A GST on fresh food? No thanks

With more Liberal MPs out promoting the idea of slapping the GST on fresh food, I joined Chris Mac on 2CC Canberra to talk about why the government shouldn't break its promise on changing this tax. Here's the transcript:





SUBJECT/S: Liberals’ plans to put GST on fresh food

CHRIS MAC: Well, Dan Tehan, the federal member for the seat of Wannon has launched into a little bit of kite-flying, I think you'd have to say, on behalf of his Coalition colleagues. That was to suggest that it was time to look at the GST and look at either increasing its rate or broadening its base. Currently the GST doesn't apply to fresh food, doesn't apply to much of the education area, nor does it apply to health care. It's these areas where the base may well be broadened and you and I could be paying a whole lot more, 10 per cent more, for a whole lot of things. Andrew Leigh is the Shadow Assistant Treasurer in the federal Opposition. He's also the federal Member for Fraser here in the ACT and he joins us on the line. Andrew Leigh, a very good morning to you.


MAC: Well, let's have a look at this. It's an interesting one, and you know that I'll ask you the question about what you'd do in a moment. But here we have Dan Tehan getting the kite out and giving it a bit of a fly on the GST.

LEIGH: It's pretty extraordinary stuff, isn't it Chris? I mean, this is a government that came to office after saying more than 30 times that they wouldn't increase the GST, and now they're sending out their Committee Chairs and junior ministers to float increases to the GST. Josh Frydenberg, I noticed, is out there too, and you just feel that with this Government, keeping promises is something for other people. They're above the whole business of keeping promises and having said something more than 30 times before the election doesn't mean they won't break that promise now.

MAC: Alright. When you look at this situation, the Prime Minister and Greg Hunt, the Environment Minister, and others in the government have all trumpeted the Treasury modelling which suggested the repeal of the carbon tax was going to save the average family some $550 or $10 or $11 a week. But if you put the GST on fresh food, on education - schoolbooks and other items related to education for kids and tertiary students - and also on services in the healthcare sector, what would that mean in terms of increased costs to regular Australians?

LEIGH: Well certainly, my back-of-the-envelope calculation says that you get a bigger price effect than the carbon price did. And of course with the carbon price you got the benefit of a cleaner environment. We saw the biggest drop in carbon emissions in a quarter of a century after the carbon price was put in place. But with this, Australians will be thinking, well, why should I be paying 10 per cent more for my apples, why should I be paying 10 per cent more for private school fees, why should I be paying 10 per cent more for health costs? Those will be huge concerns for Australians who are struggling under cost of living pressures.

MAC: Yes, well it's a massive situation. They're talking about raising, I think, something in the order of $20 to $25 billion a year, which of course is money the government desperately needs as it tries to balance the books with a lot of red ink flying about. For whatever reason, and of course they'll say that it's your side of politics that left that mess, and they'll say that they're trying to do the right thing. But if these changes are opposed - and I'm sure they would be opposed if they were taken to an election or to legislation in the parliament - what would you put up as an alternative if these changes didn't go through?

LEIGH: Well Chris, we've made a number of points about revenue raising. One is that when you get rid of the carbon price, you get rid of a significant amount of government revenue. So that's one reason the Abbott Government is struggling to make ends meet. They also scrapped the mining tax and they cut taxes on multinational companies, allowing multinationals to shift their profits offshore. So at a time when the government has given $1 billion back to multinationals, it's a bit rich then to be turning around and saying to ordinary Canberra families: you guys need to be paying a bit more on your grocery bill even though we promised before the election that we wouldn't do this. 

MAC: That stuff regarding the overseas profit shifting, didn't the Treasurer say initially that they were going to go ahead with that legislation and then it was quietly dropped during the mid-year economic statement?

LEIGH: That's right. So in 2013 he said that he wasn't going ahead with Labor's measures, but he promised to come up with his own measure which would capture some revenue. And then at the end of last year, he turned around and said, well actually, here's another broken promise: I'm not going to fairly tax multinationals. I just think it's the classic story of this government, Chris. They're really tough when it comes to the weak, but really weak when it comes to taking on the tough. They're not able to take on the big end of town, but they're certainly able to take money away from pensioners, and low-income families.

MAC: The profit-shifting there would generate how much money, Andrew?

LEIGH: Well, the amount of money that the government said no to was about $1.1 billion, Chris. That's a significant amount of money at a time when the budgetary circumstances are tight, and that's just some of the measures they scrapped on coming to office. There are other measures that, we believe, would fairly tax people with more than $2 million in their superannuation accounts.

MAC: It sounds like it's going to be a very interesting year, Andrew Leigh, and I'm sure that both Mark Parton here on Breakfast and Marcus and Paul on Drive will be giving you a buzz as this story continues to develop. Thanks very much for your time this morning.

LEIGH: It's a pleasure Chris, and happy new year to you and your listeners.  



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