Tax summit a mistake?

Press, 6 July 1985, Page 8

Tax summit a mistake?

By

BRUCE JONES,

AAP correspondent Canberra The tax summit conference in the end has been shown to be what Mr Hawke trenchantly denied it would be since he first suggested it during the last election campaign — a whopping great big mistake. Based on what he and the Federal Treasurer, Paul Keating, were saying during their intense pre-summit conference selling. campaign, it has left the Government with a “second best” package which, in spite of its changes, may prove just as hard to sell to a suspicious public. Another result has been been powerful, vested interests in the shape of the business and farming communities, hurt by their treatment, are now ranged against the Government and will almost certainly be working to put the Coalition in the Treasury benches by 1987. The summit talks provided a focus for the biggest demonstration Canberra has seen when more than 25,000 angry farmers converged on the capital to demand a “fair go”, and left feeling they had not gained it. Mr Hawke’s promise of Budget measures to ease farm costs failed to meet the rural sector’s main concerns about the effects of a capital gains tax, or its demands for further cuts in Government spending. The business sector was even more lightly dismissed and, despite a sweetener in the form -of imputation to overcome double taxation

on company dividends paid to shareholders, might be forgiven for thinking its presence at the talks was largely irrelevant. The rejection by 24 business groups of the White Paper’s option A — capital gains and fringe benefits taxes as well as a crackdown on tax shelters and negative gearing — was virtually ignored by the Government. The compromise package with which the Government replaced its preferred option consists mostly of ideas that were hardly mentioned at the talks, let alone given any discussion by the 146 participants. The new package is, in fact, almost identical to one Eut forward before the talks y the Australian Council of Trade Unions tax committee, and rejected on June 27 by Mr Hawke and Mr Keating during an unheralded meeting at Parliament House.