Page 195 - Week 01 - Wednesday, 17 February 1993
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ADJOURNMENT
Motion (by Mr Berry) proposed:
That the Assembly do now adjourn.
Goods and Services Tax - ACTEW
MR HUMPHRIES (5.01): Madam Speaker, earlier today in question time Mr Connolly made some assertions about the effect of the GST on ACTEW and about the way in which the Territory would be worse off - in fact, to the tune of $45m - once the GST was implemented. Of course he was very positive about it being implemented. We realise that he means "when" rather than "if". But I was curious at the comments he made, and I went back and checked them out. I find that there is not very much truth in what the Minister had to say. The Minister quite rightly said that ACTEW does not pay sales tax, but of course it does pay sales tax indirectly. The Minister failed to mentioned this vital information. Most people find the concept of indirect taxation hard to understand and some, like the Minister, choose to ignore it altogether.
The fact is that in the current situation government departments pay no sales tax directly but indirectly do pay wholesale sales tax, payroll tax and fuel excise. For example, government departments do not pay direct tax on the purchase of toilet paper, but they do pay indirect tax. A department, for example, pays 50c for a roll of toilet paper, but that price has built into it a wholesale sales tax of 20 per cent for input into that roll of toilet paper, payroll tax from the factory where it was manufactured and fuel excise for the transport which brought it from the factory to the wholesaler and then to the department. The base cost of the roll of toilet paper, with all those built-in taxes abolished, will be a lot lower than 50c. For example, you could say that it would be something like - and this is a notional example - 35c. GST is an added - - -
Mr Connolly: How many rolls of toilet paper would get the $45m back?
MR HUMPHRIES: I will come to that. Be patient, Mr Connolly. GST is then added to the base price of each stage of production and thus the price of the roll of toilet paper might be 40c a roll, even with GST added; 35c plus 15 per cent is 40c approximately. Therefore, the government department ends up paying 40c per roll instead of 50c per roll.
When you consider that this applies to ACTEW purchases of stationery, office furniture, cleaning products, uniforms, electronic equipment - everything that ACTEW buys - you can see that there is a very substantial saving to be made by taking off those indirect taxes. Mr Connolly looks disbelieving. He does not believe me.
Mr Connolly: This is just marginal nonsense compared to a $45m additional tax slug.
MR HUMPHRIES: "Marginal nonsense", says Mr Connolly. You do not believe me. Would you believe, say, the Federal Treasury if they said to you that this would be the case?
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