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On August 4 the Australian Catholic Social Justice Council (ACSJC) raised a number of questions about tax reform. After the Government released its tax plan, the Australian Catholic Social Justice Council took some time to study the plan and Bishop Manning, the Council's Chairman, then commented on the plan.

The ACSJC responded to the Opposition tax plan in the same manner and now comments on the One Nation tax plan using the framework set out on 4 August. Bishop Manning said that the One Nation tax plan fails to deliver on the fine aspirations that it sets out and does not address the tax reform questions raised by the ACSJC at all weft. Bishop Manning's statement follows.

How will you ensure that the tax system is fair, especially for the poorest?

'The Australian Catholic Social Justice Council's first concern in the area of tax reform is equity. We expect to see a tax system that is fair, especially for the poorest. It is not fair to tax the rich and the poor alike at the same rate. Those with greater wealth and income should pay taxes at a greater rate than those with fewer resources.

'The 2% Easytax delivers a huge tax cut to the wealthiest, and a much smaller percentage tax cut to the poorest. The One Nation Party's tax plan does not honour the principle of distributive justice.

'The One Nation Party sets out to make everyone pay their share of tax - which is admirable - but their tax plan actually asks the poor to pay more than their share. It also asks small businesses which purchase inputs to pay more tax than larger more vertically integrated businesses which produce their own inputs. It asks exporters to pay more tax than importers.

'The One Nation tax plan is quite simply unfair.

Will you increase the proportion of revenue raised through indirect taxes?

'The proportion of revenue raised through regressive indirect taxes would be greatly increased under the One Nation tax plan. Every good, service and transaction in the economy would be taxed. If each person and each transaction is taxed at the same rate, the poorest will pay a much greater proportion of their income in taxes than the better off. An increase in indirect taxes without any offsetting measures at all can only harm those who are struggling. The current emphasis on the progressive taxation of income would be lost completely.

'The net impact of the One Nation tax plan would be a much more regressive tax system.

Will you introduce or raise taxes on necessities?

'The introduction of the One Nation Easytax would mean that some necessities which are not currently taxed would now be taxed. The level of tax would be unrelated to the importance of the item in providing the basics of a civilised life, but rather to the number of stages in its production and the degree of vertical integration of its producer. The compounding 2% Easytax seems very income and all transactions, but it does not provide any details on how it will actually secure better compliance in relation to taxes on non-wage and salary income. Larger businesses have a greater capacity to reduce the number of their transactions and therefore to miniraise their tax under the One Nation Easytax system.

How will you ensure that families are not disadvantaged compared with those who have no dependants?

'The Australian Catholic Social Justice Council would like to see a tax system that does not disadvantage families compared to those with no dependants. The One Nation tax system does not include any tax free thresholds that differentiate between households with and households without dependents, nor does it include a tapered system of rebates that recognises the additional costs of raising a family or caring for family members with special needs, such as the aged.

'It is appropriate that a tax system should treat those with children differently to those without children, recognising both their contribution to society and its costs. The Easytax fails to do this. its quest for simplicity the One Nation tax system ignores the particular needs of families with dependents. Treating all households in the same manner is not the same as treating them equitably. Fairness requires that families with different needs should be treated differently.

Will the tax system be adequate and sustainable?

'Governments need to raise sufficient revenue to provide the community with certain goods, services and infrastructure as well as meeting repayments on previous borrowings. The policy documents of the One Nation Party do not provide any information on how their projections of income and expenditure are actually calculated, figures are simply asserted.

'Further attention needs to be paid to the economic assumptions and modelling on which the One Nation claims are based. For example, while the One Nation policy is claimed to generate further employment opportunities, a compounding tax on each stage of production will skew resources towards the production of goods and services with few stages of production thus reducing the number of jobs available to Australians. It will be more tax-effective to import complex manufactured goods than to produce them in Australia. Jobs will be pushed offshore! Firms with a higher level of vertical integration will pay less tax than those which have to purchase inputs, and so big business will be advantaged over smaller businesses. Again the result will be fewer jobs for Australians as bigger businesses swallow smaller businesses. Taxes based on the volume of turnover and number of transactions rather than profitability will lead to serious misallocation of resources and economic inefficiency rather than economic growth.

'The One Nation tax plan is well-intentioned but would in practice be counterproductive.'

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