GST giveaways hurt

THE Prime Minister and the Treasurer have given away more than was desirable in the revised tax reform package negotiated with the Democrats and reform comprised to this extent is only a marginal improvement on the current system.

While a broad-based consumption tax instead of the current combination of a wholesale sales tax regime and some stamp duties will benefit Aust-ralia in the long term, exempting basic foods is a major mistake.

Simplicity should have been a primary goal in the negotiations.

Instead, we are confronted with a regime that is already proving farcical and potentially unworkable.

It would have been far better to apply a lower rate of GST to all food to avoid the inevitable complexities, albeit at the cost of smaller income tax cuts.

Extreme difficulties lie ahead for small and medium-sized businesses in the food sector as they struggle to come to terms both with the complexities of the proposed scheme and the mounting compliance costs associated with it.

The Retail Traders Association of WA, in partnership with its other state counterparts within the Australian Retailers Association, has planned a massive retailer education program.

RTA efforts over the next few months will be directed towards securing Federal Government support for that important and vital program as well as seeking compensation as a result of the additional complications created by the elimination of ‘basic foods’ from the ten per cent regime.

Overall the outcome for the retail sector is disappointing and Australia has been left with job of tax simplification only half done.

• Brian Reynolds is manager of the Retail Traders Association of WA.

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