The Crest of the Commonwealth of Australia Treasury Portfolio Ministers
Picture of Peter Costello

Peter Costello

Treasurer

11 March 1996 - 3 December 2007

Transcript of 03/06/2005

Interview with Leon Byner
5AA

Friday, 3 June 2005
10.00 am (AEST)

 

SUBJECTS: Tax Cuts

BYNER:

Treasurer thanks for joining us today.

TREASURER:

Good to be with you Leon.

BYNER:

When is ‘D-day’? When is the time when, if Labor do nothing, you can pass what you put through the Budget and people will get their tax cuts, as opposed to, well we have to wait three to twelve months?

TREASURER:

Well if Mr Beazley were to say today that he will accept the tax cuts, everyone could have it on the 1st of July. The small business software providers say their ‘D-day’ is the 6th of June, it is too late for them if Mr Beazley holds off till the 6th of June. The Tax Commissioner says it is too late for him if this runs up to the end of June. But all it takes is one statement. Labor has just go to say, we will not disallow the tax cuts, and everyone can have their tax cut on 1 July. Mr Beazley refuses to say that, and he is throwing 850,000 Australian businesses into confusion, and threatening 10 million Australian taxpayers.

BYNER:

Now, is this because when this Budget goes into the Senate, Labor have the numbers to block it?

TREASURER:

That is right. Labor has got the numbers to block the tax cuts in the Senate up until the 30th of June, but because they lost the last election, after the 30th of June, there will be a new Senate, and this new Senate when it meets will be able to pass the tax cuts. The problem is what happens in the interim, and the Tax Commissioner has said, well here is some schedules, even though legislation has not passed yet. You can follow these schedules, you can give out the tax cuts as long as MrBeazley won’t disallow them as well. Mr Beazley says well I won’t give that guarantee, I’ll try and disallow them as well, or at least keep open the option. That he will try and disallow them as well - meaning that the legislation will not pass - the schedules could be disallowed, 850,000 businesses are now in confusion, and 10 million Australians will miss out on tax cuts.

BYNER:

Now there are two lots of tax cuts. There is some tax cuts that were put through some time ago, that start July 1. They will happen irrespective won’t they?

TREASURER:

The ones announced in last year’s Budget, will happen irrespective, but the ones announced in this year’s Budget to apply from 1 July, are the ones that have been thrown into confusion.

BYNER:

All right, so when we talk about the $6, the average, that’s an average figure which can vary according to the salary you are on.

TREASURER:

That is for a low income earner, $6 a week. It is $300 per annum, that is for a lower income earner. If you earn more of course, you pay more tax, and consequently your tax cut is larger, but that is because you are paying more tax.

BYNER:

Yes.

TREASURER:

When you cut taxes, then if you are not paying much, you get what seems like a small dollar amount, but it is a large percentage amount of the tax that you are paying. If you are higher income earner, it is a lower percentage, but in nominal dollars it is more Leon, that is the way it works.

BYNER:

Sure.

TREASURER:

I keep on saying to the Labor party, if you are not paying any tax, you can not cut it. You can not have a tax cut for people who do not pay tax Leon. You know, x percent of nothing is still nothing, and this is the point that Mr Beazley, he has just tied himself up into knots over this. You know he has lost the last election, this is the first Budget that the Government has brought down. It is an income tax Budget; he is going to loose control of the Senate at the end of the month, and he wants to stop tax cuts which are going to apply the next day.

BYNER:

Mr Costello, is there a precedent that you can ever remember where any Government put a Budget up, and then it was amended by the Senate successfully, and then passed?

TREASURER:

Well, what is happening now is unprecedented. Look, I’ve seen this Leon, I’ve seen Governments raise taxes and the Senate kick up a fuss I’ve never seen a Government cut taxes, and have the Senate kick up a fuss. Normally you cut taxes and it goes through the Senate, it is only when you try and raise them, that it (inaudible).

BYNER:

People listening to you and I talking this morning are going to say, well what can I do?

TREASURER:

Well what I would say is, get onto the Labor Members, your local Labor Member of Parliament. There is a lot of the Labor Members who know that Mr Beazley has made a very serious error. There is a lot of them that want to get out of this mess, and I would say to them email or write to your Federal Labor Member of Parliament. Tell them that this is no good, that you want your tax cut, and that they should put pressure on Mr Beazley.

BYNER:

Mr Costello, thanks for joining us.

TREASURER:

Thanks for your time Leon.