Keating's dopey tax plan

Letter to the Editor:

Paul Keating accused me of being dopey on tax reform ("Dopey Right wakes up on tax", AFR, February 28).  Well, who really is the dope on tax?

I have long been a champion of tax reform and lower taxes, and still am.  I was not, as claimed by the father of One Nation, a champion of the GST.  I argued for a State-based retail sales tax (RST) set at a rate which allowed a reduction in grants to the States, and therefore cuts to income tax rates, and the elimination of a raft of State taxes.

Importantly a RST would allow the forces of interstate competition to limit the overall tax take, improve the accountability of the States and reduce red tape.

When my proposal was rejected and a GST proposed, I did reluctantly support a tax switch where a broadly based GST replaced the wholesales sales tax plus a raft of State taxes and reduced income tax rates including the top marginal rate.  When it became clear that the package would not be delivered, thanks to the Democrats and ALP, I publicly and repeatedly urged the Government to abandon its bastard child.

As for Paul Keating, since failing to get his own GST up in 1985, he has lacked the fortitude for tax reform even though the proverbial drover's dog knew it was needed.  Instead, he took the easy route of relying on taxation by stealth through bracket creep and hidden indirect taxes.  If we had continued with the Keating's tax approach and high spending policies, the tax take would be higher, tax officials more intrusive and families on average weekly earning would now be paying a marginal tax rate of over 50 per cent.

Howard's GST may be flawed, but Keating's alternative is just plain dopey.

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