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Wednesday, 10 April 1946


Mr HOLT (Fawkner) .- This bill seta out to give some minor relief in respect of items affected by sales tax. The Prime Minister (Mr. Chifley), when introducing the bill, said that the concessions set out in it would involve an annual loss of revenue amounting to £1,400,000, and he recalled that, in September, 1945, relief to the amount of £2,800,000 per annum was granted. He went on to say that the sales tax concessions allowed during the current year therefore involved a total revenue loss of -£4,200,000 a year. We are becoming in- creasingly familiar with the right honorable gentleman's technique. He comes to us with a proposal for a concession and tells us how much it will cost during the year, but he omits to tell us that, in point of fact, the tax collections are rising and that, even with the concessions, the Treasury will collect more than it expected to collect. This concession runs true to form. If honorable members examine the sales tax figures for the last few years they will be interested to find that in 193S-39, the pre-war peak year, sales tax revenue amounted to about £9,000,000, compared with more than £29,000,000, collected in 1944-45, the peak war year. In the budget the Treasurer forecast the collection of £28,000,000 in the financial year 1945-46. In the first nine months of 1945-46, £24,78S,000 was collected. Disregarding the fact that the tendency is for sales tax revenue to rise, we must reach the conclusion that, on those figures, £33,000,000 will be raised from the tax this financial year, or £5,000,000 more than the Treasurer estimated. Most honorable members will recall the predictions of the Leader of the Australian Country party (Mr. Fadden), who closely analysed the financial statements, that it would be found that the Treasurer's estimates were very conservative. These figures certainly confirm the argument which he advanced at that time. Let us examine the value of concessions compared with the actual receipts. It may be true, as the Treasurer pointed out, that in a complete financial year the concessions would involve an amount of £4,200,000; but, of course, the remissions already granted last September and by this bill do not operate for a full twelve months. The concessions 'given last September involve an amount of £1,900,000, and concessions given under this legislation involve, for the remainder of this financial year, approximately £350,000. The addition of those two amounts produces £2,250,000. Therefore, it will be seen that despite having conceded these reductions on certain items subject to sales tax, the Treasurer will actually collect in the course of this financial year approximately £3,000,000 more than the estimated receipts from sales tax which he gave when he introduced the budget. Surely the right honorable gentleman must be placed on a pedestal as the most reluctant benefactor that this Parliament has as yet witnessed ! Every concession has a catch to it, and invariably seems to bring in greater revenue to the Treasury. But we must not be too carping about tax concessions, however limited they may be.

I have given those figures to the House, not so much to attack the Treasurer for not having granted greater concessions, but, to indicate to honorable members that there is within the range of his original forecast still a considerable margin, which he could use if he desired to grant additional relief in respect, of sales tax. In a moment I shall suggest items on which, in the national interest, sales tax should be reduced. Let us examine, first, the main headings of this legislation. We are told that certain goods are now being removed from the Third Schedule- that is the schedule which applies sales tax at the rate of 25 per cent. - and the tax applicable to them, will now be 12-} per cent. Perhaps I should pause on the reference to the general rate of 12£ per cent, to remind the House that the pre-war rate, which itself represented an advance of 5 per cent, on the earlier rate of sales tax, was about- 6£ per cent. That was the standard rate just prior to the outbreak of the war in 1939. Honorable members will readily calculate that sales tax of 12£ per cent, does represent a very substantial burden of indirect taxation upon the Australian purchasing public. Further, it should be borne in mind that all these purchases are not merely for consumption. Many of them are purchases of capital goods for use in industry.

One important schedule of items which is referred to in this legislation is that which deals with certain processed food Stuffs. I am somewhat astonished at the inconsistency which the Government has displayed here. It is always easy for honorable members to find anomalies in sales tax legislation, and. the Treasurer himself has .conceded that every lot -of remissions creates its own- set of anomalies ; but here, I confess to a special and personal interest, because most of the processed foodstuffs which I am interested in manufacturing seem to have eluded the Treasurer when he granted these concessions. He has included under those items upon which relief from sales tax is to be granted imported fish, fish of Australian origin, meat and meat products, vegetables processed or treated, mixtures of vegetables, meat, canned 'or bottled, cider, essences, &c, but other items which are in general . use to-day, such as processed puddings, desserts, soups; junkets and jellies are to remain in the taxable field. I suggest to the Ministor assisting the Treasurer (Mr. Lazzarini) that these items should be closely examined. To-day more than at any previous time in the life of our people, because of the shortage of domestic labour and probably because more people, particularly women, are working, there has developed a more extensive use of various processed foods or ready-to-serve foods; consequently, the maintenance of the high rate of sales tax of 12^ per cent, on foodstuffs of this kind represents a heavy additional burden of tax on the breadwinner. The larger the family, the heavier the burden becomes. I ask the Minister to examine that particular aspect.

There is another important field which, having regard to the finances available te the Treasurer, should be granted relief from sales tax. I refer to items which are used in the building of a modern home. It is true that the Government has removed sales tax from the actual materials which went into the construction of a home, but a home contains far more than timber, bricks and cement. For example, such items as paints and lacquers are still subject to the high rate of 12-& per cent. Carpets, upon which sales tax was reduced last September from 25 per cent, to 12£ per cent, and floor coverings generally are an important item of expense in a modern home. They still bear a rate of tax double that which was in existence prior to the outbreak of war in 1939. Therefore, one could describe it fairly as a war-time emergency tex rate. Another household item subject to sales tax at the rate of 12-i per cent, is crockery. I emphasize this phase more particularly because house construction costs have risen very sharply. Despite remissions of sales tax on building .materials, the cost of home-building ' has increased inordinately, and falls particularly heavily upon young servicemen who desire to re-establish themselves, and young men and women who are trying to finance the construction of their homes in the next few years. Although sales tax has been removed from the material elements of a home such as bricks, timber, and cement, all these other item? of expense are still subject to a punitive rate of tax. Furniture also carries a rate of 12-J per cent. These items should be examined before the Government introduces its next budget, because, as I have already shown, the Treasurer, even on the remissions of tax which he has granted in this legislation, will collect nearly £3,000,000 more .from sales tax than he expected when he cast his Estimates. It is probable that receipts from sales tax, even at the present, rates, will be much greater in the next financial year. Now that consumer goods are becoming more freely available as war-time production is converted to peace-time uses, people will be able to buy many things for the home and for their own needs which previously they were not able to purchase. People of even modest means to-day regard a refrigerator as a neces-. sary adjunct to their home life. It may be a kerosene refrigerator in the country, or a gas or electric refrigerator in the city, but people who were able to accumulate modest savings in the war years envisage that at an early period, they will be 'able to buy a refrigerator for their homes, if they are lucky enough to possess homes. But refrigerators now carry sales tax at the rate of 12^ per cent.

This afternoon I received a telephone call from the manufacturers of cinematograph plant in Sydney, who directed my attention to the fact that the equipment bad not received any relief from sales tax, although most forms of capital equipment, which are to be used in various income-producing ways, are now receiving the benefit of remissions. There is, I know, a widespread belief that the people in. this industry have had most extraordinarily favorable conditions during the war. That, no doubt, is true of some of them; but what most people do not realize is that for every large and consequential entrepreneur in the industry, there are perhaps five or six who are carrying on in a small way in country districts and the outer suburbs to whom the capital equipment which they put into 'their theatres represents a very large item. It was explained to me that equipment of this character at present carries the high sales tax rate of 25 per cent., although sales tax on radio receivers was reduced last September to 12-A per cent. The manufacturers pointed out to me that when they set to work, they produce enough equipment probably to cover a two-year period, and, consequently, any remissions which, may be granted later will not be of benefit to the man who, after being unable to procure this equipment for -six or seven years, now desires to install it in his theatre. That man will have to pay a high rate of tax. As the matter had been brought to my notice, I said that I would ask the Treasurer to give the request sympathetic consideration. In the past, it has not been the practice of the Treasurer to accept amendments during the debate on sales tax legislation, and, no doubt, he had sound reasons. The very anomaly that one sets out to remove by an amendment might, in turn, . create many other anomalies ; but he has shown a disposition, when a case was established in the House, to examine it with a view to seeing whether relief could be granted when the next amending legislation was introduced. I hope that between the passing of this bill and the presentation of the budget, the Treasurer will find it practicable to grant relief in respect of the items which I have mentioned, and reduce the standard rate of tax to approximately the pre-war figure.

As all honorable members have pointed out from time to time, sales tax is a most unsatisfactory tax, because its incidence does not, as the income tax does, relate to the circumstances of the person who has to pay it. The sales tax bears heavily upon the family man in the lower income ranges, who carries a much heavier burden, proportionately, in sales tax than in income tax. This tax has a depressing effect upon industry and causes increased prices. That, of course, in turn, has a deadening effect upon economic development. I therefore ask the Government to investigate, before the budget is presented, the practicability of granting substantial reductions of the rates of sales tax.







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