Sales tax, such as Australia's one-year-old GST, unduly discriminates against those without savings versus those with savings, according to a leading US scholar visiting Adelaide's UniSA.

Professor in economics at the University of Texas and the LBJ School of Public Policy, James Galbraith, says that hard economic analysis supports this conclusion and should end political grandstanding over the issue.

"It is not a matter of left and right, the facts clearly show that greater inequality arises from sales tax regimes," he says.

"Nevertheless, tax remains a key policy instrument of governments when dealing with unequal concentrations of wealth."

Professor Galbraith is in Adelaide to deliver a major public address entitled "Inequality in the world economy: A global coup?" at UniSA's Hawke Institute. 

As Director of the University of Texas Inequality Project, Professor Galbraith has researched inequality in the US and across the globe for more than a decade. 

"Some of our findings are dramatic. The pattern of inequality globally has grown since the 1980s. This is clearly linked with the rise of neoliberalism under world leaders such as Britain's Margaret Thatcher and the US's Ronald Reagan," he says.

"We use pay scales for our analysis. These can be measured, with incomes, over time."

  Prof Galbraith is the author of Created unequal: The Crisis in American pay and co-editor of Inequality and industrial change: A global view. His interest in inequality was sparked in the early 1990s during a major controversy about the source of rising disparities of wealth in the US.

  "There were two schools of thought - that inequality was a matter of either trade or technology. I concluded that neither explanation was adequate. The real source of inequality was macroeconomic performance, and in particular unequal patterns of pay," says Prof Galbraith. "This was largely a result of the falling demand for labour, increasing unemployment, and hence falling pay scales.

"In the late 1990s in the US, when we experienced more full employment, this inequality of pay declined. But the inequality of wealth increased! That's partly because we lived in a bubble economy for a period of time there, enclosed in the information sector's growth. But this has collapsed and we are going to deal with the consequences of this collapse for some time."

Professor Galbraith will be speaking at the Mercury Cinema, Lion Arts Centre, 13 Morphett Street, Adelaide at 6pm on Thursday 19 July. He appears as part of the Hawke Institute's Visiting Fellows Series 2001. More information can be found at http://www.hawkecentre.unisa.edu.au/institute/events.htm.

Professor Galbraith is available for earlier comment.

Media enquiries: Prof Alison Mackinnon, Director of the Hawke Institute,(08) 8302 4370 or Jessie Byrne, (08) 8302 0578