Keating's creeping GST


Keating's creeping GST

Even ACTU president Martin Ferguson felt the need to make a pretence of attacking the 1993 federal budget. We cannot "defend the undefendable", he said. He failed, of course, to use the opportunity to announce the launch of a campaign to force the Keating government to reverse its policy of shifting even more of the burden of financing business out of its problems onto ordinary working people.

This shift is at the centre of Labor's budget strategy. It is also the aspect of the budget that has grabbed all the headlines, although the real implications of what the budget does is not spelled out. "Indirect tax slug to raise $3.2 billion", runs The Australian's lead in the budget special edition. "Indirect taxes to yield $9.1 billion more," leads the Australian Financial Review on the same question. The slanging match between ALP tweedle-in and Liberal Party tweedle-out also centres on the question of whether Labor has introduced a hidden GST.

The ALP government has, of course, increased taxes on goods and services. There is a general 1% increase on wholesale tax, with another 1% increase in 1995. Other taxes, such as those on petrol are also going up. Wholesale tax on wine goes from 20 to 31%, and cigarettes are in for three rise of 3% each over the next year. Changes in the policy on HECS fees for tertiary students is another form of tax. These measures will raise $1.3 billion in government vrevenue, rising to $3 billion in 1996-97. According to Kenneth Davidson in the August 18 Age, wage earners on average weekly earnings will be paying $6 per week in indirect taxes, which is $2 more than the $4 they will be getting in their one-off income tax cuts. The $3 per week rise in benefits for long-term unemployed single adults and the $200 grant to unemployed people going back into to full-time education can only been seen as sops to help distract attention from the real thrust of the budget.

This increase in indirect tax is needed for one reason and one reason only: The government refuses to increase taxes on company profits. Instead, it has been steadily decreasing taxes on the corporate sector. They have now dropped down to only 33%. Even with Commonwealth services severely pruned and the states starved of funds and forced to adopt user pays for almost every service, the Keating government is still having to borrow large sums of money to keep the budget deficit within manageable limits. Because it is unwilling to tax the richest section of society, the only way it can get even some of the money it needs to tax the rest of us.

These increases in indirect tax essentially place an additional burden on ordinary working people. Even where the tax falls on so-called "business inputs", the additional cost will be passed on to ordinary workers through price rises. Thus the budget also predicts an increase in inflation to 3.5% per year.

Furthermore, these increases in taxes will not be compensated by wage increases. Recent ACTU policy has stopped linking wage increases to inflation and linked them instead to decreases in unemployment. The low projected economic growth rate of 2.75%, plans for restructuring, upgrading plant and machinery, and shedding labour just about guarantees no real reduction in unemployment over the next few years and therefore no meaningful wage increases, especially for lower paid workers.

So, more taxes on the all things we use; less tax on the profits of companies making millions out of selling the things that ordinary people make. The rich get richer, the poor get poorer. So much for Labor's promise of a "prosperous" future!

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