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The Hard Politics Of The GST

After a smooth start to the GST last Saturday, the real politics of the taxation reforms are beginning to take shape.

The political fallout is hard to predict. The ACCC has been inundated with questions and complaints since business opened on Monday, but public acceptance of the GST has been evident at the retail level.

In the coming weeks, employees all around Australia will receive their weekly, fortnightly or monthly pay packets and it is then that the real political contest will take shape as people weigh up their take-home pay gains against the losses of the GST.

Over the ensuing months, electricity, gas, telephone and credit card bills will also show the effect of the GST.

In October/November, businesses will need to file the first of their 3-monthly activity reports and remit their GST collections to the Taxation Department. Many businesses will begin to experience cash-flow problems at this time.

With Prime Minister Howard and his entourage in London for the centenary of Federation celebrations, Opposition leader Kim Beazley is coming under increasing attack over his plans for a “roll back” of the GST. The ALP appears to have invested heavily in an election campaign that focuses on the GST and not everyone in the party is happy about this.

Text of article by Alan Ramsey in the Sydney Morning Herald, July 5, 2000.

A coward’s approach to GST

So what is Labor’s policy on the new tax? Beazley is not saying, says Alan Ramsey.

Did you notice Kim Beazley gave Australians 10 solid reasons two nights ago why John Howard’s goods and services tax is a shocker, but no reason at all why Labor intends keeping the tax if it wins the next election?

It’s true. All the Labor leader’s seven-minute speech on ABC TV did on Monday night was argue why, in the Opposition’s opinion, the tax will be such a burden on the Australian economy and on ordinary Australians. Yet not once did he say why a Labor government would not get rid of it.

This is the clever corner Labor has painted itself into. It desperately wanted the tax to create chaos and confusion last weekend so Beazley and his deputy, Simon Crean, could say they told us so. It similarly wants voter fear and loathing to accelerate in the months ahead so the GST becomes the dominant election issue.

But Beazley is caught in the bind that while he insists there is nothing good about the new tax, he does not have the courage to say Labor will abolish it and return to the old wholesale sales tax regime the GST replaced five days ago, or some new system altogether.

Instead, despite a litany of reasons on Monday night why the GST, in Beazley’s view, is neither good for the nation nor for people (“I want you to know why we in the Labor Party so strongly oppose this tax”), all he pledged was that voters would be offered an alternative Labor version of the very same GST – his infamous “rollback” version.

In reality, it’s now clear that it’s not the GST as such that Labor doesn’t like, irrespective of what Beazley and Crean say publicly. It’s the Howard Government’s GST – or “this GST”, as Beazley three times referred to it in his Monday broadcast – that Labor opposes. Labor’s own GST will be the “fairer and simpler” model Beazley pledges once the Howard GST is “rolled back” in health and education and to “lift the burden on the needy”.

How Labor will do this – and pay for it – we have yet to hear.

In the meantime, know that the GST is here to stay, whoever you vote for next election. That’s the real message from Beazley’s broadcast. He would have got more political credit if he’d been candid enough to say so. Labor has neither the guts to abandon the GST nor the policy wit to craft its alternative.

ABC’s radio’s Philip Clark nailed him on 702 yesterday.

Clark: “I can muster as many arguments against the GST as anybody. If you don’t like it, pledge to repeal it. But you won’t. We’re going to have the GST under a Labor government in the same way we’ve got it under a Howard Government.”

Beazley: “No, you’re not.” Clark: “Why not?”

Beazley: “Because we’re going to roll the GST back.”

Clark: “But you’re not saying you’ll repeal it!”

Beazley: “We’re going to roll it back.”

Clark: “Yeah, well, roll back yes, abolish no. We’re going to have the GST regardless of what colour our politics are.”

Beazley: “You’re not going to have the GST in the form in which it is at the moment. We’re going to make changes.”

Clark: “But in bull terms, Mr Beazley’s promising you a fairer GST, or so he says. Mr Howard’s promising you his GST. That’s the difference, isn’t it? I mean, the ordinary taxpayer might say, ‘Well, what’s the difference?’ ”

Beazley: “Mr Beazley is promising you rollback. And he’s going to announce it in plenty of time for the next election for you to make a judgment whether or not you want it.”

So there’s your election choice: Howard’s GST or Beazley’s GST.

At least under Clark’s prodding Beazley tried to justify Labor’s political cowardice. People had gone through “massive change” involving “billions” in GST compliance costs, he said, and “we’re not about throwing them to the wolves and having this country endlessly revolving on a pinhead when it comes to debating issues critical to the nation’s future”.

How truly thoughtful. Beazley concluded: “The most sensible approach … now is to be in a posture that advocates a rollback. That’s the most sensible posture you can adopt.”

What, I wonder, would you call Kim’s leadership “posture”? The humbug posture? The gutless-wonder posture? The pragmatist’s posture? Even the no-ideas-whatever posture?

Think about it.

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Malcolm Farnsworth
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