Since the federal election, business groups have lost no time in re-raising their arguments for a goods and services tax (GST). Having had to let it go after John Hewson's spectacularly unsuccessful bid to popularise the GST in the 1993 election, business peak bodies are again sniffing out the prospects of shifting even more tax away from themselves and onto those least able to pay.
The Australian Chamber of Commerce and Industry (ACCI) and the Business Council of Australia have been joined by the chief executive of ANZ Banking, the Victorian branch of the Chartered Accountants in Australia and Victorian Premier Jeff Kennett in calling on the Howard government to break its campaign promise not to introduce a GST. While welcoming the $8 billion budget cut, they say this is not enough. The missing piece in Howard's neo-liberal offensive is a consumption tax.
These mouthpieces for capital are even receiving encouragement from some unlikely quarters. Sections of the Labor opposition's so-called "left" faction are interested in "discussing" the GST further. (And why not, after all? It was then treasurer Paul Keating and the Labor government that tried to introduce a broad consumption tax back in the mid-'80s.)
Australian Council of Social Service president Robert Fitzgerald has joined in. "We are prepared to examine all options to broaden the goods and services tax base as part of a wider tax reform agenda", he said recently.
The ACCI is planning to host a tax summit in September to which it hopes to attract business and welfare groups, trade unions, taxation and accounting bodies and academics, among others.
The main argument for a GST hasn't changed: taxes on business reduce their competitiveness and therefore their capacity to employ people. Only by broadening the tax base, by making the general community pay a tax on the goods they consume, can living standards be raised. This, business argues, would be more equitable.
This is a fallacious argument. First, it ignores the experience of countries such as New Zealand and Italy which have introduced GST-type taxes and whose economies are still weak, and unemployment, foreign debt and inflation still high.
Second, it puts an unfair burden on those least able to pay. While some basic goods might be made tax exempt, the overall impact of a GST would still disproportionately affect those least able to afford it. Meanwhile, the corporate rich would be relieved of even more of their share of the tax burden.
For the last 13 years, businesses have had little to complain about. Not only did successive Labor governments increase indirect taxes on certain goods, they dramatically decreased the rate of corporate tax — from 49% to 33%. They also cut the top marginal personal income tax rate from 60% to 47% — a gift of about $4 billion a year to a wealthy 5.6% of Australian taxpayers.
A regressive tax such as the GST would continue this process of making the taxation system less equitable. And it would not necessarily encourage corporate investment in plant and equipment (as the speculative boom in the 1980s showed).
The only way to a fairer tax system — and this is the reason it hasn't been canvassed by the government or its media mouthpieces — is to increase taxes on the rich. Right now News Limited can get away with paying tax at an effective rate of just two cents in the dollar. Billions of dollars would be recouped if the government raised the corporate and top marginal personal rates back to 49% and 60% respectively.
This, of course, would also solve the $8 billion "black hole" budget problem, if it exists, for which working people will also be slugged.