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Wednesday, 10 October 1984
Page: 1581


Senator MAGUIRE(5.25) —I also wish to speak on the sixty-third report of the Commissioner of Taxation for the year 1983-84. In particular I wish to focus my remarks on the prescribed payments system, otherwise known as deductions at source for certain payments for work. These notably apply now in respect of the building construction, road transport, motor vehicle repair, cleaning industries and so forth. The prescribed payments system has operated since the beginning of September last year. It is interesting that in the report it is documented that in the 10 months since then $251m in revenue was collected by that tax. As a result of the introduction of the prescribed payments system thousands of taxpayers have been identified who failed to lodge income tax returns previously. It is interesting that the report indicates that applications for taxation file numbers have been received from 55,900 individuals and companies since the introduction of the scheme. The Commissioner has examined about a quarter of those 55,900 applications for new file numbers to ascertain exactly which tax returns are outstanding from those companies and people. So far it has been discovered that of the one quarter examined 11,000 or 71 per cent of the total had failed to lodge taxation returns previously. I think that is an indication of how necessary this system was. At page 24 the Commissioner points out that the prescribed payments system has made an auspicious start since its introduction in September last year I believe that the introduction of this system has had no dire consequences on industry or on employment in this country, the reverse of what was predicted in the Senate last year by opponents of the legislation. The system has had no dire consequences on economic activity but so far has netted the taxpayer $251m from people who were possibly not paying tax previously.

At another point in the report the Commissioner points out the number of people who yet again have filed false applications for dependent spouse rebates. It seems to me that some people never learn. In the last financial year 16,300 Australian taxpayers submitted false claims for dependent spouse rebates. As a result of those claims being detected, those individuals were required to pay an extra $2.5m in income tax. People do not seem to realise just how simple it is these days to match up spouses' tax returns by computer technology to detect false applications.

The report is also extremely interesting in that it documents that the total outlay on staff and resources to collect Australian taxes is still running at only one per cent of total tax revenue. Interestingly, the cost of the collection of income tax is just above the one per cent average; in other words, just over one dollar in every $100 collected in income tax goes on the collection itself. But it is striking that the cost of collecting the bank account debits tax and sales tax is now well below the one per cent average. Overall it is still costing Australia, at the national level, $350m to collect taxation.

One of the interesting features of the Commissioner's report appears on page 173. It is possible to calculate from the table under the heading 'Sales Tax Collections' that while in the late 1970s sales tax collection revenue grew by about 12 per cent a year in 1981-82 revenue leaped by 35 per cent and it leaped by a further 22 per cent in 1982-83. In other words, over two financial years there was a compounded 66 per cent lift in sales tax revenue. Of course the reason for that was the last two Budgets of the Liberal Government brought down by Mr Howard. In both the 1981 and 1982 Budgets there were very large increases in the range of goods subject to sales tax and significant lifts in the sales tax rates. As a result of those actions of Mr Howard there was a 66 per cent increase in revenue from sales tax in just two financial years. The overall effect of that was to lift the effective rate of sales tax in the community by four percentage points in just two years, from an average of 13 per cent to an average of 17 per cent, effective sales tax, with inflationary consequences.