PRIME MINISTER 118/ 95
STATEMENT BY THE PRIME MINISTER, THE HON PJ KEATING MP
STATE TAX CAT OUT OF THE BAG
Mr Costello's tax cat is out of the bag and Mr Kennett has belied it.
Mr Costello's answer to repairing the Vertical Fiscal Imbalance which he says
exists between the Commonwealth and the States a State income tax has
been endorsed by his Victorian colleague, Premier Jeff Kennett.
This comes as little surprise because Mr Costello told Business Review
Weekly that he had consulted conservative State Governments, which of
course includes Victoria.
Mr Kennett's comments articulate the plan.
He says that basically the Commonwealth should have Defence,
Telecommunications and a few other responsibilities and it should only be
able to collect 20 per cent of the income tax. The balance the other 80 per
cent would be collected by the states to fund social policies and services.
Apart from the inherent problems in this proposal, the conservative States are
already walking away from all the responsibilities he says they should have.
Health and education come readily to mind, and no one brings them to mind
quicker than Mr Kennett himself.
The Victorian Premier has been closing hospitals down at an alarming rate,
shutting down hundreds of schools and has now embarked on a privatisation
binge which includes Victoria's ambulance services.
There is no better example of the Liberal mindset than Mr Kennett. Unless it
is Mr Howard, of course.
We are now seeing the real conservative agenda revealed: get the
Commonwealth out of social policy, get the Commonwealth back to some
core functions, give the States the responsibilities and walk away from them;
reduce the Commonwealth of Australia to a mirror image of the Liberal Party
a mere collection of States.
It is all consistent with Mr Howard's long-held view of the world.
2
Let there be no doubt that John Howard and Peter Costello mean to have
State income taxes and State consumption taxes. They want the bulk of the
revenue raised by the States and they want the Commonwealth pinned back
to minimal responsibilities.
What we would then have is two tax bases in the system a Commonwealth
income tax and State income and broad based consumption taxes.
CANBERRA October 1995