The new taxes are in full effect and government today indicated it has all intentions to go ahead with them despite opposition from the Unions and business community. A release from Cabinet confirms that with the exception of the environmental tax, which will be reduced from the proposed 3% to 2% and the excise tax on beer will be increased from $3.60 to $4; all other tax measures in the budget were implemented yesterday. While the Unions have repeatedly criticized government for their refusal to increase the excise tax on beer to its 1998 level, $13.66 Minister of State in Finance Joe Coye told 7NEWS the Unions are focusing on the wrong thing. He says the excise on beer isn't the problem, the tax system is.
Jose Coye, Minister of State in Finance
"When you put the tax on the beer, its not on Mr. Bowen it will fall, it will fall on the consumer of the beer. The argument being made is that you shift the business tax to that tax. The truth about it is that the business tax is intended for the burden to fall on the investor, the owner of the business, not on the consumer. So if you want to shift that tax and say let's put it on the beer and taking off the business tax, you are putting it directly on the consumer."
Keith Swift,
But isn't the price of beer regulated?
Jose Coye,
"Yes well again that's another matter. How do you justify increasing taxes and don't want the taxes to be passed on."
Keith Swift,
But they were paying that tax in 1998 and they were given a large tax reprieve.
Jose Coye,
"That was the time when maybe the decision should have been made. But I think the argument should not continue to be over whether we want to put the tax on the beer as a sin tax. I don't think that really should be the argument but right now that seems to be the argument, they are focusing on that. I am saying you need to get away from that because you are tinkering with the system. What you need to do is to do a total revision of the tax structure."
Keith Swift,
$17.9 is outstanding. Why is government refusing to collect this money which the unions have found?
Jose Coye,
"Well quite frankly if there's anyone not collecting it then something should be done and something will be done."
Keith Swift,
So you're saying that government is not aware that there is $17.9 million outstanding from a certain PIC?
Jose Coye,
"I am not aware of a $17.9 million. Whatever it is I am saying that the government is insisting on this. We are not here to encourage any person to be owing taxes and believe they can do it and get away with it."
Keith Swift,
The unions are saying that nothing has changed.
Jose Coye,
"I think we need to be careful when we get into these opinions being given by others. To say that government has refused to budge in the negotiations, its not a case that the government has refused to budge, the government has in fact rolled back the environmental tax."
Keith Swift,
Do you think from $3.60 to $4 on the excise tax is enough?
Jose Coye,
"No but if you allow me finish. You asked me the question so allow me to answer. You are focusing on one tax, which is the beer tax as if though the beer tax is on of the pillars of our tax system, it is not. I am saying that when you are negotiating, and we need to be careful in terms of what we are doing in terms of negotiation and consultations, they are different things. When you are negotiating you don't make demands in your proposals because you are negotiating. If we were to look at the tax system in its totality rather than trying to single out one tax, excise tax, and one item. Its not even singling out one tax, its singling out one item in one tax out of hundreds that are there. I am saying that there are getting carried away with the belief that we are there to cover-up for one individual. It's not the individual we should be concerned about in the tax system. We can't be saying to the user of the beer it doesn't matter because Mr. Bowen can pay it, that is not the issue. The issue about the tax system, its structure on a whole and whether it's responding to the needs of our country and that is where we need to focus."
Amendments to the environmental tax and excise duty along with the business tax on gas stations will all be tabled at a House meeting scheduled March 18th in time for implementation on April 1st.
