Timing
Labor's tax launch is to occur this Thursday, 27 August, during the day. At this stage details as to how it will be released are not available.
Tax credits
Some details as to the contents have been leaked. There will be tax credits for middle and low income earners, which apparently will be designed in such a way that they do not flow through to upper income earners. This will cause high marginal rates for a group in the upper middle of earners, unless the top rate is increased.
Wholesale sales tax - food items
Also there is the intention of getting rid of wholesale sales tax on some food items. While this is politically attractive, this will make the WST base even narrower than it is, causing concern about the sustainability of the indirect tax base in Australia.
R&D incentives foreshadowed
In an interview on the Channel 9 Sunday program yesterday (23 August 1998), the Opposition Leader, Mr Kim Beazley, hinted that the Labor tax reform package due for release this Thursday would contain some tax incentives for R&D. In response to a question as whether Labor would be "backing up those who want to invest and innovate" by a return to the tax incentives for R&D, Mr Beazley said: "There are some tax incentives [in the package] associated with [R&D]. Yes, that is part of the package. And there will be a targeting of that to really reward, in particular, small and medium sized enterprises, which you'll often find in information technologies and communications are the real drivers of innovation and interesting things in that area. And it will be substantial."
Essentially, it would seem the Labor tax package will have three main components: crackdown on tax avoidance, creating incentives to work and encouraging business investment and innovation.
Analysis
PricewaterhouseCoopers is planning to issue an overnight release on Labor's tax launch, as we did for the Government's recent tax reform statement. Liability is limited by the Accountant's Scheme under the Professional Standards Act 1994 (NSW)
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