GST subject of information blitz

Press, 31 August 1985, Page 8

GST subject of information blitz

By

PATRICIA HERBERT

The information blitz on the goods and services tax began yesterday at the Labour Party conference with the distribution of “fact sheets” by both sides.

The Government circulated a newsletter to all delegates quoting the Minister of Finance, Mr Douglas, on the taxation and benefit reform package. The union lobby against GST replied by distributing a pamphlet outlining the reasons for their opposition to the tax and looking for-

ward to “a constructive, non-antagonistic debate” on the issue. Against Mr Douglas’s claims, this asserted that GST would not fund the whole of the reform package and that there would be a shortfall of $737 million which could be raised in one of three ways:

• More income tax or a GST rate higher than 10 per cent.

• A reduction of public services.

• An increased Budget deficit.

It also claimed the

wealthy stood to gain most, not only because they would profit more from the tax cuts but because they would pay less of their total incomes in GST and because certain luxuries would become cheaper while such basics as food, clothing, and rates would become more expensive. The benefit side of the reform package was also attacked.

• The guaranteed minimum family income on the ground that it would encourage employers to pay

low wages. 9 The Family Support scheme because, by abating at $14,000, it would compound the poverty trap. © The 5 per cent increase to be given to beneficiaries because it would be insufficient to compensate them for an estimated 6.5 per cent increase in prices.

The changes to business taxation were welcomed but criticised as not going far enough. “In particular, the taxing of tax-free dividends is only a temporary measure — a

prelude to making all dividends tax-free in the hands of shareholders under the ‘imputation’ system,” the pamphlet said.

It then outlined a series of alternatives. These were:

® Decent wages without State subsidies.

® A progressive tax system based on the ability to pay.

® A broader definition of income for tax purposes to include all forms of wealth. © Universal benefits instead of targeted assistance as in Family Support.