Transcript No. 2000/03

TRANSCRIPT OF

TREASURER

GST, reshuffle

I’ve got the Treasurer on the line now. And Peter Costello, wishing you

hadn’t gone on leave?

Oh, I always like the chance to get some leave and I was very happy to have it Howard.

You know, all of us have got to have some holidays. And the weather was good and I watched

some cricket. And I had basically a good break.

Meanwhile back at the ranch, we had Joe Hockey.

Well, Joe was handling some of the consumer affairs issues because he’s the

Minister in that particular area. And I think he did a good job in handling those issues.

I think the . . .

But have you given him a lesson on the cost of soft drinks after the GST?

Well, a lot of people say, oh well, Joe was explaining the taxation of soft drinks. He

was actually trying to explain the wholesale sales tax. And the wholesale sales tax, the

current system is complicated, and I think it illustrates the complexity of the current

system. He wasn’t explaining the new system, he was trying to explain the current

system. And I noticed by the way that Simon Crean then, sort of, went on the radio and he

was going to point out all of these errors. He couldn’t explain the wholesale sales

tax, his own tax system, either.

But if you senior ministers can’t explain it properly, how are we to understand

it?

The wholesale sales tax?

Any of the tax system that we’ve got and are getting.

Well, the current system is, and I’ve always said this, the current wholesale

sales tax system is incredibly complex. I don’t think anybody’s ever been able

to explain it.

So you can’t even explain it?

The current wholesale sales tax system?

Yes, yes.

No, I couldn’t give you the ins and outs of the current wholesale sales tax

system. I’ve been administering it for the last four years and it is incredibly

complex. Issues in the courts all the time. The courts struggle with it and it is

incredibly complex. It is one of the reasons why we need a new tax system.

Okay. Now if you were Michael Wooldridge would you be comparing shaving cream with

tampons, do you think that was an electoral mistake?

:

When you get into tax arguments, and I’ve lived with these arguments since

I’ve been Treasurer for the last four years, everybody sees things differently and

it’s very hard to compare. You can either try and run a tax system on the grounds

where you sit down and you say, well, you know, let’s try and debate the merits of

every particular product and have a special rule. That’s one way of trying to run a

tax system, and that’s incredibly complicated. The other is, you can say, let’s

just have a broad tax on everything and let’s give people more money in their

paypackets so that you’ve got incentive to work and to save more money in your

paypackets with lower income taxes, and taxes collected when you spend rather then when

you earn and that’s (inaudible) . . .

Yes, but Treasurer as we speak . . .

TREASURER:

(inaudible)

SATTLER:

. . . as we speak he has run the risk of alienating 51 per cent of the population.

Well, that’s why I say, look, once you sit down and you try and work out merits of

different products and you say, you’re going to try and attach a tax on some and not

others, you get into this complexity. It’s like income tax. You know, don’t sit

down and say, well, Howard Sattler, he’s a good guy, I’ll give him one rate of

income tax. And somebody else is a bad guy, I’ll give him another. You just say,

income tax, same income, same tax. It should be the same in relation to indirect taxes.

Let’s have taxes across the board and then we can reduce our income taxes. People

have more money to spend. That’s good for the economy and it’s good for saving

and it’s good for jobs.

Yes, I know. But we’re talking about a very personal female item. You and I both

know that, we both have wives.

Sure, sure. I know that. And you know, I’ve obviously followed the debate. And

nobody is saying for a moment that this is not an essential product. Nobody is saying that

for a moment. All that the Government is saying, is we have a broad-based indirect tax.

That is, you have one rate across all products. Then what you can do, is you can cut

people’s income taxes and lift family benefits so that you’ve got more money in

your pocket to cope with any price rises. That’s the whole idea. More money in

people’s pockets . . .

I know that. But tampons didn’t used to attract any, or they don’t attract

any sales tax. Now they’re going to attract a tax.

But we’re not trying to replicate the current wholesale sales tax . . .

I know that. But it’s a point of the argument against putting a GST on it. I know

that.

Oh look, if we were trying to replicate the current wholesale sales tax system, we sit

down and we, you know, as you know, the current wholesale sales tax system taxes

toothpaste but not toothbrushes, right? Or it might be the other way around, it’s

very complicated. It might tax toothbrushes and not toothpaste. If you were trying to

replicate all of that, you would sit down you would say, what’s currently taxed,

well, we’ll do it under the new tax system. We’re trying to sweep all that away.

We’re just trying to say, well look, let’s just have a broad tax on all goods .

. .

Well, the trouble is we’re not going to have a broad tax on all goods because of

the deal you had to do with the Democrats.

Well, in the area where we had to do a deal with the Democrats in relation to food,

that’s right, because of that deal. In that area you have an exemption. And every

time, and I make this point, every time you have an exemption you lead to complexity. But

what we are trying to do, we say, well, now that you’ve got your tax to run your

hospitals, your schools, your police and everything out of indirect areas, you cut income

taxes and lift pensions and benefits so everybody has more money in their pocket . . .

Yes, but see they haven’t got it yet. That’s your problem.

Well, they haven’t got those income tax cuts and those lifts in family benefits

until 1 July. And the goods and services tax comes in from 1 July too, so that you’ve

got more money in your pocket to actually cope with price rises, if there are some. And

there will be price falls in other areas.

Did your wife tell you you’d made a mistake on the tampon tax?

Look, my wife gives me advice on lots of things Howard, and it’s nearly always

right. In fact . . .

What did she say . . .

. . . if she’s listening I’ll say, it’s always right . . .

. . . about the tampon tax?

But I tell you something. I mean, I never go on the radio and disclose my wife’s

advice. It’s always given on a very confidential basis.

Okay. Just very quickly to local government. They’re all screaming over here. They

don’t know what they’re going to have a GST on, tip fees and things like that.

You’ve got people saying, if you put it on the tip fees I’ll dump my stuff on

the roadside.

Well, there is no GST on council rates . . .

No, not on rates.

. . . or drainage or sewerage. No, let me make a point. Because that’s where

rubbish collection, household rubbish collection takes place, doesn’t it?

We’re talking about the big rubbish.

Okay. Now, if there are people that are going to tips and paying fees for service, and

it’s an actual fee for a service, you know, you want this service, here’s the

actual fee, then GST applies to fees for services. For businesses, they can get it all

back. And for individuals, the whole idea and the basic principle again, more money in

your pocket, lower income taxes, higher family allowances so that you’ve got more

money to spend.

Okay Treasurer, a lot of us are changing jobs and locations. You’re probably aware

of that. When are you planning to pull the pin as Treasurer? They’re saying you might

get Foreign Affairs.

Hadn’t heard that one. I don’t think that’s of interest to me . . .

Well, I’m leaving town, I thought you might be leaving the country?

No, it’s not of interest to me Howard. And I don’t think it’s of any

interest at all to the Government. But I heard you were going to Sydney.

That’s right. Yes.

Are you going to barrack for the Sydney Swans now are you?

I’ll not disclose that until I get there.

You’d better not because if I ever get the chance to do an interview with you in

Sydney, I will disclose that whilst in Perth you were a fanatical supporter of West

Australian football.

Indeed. And will be right up until the time I leave.

Oh that’s very convenient.

Alright, nice to have had you on the programme and I look forward to catching up with

you on Sydney radio.

Good on you Howard. Thanks mate.

Thanks for joining us. Federal Treasurer, Peter Costello.