Poll Fray Looming On Gst
The Age
Saturday October 20, 2001
Labor leader Kim Beazley yesterday set the scene for an election battle over the GST promising a $1 billion-a-year plan to make it fairer for families by removing the tax from power bills, textbooks and nappies.
Prime Minister John Howard will announce a family tax assistance plan in the Coalition's election policy launch at the end of next week.
The focus on tax came as the Liberal Party's election campaign suffered a blow when its only state Premier, South Australian John Olsen, yesterday resigned after a highly damaging report found his government had awarded a major contract to Motorola on an uncompetitive basis.
Unveiling Labor's centrepiece election policy, Mr Beazley said low-income families were hit hardest by the GST and therefore it should be removed from essentials such as electricity and gas bills.
He said that softening the impact of the GST had priority over reducing income tax bracket creep, which occurs when taxpayers are pushed into higher tax brackets.
Mr Beazley vowed to protect spending on services such as public health and education by promising to compensate the states for the revenue lost by the $1 billion-a-year reduction in the GST.
The GST cuts aim to assist young families and older Australians and have been kept modest to ensure the policy does not blow out the budget.
The main item, an exemption for household electricity and gas, is available only from July1, 2003. This helps to ensure the cost of rolling back the GST does not blow out the dramatically reduced 2001-02 budget surplus of $500 million.
He said the package had been independently verified by economic consultants Access Economics.
``This is affordable, it is deliverable, it keeps the budget in surplus," Mr Beazley declared.
He also confirmed GST would be removed from funeral services and pre-paid funerals, women's sanitary products, long-term caravan park and boarding house rentals and charities' emergency relief services.
Although this was the limit of GST exemptions for the life of the next parliament, Mr Beazley said a Labor government would look at offering further GST relief in the longer term.
It would set up a special committee to implement the exemptions and to field requests for further GST cuts.
Mr Beazley gave a guarantee that Labor would not increase the GST rate and would not extend it to other items. He also said Labor would not increase any other taxes, including income taxes, and would reverse the impact of income tax bracket creep, although he would not say when.
Prime Minister John Howard said Labor's proposal was ``political surrender" after three years of attacking the GST.
``If they become the government, they will keep more than $29 out of every $30 collected by the GST," Mr Howard said. ``There's no real difference between the Liberal Party and the Labor Party on the issue of GST.
``What's the last three years been all about? This is the most abject policy capitulation on a major issue I have seen in years."
``Rollback left Labor looking not very different from the Coalition. With a solidly performing economy, voters could be forgiven for asking: why do we need to change the government?"
Louise Dodson's comment
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© 2001 The Age