Transcript No. 2001/088

Treasurer, today is a good news day, but are you worried that the GST is overshadowing the good news of the tax cuts and the taxes that have been abolished today?

What we have done, is, we have put in place a whole new tax system. Part of it is replacing Wholesale Sales Tax which was abolished with GST. But other parts of it involve cutting personal income tax. Today we abolish Financial Institutions Duty, that is the tax that you pay when you put money into a bank account, or when your wage goes into your bank account or when you pay your credit card, or when you pay your mortgage, that is abolished, that tax, from today. And we are also abolishing stamp duties on shares today so that when you trade shares or when your superannuation fund does, it is one less tax on superannuation. And we are also introducing, from today, the chance to get a refund on dividends that are paid on shares if your personal tax is lower than the amount that has been taken off the share dividend.

YACKSLEY:

That is, as you are pointing out, good news but much of the focus electorally and politically is still on the new tax that came in. How do you turn that around, how do you get that message out?

Well, the GST was put in place of Wholesale Sales tax which was abolished, it was the hidden indirect tax before, and GST has come in in its place. That has enabled us to take taxes off exports, which has been good for our exporting industries and also the GST revenues are now paid directly to State governments, and the GST revenues are now funding all of the school teachers in all of the schools of all of the States, and they are now paying the salary for policmen. And one thing is clear, that nobody has come up with any better idea as to how to pay and fund for those important, essential services.

The company tax rate cuts, what effect do you think it is going to have on growth?

The company tax rate, we have brought it down already from 36 to 34, and its going down from 34 per cent to 30 per cent today, so that will be good for business and I hope it will attract new business to Australia. There is a lot of companies that look at putting investments in different locations around the world. We want them to put their investments in Australia to create jobs in Australia, and if you have a lower company tax rate its good for attracting that kind of investment and attracting more jobs for Australians.

But on growth itself obviously, if that had happened then there would be an impact if, how much did the changes in company tax system effect the growth forecast?

Well, they are positive for growth. All other things being equal cutting the company tax will increase your growth. But you have got so many factors that influence growth at the moment. You have got world conditions, domestic conditions, interest rates, but the one thing you can say, all other factors being equal, a cut in the company tax will actually promote growth, and growth will be higher than it would have been otherwise.

Okay, now following on, what more is there to do?

Well, we have got to finish off the Business Tax system. We are introducing a simplified tax system for small business, that is business with a turnover of $1 million or less at the moment, which will be helpful for them when they come to do their business tax returns at the end of the financial year. And, we have got to make sure that we bed down all of the teething issues, there are still teething issues which we deal with as they come up. You dont have everything perfect from day one. And I want to say to small business, in particular, which has gone through a year of very big change, we acknowledge the changes that have been required. We recognise the work that small businesses have put in. We acknowledge the incredible success that they have had in compliance. And this has been a big change for Australia but over the years, the decades, it will prove to have been a very, very, valuable change for Australia.

So what feelings do you have on today on today, when you have achieved these tax cuts, tax abolitions and 12 months on from the GST, what is the feeling?

I think we probably feel like the parents of a one year old. We have come through difficult labor and there is many hard years in front of us, but this is a great investment and we look forward to the child maturing to adulthood.