Gst Plans Set For Further Scrutiny
The Age
Monday February 22, 1993
The goods and services tax would undergo a new examination if the federal coalition won government, a spokesman for the shadow Treasurer, Mr Reith, said last night.
The spokesman also indicated that the coalition was unlikely to alter the tax in line with the independent Cole report which was commissioned by the Opposition Leader, Dr Hewson, to review its impact on the community.
A spokesman for Mr Reith said that if the coalition gained office, details of the GST would be finally decided only after work by senior federal bureaucrats. The final design would be decided by tax office and possibly Treasury officials.
The Cole report by a committee of experts under Sir William Cole, a former top bureaucrat, recommended altering the coalition's planned GST treatment of building and financial services. Sections of the report have been leaked to the media.
But the spokesman for Mr Reith quoted him as saying that the revamp of the coalition's Fightback policy last December had been made in the full knowledge of the Cole report's suggested changes.
The coalition said that the report was a draft for discussion only.
The revised Fightback reaffirmed the coalition's stance that residential and commercial construction and financial services should all be exempt from the tax.
That stance has raised concerns from the building and financial industries, worried because their exempt status would rob them of the opportunity to claim GST credits.
Mr Reith's spokesman said the Cole committee's work would be used largely as a guide to industry concerns about the GST's operation.
The Treasurer, Mr Dawkins, yesterday called for the publication of the full report, asking: ``What are they hiding?" He called the 200 pages of the report now made public ``a new startling reminder of just how extraordinary this tax is _ how administratively complex it is".
``It's going to take years to get and bed down, if they ever get a chance to do it," he said.
``It's going to totally preoccupy business at a time when business should be getting on with the jobs of expanding their businesses and creating jobs.
``They're going to be wondering about what their accountants are telling them about this new, bewildering tax which is going to totally disrupt the way in which they conduct their business." The coalition has refused to release the full report.
The leaked sections criticise exemptions generally for encouraging ``internalisation" _ discouraging businesses from contracting out work _ and for biasing business towards buying services from overseas.
The report sees little merit in the coalition's undertaking to exempt commercial building and construction from the GST. ``We consider that the GST system will operate more effectively and efficiently if commercial building construction and land is subject to full-rate GST in the same basic manner as any other supply of goods and services," it says.
The report says that the best course would be to tax non-residential land and buildings, construction and repair services, building materials and property transaction costs at the full 15 per cent.
Residential land and buildings should be ``zero-rated" _ a move it says would cut the price of housing. But it says furnishings, swimming pools, landscaping and other ``extras" should bear the full GST.
It recommends that all accommodation rented for more than 30 days be exempt from the GST, while shorter hotel accomodation is taxable.
© 1993 The Age
