Panel debates $100B tax bill

Press, 21 July 1982, Page 9

Panel debates $100B tax bill

NZPA-Reuter Washington

In a bid to control rising Budget deficits, the United States Senate yesterday began debate on the biggest tax rise in American history which would raise nearly SUSIOO billion over three years.

The chairman of the taxwriting committee, Robert Dole (Rep., Kansas) told the Senate that it had little choice but to raise revenues if the deficit were to be reduced.

President Ronald Reagan urged the Senate to pass the tax bill when he spoke at a rally in support of a Constitutional amendment which would make it more difficult for Congress to adopt a Budget deficit.

Mr = Reagan said that the Federal Government must stop "credit card spending." “No more than a thin wall of wavering will-power stands between us and ruin by red ink ... Balancing the Budget is a little like protecting your virtue — you just have to learn to say ’no - ,” he said.

“It's only by reducing tax rates and slowing price increases that Americans can finally have more money to spend, save and help the economy grow. "Some of us think the American people are tired of empty promises and want an end to .government credit card spending.” The amendment requires approval by-the Senate and the House of Representatives

and by three-quarters of the 50 states.

Congress rarely has approved a big tax increase in an election year, but the Senate’s Republican leader, Howard Baker, of Tennessee, said that he expected it would clear the Senate this week. The House Ways and Means Committee will meet in camera tomorrow to write its version of the tax.

The tax bill will not repeal the three-year income tax cut enacted last year but will raise other taxes on businesses and individuals. It also would cut about SUSI7B in Federal spending for Medicare, unemployment insurance, and welfare.

Supporters have argued that the extra taxes and spending cuts were essential

since the deficit under the Budget plan approved by Congress earlier this year was projected at well over SIOOB.

Also yesterday the American central bank, the Federal Reserve Board, has reduced • its principal lending rate to 11.5 per cent in a move that could bring cuts in high interest rates which have worried Washington's allies: The decision to cut the discount rate from 12 per cent is also likely to deflect complaints that the central bank's monetary policies are holding up economic recovery.

. The discount, or bank rate is what the Federal Reserve charges commercial banks for direct loans.