Peter Costello

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ACOSS submission confirms fairness of tax reform

NO.007

ACOSS SUBMISSION CONFIRMS FAIRNESS OF TAX REFORM

The Australian Council of Social Services must now accept that the Governments taxation reform package is fair and will improve incomes for low-income earners.

Its submission to the Senate Inquiry, released today, includes its latest research on the distributional impact of the Governments taxation reforms. That analysis shows that every income group is adequately compensated, and that the poorer will be better off from the Governments tax and social security reforms.

Since the Government released its taxation package in August last year, neither ACOSS nor any other group has been able to show that any income group will be worse off as a result of the Governments taxation reforms.

During the election ACOSS began claiming that the Governments average CPI measure contained in the tax package could not be relied upon. It demanded that Household Expenditure Survey [HES] Analysis, which produces CPI results for different income groups, be done, because only it could provide an accurate picture of spending by different income groups.

Whilst the Government rejected such analysis as unreliable, it released it nevertheless. It showed that every income group was more than adequately compensated.

After this research confirmed lower income groups were better off ACOSS refused to accept that the tax package was fair. It claimed the HES analysis conducted by the Government contained assumptions with which it didnt agree. So it demanded further HES analysis on different assumptions. This was done by the respected Melbourne Institute of Applied Economic and Social Research.

This research is contained in the ACOSS submission to the Senate Inquiry released today. Like every previous piece of analysis, it yet again confirms that the tax package is fair, and the compensation more than adequate.

After this again confirmed the benefits to low income earners ACOSS specifically asked the Melbourne Institute (see page 8 of submission) to conduct additional analysis of the price impact of tax reform on low-income households and those in receipt of Government benefits.

Like the 3 sets of analysis before it, this further analysis also showed no household would be worse off.

ACOSS must now accept the verdict. 4 out of 4 research surveys (the last done at its instruction) show low income earners improve under the Governments reforms.

Now that all the analysis is in, ACOSS should accept it.

There is now no analysis that argues against the Governments reform on distributional grounds. ACOSS should now accept the Governments tax reform endorsed at the last election.

MELBOURNE
4 February 1999

4 Feb 1999

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