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Thursday, 10 March 2005
Page: 73

Senator BRANDIS (3:19 PM) —Saying that this is the highest taxing government in Australian history is wrong. If you want to work out whether a government is high taxing or low taxing, you look at the tax rates. Under the Howard-Costello government, the rate of personal taxation has fallen. When the new tax system came in, the largest personal tax cut in Australian history was introduced. If you look at the rates of corporate taxation, in the life of the Howard-Costello government they have been reduced from 36 per cent to 33 per cent and then to 30 per cent. So we have the lowest personal tax rates that we have had for many years and we have the lowest company tax rates we have had for decades.

You half understand the point, Senator Mackay—because, although the tax rates have been reduced, the revenues have been increased. Do you know why that is, Senator Mackay? Because of the economic management of the Howard-Costello government, company profits are higher than they have been literally in decades.

Senator Mackay —GST!

Senator BRANDIS —I will come to the GST in a minute, Senator Mackay. So, from a 30 per cent company tax rate, there is more revenue generated than there was when the company tax rate under your government was 36 per cent, because companies are so much more profitable. It is the same with personal income tax. There are more people paying personal income tax at higher levels than was the case in the past. Do you know why, Senator Mackay? Because fewer people are out of work, more people are in full-time employment and real wages have increased during the life of this government by more than 15 per cent. That is why people are paying more tax, even though the rates of tax have gone down—because people are doing better, people are earning more and real wages have gone up, just like company profits have gone up, and so revenues have gone up.

But Senator Mackay has asked me to address the question of the GST. Senator Mackay, make my day. In 1999 the states and the Commonwealth entered into an agreement which was called the Intergovernmental Agreement on the Reform of Commonwealth-State Financial Relations—it was signed on 9 April 1999. It set the GST at 10 per cent. As even you know, Senator Mackay, the rate of the GST has not increased. The amount of revenue raised through the GST is greater than projected because the economy is doing so well, people have more disposable income, there are higher real wages and higher corporate profits and so people are spending more. As a result of people spending more, more revenue is being raised through the GST. But the rate of the GST—10 per cent—has not shifted, as you, Senator Mackay, would know.

Where has all this extra revenue gone? We cannot say this often enough: 100 per cent of the GST collected goes unconditionally to the states. It is not a tied grant under section 96 of the Constitution. One hundred per cent of the GST revenue goes unconditionally to the states, and 100 per cent of the surplus revenue beyond the projected amounts of the GST revenues also goes to the states.

Senator Mackay interjecting—

Senator BRANDIS —Senator Mackay, you should take the trouble to read the GST agreement. Do you know what the Labor state and territory governments promised to do? They promised to use any surplus GST revenue to reduce taxes. Have we seen a reduction in state taxes? No, we have not. This year, in my own state of Queensland, which gets about $8 billion of GST money, the Queensland Treasury will get a $760.6 million windfall beyond what was budgeted for. But have they cut payroll tax? No. Have they cut stamp duties? No. Have they cut gambling taxes? No. Have they reduced or abolished land tax? No. The Queensland government is pocketing the GST surplus, but it is not doing its part of the deal and using that surplus to fund a reduction in state taxes. If you want to know the real story about overtaxation in this country, Senator Mackay, look to the state and territory governments, which just coincidently are all in the hands of the Australian Labor Party.