The Guardian February 16, 2000


Editorial:
Out with the GST

It did not take long for top government economic gurus to condemn trade 
union plans to demand wage rises to compensate for the price increases 
which are already flowing from the GST.

Ted Evans, the Howard Government's Treasury Secretary told a Senate Inquiry 
that "There is no argument for wages to be adjusted in response to the tax 
package." The Governor of the Reserve Bank, Ian Macfarlane was equally 
opposed claiming that a "wage break-out" could threaten economic expansion.

Their views will undoubtedly be echoed and implemented by Costello, Howard 
and Peter Reith in their opposition to workers winning any compensation for 
the price rises.

Ian Macfarlane goes even further and is already blaming workers' wage 
increases for a future downturn in the economic situation.

The Government and others claim that the reduction in PAYE tax rates to 
come into effect together with the GST on July 1 this year will be adequate 
compensation.

They have come to believe their own lies  that the overall price 
increases to flow from the GST will be no more than 2.75 per cent. While 
wholesale sales tax will be discontinued when the GST comes in fully, this 
is levied on only some goods. Not a single service has a sales tax applied 
to it but almost all services will suffer a GST levy in the future. They 
ignore the fact that when a 10 per cent GST was introduced in New Zealand 
prices went up by 8.5 per cent.

Another factor that will lead inevitably to price increases is the recent 
rise in interest rates. Banks immediately put up their home mortgage rates 
and the interest rise will flow through the whole of the economy as time 
goes on.

When Ted Evans and Ian Macfarlane tell workers that they should not go for 
wage increases they are really saying that workers should suffer in silence 
and meekly accept the fact that the combined effects of the GST and 
interest rate rises will significantly lower workers' living standards.

Not only are the claims of trade unions justified but also a wage policy in 
the present situation should be formulated by the ACTU with all unions 
launching an Australia-wide wages campaign.

The assertion by Ian Macfarlane that wage increases would jeopardise the 
Australian economy should be flatly rejected. It is the usual cry of 
conservative governments  it is never the right time for a wage increase 
for workers!

For years workers wages have been restrained. At the time of the 
introduction of superannuation, the whole trade union movement gave up a 
wage claim. Many trade unions were restrained during the Accord period. 
Recently, the textile workers employed by National Textiles actually 
forewent a wage rise to "save the company". All they got in return was the 
sack and the loss of their entitlements while the company management walked 
away with large payouts.

But it is not only a question of winning compensation in one way or another 
for the GST attack on workers' living standards. The whole tax policy of 
the Government needs to be rejected. Its single aim is to benefit big 
business while making workers, low-income earners and pensioners pay.

Just consider these facts. Prices and interest rates are up. More money 
will be taken out of the pockets of wage earners and pensioners. Many low-
income earners and pensioners who did not pay tax will be paying as much 
GST in the dollar as a millionaire, on a higher percentage of their income, 
while the millionaire is compensated with tax cuts.

At the same time the cut by half of the capital gains tax will pour 
millions into the pockets of shareholders and property speculators. These 
are the people who benefited from the reduction of the official company tax 
rate from 47 to 36 cents in the dollar a few years ago and can now look 
forward to a further reduction to 30 cents by 2002. Nothing is being done 
to close the tax loopholes by which most companies pay nothing like 30 per 
cent even now and many don't pay any tax at all!

It is downright robbery of the "have-nots" for the benefit of the "haves".

We recommend that the trade union movement and the Labor Party should also 
demand that the GST legislation be repealed and a new tax policy be 
implemented which will really benefit those who the Howard Government and 
the corporations are squeezing dry.
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