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Wednesday, 18 February 1987
Page: 283


Mr CONNOLLY(5.27) —It is appropriate that the honourable member for Lowe (Mr Maher), who has just addressed the House, observed that we-I presume he means the Government-are here to tax the Australian people. The evidence of the legislation before us today, in addition to the substantial number of Bills that have been introduced in the House over the past four years, places on the record for all time the fact that the Hawke Government is Australia's biggest and heaviest taxing government in this generation. The Taxation Laws Amendment Bill (No. 5) has been passed off as something of mere administrative convenience. We are told that it introduces an instalment system for the payment of provisional tax. It introduces a number of other arrangements.

However, as was pointed out by the Opposition spokesman on Treasury matters, the honourable member for Mackellar (Mr Carlton), this legislation, along with much other legislation, has been hanging around for a substantial length of time. For example, the proposal before us was initially announced on 19 September 1985. Yet it is being debated some 17 months after the Australian people were told by the Treasurer (Mr Keating) what they could expect.

Some people may imagine that the proposal to enable the payment of provisional tax on a quarterly basis is merely a matter of administrative convenience. What this House and the Australian people must understand is that there is much more than just an administrative convenience in this proposal. We were told by the Treasurer in his second reading speech that it will result in a gain to revenue of $100 million a year and a further $90 million in the first year of its introduction which it euphemistically describes as a windfall profit.

Surely, the point is obvious: Every time the Treasurer or the Minister Assisting the Treasurer (Mr Hurford) comes into this House to introduce changes to the taxation laws of Australia, the ultimate result is that Australian people and Australian business pay more and not less tax. Is it any wonder, therefore, that throughout this nation-from Queensland to Tasmania, from Western Australia to New South Wales-there is one solid cry being heard: `We have had enough'. The Australian people are simply not prepared to support a Government which has demonstrated its inability to clean up the taxation laws, which it claimed it intended to do, and introduce a system which is administratively viable for this country.

Let us look at the Government's record. First we had the fringe benefits tax introduced into this Parliament last year. That added a further 139 pages to the Income Tax Assessment Act and a revenue gain estimated at $575m. What the Government did not bother to tell us then, of course, was that the substantiation arrangements under that Act are so grotesquely complex that it is estimated that after about four years it will probably gain a further $300,000m in tax from that source alone. Another $25m is likely to be collected as a result of the capital gains tax. The non-deductibility of entertainment expenses will mean a saving of $330m and the abolition of negative gearing provisions, as I have said, will save $100m. The new rate of company tax which has been introduced will add approximately $500m to tax collections.

All of those measures mean additional pages in the tax Act. We have now reached a situation where it compares more than favourably in size with most of the telephone directories in Australia. Yet we are told repeatedly by the Minister at the table, the Minister Assisting the Treasurer, and by the Treasurer that the objective of Australian Labor Party policy is to simplify and to reform the taxation laws of Australia. Simplify? What bunkum! As for reform, reform equals higher taxation, and that is what this Government stands for today. One of my constituents, a Mr Noel Morris, who is a retired person, will be one of those affected by these small administrative changes to the provisional tax arrangements. He wrote me a letter last week, which later appeared in the Australian of last Saturday. I would like to read it for the benefit of the House.

Sir,

Behind the ``smokescreen'' of alleged reduced and fairer taxation, the Federal Labor Government by stealth has substantially increased tax payable in 1987 and 1988 by approximately 35 per cent for some millions of Australian taxpayers.

Taxpayers who pay tax annually in April each year, as distinct from PAYE taxpayers, already pay provisional tax three months ahead of PAYE taxpayers.

However, recent government tax legislation-introduced behind the publicity fanfare of alleged imputation of tax on dividends benefits etc-provides for an additional forward provisional tax levy of a six months instalment on December 1, 1987. Thus an additional 50 per cent provisional tax just prior to Christmas 1987, plus additional 25 per cent instalments on a quarterly basis on each of March 1, June 1, September 1 and December 1, 1988.

With my reducing income in my retirement years and the impact of inflation, I am forced to liquidate some heard-earned capital to meet additional tax levies which my taxation attorney assures me will amount to an additional 35 per cent payout during 1987 and 1988.

These additional provisional tax levies are designed to put provisional taxpayers on annual assessments one year ahead of PAYE taxpayers and will remain unrecovered until death.

This outrageous tax burden is certainly not tax reduction and as it must affect some millions of taxpayers, I am appalled at the lack of public outcry by the media.


Mr Hurford —That is just not true.


Mr CONNOLLY —If the Minister at the table wishes to disagree with the contents of that letter which appeared in the Australian last Saturday, this is the opportunity to do so. I am sure my constituent would be delighted to hear his response. I am happy for him to have a copy of the letter so he can do so. The point is that there are many people in Australia, in particular pensioners, who are, to put it mildly, confused by the continuous changes which we see literally every six months or so to the manner in which taxation is applied to ordinary Australians. Those taxpayers are facing a situation whereby under this Act it is presumed by the Commissioner of Taxation that their income will increase by 11 per cent a year. How grotesque can you get? At a time when we know full well that hundreds of thousands of Australians are seeing their incomes go in exactly the opposite direction, we are told by some buffoon in the Treasury or the Australian Taxation Office that somehow or other the incomes of these people will increase. I cannot see how any pensioner could possibly be placed in a position where he has to pay higher provisional tax because of the presumption-completely erroneous-that his income will increase over a 12 month period.

Just to make the matter more complex, one does not even have a choice as to whether one pays on an annual basis or a quarterly basis. The reality is that if income varies from quarter to quarter, as it does for so many hundreds of thousands of farmers and small business people, they will find themselves in the most extraordinary position because they will be taxed in advance of the income even being earned, generated or in their hands. People who are simply employing themselves often have to depend on other people paying their bills many months after the actual service has been provided. But such realities have been ignored in this legislation.

Maybe there were some problems in relation to the concept of a 12-month pay as you earn tax arrangement. Clearly there was some advantage for some taxpayers. If they were in the lucky position of having the income early enough, they could make alternative investments for up to nine months before paying the tax. There is an argument to be made there, but there is no argument worthy of the word which the Minister Assisting the Treasurer can put before the House to say that this is a provision which is neutral in terms of tax when in his second reading speech he has already told us that in fact there will be a revenue gain of no less than $100m a year, and a further $90m in the first year.

This measure will simply be seen by so many hundreds of thousands of Australian taxpayers as yet another demonstration of how a government that was elected in 1983, and whose leader said that his Government would introduce no new taxes, has year after year for four difficult years introduced so much taxation law that today we have such a vast amount of paper that virtually every accountant in Australia is asking: `Why can't I spend my time creating wealth for this nation; why do I have to spend so much of my time advising people on how to interpret and understand an ever growing complexity of regulations and taxation law?'. What the people of Australia are crying out for now is a rational system of taxation which is fair, which can be understood and preferably which will make sure that those who should pay tax will pay it.

But every time we add more and more paper to the taxation laws of Australia, the position gets more and more complex. The income tax Act is now some 1,230 pages in length and since the last time it was amended there have been no fewer than a further 708 pages added. I would have thought that if a parliament was worthy of its name, it would have been vital that the legislation which went through it be intelligible to the people. We must ensure that they understand the principles on which they are being governed. But what we are seeing in this area of taxation yet again is a missed opportunity, the failure of this Government to keep its promises, the total failure of this Government over four Budgets to control the level of its expenditure and the total failure of this Government to introduce monetary policies which are effective and which will return to us some semblance of optimism for this generation and those who follow us. The Government has had its chance and it has blown it. The Australian people are just waiting for the opportunity to return Government members to the opposition benches of this Parliament where it is their proper place to be.