70% worse off under GST

March 11, 1992
Issue 

70% worse off under GST

By Peter Boyle

Around 70% of waged and salaried households and 60% of self-employed and farm households would be worse off under the Liberal Party's "Fightback!" package, according to federal Treasury and Finance Department estimates released on March 3. The package's goods and services tax (GST) would be mainly responsible for the losses. Only those earning $90,000 or more yearly would gain.

The figures confirm earlier observations of welfare organisations on the GST when it was first proposed by opposition leader John Hewson earlier this year. The Australian Council of Social Services (ACOSS) noted that Hewson was proposing a major shift from progressive income tax (down $11.7 billion) to a regressive 15% GST, which would increase revenue from indirect taxes by $6.3 billion. Most people would also be hit by huge spending cuts to public health, education and welfare.

ACOSS is also critical of Labor's 1994 tax cuts proposal, saying it would result in cuts to social services and would benefit only households earning more than $20,700.

The Treasury-Finance estimates say Fightback! overlooks the impact on households of a proposed $10.1 billion cut in spending in the first year of a Liberal government. Apparently stuck for an answer to these claims, Hewson branded the estimates politically biased.

According to the estimates, most people would come out behind even after proposed tax cuts in 1994 and 1996 to compensate for the GST, because the Liberals had underestimated the impact of inflation.

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