A ) TIRAI A
PRIME MINISTER PRESS RELEASE NO. 233
22nd April 1974
THE OPPOSITION PROMISES
Australians will not be fooled by the extravagant Liberal tax cut
promises. They have been through it all before.
Voters still remember the promise to cut income tax in the Liberal
policy speech for the 1969 elections.
This promise was allegedly fulfilled in the 1970 Budget with in
income tax cut of $ 290 million.
In the same Budget, however, indirect taxes and charges were
increased by $ 240 million.
Seventy per cent of Australian families were worse off because
of the direct and immediate consequences of that Budget, and the
poorer the family was, the worse it was affected.
Only the top 30% of income earners benefited on balance from the
Liberal decisions.
Liberal promises in this area tend to be totally illusory, and in
the present instance, threaten devastating consequences for the
Australian economy.
Voters in 1969 had not been promised increased duties on petrol,
cigarettes and wine, nor higher postal charges, nor increased sales
taxes across a wide variety of goods including all cosmetics
and consumer durables.
A further imposition was an increase in company income tax which
was immediately passed on in prices.
This year we are promised a tax cut three times the size of that
in the 1969 policy speech. The Liberals have carefully avoided
any undertakings that a repetition of the 1969 promise will not
take place this year. 2/
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Australians will not be fooled a second time by Liberal thimble
and pea trick promises.
At a time of inflation, the only way the Liberals could pay for
their $ 600 million income tax cut would be by again savagely
increasing indirect taxes on cigarettes, petrol, beer, postal
charges, cosmetics and consumer durables. This is what they did
in 1970 when they tried to fulfil the income tax cut promises of
their 1969 policy speech.
This is what they would have to do again in 1974.
In an attempt to conceal the inflationary effect of their income
tax cut promise and to distort its objective as a mere electoral
bribe, Opposition spokesmen have suggested that a tax cut would
moderate wage demands.
I am unaware of any economist who has suggested that such an
effect would flow automatically from a tax cut.
However, some have argued that it should be one of a number of
measures in a prices and incomes policy.
Mr. Snedden has not suggested any other measures.
Indeed, the effect on wage demands of such a tax cut would be
more than offset by the huge increases in indirect taxes which
are the hidden slug.
These unannounced policies would affect wage earners much more
severely than any other section of the community.
A Liberal Budget would clearly provide an extraordinary stimulus
to inflation. Mr. Snedden will obviously have to deny any intention
to increase indirect taxes, but Australians will remember what
happened in 1970.
This is the way of Liberal promises; what they give with one
hand they will take with the other.
What they did in 1970 they would have to do again in 1974.