Bill returned from the Senate with an amendment.

Ordered that the amendment be taken into consideration forthwith.

Senate's amendment—

(1)   Schedule 1, item 1, page 3 (lines 5 to 11), omit the item, substitute:

1    Subsection 221YA(1) (definition of provisional tax uplift factor )

      Repeal the definition, substitute:

         provisional tax uplift factor , in relation to a year of income, means, until the Parliament otherwise provides, 6%.

Mr MILES (Braddon—Parliamentary Secretary (Cabinet) to the Prime Minister) (8.35 p.m.)—I move:

That the amendment be disagreed to.

The reasons why we disagree to the amendment put to us by the Senate are the following. The coalition announced during the election campaign that it would reduce the provisional tax uplift factor to a level which is more in line with the nominal income growth in the economy. That is why the uplift factor has been reduced from Labor's eight per cent to six per cent in 1996-97. The government is also committed to ensuring that the provisional tax uplift factor in all future years is also set more in line with nominal income growth in the economy.

Under Labor, the uplift factor was set at unrealistic, high levels. This was merely a grab for revenue which put severe strain on the cash flow position of small businesses. Under Labor, the provisional tax uplift factor exceeded actual growth in income subject to provisional tax in each and every year between 1991 and 1994-95. In 1991 and 1991-92, Labor set the uplift factor at 10 per cent when the growth in income subject to provisional tax was negative in both years: minus 4.1 in 1990-91 and minus three in 1991-92.

Labor set the uplift factor at eight per cent for the last four years, including 1995-96. When the coalition moved an amendment to reduce the uplift factor to six per cent in 1995-96, Labor did not accept that rate; instead it retained the eight per cent rate. It penalised provisional taxpayers. This government will not allow that to happen again. This government will be ensuring that the provisional tax uplift factor in each year is set more in line with nominal income growth to prevent the tax grab under Labor.

The government will be setting the provisional tax uplift factor for each year when the most accurate information is available. For 1997-98 and future income years, that assessment will be best made at a later date. The rate for each income year will be based on the most accurate available forecasts of income growth for the coming income year when they are available.  Let us remember that it was the Labor Party which introduced the legislation to implement a default factor of 10 per cent. In 1990, the Income Tax Assessment Act was amended to set the uplift factor at 10 per cent for 1991 and to provide that the uplift factor would be 10 per cent for subsequent years unless parliament provided otherwise.

The government is not hiking up the uplift factor to 10 per cent after 1996-97; that is a pure and simple lie. We are moving this because we are standing by our position. We believe that it is important that we maintain our promise to the people that we would be reducing the uplift factor from eight per cent to six per cent, and that is fundamental.

Mr Martin Ferguson —The short list of promises that you—

Mr MILES —No, there is quite a long list of promises which we have kept, and this is one of the promises which we have kept. We disagree with the amendment which has been put to us by the Senate.