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Abstract: The overall economic strategy of the National Farmers Federation (NFF) for the 1990s has a tax module with two specific components. The first provides for abolition of the top two marginal personal income tax rates and reduction of all other marginal rates to 29 per cent.' The second provides for a rationalisation of consumption taxation which substitutes a ten per cent Goods and Services Tax (GST) for the existing wholesale sales tax, the tax component of the fuel excise and customs duties. The benefits claimed for this tax reform are described as 'greater horizontal and vertical equity; increased incentives to productive effort; reduced bracket creep; greater transparency of the tax system; virtual elimination of taxes on inputs and reduced avoidance and evasion' (NFF, 1989, p. 2). Although most reform proposals of this nature are predicated on a revenue neutral basis, the NFF reform depends partly on successful lowering of aggregate public spending by all levels of government from the then current 39 per cent of Gross Domestic Product (GDP) to 35 per cent by fiscal year 1992- 93.' An annual growth rate of GDP of 4 per cent in real terms would enable this expenditure reduction target to be achieved and permit annual government expenditure growth in real terms of 1 per cent. Implications of this economic strategy for other areas of government finance are an annual public sector surplus of 1 per cent of GDP (or $3 billion) plus a public sector current revenue requirement of 36 per cent of GDP of which tax revenue is to count for 32 per cent of GDP (NFF, 1989, p. 3). Is this consumption tax reform without tears, or is this proposal an impossible dream because it neglects some of the more crucial economic realities which face Australia in the 1990s?