NO.002

Victorian Premier Steve Bracks today demonstrated ignorance of tax reform with a series

of gaffes when he attempted to attack Coalition tax policy on Melbourne radio.

1. Mr Bracks claimed “I believe they’ll be paying more tax and I’ll tell

you why: because there is embedded tax in the chain as you work along.”

This is completely wrong. There is no embedded tax with GST. Business gets an input tax

credit for any tax paid on inputs.

What Mr Bracks was actually describing was the present Labor system of wholesale sales

tax where inputs are taxed with no credit system.

2. Mr Bracks’ claim of paying more tax is completely wrong. Overall after income

tax cuts, abolition of wholesale sales tax, abolition of other indirect tax, increases in

pensions and allowances, Government revenues fall by about $6 billion.

Mr Bracks should seek urgent briefings from his Treasury officials before making any

further comment.

3. Mr Bracks makes the astounding claim that “It’s questionable whether the

States will get a growth out of this.” This is a 10 per cent tax on goods and

services. The value of goods and services grows as the economy grows. GST, is by

definition, a growth tax which the States have long fought for.

Maybe at Davos Mr Bracks could ask for a show of hands from those countries that, like

the Labor Party, want a wholesale sales tax in preference to a Value Added Tax.

He could report back to Victorians on his findings.

CANBERRA

25 January 2000