Australia's Goods and Services Tax (GST), introduced amid a hail of criticism two years ago (safely away from any election, ruling politicians must have thought), continues to plague the Australian government as the parties begin to firm up their positions on taxation prior to Federal elections due later this year.
The opposition Labour party has plans to roll back the GST which could be a very persuasive tactic for many voters, and is continuing to press for an enquiry into the tax prior to the election. But coalition partners the Democrats - whose votes in the Senate will determine whether an enquiry goes ahead - are wary of the damage it could do just before the vote. They have asked for more time to consider the proposal for an enquiry, worrying that it could damage them politically, given their role in helping introduce the unpopular new tax.
Labour wants the inquiry to consider:
This is a politically-charged agenda. Democrats are concerned the proposed December deadline for the enquiry is too short; they are also concerned the inquiry does not focus on the business tax changes over the past 12 months. These have included the introduction of a much simplified payment schedule and 'Business Activity Statement' for small businesses (the source of much of the initial hostility to the tax and a key voter constituency).
Introduced by Mr Costello, the GST has proved to be one of the most controversial taxation systems delivered by an Australian government to date - particularly for small businesses which have shouldered the additional bureaucratic and red tape burdens it brought in. It is early days yet but it is clear that a significant proportion of the federal election will be fought over this controversial tax.
The new simplified business activity statement form, launched yesterday, is expected to be much easier to understand, but deputy commissioner of small business, Mr Neil Mann, declined to say how long most businesses were expected to spend on filling it in. The Tax Office did though concede that it had originally used unreliable information when it claimed last year there was no need to simplify the statement.
The Tax Office had said the form, which asks businesses how long they took to fill it in, showed the vast majority of businesses took less than an hour. But Mr Mann said yesterday that this information was contrary to feedback the Tax Office was receiving. "I'm not sure how reliable those [forms] are, and not everyone completes them so I don't know how much faith we can put in them."
The new forms have been tailored to meet the needs of the various categories of taxpayers. The Tax Office will include on the form only the taxes that are relevant to that business or investor. It has also used plain English, so that sales are no longer called "supplies".
Although Mr Costello and his government have shown signs of wavering over the GST, they are sticking by the tax and they have no plans to make any alterations - not yet anyway. Once every hundred years, he has said, was enough to reform a country's taxation system and the GST policy was a part of his strategy of reform. 'I thought we had to make sure we set a tax system that was going to last for another hundred years,' he said.
He added: 'You would not want to change a tax system too many times. I think once every hundred years or so is enough.' And, according to Mr Costello, come the year 2101 politicians will say 'it's time to change Australia's tax system ... and they'll be glad Muggins Costello did it back in 2001.'
Current signs are that the GST could cost him the next election - Muggins Costello indeed!
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