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Rollback wash-up worry

INDUSTRY groups are concerned Labor’s GST rollback could increase tax complexity and increase the costs facing WA’s gas and power utilities.

Labor leader Kim Beazley’s plan for a fairer GST calls for the removal of the GST from domestic electricity and gas supply on July 1, 2003.

If elected, Labor will lift the GST from text books, cloth and disposable nappies, women’s sanitary products and long-term caravan park and boarding house rentals from next year, and from funeral services in 2003.

Mr Beazley also promises to lift the GST burden from charities, investigate shrinking packet sizes for consumer goods, make sure State and Territory governments do not bear the burden of taking the GST off some goods and services and setting up a GST review committee.

These changes are likely to add more volumes to the bookcase filler that is the Australian tax code.

Businesses operating from home will gain the residential GST exemption, while those operating externally will have to pay the GST on their power and electricity charges.

WA’s main gas and power util-ities Western Power and AlintaGas believe Labor’s GST proposals will force more time consuming changes on them.

A Western Power spokesman said the annual GST component on a residential power bill was about $70.

“When the GST was introduced it was a fairly time consuming exercise for us to change our billing systems,” he said.

“It will be another big

exercise to take the GST off.”

And while the GST has been removed from domestic power and gas supplies, Western Power and AlintaGas will pay the GST for the raw materials required to generate that power and deliver that gas.

A spokeswoman for AlintaGas said the utility had not had a chance to digest Labor’s rollback announcement.

She said the utility would have to consider what the GST changes meant if Labor was elected.

However, it too faces making changes to its billing system to comply if Labor is elected.

Perth Energy director Ky Cao said Labor’s proposal would make things harder for Western Power and other electricity suppliers to calculate their costs.

“If you exempt the GST from something, that lost revenue will have to be made up from somewhere else,” Mr Cao said.

Institute of Chartered Accountants in Australia tax spokesman Roger Sullivan said Labor’s proposal was returning business to “the disaster that was sales tax”.

“It seems to be the case that every squeaky wheel that can get up will get an exemption,” he said.

“Labor’s proposal is hitting the businesses that have to operate from external premises. In some cases, small business owners are forced to do that because their local authority won’t let them operate from home.

“Sure, they get the input tax credits back on the GST they paid for power and gas, but that can take four months to come through. Why should they be out of pocket?”

Fallon Group director Tony Ince said Labor’s GST rollback was a small change that could have much wider ramifications.

“Like most small things, these sort of changes tend to creep up on you,” Mr Ince said.

“Sales tax evolved like this – bit by bit.”

However, not all business groups are unhappy with the changes.

Caravan Industry Australia tax spokesman Norton Whitmont said Labor’s proposal to make long-term caravan-park rents GST free was welcomed news.

The Coalition Government allowed caravan park owners to claim back the GST they paid to maintain the roads and facilities of their parks, while reducing the GST on park rents from 5.5 per cent to 1.8 per cent.

Mr Whitmont said Labor was proposing to remove the GST from those rents while allowing park owners to keep claiming the GST they paid on maintenance and other charges.

“Caravan park residents wanted to be treated the same as any other long-term renter,” he said.

“What the Coalition did treat park residents slightly better than renters. What Labor proposes is even better.”

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