GST

This month the cries of "it lives" resounded around the nation as the GST came into force and turned the best of intentions of the business community for much-needed tax reform into the Frankenstein it is in danger of becoming.

"It lives! It lives!" shouted Kenneth Branagh as he watched his creation (in this instance Robert De Niro) draw his first breath of artificially conceived life in a rather pedestrian film version of the Frankenstein classic. This month the cries of "it lives" resounded around the nation as the GST came into force and turned the best of intentions of the business community for much-needed tax reform into the Frankenstein it is in danger of becoming. The novel by Mary Shelley of Frankenstein and his creation is an apt metaphor for what has occurred in this country. The Government has inadvertently adopted the Frankenstein image by using the bursting chains theme in its advertising campaign. Unlike its various Hollywood depictions, Frankenstein was never intended as a work of science fiction but rather as a gothic romantic novel of what can happen when good intentions go wrong. Shelley who was 18 when she wrote the novel was influenced in her writing by Milton's Paradise Lost and the Prometheus legend. In the same manner that this country desperately needed tax reform and the Government and the business community joined forces, Frankenstein "collected the instruments of life around me, that I might infuse a spark of being into the lifeless thing that lay at my feet".

The tinkering by Canberra bureaucrats to impose pay-as-you-go and an Australian Business Number has unnecessarily complicated life. The Democrats share the blame, because they tried to introduce social engineering onto this tax creation by restricting its application on food. What is more worrying is the introduction of the ACCC's Allan Fels as the watchdog to ensure that this mis-shapen GST creation doesn't run amok and cause the voters to rise up. Fels is there to hand out shame notices and threaten retribution through hefty fines should any business overstep the boundaries of fair GST prices. It is an admission by the Government, despite its hand on heart statements, that it believes in the free market, it acts in complete defiance of free market logic on a consistent basis. If consumers see unscrupulous businesses hike up prices over and above the GST included price they will shop elsewhere and the business will lose market share. Australian consumers are not the hapless victims the Government believes they are.

If market forces prevail then the injection of Fels into the GST arena has nothing to do with protecting consumers but is simply a political stunt to provide the voter with an unnecessary assurance that the Government will look after their interests. The recent federal decision on digital broadcasting is another prime example of a complete lack of market realities. By restricting what can be shown on the new digital delivery mechanism, Australia has been relegated to third world broadcasting status. The criteria for the decision has nothing to do with market forces or even giving consumers the right to choose. It is a political decision to protect the commercial interests of one player in the market. Alan Fels is pressing the Government for more powers - and he might want to look at this artificial market manipulation that entrenches the monopoly position of free-to-air broadcasters. Of course it won't happen. The Government is now moving to election mode and it will need all the friends and support it can muster to avoid the electoral disaster that befell former Canadian Prime Minister Brian Mulroney when he introduced a GST.

Mulroney was shrewd enough to give up his job as Leader of the Conservative Party before an election was held and it was left to his successor to lead the Canadian Conservative Party into the worst electoral defeat in Canada's history. New Zealand by comparison had few troubles in introducing its GST, primarily because it had bipartisan support and the tax applied to everything, thus reducing the nightmare for small business owners. History will ultimately make its own judgment on the good intentions that went into tax reform and the result that eventuated. Tax reform is necessary and should have been achieved as a bipartisan effort. The electorate and the SME sector which has now been unnecessarily burdened by the bureaucratic compliance nightmare will make the final judgment. In reflecting on his creation, Victor Frankenstein said: "You seek for knowledge and wisdom as I once did; I ardently hope the gratification of your wisdom may not be a serpent to sting you, as mine has been."

The electorate and the SME sector which has now been unnecessarily burdened by the bureaucratic compliance nightmare will make the final judgment

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The purpose of this database is to provide a full-text record of all articles that have appeared in the CDJ since February 1997. It is aimed to assist in the research and reference process. The database has a full-text index and will enable articles to be easily retrieved.It should be noted that information contained in this database is in pre-publication format only - IT IS NOT THE FINAL PRINTED VERSION OF THE CDJ - therefore there might be slight discrepancies between the contents of this database and the printed CDJ.