Considering Tax Reform

The Federal Government released its Tax Reform Plan on 13 August 1998, using the title, Tax Reform – not a new tax – a new tax system. The integral part of the new system is a GST that eliminates sales tax and a range of other indirect taxes.

There is a perception that the current tax system is outdated and no longer appropriate for the new millennium. For instance, looking at one area of the current taxation system — superannuation — prior to 1983, taxation of superannuation was fairly simple: on retirement the tax was assessed and the retiree paid a small amount of tax on the lump sum received. However, after 1983, the Government of the day decided that tax on superannuation should be paid on contributions in the year when the contributions were made to the superannuation fund. This set in train a myriad of changes for taxation on superannuation funds. So today we find nine different taxation rates for superannuation, with twenty different options leading to those taxation rates — it is no wonder that the current tax system is not appropriate for the new millennium, but it has all been caused by governments in a grab for tax.

The GST, in my opinion, is being introduced by stealth. Taxpayers have now been without tax relief for in excess of two years and the bracket creep has meant that many average Australians are paying more tax now than they were two years ago. Meanwhile, the Government takes the stance that there will be no tax relief unless taxpayers agree to the introduction of a GST.

With an election scheduled for early October voters are left with only a limited choice. A vote for the Liberal Party is a vote for the GST, a vote for the Labor Party is a vote against the GST. Other social issues are being set aside. These issues include: unemployment, education, health, and other social programs that in my opinion deserve a higher priority and offer a choice to voters.

The unemployment issue has not been sufficiently addressed by either political party, nor the churches through bringing pressure to bear on the Government to solve the problems of the unemployed. These people must surely feel deserted. The Government proposes to compensate those on low incomes for the effect of the GST on their cost of living. This indicates that the Government presupposes that these people are currently in receipt of sufficient income to have a reasonable standard of living — yet I am sure that many unemployed people do not feel that they have sufficient income.

The standard of living for all Australians has been falling over a number of years. Families have been able to combat the fall in the purchasing power of their family income by, firstly, both spouses working, and, secondly, in more recent times, with lower interest rates for home mortgages giving these families relief. However, in the future, as costs continue to rise, people will feel the effects of the falling standard of living. It is my opinion that when both sides of politics talk of the level playing field for imports and exports they are really suggesting that our standard of living should be the same as our trading partners, and for most Australians this would not be acceptable. But this is happening gradually and both political parties ignore the consequences.

Australians are entitled to tax relief, especially low-income families. The GST is a new tax and I doubt that the GST will solve the problem of the amount of tax being paid by taxpayers, nor the amount of income that the Government needs to receive to provide services. The GST rate will rise; when the Government proposes an increase in the GST rate, the States will fall in line and agree to an increase in the rate, because the States are the main beneficiary of the increase.

I fail to see why voters would vote for a new tax.

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