Thursday 23rd January 1997, Courier Mail - by Phillip Hudson
A goods and service tax would not be the magical elixir to solve the nation's economic problems, Prime Minister John Howard said yesterday.
In response to the growing number of welfare and business groups calling for a GST as part of widespread tax reform, Mr Howard warned there was "a danger in the present atmosphere".
He said that the danger was people having too high an expectation that a GST would help solve every economic shortfall.
"I don't think people should make the mistake of imagining that a dramatic change to the tax system is going to, of itself, transform the economy," he told the Nine Network's Today show.
"People get this false idea that it is the economic elixir of Australia."
His comments play down one of the strongest cases used by supporters of a GST.
Mr Howard repeated his pledge not to have a GST in this term of the Parliament, but he would not rule out further tax reform or the chance of a GST after the next election.
While he supported the GST in the failed 1993 election campaign and played down its benefits yesterday, Mr Howard would not say if he was totally against a GST now
He said there was still a lot of entrenched opposition to the tax in the community.
Mr Howard's attempt to soften the GST debate follows similar comments by Treasurer Peter Costello last month.
"All of Australia's problems are not going to be solved by taxing services," Mr Costello told The Courier Mail in a pre-Christmas interview.
"There are, if I may so, far more important things to be done in this country."
A report by Dr Neil Warren from the University of NSW last year also rejected many of the claimed benefits of a GST.
Dr Warren said there was no evidence a GST would boost savings, create millions, of jobs or crack down on the black cash economy.
Victorian Premier Jeff Kennett has led the charge for debate about a GST and this week stepped up in his campaign by urging the Government to spell out its tax agenda before the next election.
Mr Kennett said a GST must be set at less than 15%.
Peak welfare group the Australian Council of Social Services want a 5% tax on some non-essential services as part of an attack on income and asset taxes.
But Federal Opposition leader Kim Beazley and Queensland Premier Rob Borbidge have opposed a GST.
The Institute of Chartered Accountants yesterday called on the Federal Government to widen discussion of tax reform beyond arguments over a possible GST.
Chairman Bruce Mulvaney said open debate on fundamental tax reform was required urgently.
"On a federal level there is an increased perception in the community that our tax system has reached its used by date, with several taxes ill-directed and narrowly based," he said.
"Feedback from our 1600 South Australian members indicates an increasing frustration at the structural impediments to getting the state and the country moving in the new deregulated and competitive world that we are now facing.
"All changes must promote, equity, efficiency, simplicity and an open tax system which provides a steady and balanced source of revenue for federal and state governments.