Australian Budget as expected

Press, 20 August 1981, Page 22

Australian Budget as expected

The full impact of the Budget sank home to Australians yesterday with the realisation that just about everything sold. in Australia, .'with the exception. of food, will cost more. .; >•

For not only has there been a modest 2.5 per cent increase in sales tax but it has been extended to a wide range of other, goods, and also various “anomalies” have been corrected. To correct these anomalies the Treasurer (Mr J. Howard) has placed a sales tax of between 17.5 per cent and 30 per cent on some items that were previously exempt. Television set prices will be increased by a 30 per cent sales tax on television picture tubes; video tape recorders, previously taxed at 15 per cent, will now be taxed at 30 per cent; sports goods and games attract a 17.5 per cent sales tax (previously 2.5 per cent), as do pleasure boats.

Even dog soaps and other items for household pets did not miss out, attracting a new 17.5 per cent sales tax. From January there is also to be indirect' tax on clothing, footwear, soft-furn-ishings and other items, previously exempt.

Australians had expected a tough, no frills Budget and that was what Mr Howard gave them on Tuesday night. Mr Howard announced a

2.5 per cent increase in sales tax for a Wide range of goods, a doubling, of the overseas departure tax, no reduction in personal income tax, and only a few large families to benefit,from increases in family allowances.

The Treasurer had little good news to deliver on inflation, employment or interest rates — with unemployment likely to remain at around current levels, inflation predicted to be 10.75 per cent this year (compared with 8.8 per cent last year) and interest rates unlikely to fall.

For the consumer the only light relief came with no

increase in excise duty on cigarettes, wine or beer.

But the "2.5 per cent sales tax, which took effect immediately; will also now apply from January 1 to clothing,' furnishings, books and footwear, all items previously exempt.

The new imposts come on top of recent rises in interest rates for home buyers and new higher health insurance charges from next month. The “Sydney Sun” pointed out that “added to the wage earners’ woes is the knowledge that Government receipts from income tax this year will leap by almost 19 per cent because of wage rises and people moving into higher tax brackets.” Winners out of the Budget have been families with more than two children, with family allowances up 50 per cent for the third and subsequent children, but this only affects a quarter of families. One cynical comment in the “Melbourne Age” was that Mr Howard’s latest Budget was “splendid for harddrinking; hard-smoking, crippled Aboriginal pensioners living in rented accommodation with five children?’ The Australian Democrats, who from this month hold the balance of power in Australia’s Upper House, the Senate, have threatened to stop increased Budget sales

taxes on building materials (which push up home costs), shoes and clothing. This was announced by the party’s deputy leader (Senator Colin Mason) but party leader Senator Don Chipp has promised that the party will not block supply. The Prime Minister (Mr Fraser) said yesterday that he was confident that the Budget would pass through the Senate.

The over-all increase in taxation, without any compensating decrease in personal tax rates, may lead to a wages push by unions. The president of the Australian Council of Trade Unions (Mr Cliff Dolan) said that the Budget had done nothing to head off current wage claims, and would spark another wages push later this year when the tax increases started to bite into people’s pockets.

The A.C.T.U. executive was now likely to recommend. that unions begin an across-the-board campaign for a $2O a week pay rise. A leading trade unionist, Victorian secretary of the Amalgamated Metal Workers and Shipwrights’ Union, Mr John Halfpenny, said Mr Howard’s financial moves would “lead to a massive wage explosion ‘which will blow the Budget philosophy apart.” ■