Down Under, GST Could Make A Competitive Difference

When a 10% goods-and-services tax (GST), now wending its way through Australia's legislature, is introduced on July 1, 2000, that country's manufactured products will become more competitive, says Heather Ridout, director of public policy at the Australian Industry Group. Among the reasons: a raft of sales and other taxes, many of which are over 10%, are slated to be eliminated, prices will fall, and the tax burden distributed over a wider range of products. Australia's big resource companies, including BHP and North and Western Mining, stand to gain significantly from the GST and a related diesel-fuel excise-tax cut. Auto manufacturers, however, are concerned consumers and will postpone buying cars until after next July, when the current 22% sales tax on autos is expected to be eliminated and replaced by the 10% GST. Appliances and electronics, which now carry high sales taxes, are likely to be similarly affected. Australia's lower, and dominant, house of parliament has already passed the GST legislation. Opposition in the upper house is unlikely to derail the approval process completely, although GST's start date could be put back and other exemptions forced through.