Never was there a better example to illustrate the chasm between economic theory and the intricacies of taxation law than the humble birthday cake. There they were, the Leader of the Opposition one day and the Prime Minister the next, attempting to proselytise the glories of their economic policies but each coming unstuck as soon as they were questioned on the detail.
Confusion and complexity is not restricted to the GST; it is in the very nature of taxation law. Mr Keating had as much difficulty explaining the present sales tax as Dr Hewson did in explaining his GST. The economic policy is not especially difficult. Dr Hewson wants to shift the burden of taxation from production and exports (wholesale tax) and income (income tax and payroll tax) and put in on consumption.
This does not mean that the burden moves to different üpeople.@ Broadly the same people will pay the bulk of the tax. The difference is that they will pay tax on a different class of economic activity: consumption not production. This, he hopes, will change people’s conduct; they will do more producing and less consuming. And as there is no tax on production for export, they will do more exporting.
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