Labor is trying to run a scare campaign on GST but it's falling flat
- by:Peter Costello
- From:Herald Sun
- August 13, 201312:00AM
EVER since Paul Keating came from behind to win the 1993 election, the Labor Party has believed that when all else fails, it can turn to a scare campaign on GST.
That's how Keating won the unwinnable election. So I was not entirely surprised to see Kevin Rudd out there last week holding a jar of Vegemite and warning the public that if Tony Abbott is elected, the price of Vegemite will go up 52 cents.
Follow me here. Mr Rudd says that Mr Abbott will have an inquiry into the tax system that might recommend changes to GST. Abbott might put those to the 2016 election - the one after this one.
So instead of voting against him then, you had better vote against him now. And save the 52 cents some time in 2017.
For all those Vegemite lovers out there (and I am one) there are two things to do.
The first is never to vote for Mr Abbott. The second is to begin hoarding Vegemite now. You can never be too sure.
I introduced the GST, so I know a good scare campaign when I see one. Keating was good in 1993. Kim Beazley ran a cracker in 1998. He was less effective with "Rollback" in the 2001 election. The scare was running out of steam by the election of 2004 and that was almost 10 years ago. Mr Rudd has brought it back.
"A New Way" turns out to be a very old scare campaign.
But now it's not so scary. He was better back in 1999. When the GST legislation passed the House of Representatives, Mr Rudd told the Australian people:
"When the history of this Parliament, this nation and this century is written, 30 June 1999 will be recorded as a day of fundamental injustice - an injustice which is real, an injustice which is not simply conjured up by the fleeting rhetoric of politicians.
"It will be recorded as the day when the social compact that has governed this nation for the last 100 years was torn up."
Wow, that was scary: a day of fundamental injustice. That was so scary, I thought he might do something about it when he got into government.
And do you know what changes he made to GST over the past six years? To use his own words, not a jot or a tittle, zip, zilch, nothing.
You see, the GST raises $50 billion a year and funds all those state hospitals and schools that our current Government boasts about. It is bedded down and working as it was designed to do.
And, while it can never be said that a tax is a good thing, this kind of tax works a lot better than the others we would have if it were ever abolished. Mr Rudd screams against the GST and then relies upon it. He reminds me of those televangelists who go down on morals charges.
Now, we should not forget that the current Government introduced a few taxes of its own without seeking approval at the ballot box.
The first was Mr Rudd's Resource super profits tax (RSPT) and the second was Julia Gillard's carbon tax.
Because the carbon tax was Ms Gillard's tax, Mr Rudd has no qualms about neutering it. He promises to reduce the price on July 1 next year.
It was originally going to raise $9 billion that year. Now it will raise around a third of that. Of course, the Government went out and spent all the money it expected to raise, not the much smaller amount it will actually raise. Which is another reason why we can't balance the Budget.
And then there is the mining tax.
YOU have heard of the emperor who had no clothes. You have heard of the pub with no beer. Now we have the tax with no revenue.
When Mr Rudd announced his RSPT he said it would raise $9 billion this year. After Julia Gillard changed it to the mining tax she said it would raise $3.5 billion.
Two weeks ago Mr Rudd's new Treasurer said it would raise $0.6 billion. But since then the Government has been refunding mining companies who have paid too much tax under the law as it stands.
Ultimately this tax could raise next to nothing, but all the money forecast to come from it has already been allocated to various spending items. Again, the Government has spent what it never received.
When the Coalition promises to get rid of those two taxes, it is not really promising that much. Those taxes don't work and they don't collect much revenue.
That is not because economic conditions have changed. It is because they were poorly designed and incompetently executed.
The French minister of finance, Jean Colbert famously said that: "The art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing."
Rudd, Gillard and Swan managed to arouse a lot of hissing from their tax policies.
But they collected hardly any feathers. Which was the goose? They have no feathers to fly on.
Peter Costello is a former federal treasurer
