GOVERNMENT SENATORS' REPORT
MAIN REPORT FOR SELECT COMMITTEE ON A NEW TAX SYSTEMGovernment
Senators strongly disagree with the emphasis placed on some of the information
contained in the body of the Select Committee's report. This is not a reflection
on the professionalism of the Committee secretariat who worked under extreme pressure
from the Chairman's advisers who seemed determined to ensure that the main body
of the report was politically motivated, had no balance in its documentation of
evidence received and was biased in the interpretation of that evidence.
Government Senators have worked on numerous Inquiries and have never
been involved in a Senate Committee report where there has been so much direct
involvement of Labor Party staff with the Committee secretariat in the finalisation
of the Chairman's report. Neither Senator Conroy or Senator
Sherry attended a meeting to deliberate on the content of the report and we can
only conclude that they were prepared to let ALP staffers determine the final
content of the Committee report. Government Senators also
wish to note the unacceptable behaviour of some Labor Senators who at various
times harassed and sledged some witnesses who were giving evidence contrary to
their own biases and generally treated some witnesses with an appalling lack of
courtesy and propriety. We hope this does not set a precedent for standards of
behaviour at any future Senate Inquiries. We have provided
this report to support our separate conclusions. IntroductionThis
Senate Select Committee on A New Tax System has terms of reference to inquire
into the Government's tax reform plans as set out in the policy document Tax
Reform: not a new tax a new tax system (ANTS). This is the main report
of the Select Committee, addressing specific terms of reference to:
inquire
into and report, on or before 19 April 1999, on the broad economic effects of
the Government's taxation reform legislation proposals with regard to the fairness
of the tax system, the living standards of Australian households (especially those
on low incomes), the efficiency of the economy, and future public revenues
[1] The conduct of the Select Committee, and
the other References committees, has been nothing less than an attempt to circumvent
the Government's mandate for tax reform that it received at the last election.
Rather than seeking to impartially examine the Government's taxation reform legislation,
Labor and Democrat senators have maintained their predetermined positions, often
accepting assertions if it suited them rather than examining the validity of the
evidence. This problem was somewhat worse on two of the references committees
where Labor had a majority in their own right. The biased conduct and findings
were best outlined in the Government Senator's minority report for the Community
Affairs References Committee: The normal process for the Senate to consider
legislation in detail is to refer it to Legislation Committees. The fact that
this normal process was overturned and the ANTS legislation is before the
Community Affairs References Committee, where the Government has minority representation,
provided an early indication
. of how this Inquiry would be used. [2]
On many occasions during the public hearings for these committees Labor
brazenly displayed their predetermined attitudes, and a breath taking ignorance
of the issues and of the ANTS policy in general. For example, Labor
Party Senator Chris Evans let the cat out of the bag on several occasions including:
"I am a Labor Party senator. We are voting against it." [3]
Much of the modelling which was commissioned by the Committee was saddled
with unreasonable worst case assumptions, rendering it useless to
informed public debate. Thankfully, in some instances, the modellers chose to
interpret the more ridiculous assumptions in a way that had some conceptual value,
incurring the wrath of the Labor senators. For example, the Chairman of
the Select Committee, Senator Cook, left no doubt as to Labor's motives for commissioning
work to find people who are worse-off. Something, which under all reasonable
assumptions, they failed to do, as illustrated by the following exchange. CHAIR
why did you not do all of the work that was commissioned? Prof.
HardingTo my knowledge, we did. But you feel that is not the case? CHAIRNo.
The terms of reference are on page 42 of the document you have submitted and they
ask for the first year impact from July 2000. You have reported to us that you
did not do that. I am just wondering why you did not do that. Prof.
HardingNeil might want to come in here. I think it is pretty hard to
work out conceptually what it is that you are modelling. Although we were asked
to model it in July 2000, the terms of reference did also say that we should assume
that all of the indirect tax increases were there and that all of the indirect
tax cuts were there. Some of the indirect tax cuts are not scheduled to come in
until 2001-02. So, in a sense, we felt that the brief asked us to abstract from
the phasing of the tax reforms issue and try to give you a feel for what it was
going to look like once the dust had settled. CHAIRIf you
had done that, there would have been more losers, wouldn't there? Prof.
WarrenThe answer to that is no. [4] Labor
senators continued to badger the witnesses for failing to adopt Labor's unrealistic
assumptions in their desperate attempt to find losers: Senator FERGUSONLet
him (Prof. Warren) answer the question. CHAIRExcuse me, I
am the chairman here, thank you very much! This is a quite serious threshold point.
The terms of reference are quite explicit. This work was not done. I understand
that, if it had been done, it would have shown that there are more losers than
in fact we now have before us
[5] The Democrats
likewise were not immune from selectively listening to a day's hearing and then
manipulating evidence to fit their predetermined position in a string of press
releases which blatantly and deceptively contradicted the actual evidence put
before the hearings. Of the over 1,400 submissions received, approximately
350 witnesses were called on to give evidence before the committees, with around
35 appearing twice or more. Approximately 30 groups doubled-dipped across committees,
and at least 4 groups appeared before more than two committees, peddling the same,
or remarkably similar, submissions. Many affiliates of national organisations
also appeared, adding substantially to the duplication. For example ACOSS appeared
three times (twice at the Select Committee and once at the Community Affairs Committee),
and their affiliate state organisations appeared 4 times across 2 committees,
raising no new issues. Such behaviour lead to media attention with The
Australian publishing an article headed Déjà vu adds
to farce of the GST inquiry junket [6].
PREVIOUS SENATE COMMITTEE REPORTS ON A NEW TAX SYSTEMThe members
of the Select Committee handed down their first reports on 18 February 1999. With
no agreement being reached on the Chairman's draft, three separate reports were
produced. Even the chairman and his colleagues would not fully endorse the Committee
report (prepared by the Chairman), instead drafting a separate Labor report. On
the basis of evidence heard by the Committee and on the basis of the economic
modelling commissioned for the Committee's first report, Government Senators concluded
in their first report that there is substantial support for the Government's tax
reform plans as set out in the ANTS policy document. Economic commentators
and modellers confirmed that benefits to the economy as a result of ANTS
will come from: - A boost to economic welfare
- GDP growth
- Employment
growth
- Export growth
- Increased investment
- Continued
fiscal responsibility; and
- More sustainable Commonwealth-State financial
relations.
There was also clear support in the evidence from a wide
range of witnesses from the business sector, the unions, farming representatives,
academics and tax practitioners for the Government's view that the current tax
system is broken. It was accepted that the existing indirect tax revenue base
would continue to diminish as the services sector increases its share of the economy.
No case was made for removing food or other necessities of life from the
GST base. No evidence was submitted which showed, on reasonable assumptions,
that the Government's compensation measures were inadequate. The References
CommitteesParagraph (17) of the terms of reference referred matters relating
to the Government's tax reform plan to the Senate Environment, Communications,
Information Technology and the Arts References Committee (the Environment Committee),
the Senate Community Affairs References Committee (the Community Affairs Committee),
and to the Senate Employment, Workplace Relations, Small Business and Education
References Committee (the Employment Committee). These committees reported on
29, 30, and 31 March, respectively. Each of these committees had a non-government
majority, with Labor having a majority in their own right on two (See Appendix
A). The Select Committee was given a co-ordination role in relation to
the reports of the three specific references committees:
in reporting
on the matters referred to in paragraph (3), the committee have regard to the
reports of the references committees referred to in paragraph (17) and integrate
the findings of those committees into its final report where relevant. [7]
Given the non-government majority on each of the references committees,
the majority reports of the Community Affairs Committee and Employment Committee
represented the predetermined views of the Labor senators, with Labor and the
Democrats sharing the honours in the Environment Committee report. Community
Affairs References CommitteeGovernment senators were genuinely frustrated
by the Community Affairs Committee's inquiry because from the outset it was apparent
that Labor senators had a fixed position with respect to the Government's tax
reform proposals without offering any meaningful alternative policy proposals.
Many witnesses and submissions also appeared to rely on assertion and anecdotes
("
I've been told that
") rather than primary sources such
as the legislation and explanatory memoranda which have been public since December
1998. This situation led Government senators to refute the claims and conclusions
of the Labor senators' report which arose in many cases from evidence containing
inaccuracies. The Community Affairs Inquiry largely focussed on charities
and not-for-profit welfare organisations which provide essential services to the
community in areas ranging from personal care to emergency accommodation and providing
food and clothing. Government senators on the Committee recognised and
valued the services that charities and public benevolent institutions provide,
noting that while government funding is provided to the community sector, the
community-based organisations raise considerable funds themselves and deliver
the vast majority of services. The charitable sector is specifically recognised
in the Government's tax reform proposals because its non-commercial activities
have been accorded GST-free status. That is, GST is washed-out on purchases by
a registered charity and there is no GST charged on the non-commercial services
provided by charities. Against this background, the main conclusions made
by Government senators were: CharitiesGST-free treatment of the
non-commercial activities of charitable institutions is generous by international
standards and will see the running costs of the sector fall due to the industry
cost reductions in the Government's tax package. The FBT exemption cap
of $17 000 of grossed-up taxable value per employee is a fair approach which allows
the PBI sector to maintain an employment cost advantage while removing the scope
for abuse. Government senators note that the FBT cap was also an ALP policy taken
to the last election. Local GovernmentLocal government will be
financially better off under the new tax system, and are expected to benefit by
around $70 million each year by not paying WST embedded in their prices, and through
savings on diesel. The States will be provided with all GST revenue and
as a result be required to maintain local government funding at least equal to
the amount local government now receives under the financial assistance grant
arrangements, adjusted each year for population and inflation movements. [On
9 April 1999, the Commonwealth, States and Territiories signed an Inter-governmental
Agreement on the Reform of Commonwealth-State Relations to formalise these arrangements.]
The Health SectorThe scope of GST-free treatment in the health
sector is both comprehensive and fair. Contrary to the conclusion of the
Labor Senator's report, the Government has achieved the best possible outcome
for GST-free health services in terms of `simplicity in administration and compliance'
with `clear and definitive boundaries'. The list of GST-free services,
aids and appliances is comprehensive. Aged Care and Disability ServicesAged
care and disabilities were areas where a great deal of evidence provided was inaccurate
and appeared to be based on anecdote rather than analysis of the Government's
proposals. This was despite the fact the Government had distributed a comprehensive
community sector briefing kit which covered most of the issues raised. In
regard to residential care, the legislation provides excellent GST-free coverage
for the sector and indeed the supply of goods and services, using the Quality
of Care Principles (subordinate legislation to the Aged Care Act 1997).
The Government has also ensured that most of the services that are important
to carers will be GST-free. These include Home and Community Care and disability
community support services for example, home nursing, personal care, home
help, delivered meals, day care, home maintenance and modification, and transport
services. The complexity of compliance was consistently overstated or misunderstood
given that all inputs are GST rebated regardless of whether the service is GST
free or taxable. Child CareAs the Government has outlined, childcare
provided at recognised facilities will be GST-free. That is, childcare provided
at facilities that receive Commonwealth Government funding, or where the parents
qualify for a government childcare payment (such as the use of recognised home
based childcare), will be GST-free. Childcare provided at non-recognised
facilities, ie. those that do not receive government funding, or where the parents
do not qualify for a government childcare payment, will be subject to GST. In
practice, however, the GST will not apply to many of these services because the
providers will be below the GST registration threshold ($100,000 annual sales
for non-profit bodies and $50,000 annual sales for other businesses). Employment,
Workplace Relations, Small Business and Education References Committee EmploymentThe
Government senators concluded that the Government's tax package will lead to improvements
in incentives to employ and be employed. The modelling evidence and forecasts
by respected economists overwhelmingly supported the Government's view that the
tax package will substantially increase employment. Even the generally
pessimistic analysis by Professor Peter Dixon showed that the most likely impact
on employment in the short-run would be an increase of about 30 000 jobs.
On a State by State basis, modelling by Professor Dixon indicated the following
distribution: STATE JOBS INCREASE % New South Wales 12,412
0.40 Victoria 7,748 0.35 Queensland 5,444 0.33 South Australia
2,135 0.31 Western Australia 5,321 0.59 Tasmania 766 0.38 Australian
Capital Territory 606 0.53 Northern Territory 307 0.29 Access Economics
in their December 1998 AEM Model Forecast report say: The good news
is that the tax cuts sweetening the GST are expected to stimulate renewed job
growth, perhaps sending unemployment down to 7% in 2001. and In
the long run the impact of the tax package raises national output by 2.5% and
there is an additional 190 000 jobs. Looking at forecasts of unemployment,
Access Economics has the unemployment rate falling by 0.9 of a percentage point
in 2000-2001 [8], while Chris Murphy of Econtech has
it falling by 0.6 of a percentage point [9]. EducationThe
education sector does extremely well under the Government's tax reform package,
with its costs expected to fall by about $240m. When ANTS was released
in August last year it stated that virtually all education would be GST-free,
with the overall scope to be subject to post-election consultation. After
the election, the Tax Consultative (Vos) Committee was established and charged
with the task of making recommendations on the appropriate scope of four key
GST-free areas, including education. The Government either accepted the
Vos recommendations, or went further, extending more generous treatment to professional
education for example. Families will also be better off with the cost of
many education related items, including computers and stationery, falling as a
result of the removal of wholesale sales tax. The education sector will
benefit from a combination of falling costs to the sector, a generous GST-free
treatment, and increased real disposable income for families as a result of personal
income tax cuts and increased government benefits. Environment, Communications,
Information Technology and the Arts References CommitteeGovernment Members
of the Committee concluded that the proposed tax reforms will establish a framework
for economic activity in Australia that is relevant to the twenty-first century.
Within that context the benefits delivered to all Australians will increase the
strength and diversity of the economy. A stronger economy, and improving technology,
will enhance the capacity to respond to a variety of challenges, including those
facing the environment. In the arts sector, the robustness of the economy
in general, the savings to business delivered by the package and the increased
disposable incomes of consumers will contribute to a vibrant and growing industry.
PRINCIPLES OF TAX REFORM(a) EfficiencyEfficiency issues with respect
to the Government's tax reform package are well summarised in the Econtech submission:
In the context of ANTS, which is primarily an indirect tax reform
package, the relevance of the efficiency principle is as follows. Narrowly
based taxes, such as the wholesale sales tax, raise the price of taxed goods relative
to the price of untaxed goods. This means that relative prices faced by consumers
for different goods and services no longer reflect their relative production costs,
leading to distorted economic choices. In simple terms, the industry pattern of
economic activity is pushed out of shape. This lowers consumer welfare. Replacing
these narrowly-based taxes with a broad-based GST should mean that relative prices
better reflect relative production costs. With a more neutral pattern of relative
prices, economic choices will be more efficient, and the industry pattern of economic
activity will gradually move into a more efficient shape. This leads to a sustained
gain in consumer welfare. [10] The following
quote from the 1975 Asprey report also encapsulates the issues: In so far
as it can be presumed that, left to their own devices, individuals will spend
their incomes wisely, and business will choose the most efficient means of production,
the minimisation of waste requires that the tax system should not influence individual
and business choices. This is the requirement that the tax system should be neutral.
Thus the tax system should not interfere with the manner in which an individual
spends his income by changing the relative prices of the goods he buys; it should
not alter the relative rewards of the different types of work between which he
has to choose, or the relative attractions of work and leisure, or the relative
returns from different modes of investment; it should not alter the relative attractiveness
of different types of business organisation, or the relative prices of productive
resources; and it should not discriminate between different types of production.
The Committee is persuaded that neutrality should be the general aim when
efficiency is under consideration. [11] In terms
of measuring efficiency gains, both Professor Dixon from the Monash University
Centre of Policy Studies and Mr Chris Murphy of Econtech provided evidence to
the Committee. It was clear from the evidence that Econtech's MM303 model was
the best specified to measure gains in consumer welfare. The Econtech estimate
of the annual gain in consumer welfare from ANTS was $607 million.
When ANTS was modelled with food being GST-free, as proposed by the Democrats,
consumer welfare decreased. That is, in overall terms, making food GST-free would
worsen the benefits of tax reform to consumers. Government Senators conclude
on efficiency grounds that the GST base should be as broad as possible and, to
maximise welfare gains from tax reform, food must remain in the GST base as proposed
in AntS. (b) SimplicitySimplicity refers to compliance
and administration issues, and is often afforded less weight than may be warranted
in tax design by economists, as opposed to tax administrators and taxpayers themselves.
the economics literature on what is good tax design has focused
largely on finding the optimal compromise between equity and efficiency, while
ignoring administrative costs. This is a major failure of this literature. [12]
During the course of the Inquiries, several witnesses addressed administrative
and compliance issues including Ms Angela Ryan from the ASCPA, Mr Michael Walpole
from ATAX (who appeared in a private capacity), Mr Simon Holdsworth, President
of the NZ Employers Federation and Mr Adrian Firmstone of the Institute of Chartered
Accountants in Australia. Mr Firmstone stated We take the position
that it is not desirable to extend the exemptions or concessions beyond where
they are, because that will simply add layer upon layer of complexity in the system
and cost upon cost to business of complying. [13] Mr
Holdsworth stated For us, a GST system in the way it came about was a simplified
system because of the simplicity and the fact that the tax applied to everything:
we no longer had to distinguish between products with differing rates of wholesale
sales tax. [14] After Ms Ryan's appearance before
the Select Committee, the ASCPA made further comments about the compliance costs
of making food GST-free, saying it would cost the economy over $100 million annually
in increased costs. They also made the following points, The Senate Inquiry
appears to have all but forgotten the compliance costs of making food GST
free and is in danger of losing sight of the impact on real people in the real
world
US research has shown that taking food out of the tax base
increases compliance costs for those affected by 30 to 50 per cent. This is based
on a definition of food that taxes restaurant meals and takeaway food. Approximately
300 000 business operators will face a massive increase in compliance costs as
a result of making food GST free. This is a dead weight on the economy and one
that will inevitably be recouped through high prices. [15]
The aim of the Democrats in the Inquiries was to marginalise the importance
of simplicity in the design of the Government's tax package. The lengths to which
they went to achieve this is shown in the following exchange at the hearings [16].
Senator MURRAYYou might like to write these down because I
do not think they are easily available. In New Zealand the general rate is 15
per cent and the food rate is 15 per cent; in Canada it is 10 per cent and food
is nought; in the United Kingdom it is 17½ per cent and food is nought; in
Germany it is 15 per cent and food is seven; in the Netherlands is 17½ per
cent and food is six; and in Ireland it is 21 per cent and food is noughtand
Ireland is not in that graph. If you look at that graph, the highest percentages
in commencement are New Zealand and the United Kingdom; and the lowest percentages
I outlined were Canada. You made a point of emphasising in your articles the key
differences between the United Kingdom and the New Zealand systems, and you refer
to us adopting a New Zealand style GST. What explains the differences with these
compliance costs, and how is it affected by what you refer to as `a New Zealand
style VAT'? Mr WalpoleWhat I refer to as `a New Zealand style
VAT', for clarification, is one that is broad and covers everything. What explains
these differences I am not sure because of the dangers in drawing these international
comparisons. However, it may well not be the food exemption or the food exclusion
that gives rise to, for example, the lower compliance costs in the UK as against
those in New Zealand. It may well be something else. It may be the turnover threshold,
and so on. So I cannot explain it clearly. Food might be the reason, but it may
equally easily be something else. Senator MURRAYOn page 3
of your submission, you list the net compliance costs for the United Kingdom of
2.3 per cent and for New Zealand of 7.3 per cent. On page 7 of the Policy article
to which I have referred, you said that Canadian compliance was lower than either
the United Kingdom or New Zealand. That means that both the United Kingdom, which
taxes food at zero, and Canada, which also taxes food at zero, have lower compliance
costs than New Zealand. I suggest to you that the evidence that differentially
taxing food increases compliance costs is not there; it is just not there on the
face of the figures, the percentages and the graphs that you have given us. Mr
WalpoleMy response is that I can see that argument. But it seems to
me that the explanation might be something else; it might be something other than
food. It seems to me to be commonsense that excluding food will lead to complexity;
it will lead to a business having to deal with this area of its taxation in a
different way to everything else that is being put into the business or put out
of the business. Senator MURRAYI agree with you that intuitively
it should; that is commonsense. But the proposition I am putting to you is that,
in the nature of the evidence available to us in your paperand, indeed,
in Neil Warren's paperthere is no statistical evidence which confirms that
exempting or differentially rating food will result in higher compliance costs.
I have your figure right in front of me, and I have quoted you the percentages
you have given me. Despite these clearly qualified remarks by the witness,
Senator Murray put out a media release [17] headed
"GST Free Food - No evidence of compliance cost problem". Mr
Walpole subsequently wrote to the Australian Financial Review, and, in
a letter published on 24 March 1999 said The better approach is to consider
Australia's proposed GST and ask whether the food exemption here would make our
tax system more complex and more expensive to comply with than it would be were
food included in the GST base. The answer to this must be clear
- all other
considerations aside, exclusions and exemptions will make compliance more difficult
and expensive, and there is ample international evidence to support that contention.
Late in the Inquiry process, papers from Professor Sijbren Cnossen, an
internationally acknowledged expert on value added taxation were tabled and a
paper by Dr Jeff Pope, an academic widely recognised for his work in the area
of compliance costs of taxation arrangements, was submitted to the Select Committee.
The importance of good design when introducing a GST was emphasised by
Professor Cnossen in the following extract from one of his papers, an extract
which Government Senators believe is an endorsement of the Government's GST design:
it should be emphasized that the minimization of the administrative
and compliance costs of the VAT starts with its design. A broadly based VAT with
a single rate, few exemptions, and a generous small business exemption should
help in keeping initial and ongoing operating costs within acceptable bounds.
operating costs of the VAT can be minimized by getting it right the first
time, by simplicity in structure and operation, stability and certainty in legislation
and rulings, the timely dissemination of information, convenience in payment arrangements,
and, it should be added, by administrative integration with the business income
tax. [18] Dr Pope's paper provides additional
important evidence with respect to comparing international experience with compliance
costs. At the outset he points out It is essential that research findings
are not only accurately quoted but placed in context. In short, in a rush to score
'political points' there is a danger of a simplistic and erroneous correlation
of factors being made, or data being presented in a misleading way. [19]
His paper goes on to explain that a range of factors have an impact on
compliance costs and then demolishes the proposition that there is no impact on
compliance costs from making food GST-free. There is no evidence to show
that zero-rating food, as in the UK and Canada, leads to lower compliance costs
than in New Zealand, which includes food. Rather, the apparent lower GST compliance
costs in the UK and Canada which applies only to small business and not
large business are entirely explained by other factors. These include,
in particular, the GST registration threshold level (for the UK) and research
methodology, previous experience with a retail sales tax and the level of computerisation
(for Canada). [20] To the best of this author's
knowledge, there is no compliance cost research in the world that supports the
proposition that zero-rating (or excluding, in layman's terms) food from a GST
leads to lower (gross) compliance costs to the country overall. [21]
... bringing the New Zealand threshold roughly in line with that of the
UK's would probably reduce the gross compliance cost estimate for the country
to a figure close to that of the UK's
[22] To
sum up, a detailed analysis of the compliance cost estimates from the UK and New
Zealand show that, at a disaggregate level, UK compliance costs are only lower
for smaller size business, and above US$500,000 annual turnover are actually higher
than New Zealand's. Various factors, especially the much higher UK GST registration
threshold, clearly account for the UK's relatively higher gross compliance costs
overall. It is completely spurious and false to attempt to correlate the UK's
zero-rating of food with lower compliance costs and New Zealand's inclusion of
food for higher compliance costs. [23] With
respect to Canada In short, Canada's GST compliance cost estimates have
absolutely nothing to do with its zero-rating of food in its GST, and no compliance
cost study (to this author's knowledge) has ever cited this as a possible reason.
[24] On the issue of the compliance cost estimates
in the Regulation Impact Statement, Mr Pope made the following comments Some
commentators are questioning Government estimates of the compliance cost of the
GST as contained in its Regulation Impact Statement (1998). One such critic is
Tran-Nam
. There appear to be three main points made by Tran-Nam. These are
briefly considered, but overall are not considered by this author to seriously
bring into any doubt Government estimates. [25] On
the point about considering net and not gross compliance costs, Pope says It
is therefore reasonable for business to be primarily interested in, and for researchers
to identify and estimate net compliance costs, which are the true cost
to business. This aspect would only be an issue if the Government or other researchers
ignored gross compliance costs; this is clearly not the case. [26]
In short, this is at best a non-issue or at worst mischief making. Mr
Pope concludes Food should be included in the GST base at the full 10%
rate. This policy minimises administrative and compliance costs. Any arguments
using compliance cost estimates from other countries in support of zero-rating
food are erroneous and totally misleading. [27] (c)
EquityThe issue of the equity or fairness of the ANTS package was
discussed at length during the hearings of the Select Committee. Many organisations
commissioned research to determine what they considered to be the distributional
impact of the package on their constituents. The outcome of all of the research
commissioned was that when using reasonable assumptions no group of people were
found to be worse off under the ANTS package. ACOSS, for example,
repeatedly claimed that the ANTS package was unfair, but repeatedly failed
to show how. After the package was released in August 1998, ACOSS refused to believe
the Treasury cameos which showed every group to be better off, and demanded that
the Treasurer release Household Expenditure Survey (HES) based analysis. ACOSS
claimed that this would show the true distributional impact of the package. The
Treasurer released this analysis which, contrary to the ACOSS view, also showed
that each household group would be better off, with the cost of living increase
varying between 1.3 per cent and 2.5 per cent compared to the Government's commitment
of an up-front 4% increase in benefits. ACOSS, in their continuing quest
to find losers, then commissioned modelling from the Melbourne Institute. The
results of this modelling were discussed in the Government Senators' first Select
Committee report: ACOSS asked the Melbourne Institute to model the
price effects for households whose primary income source is government income
support payments, described by ACOSS as households with the lowest incomes.
Four assumptions were then modelled, using the Treasury inflation figure of 1.9%
as the most optimistic assumption, and then getting progressively more pessimistic
(See ACOSS submission p.9.). The results of this modelling showed that
even under the most pessimistic assumption used by the Melbourne Institute, every
group modelled was better off under the tax package. [28]
Still not happy with the modelling results ACOSS further narrowed the scope
of the model, finally claiming that they had at last found losers. However, the
results of this modelling were in direct contrast to those of NATSEM, with NATSEM's
Prof. Warren and Prof. Harding questioning the ACOSS methodology. Senator
FERGUSON ...Your NATSEM results do not seem to support ACOSS's model
which they released recently, which I can only presume you have had a chance to
either see or read about. Have you got any comments as to the reasons for the
apparent discrepancy between ACOSS's modelling and your own results? Prof.
Harding ...On the part that we modelled, we felt that they had not modelled
the family tax package. [29] And Prof.
Harding ...It is difficult for us to tell, in some cases, exactly what
they have done, because the methodology is not fully spelt out in the document
that they put out. But we believe that they did not model the benefits of the
family tax package. Senator FERGUSONYou believe, from your
observations, that they have done their modelling without taking into account
any of the effects of the family tax package? Prof. HardingWe
believe that is one issue. There are some others. Senator FERGUSONAnd
you do not want to share those others with us? Prof. WarrenThere
are some concerns about how they got to July 2000 from the Melbourne Institute
numbers. Again, like Ann, I have a concern about the methodology, but that is
really seeking an explanation more from ACOSS as to how they got to those of July
2000. They are quite important in terms of how the price effects move and then
how people lie each side of the four per cent. It is from there that they generate
the concern about the losers. ...They used a technique which essentially
takes the 2001-02 numbers and adjusts them for the information that the Treasury
indicated as being the expected July 2000 number versus the 2001-02. The 2001-02
number is 1.9 per cent; the July 2000 number is 2.5 per cent. So they adjusted
the Melbourne Institute numbers by 2.5 over 1.9 times the 2001-02 numbers. That
is the methodology they use to get to July 2000. We had difficulties with some
of that, which begins to explain why we do not get the same order of magnitude
of the losers as they get. [30] ACOSS evidence
given later at the same day's hearing did not clearly respond to any of the methodological
concerns raised earlier by NATSEM. Mr Davidson focused his responses on conclusions
relating to pensioners rather than explaining why price impacts for families with
children were estimated without including reference to the Government's increased
family assistance. The issue of durability of compensation was raised at
this hearing as well as in earlier evidence from Mr Geoff Carmody. The claims
made were that while the Government committed to compensate for the one-off price
impact of tax reform, the pension link to 25 per cent of MTAWE could overtake
this compensation over time if wages were rising faster than prices. This overlooks
the fact that the GST works on prices and compensation for GST therefore must
be compensation against price rises. In response, Government Senators note
that the ANTS package set out explicitly that the Government legislated
guarantee of pensions being at least 25 per cent of MTAWE will continue to protect
pensions in this scenario. What this means is that when the GST is introduced,
pensions will increase by an up-front 4 per cent and be maintained at 1.5 per
cent more than the CPI level. If, in the future, 25 per cent of MTAWE is higher,
then pensions will rise again and rise further in excess of prices. In this scenario
pensioners get higher real increases. The two promises provide double protection.
NATSEM ModellingThe non-Government members of the Select Committee
asked NATSEM to model the distributional effects of the tax package using a range
of adverse assumptions regarding inflation, household specific price impacts,
dissaving by lower income groups and the exclusion of food. In all, ten options
were modelled for 29 cameo groups. The key assumptions fed to NATSEM by
Labor and Democrat were: - including housing and tobacco in the price
effect of the GST;
- using a hypothetical dissavings ratio; and
- a
70 per cent pass through of indirect tax cuts in the first year but with 100 per
cent of increased costs passed through in one year.
In the first
option, NATSEM replicated the methodological assumptions set out in ANTS.
Harding and Warren endorsed the Treasury estimate of a 1.9% CPI impact
from the tax package and stated,
estimates of the distributional
impact of the package are extremely close to the Treasury's in almost all cases
[31] And Some variation has to be expected,
as we are using more recent projections of likely changes in average weekly earnings
and the CPI than were available to the Treasury at the time that they undertook
the modelling. [32] That is, the analysis confirmed
no category of person worse off from the Government's tax reform. In fact, pensioners
and low-income earners are better off from tax reform than without it. Options
2 to 6 were based on a higher CPI impact of the GST because the Select
Committee instructed the modellers to include in the CPI effect the expected
impact of the tax package on tobacco and new home prices. Harding and Warren disagreed
with this approach: It should be noted that we do not endorse using this
measure as the appropriate indicator of the likely change in prices facing households.
There are strong arguments for not compensating smokers for the likely increase
in prices facing them under the ANTS tax reform package. In addition, we have
not been able to model the distributional impact of the proposed First Home Owners
Scheme, so that the adverse distributional effect of the GST on house prices is
included within this measure but not the positive effect of the new scheme specifically
designed to overcome this adverse effect. [33] Notwithstanding
this adverse CPI assumption, Under the assumptions implicit in Option 2,
however, on average there are still no losers expected from the tax reform package
for the cameo households modelled. [34] Option
3 used the higher CPI estimate, and also used household specific price effects
(based on HES data) and an arbitrary dissaving assumption for low-income earners.
The authors themselves disclaim the validity of Option 3 results because of their
concerns about the higher CPI estimate. We do not support this as the most
appropriate measure of the impact of the tax reform package on prices, preferring
instead a measure of price change which excludes the likely impact of tobacco
and new house price changes. [35] NATSEM
also questioned the reliability of their measure of dissaving, saying:
Given the very tight time frame in which this report has had to be completed,
it has not been possible to undertake a comprehensive analysis of the comparative
dissavings rates revealed in the HES. As a result, we have simply imposed completely
arbitrary dissavings rate assumptions upon different types of households [36]
A word of caution was also given by NATSEM in relation to their use of
the HES data The estimates should be regarded as broadly indicative, rather
than definitive particularly for those small population sub-groups where
the HES sample contains only a limited number of survey respondents. [37]
And This underlines the need for caution when using these household-specific
price effects, as it seems likely that some component of the apparent difference
between different household types is a result of sampling error. In other words,
if the entire population had been sampled, different price effects might have
emerged for each of these household types. [38] Option
4 built on Option 3, with its attendant errors on tobacco, house prices and dissaving,
and incorporated a 70% pass through of indirect tax cuts in the first year but
100% of increased costs arising from GST passed through. The authors again discounted
the usefulness of this option, stating It is important to recognize that
this 70 per cent scenario should not be viewed as the standard case. A strong
defense can be mounted for the ANTS assumption of 100 per cent shifting forward.
In particular, one could cite the powers being given to the Australian
Competition and Consumer Commission (ACCC) to pursue businesses who do not fully
pass on their tax related price changes. [39]
This
aggressive strategy is likely to ensure 100 per cent shifting of the indirect
tax changes does act to offset the typical economic argument that the market will
take some time for the tax-related price increase to flow through. Therefore,
in the case of the ANTS reforms, 100 per cent shifting is probably the most reasonable
assumption in the medium term. As a result, the 70 per cent WST and Stamp Duties
shifting assumption should be viewed as at the extreme of the range of possibilities.
[40] It is only by using unreasonable assumptions
that the report can find categories of persons worse off and even then very few.
Option 5 and 6 modelled the removal of food from the package, with the
revenue shortfall funded by reducing tax cuts (Option 5) or increasing the GST
rate (Option 6). With respect to removing food, however, Warren and Harding noted
that what hadn't been modelled, but should be was
the increased complexity
of a GST with food made GST-free, both for the Australian Taxation Office and
the over 20 per cent of businesses who will be collecting GST. These increased
compliance and administrative costs must mean a greater burden on households than
we have been able to estimate in this study. This will manifest itself as reduced
GST revenue (net of administrative costs) and the prices of goods and services
increasing by more than we have estimated in this report. [41]
In addition to the concerns of Warren and Harding, Government Senators
note that these options reduce tax cuts principally from taxpayers in the $20
000 to $50 000 bracket or increase the GST rate to 12%. Government Senators
note that in Options 1 to 6, NATSEM assumed that the Government would increase
pensions by only 3.4 per cent, notwithstanding unreasonable CPI assumptions which
NATSEM were directed to model and the Government's commitment to compensate pensioners
above the actual CPI effect by a margin of 1.5 per cent. Because Warren
and Harding rejected the validity of the higher CPI assumptions imposed on them
by the Committee, they modelled Options 3, 4 and 5 with tobacco and house price
effects removed from the CPI as used in ANTS. In these "B"
scenarios, Warren and Harding approximated the Government's actual compensation
approach by assuming that pensions are increased by 1.5 per cent more than the
corresponding CPI effect for each option. Option 3B was stated by the authors
to be probably the most appropriate. Option 3B shows what the tax
package is worth using the lower CPI assumption, with the compensation rate for
pensions and allowances being 3.5 per cent (equal to NATSEM's estimated CPI of
2 per cent plus the Government's buffer of 1.5 per cent). Under Option 3B, every
single group modelled is better off under the ANTS package. However,
Option 3B understates what the Government's tax package is worth because it discounts
the price effects of tobacco and housing from the CPI, whereas the Government's
commitment is to provide a 1.5 per cent buffer above the actual CPI. It
is clear from the report that Harding and Warren do not favour the removal of
food from the GST base. The Australian Democrats were the driving force behind
setting up the Senate Committee with the express intention of mounting a case
to exclude food. The Committee commissioned the work of Harding and Warren which
found against such an outcome. Indeed not one of the Committee's consultants supported
the exclusion of food. The additional options modelled on the basis of
adverse assumptions, many of which Harding and Warren were clearly uncomfortable
with, resulted in only 85 observations out of the 6090 modelled where particular
household types were not beneficiaries from tax reform. If the 70% pass
through option, which is considered unrealistic by Harding and Warren, is set
aside then only 15 observations, mostly as a result of the higher CPI and arbitrary
dissavings assumption, do not show a net benefit from tax reform. Given
that the Government's compensation commitments were not modelled correctly, the
validity of these observations must be called into question. Fairness
and foodThe issue of exempting food for equity reasons was canvassed in
the first Select Committee report. In the first report a paper presented
by Professor Warren was used, which pointed out that rather than being a progressive
equity measure, zero-rating food would benefit the wealthy to a much greater extent
than the poor:
zero-rating food benefits most in nominal terms,
those in the highest income groups. In fact, the top 20% benefit twice as much
in terms of dollars and cents from zero-rating food, as does the bottom 20% [42]
Ms Angela Ryan from the ACPAs also presented evidence in support of Prof.
Warren's assessment: If you are looking at the dollar amounts of GST that
you are going to lose if you take out something like food, it is the high income
earners that will do best out of that system by a proportion of about two to one
if you compare the top 20 per cent of households with the bottom 20 per cent.
[43] The evidence provided by Professor Warren
and Ms Ryan undermines the argument presented by the Democrats that the Government's
tax reform package provides too much benefit to the wealthy. The Democrats propose
to solve this by exempting food from the GST, and taking away tax cuts from average
earners and above to fund it. The irony of such a move would be that by
exempting food from the GST they would be providing additional benefits to the
wealthy over the poor at a ratio of 5 to 1. Internationally acknowledged
expert on value added taxation, Professor Sijbren Cnossen, also dispelled the
myth that removing food from the tax base would lead to greater equity: In
high-income countries, it is increasingly being realised that VAT-rate differentiation
makes little sense on equity and administrative grounds. [44]
Professor Cnossen also went on to explain that there was somewhat of a
rethink going on in Europe on the issue of levying value added tax at lower than
standard rates on certain necessities. There is also a growing consensus
in high-income countries albeit more on paper than in practice that
lower-than-standard rates are not really an effective way of alleviating the tax
on the poor. Because the consumption patterns of low and high income groups have
converged, rate differentiation changes the impact of the VAT less than might
be expected when necessities are zero rated (as, for example, in the United Kingdom),
taxed at a lower rate (as in the Netherlands), or taxed at the standard rate (as
in Denmark and Sweden). Other instruments, such as the income tax and income-support
systems, are clearly much more effective in financially assisting the poor. Differentiated
VAT rate structures, moreover, greatly increase administrative and compliance
costs, particularly of small businesses. [45] (d)
Revenue Sustainability One of the reasons advocated by the Government
for the need for comprehensive tax reform was that the current tax system is failing
Australia. The following extract from the ANTS document refers: The
current tax system is ineffective. It provides a crumbling base from which to
derive the necessary revenue to fund essential government services, including
those provided to rural and regional areas as well as those provided through the
social security system. It is totally inconsistent to be committed to maintaining
or increasing current levels of expenditure on social security but to be opposed
to fair and systemic reform of a crumbling tax base. In the absence of
comprehensive reform, the existing tax system will only become even more ineffective.
The Commonwealth will become increasingly reliant on income taxation directly
levied on individuals and companies if it is to maintain funding for government
services. Tax rates would rise and the system become even more unfair as
those individuals and companies who had the opportunity to avoid or minimise their
tax increasingly did so. The indirect tax base would continue to decline, rates
would need to be increased again, and this debilitating cycle would continue.
Furthermore, under the current system the tax base of the States will become
even more inadequate and more inefficient in terms of funding necessary services.
[46] While Professor Dixon did not support the
proposition that the current tax base was eroding, his view was an isolated one.
In particular, Access Economics, which has over ten years' experience in
projecting Federal and State revenues, disagreed with Professor Dixon's position.
In a paper released on 17 February 1999, Access made the following comments
The Federal indirect tax system In the ten years to 1997-98,
and despite rate increases to stem revenue losses, Federal indirect taxes fell
from 6.40% of national income (GDP) to 5.55%. Another fall is expected in 1998-99.
In the decade to 2008-09, Federal indirect taxes are projected to fall from 5.34%
of GDP to 4.49%. In today's dollars, that is a shortfall of $5.33 billion a year
compared to 1999-00 collections. Losses may be expected to mount thereafter. Weakness
in the tax take is due to: - Improved fuel efficiency and the trend
to smaller cars.
- A falling impact of the penalty duty on leaded petrol,
as more cars use unleaded.
- Falls in tobacco usage and modest growth in
the consumption of spirits.
- Already announced falls in tariff rates,
notably in 2005.
- New cars sold continuing to decline as a share of total
consumer spending, with people spending relatively more on the likes of travel
and restaurants instead.
- Growth in the value of services outstripping
that in the value of goods and therefore undercutting other sales tax collections.
- The fall in the next decade (as a share of GDP) is expected to be the
same as last decade. But last decade's fall would have been worse, had not rate
hikes in sales and excise taxes overwhelmed the impact of tariff cuts (see the
Table). The reason Access Economics does not project a more rapid decline next
decade is we are deliberately conservative in our assumptions. In particular,
we assume the relative decline in the value of the tax base for the likes of cars,
petrol, cigarettes and alcohol is less fast in the future than it has been in
the past.
- Impact
of the 93/4 Federal Budget ($m)
| | | |
- WST rate increases
| - 435
|
- 585
| - 1207
|
- 1345
| - Wine & cider WST
rate increases
| - 70
|
- 95
| - 105
|
- 110
| - Petroleum excise rate
increases
| - 790
|
- 1380
| - 1475
|
- 1540
| - Tobacco excise rate
increases
| - 45
|
- 120
| - 180
|
- 185
| - Total indirect tax increase
| - 1340
|
- 2180
| - 2967
|
- 3180
| - Total indirect tax increase
to GDP
| - 0.30%
|
- 0.46%
| - 0.58%
|
- 0.60%
| - Total indirect tax
increase as % of Federal indirect tax
| - 5.80%
| - 8.75%
|
- 11.43%
| - 11.91%
|
- Source: 1993-94 Budget Paper No. 1, page 4.6
- The
State indirect tax system
- In the ten years to 1997-98 the States raised
franchise fees, notably on tobacco, and financial transactions taxes. As a result,
State indirect taxes rose from 5.34% of national income to 5.78%, up 0.44 percentage
points. A fall is expected in 1998-99. In the ten years to 2008-09, State indirect
taxes are projected to fall from 5.62% of GDP to 5.36%, down 0.26 percentage points.
In today's dollars, that is a shortfall of $1.61 billion a year compared to 1999-00
collections. The fall is expected across several key taxes:
- Stamp duties
are cyclical, and they are riding current good growth in the economy. However,
as asset prices ease from cyclical highs, and as ageing of Australia's population
base crimps growth in new housing starts, the growth in stamp duty collections
is not expected to keep pace with growth in the wider economy.
- For payroll
tax, States such as WA and Queensland have lower rates of payroll tax (and more
exemptions) than do the other States. With those two States expected to see the
fastest job growth in the next decade (as they did last decade), the regional
composition of growth will lead to a relative fall in payroll tax revenues.
- For
franchise fees and other taxes, weakness in the petrol, tobacco and liquor tax
bases is projected to slightly outweigh the strength in the gambling tax base.
As with payroll tax, the low tax States of Queensland and WA are expected to grow
a little faster than other regions. That will also hold back collections.
The
big picture That leaves the following big picture. The Dixon/Rimmer
modelling suggests the indirect tax system will generate revenues rising faster
than the overall economic cake without rate increases. Access Economics
expects indirect tax revenue to decline, unless rates rise or the base is widened.
In times past the decline has been delayed mainly via rate rises. This
analysis suggests problems ahead. To keep revenue at its current share of the
national cake would require increases in tax rates over the next decade. Examples
include the Federal excise on petrol (which would have to rise by more than 6
cents a litre over and above the usual indexation), and the standard rate of sales
tax on cars (up from 22% to 26.5%). In total, and measured in today's dollars,
the shortfall a decade down the track from keeping the current indirect tax system
is projected to total $7 billion a year. It would rise thereafter, as growth in
services continues to outstrip that in goods, ensuring the indirect tax base continues
to erode. [47] This independent analysis puts
an end to Labor's claims that Australia's indirect tax base is not shrinking.
Government Senators do not agree with Labor or Professor Dixon and maintain that
tax reform is essential to maintain sufficient government funding to provide services
expected by the community. A further matter which comes under the effectiveness
of a tax proposal is its ability to deliver revenue, including from the black
economy. A central element of the Government's tax package is its integrated
nature. This was noted in ANTS: The whole package of tax reform
will enhance community confidence in the fairness of the tax system. The combined
effect of the various measures will be greater fairness, transparency and certainty,
resulting in increased compliance. Some specific measures will assist the Tax
Office to make greater in-roads into the cash economy. The GST, the alignment
of business tax payments, the establishment of the ABN and the new withholding
arrangements will, together, result in more timely receipt of better information
and a more comprehensive matching capability for the Tax Office to act upon. The
level of integration of the GST into the tax system as a whole will be a key feature
of the Government's approach. The introduction of the ABN will make it
much more difficult for those operating in the cash economy to avoid their tax
responsibilities. It will also put a stop to people opting out of employment relationships
to avoid withholding taxes and thereby slipping into the cash economy. Those
within the community who continue to flout our tax laws and place an unfair burden
upon others, will no longer get away with it. More scrutiny will also be given
to the tax-driven activities of high wealth individuals, tax manoeuvring of international
groups and artificial end-of-year tax planning. A special focus will be given
to activities aimed at exploiting any of the new measures foreshadowed in this
package. The Commissioner of Taxation has estimated that $3.5 billion over
three years in additional income tax revenue will be generated as a result of
these collective impacts. [48] Professor Cnossen
draws together enforcement and administration issues: The level of administrative
costs should also be influenced by the extent to which the control of the VAT
is integrated with that of the business income tax, since many aspects that enter
into the control of the income tax are relevant to the control of the VAT and
vice versa. Thus, the sales receipts and cost of purchases figures in the profit
and loss account submitted for income tax purposes should provide a useful cross-check
on gross and net VAT liabilities. Similarly, a check on cash receipts as part
of a VAT audit may uncover undeclared sales and hence income that should have
been reported for income tax purposes. Clearly, since VAT is an accounts-based
tax, VAT enforcement should benefit from joint controls and audits with the income
tax. [49] This is an important issue which the
Opposition has ignored in making false claims about tax reform having an impact
on the black economy in Australia. ISSUES(a) Food Why food should
be in the GSTThere has been some debate over exactly how broad the base
for the GST should be, and this has particularly focussed on the Democrats' proposition
that food should be exempt. The Democrats have not, however, provided a definition
of food. Witness after witness appeared before the Committee, urging on
grounds of good tax design and good policy, that food be included in the base,
culminating in the Australian Tax Commissioner declaring that exempting food would
be a recipe for disaster. [50] Why
a recipe for disaster? Because we could have a situation like that in Canada
where the sale of five or less doughnuts is taxable, but the sale of six or more
doughnuts is GST-free provided the doughnuts are not for immediate consumption
at the establishment. This has apparently led to the formation of ad hoc consumer
doughnut clubs at the door of take away outlets in order to take advantage
of the bulk buy rule. Because we could have a situation like that in the
UK, where a hot meat pie is generally taxable but bakeries successfully argued
that they heat their pies mainly to create freshly cooked food and an enticing
smell. Consequently, hot pies sold from bakeries are GST-free unless they
- are specifically heated at a customer's request;
- are thrown
out once they have been kept hot for a period of time; or
- have been reheated
from cold (as opposed to being cooked from raw).
- A more recent UK ruling
is that a meat pie sold in a bakery before 3pm is taxable as a snack food, but
if sold after 3pm it becomes a grocery and is tax-free.
- The UK VAT information
indicates biscuits are standard rated if they are covered or partly covered in
chocolate or some other product similar in taste and appearance to chocolate.
This includes:
- all fully and semi-coated biscuits including biscuits
decorated in a pattern with chocolate or some similar product;
- chocolate
shortbread;
- gingerbread men decorated with chocolate unless this amounts
to no more than a couple of dots for eyes; and
- ice cream wafers partly
covered in chocolate.
- It does not include:
- chocolate
chip biscuits where the chips are either included in the dough or pressed into
the surface before baking;
- bourbon and other biscuits where the chocolate
or similar product forms a sandwich layer between two biscuit halves and is not
continued onto the outer surface;
- jaffa cakes; and
- biscuits
in a coating of caramel or some other product that does not resemble chocolate
in taste and appearance.
All of the economic modellers, including
Chris Murphy, Peter Dixon, Geoff Carmody, Ann Harding, Neil Warren, and even the
academic who did ACOSS's research, Dr David Johnson, argue that it is best to
leave food in the tax base. A very wide group of business groups, tax experts,
accountants, community groups, and other witnesses were adamant that food should
remain in the base. The reasons that they give all conform to the general principles
of good tax design outlined earlier; efficiency, simplicity, and equity. On
efficiency, evidence from both Econtech and Peter Dixon, showed that excluding
food from the tax base would lead to a reduction in economic welfare. On
simplicity, excluding food from the base would make the tax system immeasurably
more complex, would place an enormous burden on businesses to comply, and would
lead to endless disputation over definitions. There was a clear message from the
Commissioner of Taxation: I would like to put before the Parliament some
of the issues that, from an administrative perspective and a cost perspective,
I think it is important be shared so that as you come to your decisions they are
understood. The point that I want to make most directly is that in attempting
to draw a line around food we have long experience from the operation of the wholesale
sales tax that attempting to draw that line will inevitably lead to significant
disputation. It will lead to a tax system that has more aggravation rather than
less. The cost to business will inevitably increase, as will the costs of administration,
if we are to achieve reasonable levels of compliance. And it does raise compliance
issues. Overseas experience and our own experience with the wholesale sales tax
says that there will be attempts around those lines to move things into GST-free
areas and so on. [51] He went on to say I
do believe strongly that when you have a tax system that becomes subject to ridicule
which some of these rules can lead to, with stories like the formation of doughnut
clubs outside doughnut shops so that individuals wanting one will get together
and one will go in and buy sixit sounds funny, but you are almost promoting
a sense in people of a comfort with not complying with the law. They become significant
issues for administration of any system. [52] Equity
is most effectively achieved by leaving food in the base and working on compensation
through the income tax and welfare systems, as the Government has done. This allows
for better and more generous targetting, without the wasteful free kick
to the wealthy that a food exemption would entail. Professor Cnossen referred
to
a study in Sweden which shows that the main beneficiaries of a
zero rate on food would be yuppies single people with dual incomes living
together. These people buy more expensive varieties of food, eat out more often,
and tend to throw food away more easily. [53] Professor
Cnossen also stated Research and experience in other countries proves that
the best GST is a GST with a single rate applicable to all goods and services.
A zero rate on food is largely ineffective in mitigating the GST burden on the
poor. Zero rating food is like giving stones for bread to the poor, because they
continue to pay the GST on other items of consumption. The poor are helped more
effectively through changes in income-support systems and, to some extent, the
income tax. [54] While the position of Government
senators is that food should remain in the GST base, the views of witnesses are
outlined below: National Seniors Association (representing 151 000 members)The
NSA said that they were broadly supportive of the proposed legislation and that
it was best for the whole community if food was not excluded from the GST.
David Deans, Chief Executive. [55] Provided
an adequate compensation package is implemented, excluding food would only serve
to complicate the GST and reduce the size of personal income tax cuts. It
is time parochial sectional interests stopped muddying the waters by seeking short-term
deals which are not in the best interests of all Australians. National
Association of Retail Grocers (representing 10 000 small & independent grocers)The
Chairman Mr Ian Baldock recently travelled to New Zealand meeting with business
people and consumers, who reacted with a combination of absolute horror
through to derision that we would even be remotely considering the removal of
food from the GST. [56] He said that exempting
food would be an administrative nightmare of enormous complexity,
would result in higher prices, and create a competitive advantage
for large retailers over small retailers. Mr Baldock said that up
to half of its members would be forced to close if food is excluded [57]
Baking Industry Association of Australia (representing over 100 000 people
in the bread and baking industry) support a GST on food, including bread.Whether
big or small, we are of the very clear view that every business in the industry
will be detrimentally affected if food is exempt from the GST. We are yet to see
any definition of food for exemption from the GST which we consider would not
be heavily detrimental to the industry. We believe the cost of compliance would
be substantial, but falling particularly harshly on small businesses, Marcin
Firek, Executive Director. [58] Council of
Small Business Organisations of Australia (representing 150 000 small businesses)It
is our very strong belief that to exempt food would be a disaster. Rob Bastian,
Chief Executive. [59] Without question,
small business wants food included. After travelling to NZ and meeting
with counterparts, Mr Bastian said that the response from New Zealanders
was perfectly clear `For Heaven's sake, you are nuts if you exclude food.'
I can't overemphasise the strength of the feedback from the New Zealanders
to include food in the tax. Australian Chamber of Commerce and Industry
(representing 350 000 businesses)The potential exemption of food
would be a critical blow to the fundamental attraction of a single rate, broad-based
GST. All the key advantages in terms of lower compliance burden, high level of
voluntary compliance, ease of administration and improved competitiveness would
be seriously eroded if food were to be exempt. [60]
It is difficult to exaggerate the compliance nightmare which an exclusion,
or partial exclusion of food would cause for small businesses in the retailing
and distribution sectors. National Farmers Federation Once
you start zero-rating things and having things so that every invoice has to be
dissected, the compliance costs go up exponentially, Bob Douglas, Director
Rural Policy. [61] A decision not to tax
basic food, but to tax restaurant meals and and take-away foods, adds mind-numbing
complexity to the tax system, NFF Submission to Senate Select Committee.
[62] Australian Food and Grocery CouncilExcluding
food from the GST base will only serve to render the system more complex, more
administratively difficult, and more costly to comply with. Mitch Hooke,
Executive Director. [63] It is just not
an efficient way of ensuring that the social objectives of tax reform are met
equity, progressiveness and responsibility for the poor and disadvantaged.
There is simply no desire on our part to support a piecemeal approach
to the reform of Australia's taxation system. It is neither in the nation's interests
nor our industry's. Australian Small Business AssociationWe
must make the system as simple as possible. In our view part of the simplification
is to make the system all embracing with no exclusions and no exemptions. Canada's
system was full of exemptions, it failed. New Zealand had few exemptions and it
worked. Should a GST be imposed which includes exemptions Small Business would
have to question its support for such a system. Peter Siekman, Federal
President. [64] We would like to see food
included in the GST, overall, completely. [65]
Woolworths (Australia's largest supermarket group) & Coles MyerWoolworths
Chief Executive, Roger Corbett, told The Age that the GST should
be introduced as structured by the Federal Government. [66]
The retail industry supports the GST including food across the whole
range. We believe the GST will improve the economy, and a better economy is a
better retail environment. Australian Tax OfficeThe
critical point I want to inject into the public debate is that any attempt to
draw a line around food will lead to costly disputation and greatly increased
costs for the community in administering the GST. [67]
Tax Commissioner, Michael Carmody. We estimate that up to 370 000
businesses will also be in the `business' of distinguishing between GST and non-GST
purchases and sales. [68] GST-free food
would would be a recipe for disaster, and it would cause the Tax Office
to introduce rules that inevitably will be subject to ridicule and that
almost encourage people to become comfortable with entering into arrangements
to exploit them. [69] Australian Society
of Certified Practising AccountantsApproximately 300 000 business
operators will face a massive increase in compliance costs as a result of making
food GST-free. This is a deadweight on the economy and one that will inevitably
be recouped through increased prices. [70] Angela
Ryan, Tax Director. If food is made GST-free it would cost the economy
over $100 million annually in compliance costs. Financial Planning Association
of Australia (Professional Association for Financial Planners 10 000 members)If
the integrity of the Government's tax reform package, including the GST, was not
kept intact it would make a mockery of the reform package. Michael McKenna,
CEO. [71] The new tax system was designed
to work in its entirety. Exempting food from the GST will increase the level of
GST on other goods and services and distort the reforms." Tricon
(Company which controls Pizza Hut, KFC, and Taco Bell) Want either all
food out or all food in, estimate that if supermarket food is exempt and restaurants
are not then they will lose 7000 jobs in their industry. [72]
New ZealandersThe former head of New Zealand's GST Co-ordinating
Office, Marylin Goddard, said that her country's acceptance of a flat rate for
all goods and services was the key factor to its success, and that Australia must
stand firm in its rejection of exemptions to the GST. [73]
That was accepted in New Zealand. It was not an issue, it was certainly
accepted by small business, said Ms Goddard. Business Coalition
for Tax Reform (representing almost 40 industry bodies)Excluding
food would add significant compliance costs, particularly for small business;
tend towards creating a culture of non-compliance and activity that seeks tax
avoidance; increase the administrative costs and the time spent by tax administrators
and the courts in deciding what is and what is not food for the purpose of tax;
and reduce the general competitive advantages of a single rate, broad based indirect
tax. Fergus Ryan, Chairman. [74] Mr Ryan
said that GST-free food would be a nightmare, [75]
saying that to make such an exemption would call into question the value
of the whole tax reform package. [76] Corporate
Tax Association (representing over 100 major companies on tax matters)Exemptions
from the broad-based single tax rate will add exponentially to compliance costs.
To us it would appear to be an unnecessarily wasteful and costly option to the
extent that benefits would flow indiscriminately to those not sought to be advantaged
by the measures. Mr Romano Nenna, President. [77]
Setting up systems to deal with different rates would cost tens of
millions for large retailers, and proportionately so for smaller retailers. Our
main concern is compliance costs as far as the exemption of food is concerned.
Commonwealth TreasuryIn the absence of other changes, the exclusion
of food, clothing and shelter from a GST would result in less taxation revenue
and higher disposable income across the community than would be the case if these
goods were taxed. However, this would mean that the package was unsustainable
as a whole, with likely highly adverse economic effects on the fiscal balance,
monetary policy settings, growth and employment. [78]
The Irresponsibility of the Democrats' PositionOne disappointing
aspect of the debate has been the propensity of the Democrats to claim the support
of people whose views do not actually support them. For example, they attempt
to conscript the modellers Peter Dixon and Chris Murphy to their side, as evidenced
in the Press Release Economists agree GST-free food won't hurt the
economy. In actual fact, Dixon and Murphy agree on exactly the opposite
(to different extents), and both support food being included in the base. They
also attempt to conscript Treasury to their side with a press Release entitled
Treasury figures support Democrat arguments: Zero rated food slashes inflation
& compensation costs. In actual fact, Treasury support the inclusion
of food in the base on the grounds of good tax design. Another example
is the expert on compliance costs, Professor Walpole, whom the Democrats claimed
backed up their case, but who explicitly endorses food being in the GST base and
who felt compelled to write to the AFR to refute the Democrat portrayal. The
repeated refusal by the Democrats to accept the evidence from the expert witnesses
on this issue elicited this response from Geoff Carmody of Access Economics, There
are none so blind as those who won't see. [79]
The Democrats often claim that if 23 out of 27 OECD countries exempt food,
why can't Australia. There are several points to make regarding this claim.
When it comes to public policy, Australia ought to follow world's best practice,
not common or outdated practice. World's best practice is universally considered
by tax experts to mean the fewer exemptions the better. As Professor Cnossen notes
Early converts to the GST (which they call VAT) generally have dual rate
structures, including most member states of the European Union. The reason is
that in the late 1960s and early 1970s food still weighed heavily in consumer
baskets and income-support systems were not well developed. Moreover, the original
EU member states wanted the burden distribution of the new tax to be as close
as possible to that of the previously existing turnover taxes. The intention was
to avoid complicating discussion of the VAT's merits at that time, a very
novel idea with debate about the proper distribution of the tax burden
under the new levy. Even these countries do tax food, however, albeit at a reduced
rate. And even in these countries it is now widely recognized that a single rate
would be best on grounds of fairness, efficiency and simplicity. Later
converts to the GST and countries with modern tax systems have single-rate GSTs.
These countries include Denmark, Norway, Sweden and Iceland, as well as New Zealand,
Switzerland, Japan and Singapore. (Canada is a notable exception.) These countries
realize that the poor are better taken care of through the income tax and income-support
system. [80] The Democrats themselves are divided
over the crucial question of how much food should be exempt. Leader Senator Meg
Lees supports a narrow definition [81] which excludes
restaurants, but this is contradicted by the Economics Spokesperson Senator Andrew
Murray, who favours a wide definition including restaurants because if you
make it too narrow, you make it too complex. [82]
(b) Families with childrenGovernment Senators refute the claims
of Professor Peter McDonald in particular, that the tax reform package does not
give due regard to families with children. Much of Professor McDonald's
critique appears to be predicated on an assumption that the impact of tax reform
will be higher for families with dependent children than for all other households
regardless of household income. NATSEM's report to the Select Committee
however, provides information which undermines Professor McDonald's assumption.
The experience for single age pensioners outlined above provides a reasonable
guide to how the estimated distributional impact of the package varies for other
low income groups as the Treasury's assumptions about dissaving and price effects
are changed. But the precise effect depends upon the estimated increase in prices
facing each particular type of household. Based on the estimates of price changes
shown in Table 5, it does not seem possible to conclude that families with children
generally face higher potential price increases than families without children.
For example, the estimated increase in prices from Option 3 for single income
couples without children is 3.1 per cent. This is higher than the estimated price
increases facing any of the other single income couples with children. Similarly,
the estimated price increase from Option 3 for two income couples without children
is 2.6 per cent. This is higher than the estimated impact for a two income couple
with two children, one of whom is aged less than five years. But it is marginally
lower than the estimated impact for a couple with two children, both of whom are
aged 5 to 12 years. Does removing tobacco and housing make any difference
to the conclusion above that families with children do not appear to face higher
price increases than the average or than families without children? The relevant
price effects are shown in the column of Table 6, headed `Option 3B'. This column
shows household-specific price effects, but with the impact of tobacco and housing
price changes removed. If anything, these results appear to more strongly reinforce
the earlier conclusion that families with children are expected to face lower
price increases than both the average and than families without children. Given
an estimated average CPI movement of 2.0 per cent, the only household groups with
children expected to face price increases above this average are two income couples
with income equally split between them and with one child aged five to 12 years
and self employed couples with children. Even given that families with
children do not seem likely to face above average price increases from the tax
reform package, are they still net winners from the package if the impact of tobacco
and housing prices is included and, at very low income levels, they are assumed
to be dissaving? Suppose for the moment we take the `worst-case' dissaving assumption
of 10 per cent used by Treasury in the Draft White Paper (1985, p. 259). This
can probably be regarded as providing an upper bound to any likely medium term
dissaving by households. Looking first at families with no private income,
who are fully dependent on the social security system, Table 11 indicates that
most social security dependent households seem likely to make small gains from
the tax reform package under the Option 3 assumptions. Recall that the estimate
of the price increase facing each of these types of households varies depending
upon what type of household they live in and it also includes the impact
of tobacco and housing. In this sense it is a worst case estimate. As Table 11
suggests, if social security households are not dissaving then they do relatively
better from the tax package. However, even at an assumed dissavings rate of 10
per cent, they are not on average net losers. Treasury analysis of HES
data corroborated the NATSEM findings, as evidenced in the following exchange
during the hearing on 8 April: Senator GIBSONMr Smith, I would
like to basically repeat a question I put this morning to Professors Harding and
Warren. This is to do with the effect of the tax package on families
Mr
SmithThe broad answer is that I think we have previously indicated that
we felt that our own analysis comes up with similar results, and our own analysis
comes from Mr Gallagher. Mr GallagherIn the indicative analysis
that we have done using the HES data, if you look at households with and without
children, the price effects for those households are indistinguishable, given
the nature of the analysis. Like that of Professors Harding and Warren, there
is a very slightly smaller price effect on families with children, but you would
not want to make too much of that. As the number of children increase within the
limits of the sample, it is still the case that the price affects the families
with children. If you look at the expenditure patterns of households with children
and with dependants under the age of 17, you can see that the broad expenditure
patterns of those households are in fact very similar across the 17 categories
on which the ABS published its information. So we have two thoughts. One is that
the modelling says this. Then, if we go back to the information in the original
ABS HES data set, it says that the expenditure patterns are fairly similar at
a broad level. So it is not surprising that we do not think there is any additional
price effect for families with children in the design of this package. Senator
GIBSONThank you, Mr Gallagher. While both NATSEM and Treasury
have strong misgivings about the reliability of HES data, it is the only household
specific database available. The data, therefore do not appear to support Professor
McDonald's central proposition around which his assertions are based. A
further claim raised by Professor McDonald is that price rises associated with
children are estimated in ANTS at 30 cents per week. The 30 cents per week figure
is a fundamental mathematical truism related to the level of the current per child
family payment added to the expected value in July 2000 of the current Family
Tax Initiative. That is, the impact of a 1.9 per cent price increase on a minimum
family payment per child of an expected $632 plus $200 for the FTI is $15.80 per
annum or 30 cents per week. What Professor McDonald should be looking at
is the real cash gain (ie benefits after taking into account the GST and its impact
on prices) to different family types as it shows the total benefits to families
from tax cuts and increased family benefits. For example, in the case of
a dual income couple on $30,000, both a childless and with-child couple will receive
an income tax cut of $14.96 per week from which the impact of GST is subtracted
($9.33 for the childless couple and $9.63 for the with child couple). The childless
couple therefore receives a real cash gain of $5.63 from the tax cuts whereas
the with-child couple receives a real cash gain of $5.33 from the tax cuts plus
a further $30.25 in increased family tax benefit. This clearly shows that
concentrating on the 30 cents figure as Professor McDonald does is a red herring
when trying to look at the benefits of the tax package to families with children
and demonstrates, at best, a lack of understanding of the ANTS cameo tables.
Another claim from Professor McDonald was that families with dependent
children between the ages of 17 and 24 are not recognised in the compensation
package. This is not correct. Under the families package, there is no change
to the age limits for receipt of the Family Tax Benefit; the maximum age for payment
will continue to be 18 years. As with other income support payments, a 4 per cent
increase will apply to the Youth Allowance which includes a 1.5 per cent real
increase. Youth Allowance is available to eligible children between the ages of
16 and 24. (c) International Food Price ComparisonsOne of the
claims made by the Democrats in support of making food GST-free is that some OECD
countries either tax food at a concessional rate or make it GST-free. The corollary
is that food is more affordable under such arrangements. Government Senators
have obtained some data comparing international food prices. In 1996, the latest
year in which information was available shows the following: Comparative
price levels for food, 1996 (Australia = 100) [83]
Austria Belgium Finland France
Germany Ireland Italy Luxembourg Netherlands
Portugal Spain EU11 | 141 136 148
147 140 120 135 140 124 105 116
135 | Denmark Greece Sweden UK EU
15 Iceland Norway Switzerland Turkey Australia
New Zealand Japan | 178 112 158
115 133 167 185 188 67 100
115 254 | If the Australian figure was inflated
by the expected average price rise of 4.4% for food (ie to 104.4), it is obvious
from the table that food prices in Australia still remain very much at the lower
end of the scale. It also shows that factors other than taxation treatment determine
food prices (including protection levels). Government Senators conclude
it is a fallacy to argue that food has to be concessionally taxed to ensure low
food prices. CONCLUDING REMARKS The 1998 election saw the
Coalition Government go to the people with a detailed comprehensive tax reform
plan breaking Labor's cycle of electoral deceit and broken tax promises.
This bold course of action sets this Government apart from the failed attempts
of previous Governments to reform the tax system. For over twenty years,
both major political parties have understood the need for comprehensive tax reform,
and have held inquiries. In 1985, a broad-based consumption tax was proposed
in the Draft White Paper. The Labor Government took its preferred Option
C (a 12½% broad-based consumption tax) to the Tax Summit and then in the
face of pressure did nothing. In 1993, the Coalition in opposition proposed
a GST but was not elected. The Labor Government, which campaigned on the basis
of no tax increases, then funded their election promises by increasing all wholesale
sales tax rates and excises and withdrawing the L-A-W tax cuts. These tax increases
went ahead because the Democrats supported the legislation in the Senate without
demanding any compensation for the higher prices which resulted. In 1998,
the Coalition developed the most detailed and comprehensive tax reform policy
and put it before the people prior to the election. The election was won by the
Coalition. A mandate was received to proceed with the tax reform proposals and
Government Senators consider the Senate should respect this mandate and pass the
ANTS legislation. The Senate Inquiry process on A New Tax System
has been used as a political device by non-Government Senators to undermine the
Coalition's mandate for tax reform. The Inquiries have focussed solely
on the GST, and have ignored the rest of the tax package which includes:
- Lower marginal income tax rates for 95% of taxpayers resulting in $13 billion
of tax cuts
- Increases to pensions and to family benefits to make people
better off after GST
- Lower costs for industry because of the removal
of $10 billion a year of embedded taxes on business
- Increased competitiveness
for Australian exporters because of $4.5 billion reduced costs.
Government
Senators Conclude:1. The Inquiry process produced no information that
was not already in the public domain or had not been considered by the Government
when putting the tax reform plans together and debated during the election campaign.
2. The Inquiries by the Senate were poorly focused and mis-used by Labor
and Democrat Senators who manipulated the Inquiries in an attempt to re-argue
their political positions which were defeated in the last election. The Democrats
ignored and misrepresented evidence which did not support their position with
respect to food and GST. 3. Many witnesses and submissions relied on false
assertions and anecdotes many of which were irresponsibly perpetuated by
the Labor Senators rather than primary source material, such as the legislation
and explanatory memoranda, which have been public since December 1998. Government
Senators therefore do not place any credit on the claims and conclusions of the
Labor Senators which are willingly based on misleading and inaccurate evidence.
4. The Government's tax package entirely meets the criteria by which tax
reform should be assessed - it is efficient
- a single
rate GST and few exemptions means minimum distortion to allocation of resources
and prices and economic welfare increases by the greatest amount
- it
is simple
- least compliance effort by business and ATO and no wasteful
tax rate re-classification (eg frozen yoghurt) court battles
- it
is equitable
- GST effects are offset by compensation - either increased
pensions or benefits or tax cuts and compensation is targetted to those in need
- it increases the sustainabilty of the tax base and therefore
governments' ability to continue to provide services.
5. There was
no credible evidence to demonstrate, on reasonable assumptions, that any modelled
household type would be worse-off as a result of the Government's tax reform package.
6. The reasoned evidence to the Inquiries overwhelmingly supported food
remaining in the GST base on efficiency, simplicity and equity grounds. The Democrats
refused to acknowledge that when informed witnesses addressed issues of equity
and fairness they supported the use of direct compensation rather than narrowing
the broad-based design of the GST. Appendix AMEMBERSHIP OF
THE COMMITTEES: Senate Select Committee on A New Tax SystemSenator
Cook, ALP (Chair) Senator Ferguson, LP (Deputy Chair)
Senator Conroy, ALP Senator Gibson, LP Senator Murray,
AD Senator O'Chee, NP Senator Sherry, ALP References
Committees: Senate Community Affairs References
Committee Senator Crowley, ALP (Chair) Senator Knowles,
LP (Deputy Chair) Senator Bartlett, AD Senator Evans,
ALP Senator Gibbs, ALP Senator Tierney, LP | Senate
Employment, Workplace Relations, Small Business and Education References Committee
Senator Collins, ALP (Chair) Senator Synon, LP (Deputy
Chair) Senator Carr, ALP Senator Crossin, ALP
Senator Ferris, LP Senator Stott-Despoja, AD |
Senate Environment, Communications, Information Technology
and the Arts References Committee Senator Allison, AD (Chair)
Senator Tierney, LP (Deputy Chair) Senator Bishop, ALP
Senator Bolkus, ALP Senator Lundy, ALP Senator
Payne, LP | | Footnotes[1]
Terms of reference, paragraph 3. [2] Government
senator's report for the Community Affairs References Committee, Inquiry into
A New Tax System, p.180 [3] Evidence, Community
Affairs Committee, p.614 [4] Evidence, p.2306
[5] Evidence, p.2307 [6]
The Australian, 11 March 1999, p.4 [7]
Terms of reference, paragraph 4 [8] Access Economics,
AEM Model Forecast Report, 7 December 1998. [9]
ECONTECH, (Murphy Model MM2), Australian Economic Outlook, 13 December
1998. [10] Murphy C, Modelling A New Tax System
(ANTS) - Comparing Monash and MM303, Commissioned by the Senate Select Committee
on a New Tax System, 1999, p.3 [11] Asprey, Full
Report of the Taxation Review Committee, 1975, p.16 [12]
Warren N, GST: The long, winding road, 1996, p.11 [13]
Evidence, p.1799 [14] Evidence, p.1906 [15]
ASCPA, Media Release, 10 February 1999 [16] Evidence,
pp 1780-81 [17] Murray, Senator Andrew, Media
Release 16 March 1999 [18] Cnossen Sijbren, Administrative
and Compliance Costs of the VAT: A Review of The Evidence, Tax Notes International,
20 June 1994 [19] Pope, Dr Jeff, The Compliance
Costs of the Goods and Services Tax: A Comment on Current Major Issues 1999,
p.2 [20] Ibid, p.1 [21]
Ibid, p.3 [22] Ibid, p.4 [23]
Ibid, p.6 [24] Ibid, p.8 [25]
Ibid, p.10 [26] Ibid, p.12 [27]
Ibid, p.15 [28] Government senator's report,
Senate Select Committee on a New Tax System First Report, February 1999,
p.59 [29] Evidence, p.2345 [30]
Evidence, pp 2345-6 [31] NATSEM, p.1 [32]
NATSEM, p.20 [33] NATSEM, p.1 [34]
NATSEM, p.21 [35] NATSEM, p.2 [36]
NATSEM, p.13 [37] NATSEM, p.21 [38]
NATSEM, p.22 [39] NATSEM, p.14 [40]
NATSEM, pp 14-15 [41] NATSEM, p. 37 [42]
Warren, op cit. p.7 [43] Evidence, pp 567-8 [44]
Cnossen, Sijbren, Global Trends and Issues in Value Added Taxation, Economic
Faculty, Erasmus University, 1998, p.409 [45]
Cnossen, opcit. pp 409-10 [46] ANTS, p.8
[47] Access Economics, Is the existing indirect
tax system broken?, February 1999, p.i-ii [48]
ANTS, p.150 [49] Cnossen, op cit,
p.1653 [50] The Age, 25 March 1999 [51]
Evidence, pp 2231-32 [52] Ibid [53]
Cnossen Sijbren, What rate structure for Australia's GST? Canberra, 24
March 1999 p.2 [54] Ibid p.1 [55]
National Seniors Association Media Release, 31 January 1999 [56]
Evidence, EWRSBE, p.278 [57] The Australian,
24 February 1999 [58] Submission, Senate Select
Committee on ANTS, 29 February 1999. [59]
Evidence, p.2207 [60] ACCI Submission, Senate
Select Committee on ANTS, 1 February 1999 [61]
Evidence, p.250 [62] NFF Submission, Senate Select
Committee on ANTS, 27 January 1999 [63]
AFGC Media Release, 4 February 1999 [64] ASBA
Submission, Senate Select Committee on ANTS, 23 February 1999 [65]
Evidence, p.1103 [66] The Age, 26/3/99 [67]
Tax Commissioner Michael Carmody, Speech, Hobart, 24/3/99 [68]
ibid [69] The Age, 25/3/99 [70]
Aust. Society of Certified Practising Accountants, Media Release, 10/2/99. [71]
Financial Planning Asociation of Aust., Media Release, 26/3/99 [72]
Evidence, EWRSBE, p.232 [73] AAP Report, Exemption-free
GST crucial says head of NZ Task Force, 10 February 1999 [74]
Evidence, p.608 [75] Sydney Morning Herald, 28
January 1999 [76] BCTR Media Release, 4 March
1999 [77] Evidence, p.413 [78]
Submissions, Vol 3, p.783 [79] Financial Review,
12 April 1999 [80] Cnossen, op cit, p.1 [81]
The Australian Democrats Taxation Policy Response, 18 September 1998 [82]
Senator Andrew Murray, Meet the Press, 4/4/99 [83]
Source, OECD Non-government (bold)
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