Page 3395 - Week 11 - Wednesday, 14 November 2007
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MR STEFANIAK: At least he corrected the record. And I think I heard him say that he is actually giving some of that money back to businesses. That means a lot to business. That will be a very substantial improvement for a lot of businesses—the fact that they do not have to pay 139 per cent; they have to pay only 100 per cent. That is a huge impost in itself, but there we go. At least the government is now abiding by that particular policy. But it does not give you much confidence in this lot, obviously. That is just one little example of how the government treats businesses and how some of the taxes affect them.
As I said, businesses that use gas will pay a lot more than the $38. Restaurants will be most severely affected, of course, because they use substantial amounts of gas compared to residential households—probably compared to a number of other businesses. It is going to be considerably more than $38 for restaurants. It will probably eat away a lot of the benefits that some of them with outdoor dining might have got as a result of the recantation by Mr Hargreaves yesterday.
Businesses use more electricity than households, of course; they should expect to pay substantially more than the basic $16 paid by households due to the tax. And businesses that use telecommunications services will have their telecommunications bills increased by the utilities tax. Businesses make substantially more calls than households and will be expected to pay substantially more than the $36 paid by households due to the tax.
The government have made a number of arguments. They have argued that the increased charges passed on to consumers as a result of this tax will better reflect the true cost of delivering services. That is a meaningless argument. It is absurd for the government to talk about the true cost of services as they add a layer of taxation on top of the existing cost. It is a nonsense to talk about the true cost of services in those circumstances.
This government has increased taxes in a number of areas—about seven areas, with two new taxes. That adds additional layers. Yes, that then becomes a true cost of services. And if in the next budget the government increases a few more taxes, that will become a true cost of services. The true cost of services will be affected by whatever the government does. If it increases taxes further, the true cost of services will be an additional layer, an additional impost on businesses, making the cost of some services so prohibitive that they might have an effect on the viability of certain businesses. By getting rid of this tax, the true cost of services will drop for businesses. That might ensure not only that businesses survive, but maybe also that some businesses grow, prosper and expand. That leads to considerably more revenue coming into government coffers than would otherwise be the case.
I turn to economic growth. There are some economic inefficiency arguments. Imposing this tax on the provision of particular services rather than spreading the tax over a wider base creates more economic inefficiency than alternative taxation schemes, by changing the relative costs of services. For individual customers, consumers, this change in relative prices creates what economists call a substitution effect, in addition to the income effect of higher costs. This means that consumers
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