Controversial Goods And Services Tax Could Be Responsible For Australia's Economic Decline

Mary Swire, Tax-news.com, Hong Kong

05 April 2001

A survey conducted by the Australian Financial Review newspaper has revealed that the introduction of the controversial Goods and Services Tax (GST) has significantly contributed to the sharp economic decline that Australia experienced in the latter quarter of last year.

The Financial Review survey questioned twenty of Australia's top market economists, seventeen of whom considered the GST to be either the single most important factor or the equal most important factor slowing down the economy along with rising oil prices, interest rates and a go-slow in the global economy. The newspaper stated: 'The survey's findings will embarrass the federal government, which has been fending off opposition claims that the GST "mugged" the economy.'

The GST has been severely criticised since it was implemented last July. Ray Regan, President of the Australia's National Tax and Accountants' Association, is on record as saying that it is expected that thousands of taxpayers will suffer massive penalties when they calculate their GST liability. He claimed: 'Many taxpayers who used the simplified GST accounting method in their business activity statement return will be like lambs to the slaughter once they are audited by the Australia Taxation Office.'

Indeed it has caused so much controversy that it has become a political hot potato. With the general elections on the horizon the government has hinted that it may consider scrapping the tax, particularly as the opposition is using the GST against the government in a bid to win votes.

But Federal Treasurer Peter Costello has recently claimed that many Australian states are arguing over how the GST revenue is divided among them which he says shows they support the system. He said: 'The states today are fighting for their shares of GST, far from being opposed to it, they are now scrambling over each other to get a bigger share of GST.' And with this latest report by the Australian Financial Review the debate is set to rage for some time yet.

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