GST Starts to Needle

The Government is once again facing GST chaos and a consumer backlash as more details of the GST emerge. Drug dealers will be forced to put up their prices by more then 10 per cent as they try to offset the costs of complying with the new tax system.

The Government, adamant that drug dealers will be forced to pay the new tax like everyone else is refusing to back away from their proposal to register all drug pushers.

All illegal drug dealers will be required to register for an Australian Drug Dealers Number (ADDN) with the Australian Tax Office. Despite a low-key campaign, orchestrated by the Australian Taxation Office and the police force, most drug dealers have been registered.

"It was no big deal," said a police spokesperson. "Most of these people are already on our criminal database. It was just a matter of assigning them a number which could be checked against their tax file records."

Many drug dealers are outraged, insisting they supply health products and not luxury items. The NSW Users & Aids Association (NUAA) is planning huge protests in the coming months.

A spokesperson for the NUAA attacked the Governments plan. "Many dealers are unsure how they will implement this scheme. The Government is offering us a $200 subsidy, but what is that going to do. Not all of us have million dollar turnovers. Most dealers are illiterate, small one-man outfits with a mobile phone and a Ford Falcon. They do not have the resources to comply with the proposed GST scheme."

The Police Commissioner welcomed the Government's move. "Traditional policing has failed to dent the illegal drug industry. Taxes and regulations work for the alcohol and tobacco industry. The also generate a fortune in revenue for the states," he said.

Kerry Chikarovski, grabbing the chance to make a headline, spoke out against the tax and her Federal colleagues.

"They have it wrong," she declared. 'These are indispensable products for addicts, not something they can do without. They should not be taxed."

There is also a widespread fear in the drug community that prices will rise above 10 per cent. The NUAA was working closely with the ACCC to ensure prices did not rise above 10 per cent. Although the ACCC has admitted it will be difficult to monitor the movement of drug prices when the GST was introduced.

"We will need to rely on user information, for obvious reasons many users are reluctant to supply this information to any Government organisation. Apart from the fear of police harassment there is the feeling that drug pushers will simply cut off their supply if they complain about price increases."

As the campaign against the tax on drugs gains momentum, the Prime Minister was forced to defend his Government.

'There was no case for removing illegal drugs from the GST. At present illegal drugs are tax exempt but from July 1 would be subject to the 10 per cent GST and this would not be reconsidered," Mr. Howard said.

"I don't believe there's any case for doing that I think the GST should cover just about everything. The Australian Democrats agreed only to pass the GST if certain items were taken out of the GST system. Illegal drugs were not mentioned and we intend to make sure that they are taxed correctly".

"If illegal drugs were made GST-free then the way would be open for many other items to be exempted and the system would unravel," Mr. Howard continued.

"People have argued if you don't have a GST on condoms why should you have it on illegal drugs. My argument is that initially we didn't want that anomaly," Mr. Howard said. "We want everything taxed."

"If you agree to take it off illegal drugs, then within a few days somebody will mount a case to take it off something else. The whole essence of a goods and services tax remember is to have it on effectively everything at a relatively low rate so you can be rid of the very, very high rates on some things which distort economic choice. The more products you exempt, the more the system will unravel and you may as well not have the GST."

Bob Carr welcomed the move saying he was sorry the NSW Government would be missing out on the revenue expected to be generated by this year's Sydney Gay and Lesbian Mardi Gras. "According to estimates, the Sydney Gay and Lesbian Mardi Gras generates $90 million. We could more then double that figure if we counted the money spent on drugs over that period".

Civil liberty groups and churches are concerned the Government will become hooked on these taxes in much the same way as they are now dependent on revenue generated from alcohol and tobacco sales as well as the millions generated by poker machines.