Malcolm Turnbull (Wentworth, Liberal Party, Prime Minister) Share this | Hansard source

a consumption tax. The honourable member's great hero, Paul Keating, advocated one as long ago as 1985. The advantage of a consumption tax is that it does not distort economic activity, because it applies across the board. Of course that is why the argument always is: to broaden the base and, when you can do so, lower the rate. The honourable member understands that.

The problem with a consumption tax is that it applies to everybody, regardless of income: so if the person on a very modest income goes to buy a bag of groceries, they pay the same amount as a wealthy person in GST who buys the same bag. So that is the point.

Ms Plibersek interjecting—

The honourable member says she knows that. If knows that, why does she ask these questions that can only lend themselves to such an obvious answer?

So that is why—given that taxes of this kind, while very efficient, are not progressive in the way income tax is and therefore can be called regressive—there always have to be levels of compensation, adjusting tax, pensions and other transfer payments. And of course this was what was done by the Howard government in 2001.

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