Families May Suffer Under GST

The Federal Government has admitted that some families may be worse off under the new tax system which comes into effect on July 1. Changes to eligibility rules for the parenting payment – worth up to $67 a fortnight – may mean some families will no longer be entitled to the benefits.

The government is now arguing that although some parents may temporarily be disadvantaged, the overall effect of the new tax scheme will in fact make families better off.
In order to off-set any disadvantage, the government has announced a once-off compensation package for those families that can prove financial loss. This compensation will be paid out only once, and will last for just three months, finishing on September 20.

The government claims that any economic disadvantage resulting from the new tax package will apply only in the early months of the system – thus the short period being allowed for compensation. A spokesman for Family and Community Service Minister Jocelyn Newman said that the government was not expecting any demand for the compensation, but should it be required as a safety measure, the system will be in place for a short period. Prime Minister Howard told Parliament that the “review mechanism” was established “to enable anybody who thinks they are being financially disadvantaged … to have their circumstances assessed”.

The admission by the Federal Government that some families may be worse off under the new tax system is a cause of concern. Of equal concern is the remedy being provided: families will have to demonstrate financial loss before receiving any compensation for the shortfall.

It seems that families should automatically be given any financial compensation. The Government, in other words, not families, should be the one to take the initiative. One wonders how many families will a) know they are entitled to the special compensation; b)  take the time to offer proof of financial loss; and c) be able to accurately provide the evidence for such loss. My guess is most families would not consider it worth the bother.

Moreover, this should be a permanent arrangement, not a short term one. If any family is penalised by the GST, now or in the future, redress should be available on an ongoing basis, not just for three months.

This Government has put families first in its rhetoric. In this situation it should put families first in action as well.

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