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Tuesday, 16 October 1984
Page: 1754


Senator JACK EVANS(3.59) —The topic of the matter of public importance this afternoon is the refusal of the Government to disclose its taxation policies before the election. As Senator Dame Margaret Guilfoyle has so accurately put it, this Government wants to go into this election with a blank cheque from the electors of Australia. I am not sure the Australian electors have much of a choice. They either give a government or a party a blank cheque or they give it the opportunity to make a number of election promises which it inevitably breaks. So the electors are presented with a Hobson's choice, and that has been the pattern for many years.

The regrettable thing is that the Government and the Opposition today, and for many years past, have lacked a tax plan. So to talk about a government refusing to disclose its taxation policies would give one the impression that, in the past, we have always had clear policies enunciated prior to an election by either or both parties. In fact they have both been afraid-in particular the party in power has always been afraid-to put forward a comprehensive tax policy, a detailed tax plan, particularly if it is going into the election with a prospect of winning it. It knows that it will be abused following the election if it does not keep to every word of that tax plan. It is relatively easy, particularly if a party is going into an election with very little prospect of winning it, to come up with dream-like promises of tax proposals because the party knows that they will not have to be implemented for the next three or four years. It needs to be recognised that the abuse of an opponent's plan or an opponent's tax record is no substitute for having a plan which is clearly enunciated and set before the electors. The electors need to know the alternative plans of the political parties or, preferably, electors would like to know the long term tax plan for Australia irrespective of which party or parties are in power. The tax plan changes very little irrespective of which party wins the election.

We have found in this Parliament that the Liberal Party of Australia has quite willingly gone along with everything which has been put forward by the Labor Party Government and has voted 100 per cent for every proposal that has come forward in terms of its tax plans. The Liberal Party will undoubtedly do the same after the next election. It will again support wine taxes; it will support taxes on the necessities of life. It will do anything. It will even support a capital gains tax if the Government includes that in its next Budget. I ask anybody in the Opposition to deny that that is what it will do. It will allow capital gains taxes to be passed through this Senate if this Government introduces them, and we need to recognise that. I do not say that that is necessarily a bad thing because it is an indication of the recognition by all parties in this Parliament that Australia needs a comprehensive, long term tax plan. It needs a strategy that people around Australia can recognise, can live with and can plan for.


Senator Watson —Where is the Democrats' strategy?


Senator JACK EVANS —I am glad the honourable senator asked that question. There are a number of tax questions to be addressed when looking at a tax strategy, and the Australian Democrats have done just that. Firstly, one needs to address the philosophic questions; whether we use a tax system for a redistribution of income; whether we need to provide under that tax system protection of industry segments; whether we believe there is a need through the tax system to support disadvantaged individuals; and whether we have a stronger philosophical base towards government expenditure or private enterprise expenditure. In the last several years-four or five years in particular-there has been very little difference between most Australian political parties. If one reads their policies one discovers that they are all of one mind, they all follow a similar philosophy and the debate comes down to minutia in this Parliament because there is nothing to distinguish between the political parties in Australia in terms of a long term tax plan. The one ingredient that may be missing is the courage to carry out that long term tax plan because it must inevitably include a lot of unattractive aspects as well as the more attractive facets.

We would all like to pay a lower rate of personal income tax. It is interesting that governments rarely lower personal income taxes. The question of whether we have a flat or a progressive rate of taxation seems now to have been resolved. It is inevitable that we will have a progressive income tax system and only the flat-earthers are left favouring a flat rate of income tax. I think it is also uniformly agreed that we need gradually to move across towards a higher consumption tax ingredient whilst we are reducing our personal income tax ingredient. We must compensate in particular those on low and fixed incomes if we are to introduce a higher consumption tax, whether that be a retail tax, a wholesale tax, a turnover tax, a value added tax, or any other kind of consumption tax. We need to recognise that there are some people who would be disadvantaged, and they need to be looked after if consumption taxes are increased.

We need to address the subject of capital gains taxes and windfall profits. The Australian Democrats do not see the necessity for introducing a capital gains tax. We believe that the existing legislation either is in place or can be put into place with very simple amendments to cover those who are currently evading their tax obligations. Payroll tax, which is a State tax, is an iniquitous tax. I think that everybody in this Parliament would agree that it needs to be eliminated as rapidly as possible. I think that all parties are willing to get rid of a retained profits tax, the Division 7 tax. It just requires the courage to do so when one is in government. I think resource rent taxes will become non- partisan taxes in their application. We will see that the party which was speaking vigorously against them this year will warmly embrace them should it be re-elected to government. We need to consider the potential in the Henry George League plan for land taxes, not necessarily as the be-all and end-all but as one of the ingredients which flow from that philosophy in taxation. The big queries will be on gift duties, estate duties and wealth taxes. They will never be introduced unless there is a non-partisan approach because electorally they are too damaging.

We need to address the whole question of tax evasion and particularly we need to find better means of taxing those who are engaged in the cash economy. There are still hundreds of millions of dollars, if not thousands of millions, lost to any government through the evasion of taxes through the cash economy system of tax avoidance. We need to look as such things as tax splitting. In addition we need to consider whether spouse rebates should be replaced with family allowances to put the emphasis on child raising. We need to consider again the potential single purpose levies such as Medicare with other areas such as national superannuation and national workers compensation and make those taxes identifiable so that they cannot be gradually channelled into general revenue. We need to consider the potential there is in our tax system for income averaging and, at the bottom line, we need to be able to ensure that whatever tax system we have we do have a guaranteed minimum income for those who are unable to get into the Australian system.

The Australian Democrats would envisage many of these reforms going through relatively easily if we were able to achieve consensus and move into a long term tax plan on a non-partisan line. For that reason-I speak constructively and positively for my remaining few minutes in this debate-this week I will be introducing a Bill into the Parliament which sets out a timetable for comprehensive tax reform. It will be non-partisan and it will give every political party the opportunity to be involved in the planning of and preparation for that system. It will take advantage of the reviews which have taken place over many, many years but which have, to a large degree, been ignored because they are too difficult for one political party on its own to introduce. We had the report of the Asprey Taxation Review Committee, a comprehensive report second to none in this country's history, which is still lying on the shelf waiting for somebody to pick it up and really work it through . That was followed by the report of the Mathews Committee of Inquiry into Inflation and Taxation. We had the Campbell Committee of Inquiry into the Australian Financial System which again touched on a number of areas of importance to our taxation system and there have been many more reports. Those reports to which I have referred were handed down nearly 10 years ago. What have we been doing since then?

We are now saying that the Economic Planning Advisory Council will consider again what is needed in the tax system. I do not deny that there is a part to be played by EPAC in reviewing our tax system, but let us at least ensure that when EPAC comes up with its recommendations, there is a timetable, a plan and a multi -party approach to what it will recommend. The Australian Democrats' plan for a tax reform timetable will not put just an Australian Democrats point of view on the philosophy or the policies of tax; it will enable all political parties to have input. Beyond that, it will encourage input from the people of Australia. It will be a comprehensive timetable and it will, I believe, point the way not just to this Government or the next government, not just for the next 10 years but for the next several decades, as to what our tax policies for this country should be.

If we want stable government, if we want businesses to invest in this country because they see it as having a stable economic system with a comprehensive tax plan that does not bounce around from election to election and, within that three-year term of a Parliament, bounce around from a post-election Budget to a pre-election Budget, then let us work towards a comprehensive tax system which will achieve those objectives so that governments of Australia, Federal and State, the businesses and the taxpayers of Australia right across the board can recognise that here is a government, here is a nation with a tax system which is relatively easily understood, comprehensive, with vision and which looks into the long term future as well as the immediate future and enables people to plan for their tax.

I accept that the reform of the tax system as a whole is not a simple task. It is not just the task of finding a simple, efficient and equitable system. Although it involves obvious considerations, such as the efficient allocation of resources within the economy, the redistribution of wealth, social welfare, employment, industry protection, Federal-State relations, international trade and the management of the economy, I believe that we can achieve that goal. There will be ramifications for the business community because of the effects upon the legal status and the liabilities and responsibilities of legal entities , such as corporations and trusts. There will be many considerations- philosophical, political and real world political. I believe that this Parliament has the capacity to do it. On behalf of the Australian Democrats, I offer our support to any government which is willing to work towards the achievement of such a goal-a comprehensive tax plan which will see Australia through any highs and lows in the economy, and any problems that we see in our immediate or long term future.