Transcript No. 40

Network 10 with Paul Bongiorno (Pre-recorded)

13 August 1998

SUBJECT: Tax Reform Plan

Thanks for joining us Treasurer.

Thanks Paul.

Well I noticed that you pay for your tax cuts virtually out of your surplus, in fact it

cuts your surplus roughly about in half in the years that the tax cuts cut in. Now if you

can do it, why can’t Labor?

Well I think in the year in which it cuts in, we’ve still got a decent surplus. In

addition to that we are retiring debt. And if you’ve got your budget in surplus and

your debt under control, it’s time to give something back to the taxpayers. This is a

package about tax relief. 81 per cent of Australian taxpayers will now be on a marginal

rate of 30 cents or less. The average earner who’s now paying 43 cents in the dollar

goes down to 30 cents. That’s 13 cents off their top marginal tax rate. This is great

for low and middle income earners and it’s a return to Australia.

Well I accept that they are quite significant tax cuts, but I return to my point, if

you can do it, why can’t Labor eat into that surplus?

Well the Labor Party can’t because they won’t embrace indirect tax reform.

Because they won’t embrace indirect tax reform, because they can’t therefore

have a tight system to pick up the cash economy, they can’t get the benefits of

growth from business and that means that they can’t offer income tax relief.

Well the rabbit out of the hat today no doubt was the GST funding the States. Now what

happens if New South Wales and Queensland say to you, we don’t want this?

Well would the New South Wales Government say it didn’t want any funding? Would it

say it wanted to close hospitals and schools? Of course it won’t. We understand that

the Labor Party will instruct its Premiers to oppose tax reform, but when this system is

implemented, when the Commonwealth offers to all of the States all of the revenue so they

can pay for their schools and hospitals, I don’t think you’ll find that Labor

Premiers will send the cheques back. I think that they’ll be keeping their cheques

and once more they’ll be getting a much better financial deal. And of course the

other point about it is this. This means that the GST rate can’t go up unless six

State Premiers and two Chief Ministers unanimously agree and it goes through the House of

Representatives and it goes through the Senate. Now that is a mechanism to make sure that

the rate doesn’t rise.

Just finally and briefly, on a question of fairness into the future, I noticed you give

a rebate of about $250 to pensioners and self-funded retirees of around $1000, that’s

a one-off though isn’t it, but the GST continues.

A one-off tax rebate, a tax rebate of $250 a year, a one-off $1000 to all pensioners

and up to $3000 for self-funded retirees, for a couple up to $6000. Now all for what? For

a 1.9 per cent price increase. That’s to make sure that they are given wealth

compensation to cope with any price increases and prices rise by only 1.9 per cent.

Treasurer Costello thanks for joining us.

Thanks very much.