The Leader of the Opposition, Kim Beazley, is in danger of looking faintly ridiculous when he talks about Labor’s policy on the GST. For nearly two years, he has been talking about GST roll-back. Until this week, the details of that were unclear. Hitherto, Mr Beazley has spoken only of making the GST simpler and of making its impact fairer.
On the question of fairness, it seems that all Labor has got to offer is speaking about one or two motherhood goods or services and removing the tax on them. Labor had already mentioned sanitary items, caravan park site fees and charities. This week it was funeral expenses.
“Imposing a GST on funeral expenses is an unfair burden on Australian families, especially the elderly,” Mr Beazley said. “It is the equivalent of a death tax.”
Will, yes, the elderly tend to die in a higher proportion than the young, and so the equally elderly widows and widowers will inevitably pay more funeral GST than others. But the elderly have had more time to save and prepare. And, yes, people who die tend to leave families behind who will have to pay the GST, so families will have to pay the GST. Once this waffly logic is taken to its inevitable conclusion, one would have to do away with the GST altogether. But Mr Beazley has not got the ticker to do that, nor is there the financial wherewithal to do it because it would leave a huge hole in the Budget and make Mr Beazley’s promises on health and education undeliverable. Besides, all these families “”unfairly burdened” have been given compensation in the form of welfare increases and tax cuts so an efficient, universal tax could be implemented.
So Mr Beazley is tinkering around the edges with trivial changes that have the maximum emotional response for the minimal amount of financial outlay.
In the case of funerals, the outlay will be a trivial $60 million a year. But it will come at the cost of further complexity, illogicality and anomalies in the GST system. For example, the flowers supplied by a funeral director would be tax free but of those bought by relatives coming to the funeral would attract tax.
Indeed, the promised exemption on funerals highlights the inconsistency of Mr Beazley’s stated aims. The more he aims for “”fairness” the less he can achieve on the simplicity front. At present, GST exemptions affect businesses engaged in the provision of food and of education and health goods and services. Those businesses have had to run fairly complicated accounting and stocktaking systems to cope with the two classes of goods and services. If Mr Beazley – – in that the name of fairness – – extends exemptions he will inevitably draw more businesses into the complexity zone of running two classes of goods and services.
Labor’s simplicity and fairness promises might have had some resonance in the early days of the GST. However, more than a year after its implementation, people have begun to accept it and business has a clear message to government – – please, no more changes.
A survey this week by the Australian Chamber of Commerce and Industry found, “The most important issue of concern to business is the frequency and complexity of changes to tax laws and rules.”
In all, the GST has taken longer to settle in than first thought, but now it is doing so. Further, the benefits are taking longer than first thought, but the evidence is now coming in that the tax is improving Australia’s export position and is delivering revenue growth that will sustain government services in the future.
It is here that Mr Beazley should concentrate his efforts. He should forget about tinkering on that the edges of the GST and concentrate on health and education.