1975

January

Asprey Taxation Review

In 1972, the McMahon Coalition Government decided to institute a public inquiry by a Committee into the operation of the taxation system 'which would put the Government in a position to have an overall look at tax policy.' The Committee provided a comprehensive final report with detailed recommendations covering many aspects of the taxation system. The Committee reached the general conclusion that the taxation system should place greater reliance on taxes on goods and services by the inclusion of a broad-based tax.

The then federal Labor Government stated that the recommendations of Mr Justice Asprey would be taken into account in the 1975 Budget, with urgent consideration of the restructuring of the taxation system.

In the Budget, no reference was made to a broad-based indirect tax. The Labor Government concentrated on changes to the personal income tax.

Preface to Asprey Taxation Review Committee Report. AGPS, Canberra, 31 Jan 1975. (Attachment 1)

Australia. Senate. Governor General's Speech, 9 Jul 1974, p. 7.

Australia. House Of Representatives. Appropriation Bill No 1, 19 Aug 1975, p. 62.

1975-1980

The newly elected Federal Coalition Government in late 1975 expressed a similar lack of interest in goods and services tax reform, a position it maintained for the ensuing five years.

1980-1981

Treasurer proposes Broadly Based Indirect Tax

In November 1980, the then Treasurer, Mr Howard in the Fraser Coalition Government, announced that the Government had decided to examine certain options for change to the present taxation system-in particular, the option of changing the tax mix by shifting the burden to indirect consumption taxes thereby reducing the burden of income taxes.

In February 1981, the Treasurer made a submission to Cabinet proposing a broad-based indirect tax, with a number of options. Cabinet rejected the proposal.

Australia. House of Representatives.

Hansard, 12 Mar 1981, p. 758.

Australia. House of Representatives. Hansard, 24 Feb 1981, p. 20.

1981

March

Taxation System - Ministerial Statement

In March 1981, the Treasurer, Mr Howard issued a Ministerial Statement to provide the House with an opportunity of debating the present taxation system, and more specifically, detailing reasons for the Government's decision not to introduce a broad-based indirect tax. The Treasurer stated that a multi-stage VAT was quickly rejected because it would have imposed a considerable administrative burden on both taxpayers and collecting authorities. A retail turnover tax would have involved a very extensive licensing system, and the necessity for a significant increase in the number of taxpaying units. The simplest method would be to extend the existing wholesale sales tax to some goods (then exempt) and to impose a tax on selected services.

The Treasurer stated that in deciding whether to broaden the wholesale sales tax system, the Government did not want to increase its reliance on indirect taxation unless it could achieve a noticeable offset in personal tax reductions while being anxious to minimise the inflationary consequences of collecting additional revenue. Detailed projections revealed that these two objectives could not be achieved. Despite the advantages of an increasing reliance on indirect taxes, the Government indicated that it was not prepared to squander the gains made and maintained in the fight against inflation.

The Government would continue its 'uncompromising attack upon tax avoidance.'

Australia, House of Representatives. Hansard, 12 Mar 1981, p. 758.

1983

March

Federal election

In March 1983, the Hawke Labor Government was elected. The election platform included promises to reduce taxes for almost six million Australians, with the greatest tax cuts benefiting those on the lowest incomes, and to reform the tax system, aiming for greater efficiency and equity. During the election campaign and its aftermath, there was considerable public debate and concern about the integrity of the tax system in particular 'Bottom of the Harbour' tax schemes and the growing cash economy.

ALP Policy Speech, Federal Election Campaign Launch. Sydney Opera House Theatre, 16 Feb 1983.

1984

December

Taxation Summit Announced

In October 1984, the Prime Minister, Mr Hawke, announced the staging of a Taxation Summit via a consensus style debate involving wide ranging representation from government, unions, business and community groups.

In November 1984, Mr Hawke announced the Government's nine tax reform principles, including commitments :

• to not increase the overall tax burden
• to provide for personal income tax cuts
• to counter tax avoidance and evasion
• to provide a simpler, fairer and more progressive tax system, not disadvantaging people on welfare benefits, and
• to reduce poverty traps, promoting investment, employment and growth.

Australia. Prime Minister (Bob Hawke). 'Government Taxation Policy'. Statement, 31 Oct 1984.

Australia. Prime Minister (Bob Hawke), ALP Policy Speech, 13 Nov 1984.

1985

June

Draft White Paper

In preparation for a Taxation Summit, submissions were invited and Treasury set about preparing a Draft White Paper. The paper was subsequently released six weeks before the Tax Summit in July 1985.

The Draft White Paper considered :

• income tax cuts through reducing marginal income tax rates
• introduction of new taxes such as the fringe benefits tax and capital gains tax
• introduction of identity cards which would be used to improve the level of voluntary compliance and assist in reducing tax avoidance
• quarantining of negative gearing losses and the restricting of primary production losses
• introducing a tax on gold mining
• abolishing petroleum exploration and primary production rebates
• restricting film industry concessions
• tightening soil and water conservation concessions
• abolishing concessional rebates on superannuation, life insurance, education, property rates and land tax expenses
• replacing the existing medical rebate with a concessional rebate on medical expenses, and
• introducing a foreign tax credit system for the foreign source income Australian residents.

The above amounted to income tax base-broadening measures and modest personal income tax cuts-collectively these initiatives were put forward as Option A.

Further, the White Paper argued strongly against a Wholesale Sales Tax and for its replacement with a retail sales tax on goods and services called a Broad-Based Consumption Tax. Options B & C were extensions of Option A.

Option B involved income tax base-broadening measures, a 5% consumption tax on most goods and services, a 10% wholesale sales tax on cars, wine and those goods in the highest category, and modest personal income tax cuts.

Option C involved income tax base-broadening measures, a 12.5% consumption tax on all goods and services, and major personal income tax cuts.

'Reform of the Australian Tax System'. Draft White Paper, Canberra: AGPS, Jun 1985.

1985

July

Taxation Summit

The Government and Treasury recommended Option C, but it was Option A which gained the ascendancy at the Summit. To many observers, it seemed that the main reasons Option C failed were political, rather than economic.

The ACTU objected to the consumption tax and questioned whether all the pain was worth income tax cuts amounting to an extra $8 per week for workers. Welfare groups were concerned that the proposed goods and services tax compensation arrangements would not adequately protect social welfare recipients. Employer groups did object to the new taxes on the business community but supported the consumption tax.

In the face of strong opposition, the Government was prepared to consider changes to its preferred tax plan. These changes included varying the rate of the consumption tax (proposed 12.5%), exempting food from the proposed consumption tax or providing compensation for the cost of food to low income earners, exempting charities, fuel and building materials. However, despite negotiations with business leaders and unions, no compromises were agreed to. Further difficulties followed when four key Cabinet Ministers decided that they would not support a tax reform package which included a broad-based consumption tax.

In the end no clear consensus could be gained for any one option and so a minimalist approach was ultimately taken, this being Option A.

Warren, Dr N. GST, the long, winding road, Sydney, Institute of Chartered Accountants, 1996.

Grattan, Michelle and Robinson, Paul, 'PM close to food tax deal', The Age, 4 Jul 1985: 2. (Attachment 2)

Bowers, Peter, 'Hawke had no choice but to opt for damage control', The Sydney Morning Herald, 6 Jul 1985, p. 1. (Attachment 3)

1985

September

Statement by the Treasurer

After the Tax Summit, the then Treasurer, Mr Keating announced the Government's tax reform proposals which involved some 22 measures to reform the Australian taxation system. The measures essentially provided income tax cuts and were aimed at improving fairness in the income tax system and sought to reduce tax avoidance. Two of these important measures were the introduction of the Capital Gains Tax and Fringe Benefits Tax. Minor improvements were to be made to the existing wholesale sales tax, and no provision was made for a broadly based consumption tax.

'Reform of the Australian Taxation System', Statement by the Treasurer, Canberra: AGPS, 19 Sep 1985.

Post 1985-1996

Taxation reform under Labor

This decade of taxation reform was characterised by substantial income tax changes pursuant to the Labor Government's taxation reform program where the Income Tax Assessment Act 1936 grew substantially in detail and complexity. The essence of the long standing income tax regime was maintained, but with adjustments made to improve fairness, to reduce tax avoidance, and to increase the size of the tax base by including taxes such as capital gains and fringe benefits tax.

Income Tax legislation after 1985.

1990

March

Federal election

The 1990 federal election focused on family issues generally, taxation being more of a side issue. Following the election, the Opposition Leader Mr Peacock resigned and Dr Hewson was elected Leader of Liberal Party in April 1990, and Leader of the Opposition.

1990

October

Beginnings of Fightback!

With the Liberal and National Party endorsement for a GST, Opposition Leader Dr Hewson and Shadow Treasurer Mr Reith and Access Economics begin work on Fightback!

Power, Julie, 'Nats Get with It : Support Libs on Consumption tax'. Australian Financial Review, 29 Oct 1990, p. 4. (Attachment 4)

1991

November

Release of

Fightback!

Dr Hewson released the Fightback! economic manifesto (some 650 pages) which included as its centrepiece, a Goods and Services Tax. Fightback! however, was an action plan for the first year of a Coalition government, and was therefore much more than a tax reform plan. The tax essence of the proposal was a 15% GST (replacing the Wholesale Sales Tax), a $13 billion dollar personal income tax cut, a $10 billion cut in government expenditure partially offset by increasing other areas, including $3.6 billion in selected government programs on Social Welfare, the abolition of State payroll taxes and substantial cuts in petrol excise duty and proposed schemes for savings. Fightback! also include changes to Medicare, the labour market, to public service delivery as well as the sale of a number of government-owned business.

Fightback! - It's Your Australia, Canberra, Liberal and National Parties, 21 Nov 1991.

Post November 1991

Fightback! discredited

To many observers, Fightback! was a complicated document and was very difficult to communicate to the community. These problems were highlighted in the media where Dr Hewson failed to explain the detail of the tax and it was easy for the Government to attack it. The Mackay Report (p.17) stated that 'Repeatedly, participants in this study referred to the implausibility of the Coalition's attempts to persuade the electorate to adopt a new tax-particularly a tax which seemed complex and unpredictable in its effects.'

The Mackay Report - Keynote - Why did Labor Win ? Mackay Research Pty Ltd. April 1993.

1991

December

Mr Keating succeeded Mr Hawke as Prime Minister.

1992

February

One Nation - response to Fightback!

The One Nation Statement was delivered by Prime Minister Mr Keating which promised that a re-elected Labor Government could deliver the same personal income tax cuts as the Coalition's Fightback! proposal to middle class voters but without the need for a GST. This gave voters a stark choice between a reduced income tax with no GST and a reduced income tax with a GST.

One Nation Statement by the Prime Minister. Canberra: AGPS, 26 Feb 1992.

1992

December

Fightback!

Mark II

Dr Hewson reconsidered Fightback! and relaunched it to make the GST more acceptable to the community. The major provisions were to remove the goods and services tax on food and child care through zero rating and provision for a Rebuild Australia fund for new public works. Changes to Medicare, the $10 billion dollar cut in government expenditure and Jobsback package of labour market reforms remained unchanged.

Fightback! Fairness and Jobs, Canberra, Liberal and National Parties, 18 Dec. 1992.

1993

March

Federal Election

Prime Minister Keating undertook a high profile media campaign against Fightback! Focussing on the electorate's perceived fear of the GST, its permanence and its broader implications for the national lifestyle. Labor defeated the Coalition in what some observers described as the 'unlosable election' by discrediting the GST to the electorate. In analysing reasons for the election outcome, observers noted that groups such as unions, business, social welfare, students, pensioners, and public servants were all affected by Fightback! and were uncertain about its effect.

Transcript, 'Losing the unlosable: How the Liberal Party lost the election', Four Corners, 5 Apr 1993.

Bruer, Mark, 'Food for political thought', The Age, 6 Mar 1993, p. 23.

1993

July

Fightback! Demise

Dr Hewson speaking at a business breakfast in Kalgoorlie before the opening of the West Australian Liberal Party Conference, recommitted the Liberals to the central principles of Fightback!. This statement was attacked by Mr Aldred, then Liberal member for Deakin, Victoria, considered a prominent rebel in the Party. Mr Aldred said 'I think we should dispense with the title Fightback! and with the notion that we have to have a tightly integrated policy.'

Fightback! was also rejected by former Shadow Treasurer, Mr Peter Reith who had retired to the backbench after the election. In a speech to a group of disenchanted Liberal supporters in Melbourne, Mr Reith stated that Fightback! should be consigned to the political graveyard.

Davis, Ian, 'Hewson digs in on Fightback'.

Canberra Times, 25 Jul 1993, p. 1. (Attachment 5)

Millet, Michael, 'FightbackDead and Buried, says Reith', Sydney Morning Herald, 31 Jul 1993, p. 1. (Attachment 6)

1993

November

Fightback! without the GST

Dr Hewson remains committed to the general principles of Fightback! but states that Fightback!, minus the GST, will form the basis for future policy.

Transcript, 'Leader of the Opposition surveys the year'. Lateline, ABC Television, 30 Nov 1993.

1994

April

Fightback! Scrapped

The Shadow Treasurer, Mr Downer says the large spending cuts as outlined in Fightback! will be scrapped.

Dr Hewson declares the Fightback! policy is 'Dead and Buried'.

Kitney, Geoff, 'Big spending cuts dumped by Opposition', Sydney Morning Herald, 12 Apr 1994, p. 1. (Attachment 7)

Tingle, Laura and Stewart, Cameron, 'Hewson pronounces Fightback! manifesto dead and buried', The Australian, 16 Apr 1994, p. 3. (Attachment 8)

1994

May

Mr Downer succeeded Dr Hewson as Leader of the Opposition.

1995

January

Mr Howard succeeded Mr Downer as Leader of the Opposition.

1995

May

GST completely off the political agenda

Mr Howard, Leader of the Opposition, stated that a GST or anything resembling it was no longer Coalition policy... nor will it be policy at any time in the future... it is completely off the political agenda in Australia.

'Howard bans GST forever', The Age, 3 May 1995, p. 5.

1995

September

ATAX Tax Summit

A decade after the Hawke Government's Tax Summit, the University of New South Wales organised a conference in Canberra. The conference-Tax Summit, 10 Years On, A New Agenda-reviewed tax reform over the last decade and examined current issues.

Only one paper examined the issue of whether the indirect tax base extension was off the political agenda. Mr Anderson, a partner of Arthur Andersen, provided a paper which questioned whether the indirect tax base could be extended in the future. He saw that the sales tax was a much maligned tax in Australia and acknowledged that although it had deficiencies it was low in its administrative and compliance costs. A GST which would likely collect more revenue would also increase administrative and compliance costs. Mr Anderson thought that further expansion of traditional indirect tax bases would only exacerbate problems which were already evident throughout the sales tax, excise and State indirect tax bases. A new services tax was possible, but would not come without similar problems. A possible area of expansion lay with business franchise fees although there was uncertainty about their Constitutional validity, which would likely be challenged particularly if such fees were broadened. Overall, the future for indirect tax base extension was not bright. Anderson considered that an extension of the indirect tax base would have adverse consequences for business as governments would continue to concentrate the tax base expansion on business inputs rather than on consumer goods resulting in further problems and reduced competitiveness through higher business input costs.

ATAX Tax Summit -10 years On - A new Agenda, Canberra, Old Parliament House, 18-20 Sep 1985.

Phillip Anderson, 'Has Indirect tax Base Extension Got A Future?', Paper presented to the ATAX Tax Summit. Canberra, 19 Sep 1985.

1996

March

Federal election

The GST was not an election issue. The Howard-Fischer Coalition came into government with an election platform promising no new taxes or increased taxes.

For more than a year the Coalition Government dismissed tax reform as being on the political agenda, emphasising in particular, that there would be no GST in its first term of Government.

Australia. Shadow Treasurer (Peter Costello), 'Meeting our Commitments' Press Release, 15 Feb 1996, Liberal Policy Launch Statement, 18 Feb 1996.

Henderson, Ian, 'Howard resists GST pressure', Australian, 11 Nov 1996, p. 4.

Ongoing since 1996

May

Community calls for taxation reform

Extensive media comment calling for taxation reform by State Premiers and business and social welfare peak bodies, including calls for a taxation summit and an inquiry similar to the Australian Financial System Inquiry (Wallis inquiry).

In July 1996, the Victorian Premier, Mr Kennett urged the Prime Minister, Mr Howard to embrace a debate on tax, warning Australia had only a two-year time frame for reform.

Various newspaper reports including Field, Nina and Grattan, Michelle 'Pressure mounts for tax reform', Australian Financial Review, 11 Nov 1996, p. 1. (Attachment 9)

'Two Years for tax reform, says Kennett', Canberra Times, 20 Jul 1996, p. 2. (Attachment 10)

1996

July

Audit Commission Chairman recommends tax review

Professor Officer, National Commission of Audit Chairman urged a review of the taxation system when speaking at an Australian Society of Certified Practising Accountants luncheon on the Commission of Audit report.

Davis, Ian, 'Audit Commission chief urges tax system reform', Canberra Times, 25 Jul 1996, p. 2. (Attachment 11)

1996

July

Productivity Commission reform agenda

The Productivity Commission's first report Stocktake of Progress in Micro-economic Reform supported the introductions of a broad-based consumption tax and radical reform of Federal-State finances.

Stocktake of Progress in Micro-economic Reform, Industry Commission, Canberra, AGPS, July 1996.

Ellis, Stephen, 'Radical Reform Program', Australian Financial Review, 19 Jul 1996, p. 1. (Attachment 12)

1996

October

ACCI/ACOSS National Tax Reform Summit, Correcting the Balance

This joint conference of business and social welfare involved over 200 peak body representatives from diverse sectors of the community; Parliamentarians and public servants were not invited. The Summit was convened to encourage broad community discussion and increase awareness of the need for fundamental tax reform in Australia.

The Summit acknowledged that broad based reform was essential to address serious deficiencies in the structure of the current tax system, and that such reform must have wide ranging community support and must be designed to ensure the long term integrity of the tax system. Seven criteria for tax reform were agreed-equity, economic efficiency, revenue adequacy, simplicity, transparency, cost and tax avoidance. It was a common view that reform of indirect taxes and income and asset taxes should be approached simultaneously.

The Summit strongly supported the rationalisation of the indirect tax structure-either through a broadening of the existing indirect tax base with exemptions for business inputs, or preferably, through a more uniform, broadly based consumption tax applying to all goods and services, to replace both the wholesale sales tax and many of the existing inevitable and distorting State taxes (such as Financial Institutions Duty, Debits Tax, Payroll Tax, Franchise Taxes). In this context the Summit expressed strong support for the removal of indirect taxes from exports because they hindered Australia's international competitiveness. There was no detailed discussion of a particular tax rate, but there was concern that a tax rate of 15% would pose too many problems for adequate compensation of the needy and those on social security. Throughout the conference, emphasis was placed on the need to protect those on social security and those on low wages from any adverse changes.

The principle of reformed Commonwealth-State tax sharing arrangements allow the revenue base of States and local authorities to better match their spending responsibilities was strongly supported. This should be achieved by a fixed and well understood methodology for the sharing of taxes collected by the Commonwealth.

Harrison, John, The National Tax Reform Summit: a Summary of Outcomes, Research Note No. 10 1996-97, Canberra, Parliamentary Library.

1996

November

Small business deregulation taskforce recommends fewer tax rates in the wholesale sales tax system

The Small Business Deregulation Taskforce report recommended that the number of wholesale sales tax rates be reduced at the same time as some exempt goods have sales tax applied to them, thereby satisfying the 'revenue neutral' criteria.

Field, Nina, 'Time for business', Small Business Deregulation Taskforce Report, Canberra, AGPS, Nov 1996.

'Call for radical tax surgery in small business report', Australian Financial Review, 1 Nov 1996, p. 2. (Attachment 13)

1996

December

Wallis inquiry

In December 1996, the Wallis inquiry into financial services conceded that recommendations on tax reform were out of bounds for the inquiry although it had received submissions calling for such reforms. However, the issue of taxation reform was noted by the inquiry to be of significant concern in improving Australia's competitiveness.

Australian Financial System Inquiry, Final Report, (Wallis Report) Canberra, AGPS, March 1997.

Kirby, James and Kerin, John, 'Wallis backs away from tax reforms', Australian, 13 Dec 1996, p. 23.

1997

March

JCPA Report No 348 - Tax Law Improvement Project terms of reference too narrow

In November 1993, the Joint Statutory Committee of Public Accounts in the Commonwealth Parliament published a report recommending the setting up of a broadly based Task Force to rewrite the income tax law. In the following month, the Government announced the Tax Law Improvement Project (TLIP). The purpose of the project was to restructure, renumber and rewrite the income tax law. The terms of reference allow the Project team to consider rewriting the existing tax law, but not major policy changes. There have been ongoing criticisms of the TLIP's terms of reference being too narrow, raised in particular to the Joint Committee of Public Accounts. JCPA Report Nos 343 & 345 supported the project's terms of reference. However, in JCPA Report No 348, tabled in March 1997, it was considered that the Tax Law Improvement Project review did not go far enough and it called upon the Government to give TLIP a wider mandate. Given that the project's brief was to review income tax, there has been no consideration of a consumption tax.

JCPA Report No. 348, 'An Advisory Report on the Tax Law Improvement Bill 1996', Canberra: AGPS, Mar 1997.

1997

May

Prime Minister put taxation reform back on the political agenda

At a Liberal Party function in Sydney, the Prime Minister, Mr Howard took steps to address the growing momentum of the tax reform debate. He stated that any taxation reform proposal would have to pass three tests :

• it must generate more employment
• it must help boost exports, and
• it must generate higher living standards, encourage risk-taking and provide greater economic incentives.

In June 1997, the Prime Minister received endorsement for taxation reform from a national meeting of the Liberal Party, Parliament House, Canberra.

Dwyer, Michael, 'PM's tax reform rules', Australian Financial Review, 26 May 1997, p. 1.

Peake, Ross, 'PM gets endorsement for tax reform', Canberra Times, 18 Jun 1997, p. 3.

1997

June

GST raised profile in taxation reform debate

A GST was given a higher profile in the taxation reform debate. The Treasurer, Mr Costello, blamed the taxation system for costing jobs and suggested that the introduction of a broadly-based indirect tax would make tax avoidance harder.

The Opposition indicated its position as being anti-GST in that the tax does nothing to create jobs nor help family incomes.

'GST the answer to tax dodgers', Australian Financial Review, 4 Jun 1997, p. 3.

Transcript, 'Treasurer explains his arguments for tax reform', AM, ABC Radio Program, 17 Jun 1997. (Attachment 14)

Short, John and Henderson, Ian, 'Costello links jobs to tax reform', Australian, 17 Jun 1997, p. 2.

Leader of the Opposition, Transcript of Doorstop Interview, Parliament House Canberra, 17 Jun 1997. (Attachment 15)

Chamberlin, Paul and Das, Sushila, 'Labor, Coalition remain at odds on tax', The Age, 18 June 1997, p. 4.

1997

August

High court decision on business franchise fees. pressure for GST

A series of High Court decisions have defined excise duties to be any levy imposed upon goods at any point in the production and distribution chain. Given that section 90 of the Constitution vests exclusive power to the Commonwealth to impose duties of customs and excise, this interpretation has effectively prevented the States form imposing a tax on goods. The States have attempted to find ways of levying consumption taxes which were structured in such a way as to circumvent the High Court's definition of an excise. By 1995-96, business franchise fees were raising $4.9 billion, representing just over 16 per cent of total State and Territory taxation revenue. The constitutional validity of business franchise fees on tobacco was challenged through the High Court. The decision has effectively declared all current State business franchise fees to be constitutionally invalid. As a stop gap measure, the Commonwealth has agreed to impose its own tax on petrol, alcohol and tobacco, the proceeds of which will be paid back to the States. The invalidation of this substantial source of State revenue is another pressure for further review of both Federal-State financial relations and the structure of taxation.

James, Denis, Federalism up in Smoke? The High Court Decision on State Tobacco Tax, Current Issues Brief No. 1 1997-98, Dept of the Parliamentary Library, Canberra.

Walter Hammond and Asscoiates Vs. the State of NSW and Ha and anor Vs. the State of NSW and others

1997

August

Cabinet agrees to pursue tax reform

Cabinet decides that a taskforce of Government officials will be set up to develop tax reform options and will report to the Prime Minister in 3 months. The Prime Minister, Mr Howard's thinking is in terms of a tax reform package that reduces personal income tax, and a broad-based indirect tax that replaces some or all of the existing indirect taxes.

Prime Minister, John Howard, 'Taxation Reform'. Press release, 13 Aug 1997 (Attachment 16)

The Prime Minister has also flagged the prospect of a major overhaul of Commonwealth-State financial relations that could significantly alter the States' revenue sources, as well as shift responsibility for significant spending programs between the two tiers of government. The Prime Minister has called a special meeting of all Premiers to discuss Commonwealth-State financial relations and has refused to rule out any options States could put to his government.

John Short 'GST : Howard's biggest gamble, Election battlelines drawn on tax reform', Australian, 14 Aug 1997, p. 1.

1997

October

Treasurer announces formation of a Tax Reform Consultative Task Force

The Treasurer, Peter Costello, establishes a Government Tax Reform Consultative Task Force under the chairmanship of Senator Brian Gibson to take submissions from the public on fundamental tax reform to set Australia up for the 21^st Century.

Peter Costello, Treasurer, Press conference[Tax Consultative Task force, tax reform], 23 October 1997, p1-5.

1998

July

Cabinet endorses tax reforms

On 28 July, under the utmost conditions of secrecy, members of the Cabinet met in Sydney to examine for the first time details of a tax reform package prepared by the special Treasury tax task force. Treasurer Peter Costello emerged at the end of the day to confirm Cabinet's endorsement of the Tax reform package.

Pilita Clark,'The oath of secrecy behind Howard's 20-year quest', Sydney Morning Herald, 15 August 1998, pp.1,10.

1998

August

Coalition Government releases its tax package

The Government releases its tax package Tax reform: not a new tax, a new tax system. John Howard hails his new tax system as the most significant overhaul in almost 100 years. The proposed reforms include a 10% GST and the promise of income tax cuts. Further details, Tax reform: Fact sheets were released on the Government's Website : http;//www.taxreform.gov.au.

Howard, John, 'A charter for the 21^st century' [edited transcript of the Prime Minister's Press Conference] Age, 14 August 1998, p. 8

John Ralph appointed to head review of business taxes

The Treasurer has appointed Mr John Ralph, a prominent Melbourne businessman to head the government's review into businesses taxes. 'A key aspect of the review will be the prospect of cutting the company tax rate from 36% to 30%' Mr Costello said. The committee is due to present its final report on 31 March 1999.

Phillip Hudson, 'Ralph named to head tax probe', Age, 15 August, 1998 p.D2

Federal election

Called

Prime Minister calls an election for 3 October, stating 'the main issue in this election will be that of economic competence ... In the area of taxation we have a plan for the nation's future.'

Prime Minister the Hon. John Howard MP, Press Conference, Prime Minister's courtyard, Parliament House, 30 August 1998.

Coalition retains government despite the Labor Party winning a majority of votes. John Howard declares his win a mandate for tax reform. However, Democrats leader, Meg Lees, whose party holds the balance of power in the Senate, reaffirms her rejection of a GST on food.

Craig Johnstone, 'GST countdown :Howard claims victory creates tax mandate', Courier Mail, 5 October 1998, p. 1

1998

October

Democrat leader looks at compromise over the GST

The leader of the Australian Democrats, Senator Meg Lees, seeks greater compensation for low income earners on the introduction of the GST. This insistence leaves open possible negotiations between the Democrats and the Government on the introduction of the GST.

Ian Davis, 'Lees comments sharpen focus on compensation', Australian Financial Review, 16 October 1998, p. 4

Senator Harradine predicts closer scrutiny of the GST

Re-elected independent Senator Harradine forecasts the GST will be split up for scrutiny among many parliamentary committees.

Andrew Darby, 'Victorious Harradine's drawn-out GST plan', Age, 24 October 1998, p. 13.

Review of Business Taxation's final report deadline extended

The head of the Review into Business Taxation announces that the Treasurer has extended the Government's deadline for the review's final report from 31 March 1999 to 30 June 1999. He also flags the release of three discussion papers examining various principles applying to the reform process.

John Ralph AO, 'Review of the Business Taxation', Press release, 27 October 1998.

Government sets up the Tax Consultative Committee

The Treasurer, Mr Costello, appoints Mr David Vos, to chair the Tax Consultative Committee set up to examine in greater detail, the scope of the four GST-free areas, i.e. health, education, religious services and the non-commercial activities of charities.

Louise Dodson, 'New GST man raps time frame', Australian Financial Review, 28 October, 1998,p. 4.

Independent Senator Mal Colston signals support for the Government's tax reforms

Senator Colston indicates his support for the Government's tax reforms saying 'I believe that it [the govt] has a mandate [to introduce a GST] but I would want to see the actual legislation to make sure that it is consistent'.

Steve Lewis, 'Colston signals support for Govt's tax package', Australian Financial Review, 30 October 1998, p. 3

1998

November

Treasury papers analysing the impact of the GST released

Treasury releases secret analysis of the Government's tax reforms. It confirms earlier criticism of the tax reform package that the GST will impact more heavily on the lower income groups and demonstrates that the Government's assumption of a 1.9 per cent price rise for all families will not adequately compensate the lower income groups.

Tim Colebatch,'No surprises in GST analysis', Age, 12 November 1998, p. A6.

Tax Consultative Committee releases its report

Treasurer, Peter Costello, announced that he had received the recommendations of the Tax Consultative Committee, stating 'The Committee has provided the Government with a workable and comprehensive framework for applying the GST to the areas under scrutiny.'

Treasurer, 'Tax Consultative Committee Recommendations', Press Release, 13 November 1998.

Special Premiers Conference called to discuss revenue sharing under the GST

Premiers agree to the introduction of the GST which will result in a fundamental change to federal-state relations. The Prime Minister described the outcome as successful stating 'The Treasurer and I regard this as an outstandingly successful meeting...Despite the fact that the Labor states registered their in-principle objection to the GST, there was no evidence that any of them wanted to be excluded."

Ross Peake, 'Premiers say yes to GST', Canberra Times, 14 November 1998 p. 1.

Business Taxation Review Committee releases its first discussion paper

The Review of Business Taxation Committee released its first discussion paper, A Strong Foundation, which proposes goals for tax reform and new systems of policy making, legislation and administration of the business tax system.

Richard Salmons, 'The year of the tax reform debate', Age, 24 November 1998, p. B1

Government agrees to a Senate Inquiry into the GST

On 25 November 1998, as a result of negotiations between the Government and the Australian Democrats, the Senate referred issues relating to the GST and a new tax system to a Senate Select Committee with a Labor chair. The committee will undertake a two stage inquiry. Stage one will test the assumptions and modelling of the Treasury and Stage two will, using three existing References committees, allow wide community input into the effects of the new tax system and any legislation on different portfolio areas. Reporting date for the final report is 19 April 1999.

Louise Dodson and Steve Lewis, 'Democrats force GST backdown', Australian Financial Review, 25 November 1998, pp. 1, 8

1998

December

GST bills pass the House of Representatives

The 17 GST bills passes their final stage in the House of Representatives thereby setting the GST on its path to becoming a reality.

James Grubel, 'Coalition celebrates as tax passes first stage,' AAP, 10 December 1998.

Review of Business Taxation releases its second discussion paper

The second paper released by the Review of Business Taxation, 'An International Perspective', compares the international business tax regimes overseas with Australia's. It found that Australian business pays a relatively high effective rate of tax compared with its international counterparts.

Sean Aylmer, 'Regime not too taxing overall', Sydney Morning Herald, 24 December, 1998, p. 21

1999

February

First report of the Senate Inquiry into Tax Reform released

The Senate Select Committee on a New Tax System releases its first report on 18 February 1999. This report focuses on a preliminary analysis of the economic modelling and projections underpinning the Coalition's tax reform package. The Labor, Coalition, Democrat and Green Senators presented their own conclusions in the report.

Senate Select Committee on a New Tax System, 'First report',February 1999.

The Review of Business Taxation releases its final discussion paper

The two volume discussion paper, A Platform for Consultation, was released by the Review of Business Taxation on 22 February. Options in the report include consideration of major concessions for capital gains tax, effectively abolish the fringe benefits tax and reduce the corporate rate of tax to 30 per cent.

Louise Dodson, and Steve Lewis, 'The Ralph tax revolution', Australian Financial Review,23 February 1999, pp.1, 11.