Tax Cuts – Interview with John Laws, 2UE

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Tax Cuts – Interview with John Laws, 2UE

Interview with John Laws


Friday, 3 June 2005
9.35 am




Are you there Mr Costello?


I am John, good to be with you.


How you doing?


Very well indeed, it is very cold in Canberra, I can assure you of that.


I’ll bet it is. It would have been below zero when you got out of bed

this morning to do your run, did you do your run this morning?


Well, it was below zero when I got out of bed, let’s leave it there.


Why is Labor being so stupid and pig-headed as to oppose the tax cuts?


Well, they made the wrong call on Budget night…


They did.


…they said they were going to oppose the tax cuts and everyone assumed

that alright, well they would make a bit of a song and a dance but the tax cuts

would go through and they would apply from 1 July. But as this has dragged on

over the last three weeks, they have become increasingly desperate really, and

the moves and the countermoves that they have engaged in have now ended up where

they have backed themselves into a corner.


Yes but they can’t do anything.


The only thing that they can do is they can delay peoples tax cuts, that is

all they can do, they can’t stop them, but they can delay them.


Well why, whether it is $6, $10 or $50 as I keep saying, 60 per cent of something

is a whole lot better than 100 per cent of nothing.


Absolutely, and that is why people want their tax cuts on the 1st

of July. Now, the point I want to say to the listeners today is eventually these

tax cuts will come into force. So that is the good news. The bad news is that

if Mr Beazley won’t guarantee not to disallow these schedules then, if

he won’t give that guarantee, they may be delayed and people will have

to wait for them. But we can fix both problems. We can give them the tax cuts

and we can give people their tax cuts on 1 July if Mr Beazley will give an assurance

that he won’t disallow these schedules and the Commissioner of Taxation

made that clear yesterday giving evidence in the Senate.


That is right. Michael Carmody said that a simple promise from Labor, or in

other words from Kim Beazley, would ensure that all Australians get their tax

cuts from July 1 but why won’t he give that assurance?


Well that is right, so that was really, I thought the Commissioner of Taxation

went as far as he could possibly go and he said ‘Look, I know it won’t

be the law on 1 July, so technically speaking the law won’t give you the

tax cuts, but if Mr Beazley will just say that he won’t disallow these

schedules then employers can pass it on.’ And I thought that it was a

very generous offer from the Commissioner of Taxation, Mr Beazley had the opportunity

yesterday to give that assurance, all he has got to say is we won’t be

disallowing these schedules and everyone gets their tax cut. Unfortunately he

didn’t say it yesterday. But I do say to Mr Beazley, there is still time,

he could give that assurance today and everyone will get their tax cut. Now,

sooner or later they are going to get it and he shouldn’t be playing with

people like this and you have got to remember from an employers point of view

John, there are 850,000 employers that need to know what to do on the 1st

of July.


Well, that’s right. Is it possible to offer the new rates even if they

haven’t yet passed the Parliament?


It is, even if the rates haven’t passed the Parliament, employers can

offer them to their employees as long as the schedules aren’t disallowed.

Now, they can be disallowed by the Labor Party, the Labor Party votes against

them they will be disallowed. So the Commissioner said, ‘Look, just tell

us you won’t disallow them, and even though the Bills haven’t passed

the Parliament, people can have their tax cut,’ but that is the assurance

Mr Beazley didn’t give yesterday unfortunately.


Okay, if they are delayed, can the money be backdated or do we miss out for

every week they are delayed?


You miss out for every week they are delayed but when you file your tax return

at the end of the year, you would get it. So, you would miss out and you wouldn’t

get it for 12 to 18 months until you filed your tax return and then you would

get it. Alternatively, the Commissioner said yesterday, you could lodge for

a variation, that is a bit complex and he also said he wasn’t too keen

on getting seven million variation lodgements. So, you will get it. Look, I

make this commitment to the public, they will get their tax cuts. I hope they

get it on 1 July, if Mr Beazley delays it they will get it but unfortunately

they won’t get it until they put in their tax returns and that will be

12 to 18 months time.


Have you got a feeling about the thoughts of the backbench of the Labor Party?


Yes, there are many Labor backbenchers that know this has been a disaster for

the Labor Party and know that the Labor Party has just put itself out on a limb

and is rapidly sawing the limb off the tree…




…and they want to allow the tax cuts to take effect. And I would say

to people that it would be worth contacting your Labor MP and telling them that

they shouldn’t be blocking the tax cuts because I think if enough of the

backbench can get enough public support they might be able to change Mr Beazley’s

mind on this.


Yes well you would think the backbench could change his mind, I mean if they

are disenchanted by it, and I imagine they all are, you know, it would be a

mistake, why didn’t, well you don’t know why anymore than I know,

but it would have been possible for Kim Beazley to object in principle but say,

I am not going to stand in the way of it but remember, I objected to it when

it was announced.


Yes, that is what normally happens, when a Government brings down its Budget,

normally the Opposition says, well we don’t like it, we wouldn’t

have done this, we wouldn’t have done that, but they let it through, that

is what normally happens. And you know, that is what has happened to me in many

of the Budgets that I have brought down, I have never seen this tactic before

and apparently the decision was made by a small group of the confidantes of

Mr Beazley, they weren’t experienced about economic policy, I think they

made the wrong call, now…


I mean they are not experienced in common sense for God’s sake, they

couldn’t stop it.


…well that is right, they made the wrong call and when you make the wrong

call, the best thing to do is to reverse it and get out of it as quickly as

possible not to dig yourself in.


I would have thought so. Thank you very much for your time Treasurer.


It is great to be with you John, thanks very much.