E. O. E. -PROOF ONLY
TRANSCRIPT OF INTERVIEW WITH TERRY WILLESEE -4 JUNE 1985
TERRY 17ILLESEE:
Mr. Hiawke thanks for Joining us.
PRIME-MINISTER:
My pleasure Terry.
TERRY 1VILLESEE:
First up, what is the likelihood that the government's proposals
an taxation will becbme fact?
PRIME MINISTER:
w~ ell it the nine principles that I laid down in the election
campaign the * ninth one, a very important one, was that we
-would want to see a broad acceptance in the communtnity of our
proposal. Now I believe, Terry, that in the period leading up
to a national summit the majority of Australian people will see
the good sense and benefit f or them of the proposal so I think
we'll get there.
TERRY IIILLESEE:
You would expect heavy argument against the capital gains tax?
Is there any likelihood you could change your mind on that?
PRIME MINISTER:
Well as regards the whole package the last paragraph of the
White Paper says, Terry, that we want the community to examine
the whole proposal and if we're in a situation where it's clear
that the great majority of the community were against particular
issues we would have to take that into account but I believe
t * hat the community will say that that is a sensibl. e part of a
total package. Can I just make this quick point about the
capital gains tax or two quick points: the personal home,
the private home is not involved; the second thing is that it
is a tax upon real gains, not on nominal gains; and the third-
I'm sorry I said two but the third and most important point
is it's not a great revenue raiser but it is an absolutely
important part, Terry, of the fight against tax avoidance and
evasion.
TERRY WILLESEE:
But on capita] gains. M~ r. Prime Minister, Mr. IKeating told us
prior to the election the governmnent had no plans for a capital
. gains tax. Now post election he tells us he not only has plans
for it but he wants to implement it. Have we been deceived? / 2
SNo you have not been deceived. We said during the election
campaign that we would prepare a position which vwould be put
to the community as a whole about all the available areas that
ought to be looked at to produce a fairer and simpler and more
economically efficient system. You cannot possibly put before
the community an analysis of the inade-quadies of the existing
system and the areas for reform without talking about capital
gains. TERRY WILLESEE:
Well why were we told there were no plans for capital gains
tax? PRIME MINISTER:
Because there were no plans and what we've got now is a
situation where we've put a preferred position to the Australian
community. I repeat that if the community as a whole said
look we don't want that, we would have to take that into account.
But I believe the Australian community will ask itself the
question why is it that Australia uniquely of all the
western countries would say there shouldn't be a capital gains
tax. And I think they will come to the conclusion that it is
fair . that if they, ordinary Mr. and Mrs. Australian, go to
work and by the sweat of their muscles or the exercise of their
brain power they get ' income and are taxed upon it, that there
shouldn't be a discimination against them by there being no
tax upon income which comes to people through no exertion of
themselves. And secondly I'm sure they'll say they want to
wipe out tax avoidance and evasion to the maximum extent and
they will accept that this is a desirable part of that approach.
TERRY WILLESEE:
Well Mr. Hawke taxation new proposals or the current ones
affect everybody to a certain extent. Now you're chauffeur
driven to work and to social functions and to sporting events.
Will your employer be obliged to pay the 46% tax on those
perks. that you get. including, for example, your house?
PRIME MINISTER:
There'll be no distinctions Terry on the approach that will
apply to us and to people generally. I want to make the point
on every available program that as far as I'm concerned I'm
not looking for preferential treatment and I will ensure that
at the end of this process in regard any benefit that might
come to be available to me in regard to reduction in tax rates
that I won't be seeking to take advantage of that on the
contrary. TERRY WILLESEE:
So you're saying all employers will be treated equally.
But isn't it a bit silly that you as the Prime Minister of this
country aren't entitled to a home in Canberra without your
employer having to be taxed on it?
PRIME MINISTER:
Well it's not a question of it being silly. I think + he
point that has to be understood Terry is this+-I think when
you examine the paper you'll see the force of this: that fringe
benefits are exploding in Australia, It's calculated that they
go out to treble in something like three years time if nothing
is done about them. Now all that means, Terry, is that the
great bulk of Australians who don't get benefit of the fringe
bip-fi+-ill havp a. rreater burden through time imposed upon I
them if we don't bring them to an end.
TERRY ' WILLESEE:
Well what about those perks the employer who normally provides
them will now be taxed 46% on that. W~ on't he therefore somehow
-have to recover that cost and presumably pass it on through the
product he sells and therefore the consumer is hit again?
PRIME MINISTER:
There will be a variety of reactions, Terry, from employers.
It won't be anything consistent across the board. Some
employers will sa~ y well we're prepared to absorb, others will
say well we'll convert that sort of benefit to a cash payment
and to the employees because of the very substantial reductions
in marginal rates you'll get a benefit from that, and others
may say well we won't go ahead with that particular benief it.
There'll be a variety of reactions but I simply say that I
believe that the Australian community when they look at the
facts. see how this is exploding as an area of non-payment of
tax, will say well we believe in the general interest of the
community something needs to be done about it. But that's djust
another area, Terry, where I want the Australian community to
look at this issue as a package, There, of course, in any
packag~ e will be elements of it which some people won't like.
lhat ' is important Terry is that people as a whole look at this
tax system that we've got., see that it's disintegrating and
disintegrating in way which is imposing with each passing
month a greater burden on ordinary Mr. and Mrs. Australia.
Now wie've got to bring an end to that in the process if
Aa:: atotal package we can produce a fairer, 4a more efficient
system I think that's what Australia will want.
TERRY WILLESEE:
Well Mr. Hiawke the assets test, it was sold badly and in fact
it had to be re-assessed. How bard will you be working to
sell the tax proposal and are you sure you got it right?
PRIME MINISTER:
I'll be working very hard with Mr. Keating and others of my
colleagues. We are not seeking to impose somthing. As I said
the ninth principle that we laid down was that the community
has got to be broadly satisfied. I wvant to make this point,
Terry, that as of today 40%, or its 39% 40% of all Australians
who are in full time employment are now at the point where of every
dollar they earn at the margin they are paying 46 0. In other
words half of every dollar is being taxed. Now that's no good.
' We've got to get. A situation where the direct tax on people is
very substantially reduced. Now you can only do that by
comprebensive reform and I think people will want to see that
happen because your., vd~ ewers, Terry, don't wiant a situation
where half the their extra dollar that they earn is going in
* tax and they are right in not wanting that.
TERRY VIILLESEE:
Mr. Hawke, thank you very much indeed for your time.
PRIME MINISTE~ R:
Terry, thank you very much.