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Does the Prime Minister talk to his Treasurer?

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Michael Keenan MP Shadow Assistant Treasurer, Superannuation and Corporate Governance

Unlike the Prime Minister who has thrown in the towel, the Coalition has an answer to cutting petrol prices.

Michael Keenan, the shadow Assistant Treasurer, says "The Prime Minister should copy another of the Coalition's policies. He should cut excise by 5 cents a litre.

"He must not wait 18 months before making a decision. He has to resist his natural tendency to refer the issue to a committee.

''Changing the interaction between the GST and excise on petrol will increase complexity. It will increase compliance costs. It would increase software and systems costs - particularly of small business service stations,'' Mr Keenan said.

This is something that Kevin Rudd seemed to realise when he was in Opposition. On 16 January 2007 he said in a radio interview: MITCHELL:

Would you at least remove the GST component on petrol?


No, I don't think you can go that far.


Why not?


I think you've got a system when it comes to the application of GST across the general economy you start gouging out more exceptions, I think the taxation system becomes ungovernable.


So, what do you mean, it would cost you too much?


I think you've got to be very careful about carving out exemptions and exceptions to generalised taxation arrangements and that applies to GST as well.

The Prime Minister should help out his Treasurer and Assistant Treasurer, and let them know his views on this matter. He should get them to rule out differential GST rates.

In addition, the policy that Mr Rudd rejected last year has already prompted claims for compensation from the States.

"The Prime Minister said his Labor government would end the blame game and get co-operation from Labor Premiers.

''That's news to Queensland Premier Anna Bligh who says her State will not tolerate a reduction in GST revenue without compensation. This is a bit rich - the States are receiving a GST windfall, as more and more GST comes in from the surge in fuel prices.

"The Prime Minister needs to take a decision, keep it simple and actually do something that will help all Australians. Cut the excise, and petrol and diesel will be cheaper overnight," said Mr Keenan.