported is that a 25 per cent flat tax would make every taxpayer earning less than $23,000 a year worse off. That would be about 83 per cent of taxpayers. The Canberra Times report went on to state:

At a news conference later he-

that is, Mr Stone-

could not define the proportion of taxpayers who would be worse off at the outset of change.

That proportion is about 85 per cent. Nor does he appear to have pointed out that a taxpayer with a $13,000 income would be $22 a week worse off, that someone on $17,000 a year would pay $18 a week extra tax, that someone on $20,000 a year would pay $13.30 a week extra tax and that some five million taxpayers-I said about 85 per cent-would be worse off. Included among that 85 per cent would be the great majority of Australian farmers on their present income levels. As my colleague John Kerin pointed out in the House yesterday, the adoption of a flat tax proposal as advocated by the Federal National Party as well as the Queensland National Party would mean a tax increase of around $2,000 for a farmer on average levels of farm income, as reported by the Bureau of Agricultural Economics.

That is what would happen initially-that is 85 per cent of the population would pay more tax of the amounts I have stipulated-if a 25 per cent flat tax was introduced. Mr Stone was also reported as saying that with government restraint that 25 per cent rate could ultimately be brought down to 20 per cent. Assuming that the deficit would be of the same size, a 20 per cent flat tax rate applied now would require a cut in government outlays of the order of $12 billion or $13 billion. I cannot get any response from Senator Messner, Mr Howard or anybody else in the Opposition-

Senator Messner —You have not asked me.

Senator WALSH —I asked the honourable senator here last week. The letter is in the mail-not with a cheque, though. I cannot get any answers from any of those worthy members of the Opposition as to where they would suggest cutting government outlays by $12 billion or $13 billion, but I would welcome Mr Stone's suggestion as to where they could be cut. I guarantee to make those comments available to the public.