Transcript No. 2000/11

TRANSCRIPT OF

TREASURER

SUBJECT: GST, Interest rates

Mr Costello, thanks very much for your time.

Thanks Mike.

You seem to be facing a real uphill battle over the confusing charges of the GST in the

next five months.

Mike, I’ve been involved in plenty of tax changes over the last four years and

there are always teething problems in putting tax changes in place because this is

redrawing the Australian taxation system . . .

But nothing like this.

There will be some in relation to this. This is the biggest tax change we’ve had

in Australia, ever.

Was it a little embarrassing for you and the Government when your own acting Treasurer,

Joe Hockey, was confused over the GST effect that it would have on a bottle of coke, he

wasn’t sure. So how are we all supposed to know what we’re going to pay?

Well, I actually watched that interview and what he was trying to explain was wholesale

sales tax on a bottle of coke. It’s the current system, not the new system.

So can you tell us what a can of coke or a bottle of coke might cost us?

Well, you’ve got to start off with the current situation. You’ve got

wholesale sales tax on fizzy drinks at the moment and that comes off, and then you have a

10 per cent value added tax which should make a can of coke actually cheaper.

Is it awfully late to be talking about these charges now, five months before the

introduction of the GST? There just seems to be too much confusion out there still.

Well, five months is an awful lot of time. But we’ve purposely done that so that

everybody has a lot of notice. And five months, I’ve published today a list of those

fees and taxes that don’t bear GST, five months is a lot of warning so that people

can get ready.

Is that list set in concrete?

Well, that’s the list that the State Governments gave me. Now, if they’ve

done the work properly and got it right, we can do it first thing in the morning.

What was your reaction to the News Limited papers today and their so-called secret hit

list of charges?

Oh yes, this so-called secret hit list, which by the way I’d just sent to six

State Governments and two Territory Governments. So secret incidentally, that it had gone

to the Labor Treasurer of Tasmania, Simon Crean’s brother. And so secret that it had

been discussed by Commonwealth and State officials for a considerable period of time. Even

then, of course, News Limited got it wrong. They started off in their tabloids today by

saying, motor car drivers’ licences were going to be subject to GST. They’re

not.

Pet registration . . .

Pet registration, quite wrong again. And the reason why I published the list today was

that obviously having got that wrong they were going to continue to make errors, so I put

the list out today so everyone could see it.

Now on the issue of rounding up prices when it comes to the 10 per cent GST charge, has

that issue been settled yet?

Oh yes, I think that’s been well and truly canvassed. And as a result of

abolishing wholesale sales tax and other taxes and introducing GST, nothing goes up by

more than 10 per cent. Some things will go up by less than 10 per cent and some things get

cheaper.

Just a quick example. Something cost 70 cents, GST is 7 cents, now what’s the

final price there, is it 75 cents or 80 cents?

Well, first of all you’d have to know whether there were any taxes on that good at

the moment because they’ve got to come off.

So when any of us go into buy something that’s worth 70 cents, how are we to know

this?

Well, what you’ll pay is what you pay at the moment. The price will be shown

clearly on the shelf and that’s what you pay. Now, the way in which the price moves,

depends on how it’s taxed at the moment, if it’s taxed at 22 per cent at the

moment it should come down, if it’s not taxed at the moment it should go up.

Mr Costello, one final question. Analysts are predicting a quarter of a per cent

increase in interest rates tomorrow. Will that happen?

I never talk about tomorrow Mike. And there’s a couple of things I never talk

about, one is the future movement of interest rates and the other is the value of the

dollar. I leave people to make their own decisions. If they’re right they can do

well, and if they’re bad they’re at their own risk.

Okay. Mr Costello, thanks for your time, we appreciate it.

Thanks very much Mike.