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Thursday, 25 June 1998
Page: 4086


Senator SHERRY (1:15 PM) —I do not intend to take the 20 minutes that is allocated, but I do intend to spend five minutes on some issues relating to tax reform. The Taxation Laws Amendment (Company Law Review) Bill 1998 is an important piece of legislation, specifically in respect of anti-avoidance provisions. The amendments principally relate to situations where amounts are paid as capital rather than dividends to confer a tax advantage on the person receiving the benefit and the company paying the amount. The legislation deals with matters relating to the capital gains tax, and I think it is important, in the context of tax reform, which this is part of, to deal very briefly with some underlying issues that relate to the current tax reform debate, which is an important debate to have.

I take the opportunity to put on record the situation in respect of personal income tax rates that existed when Mr Howard, the current Prime Minister, left office on the defeat of the then Liberal-National Party government in 1983 as compared with the situation that we had in 1996. It has been claimed in the current tax reform debate that no reform in fact took place under a Labor government. I draw the Senate's attention to the fact that in 1983, when Labor gained government, the marginal tax rate for people earning between nought and $4,595 was nil; the rate for people earning between $4,595 and $19,500 was 30c in the dollar; for those earning from $19,500 to $35,788 the marginal tax rate was 46c; and for those earning over $35,788 the marginal tax rate was 60c in the dollar.

It is not correct for Mr Howard and Mr Costello to claim that there was no significant tax reform. When Labor left office, it had made significant changes to the marginal income tax rates. We have a situation now, as a result of Labor reform, where those earning taxable income between nought and $5,400 have a nil marginal tax rate; those earning between $5,400 and $20,700 have a marginal tax rate of 20c in the dollar; those earning between $20,701 and $38,000 have a marginal tax rate of 34c in the dollar; between $38,001 and $50,000 it is a 43c marginal tax rate; and in excess of $50,000 it is a 47c marginal tax rate. I draw the attention of the chamber to the reduction in the top rate from 60c to 47c and the reduction in the middle range tax rates from 46c to 43c or 34c marginal tax rate. That was very significant reform of the income tax system.

I could speak extensively about other aspects of the current tax reform debate. However, in the interests of ensuring that the non-controversial legislation we have before us is passed expeditiously, I will not deal at length with any more issues at this time.

The other point that Mr Howard and Mr Costello made strongly prior to their election in 1996 was a firm commitment to no new taxes and no increase in existing taxes. This morning I looked at the list of tax changes in this country since the election of the current government. There is evidence of a tendency to call taxes by other names. We all know about the infamous superannuation surcharge. We have also had a nursing home tax introduced, an accommodation charge for nursing home residents up to $4,380 annually, which is $12 a day. With regard to the infamous superannuation tax, called a surcharge, $500 million a year is expected to be collected.

There are a significant number of associated problems that I will not go into today; that would require a 20-minute speech in itself. The private health insurance tax, yet another surcharge, is $500 a year. There are also various customs charges, a reef tax and a drugs tax. So there have been a range of new taxes or increases in existing taxes under this government, and that is a significant breach of the commitment given by the Prime Minister at the last election.

I will conclude on this point. There has been no more significant breach in the tax reform debate than the breach of the rock solid commitment given by the Prime Minister that we would never, ever see a goods and services tax—never, ever. I do not think we should miss an opportunity to remind the Australian public about the commitment given by the Prime Minister. Of course, he has followed it up with a new commitment: if a goods and services tax is introduced by the current government, should they be re-elected, we will never, ever see the goods and services tax increase once it is introduced. If the Prime Minister can redefine his commitment that we would never, ever have a goods and services tax, how can we believe his commitment that it will never, ever be increased should it be introduced?

Question resolved in the affirmative.

Bills read a second time, and passed through their remaining stages without amendment or debate.