The Guardian February 17, 1999


Editorial:
Democrats missing the main point

The campaign being waged by the Australian Democrats and supported by a 
number of non-government organisations to exempt food and tourism from a 
future GST misses the main point of the GST.

The aim of a GST is to shift the payment of taxation away from corporations 
and high income earners onto the shoulders of middle and low income 
earners. In fact every man, woman and child will be become taxpayers. 
Thousands who pay no tax at all or only a small amount arising from 
Wholesale Sales Tax will become taxpayers.

Although the exemption of food would be a welcome step it still allows the 
Government to establish a GST on all other goods and services. The 
Democrats and others who go along with this policy should wake up to the 
fact that there is no such thing as a fair GST. IT SHOULD BE REJECTED AS A 
MATTER OF PRINCIPLE.

It has become common policy for governments to offer some sweeteners to 
bribe an otherwise unwilling population to accept wrong economic policies. 
This was done by the Federal Government to achieve the privatisation of one 
third of Telstra. A billion dollar slush fund was set up to bribe 
environmentalists to accept privatisation. Many did! Other concessions were 
given to Senator Harradine to secure his vote. It worked!

The NSW Liberal Party is doing the same thing by offering paltry cash 
handouts or shares as a bribe to voters to accept the Liberal's proposed 
sell-off of the State Electricity network. The exclusion of food does not 
make a GST acceptable.

Once a GST is established it will be extremely hard to throw it out later. 
It can be amended, the rate of the GST increased as has happened in most 
other countries which have a GST or the range of goods and services taxed 
can be extended.

The removal of food items may be ultimately accepted by the Government to 
ensure that the PRINCIPLE OF A GST is established. An argument put forward 
repeatedly by the Government is that the tax system is a shambles and must 
be reformed. In effect, the Democrats have accepted this spurious argument. 
The PAYE system is a PROGRESSIVE tax system while a GST is REGRESSIVE in 
that it does not take into account differences in incomes.

The main problem with the existing tax system is that governments have made 
concession after concession to big corporations to minimise their tax 
payments. In some cases they avoid paying tax altogether. In the numerous 
Press Releases of the Democrats in their campaign to have food exempt from 
a GST there is no mention of this aspect. Yet, this is the main measure 
that must be taken to "reform" the present tax system.

A GST will allow governments to continue the process of giving more 
concessions to corporations and this is how shifting taxes to what we spend 
rather than what we earn will work out.

Last year a leading Sydney newspaper announced that Consolidated Press 
Holdings (Kerry Packer) made profits of $614.53 million over the two years 
1997-1998 but did not pay a single cent in tax. This was achieved by 
various tax dodges such as franking credits, non-assessable income and 
future income tax benefits.

Kerry Packer is not on his own. Many of the multi-national corporations do 
not pay any tax either. They use a variety of dodges provided by compliant 
governments. They hide their incomes in tax havens like the Cayman Islands, 
by transfer pricing, forcing governments to give them tax breaks by playing 
off one government against another to name just a few. They employ top 
accountants to avoid their tax obligations. They travel around the world 
first class, stop at five star hotels, drive Mercedes-Benz and hold 
luxurious parties. They support the Howard Government and are fully in 
support of a GST so that you and I pay for their shameful greed.

Wake up Australian Democrats! If a GST is introduced even with the 
exclusion of food items the big corporations and Howard will have chalked 
up a victory.
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