Australia Turns To Indirect Taxes

Press, Volume CX, Issue 32381, 21 August 1970, Page 10

Australia Turns To Indirect Taxes

In his first Budget the new Federal Treasurer (Mr Bury) has gone further than his predecessors in Australia, or his counterparts in New Zealand, in switching from direct to indirect taxation. It is a change which is likely to be carried further in both countries. Faced with a buoyant economy in which wages and prices are rising rapidly, Mr Bury has lowered personal tax rates for all except the highest incomes, but has recouped this loss of revenue from higher taxes on company profits, cigarettes, petrol, wines, and some consumer goods, and from higher post and telegraph charges. Australians in the “ upper middle ” range of incomes—between $5OOO and $lO,OOO a year—will fare best under the new tax system. For those on lower incomes the increases in indirect taxes seem likely to cancel out the relief gained from the lower income tax Beneficiaries under various social service schemes have fared worst of all. Pensioners will receive 50 cents more each week, the smallest increase for some years, and hardly enough to compensate for the inflation of the last 12 months. A married couple on the age benefit will now receive $13.75 each. Recent surveys by state and university groups have indicated that 10 per cent of Australians live near or below the poverty line; for these people, amid the general affluence, the Budget offers almost no relief.

Mr Bury has done something to help woolgrowers, who have had to face the consequences of

falling prices and serious drought in parts of eastern Australia for the last two years. More money is voted for wool promotion and research; and although the Treasurer has said that assistance to the wool industry Is “ short term ”, it is likely to become permanent, just as subsidies to dairy and wheat farmers have lost the “ temporary ” status originally assigned to them. Mr Bury could hardly ignore the financial problems of rural industries; farmers’ complaints could not be ignored without inviting the danger of the Country Party’s withdrawing from the Liberal-Country coalition which forms the Federal Government. It remains to be seen whether Mr Bury’s $3O million assistance to the woolgrowers goes far enough. The industry has already said it does not.

Wages and prices are on average about 25 per cent higher in Australia than in New Zealand, and this Budget will widen the gap. Some New Zealand manufactures should now be better placed to compete on the Australian market Australia could well afford to buy more from this country. Last year it had an over-all surplus of $4OO million in its overseas trade transactions, and this should increase substantially in the present financial year. Some Australian financial commentators have suggested that if the boom continues it will not be long before international financial institutions such as the International Monetary Fund will put pressure on the Australian Government to revalue its currency or to reduce some of the country’s high tariff barriers against imports; either would assist New'Zealand’s exports to Australia.