Luxury goods cheaper in new Aust. tax scheme

Press, 20 September 1985, Page 6

Luxury goods cheaper in new Aust. tax scheme

NZPA-AAP Canberra Luxury consumer goods will be slightly cheaper but household appliances and snack foods dearer from today as part of the Australian Government’s rationalisation of the wholesale sales tax system. Under the new system, announced in Parliament yesterday by the Treasurer, Mr Paul Keating, the existing four-step tax scale would be reduced to three steps. The steps will be 10, 20 and 30 per cent instead of the existing 7.5, 10, 20 and 32.5 per cent rates. The changes took effect from midnight. Goods that are taxed at 7.5 per cent will carry a 10 per cent tax. This category includes most household appliances, including furniture, refrigerators, freezers, vacuum-cleaners, washing machines, and dryers. Domestic stoves, spaceheaters, and water heating systems will be taxed for the first time — at 10 per cent. Snack foods such as potato crisps, ice-cream, and biscuits will also be taxed for the first time — at the same rate as for chocolate and other confectionery, which will bear a 10

per cent tax instead of 20 per cent. Luxury items taxed at 32.5 per cent will be taxed at either 30 per cent or 20 per cent. This will mean a slight price fall for goods such as televisions, videos, cameras, furs and jewellery, which will be taxed at 30 per cent. Other items taxed at 32.5 per cent will be cheaper, because they will be taxed only at 20 per cent. This category includes records, tapes, pens, cigarette lighters, ornaments, brushes, and shaving equipment. Several other items that are exempt from tax will be taxed at the same rate as similar taxable goods. For example, map books wHI be taxed at 10 per cent, as maps are now.

Conversely, herbal teas, which are taxed at 20 per cent, will be exempt, to match ordinary teas.

The measures were expected to net the Government ?Aust7s million (?97.5 million) extra in this financial year, and about sAustllo million ($143 million) in a full year, Mr Keating said. The inflationary effect of the changes would be about 0.1 percentage points, he said.