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Tuesday, 23 October 1984
Page: 2215


Senator JACK EVANS(3.51) —This debate is symptomatic of the problems and the causes of Australia's whole tax system. All parties agree that we need tax reform. All parties agree that there are severe inequities, both legal inequities already written into the system and illegal inequities through which people can take advantage of the system. All parties agree that no one can understand the tax Acts as they are currently written, but no party can give a pre-election commitment to comprehensive reform because its political opponents would flay it in the run up to this election. It is time we agreed that there be no promises on specifics in this election campaign because, let us face it, nobody believes politicians on tax promises, least of all the politicians themselves. Instead of making promises on specifics I propose that all political parties agree that the next Parliament-of whatever political complexion-will form an all-party committee to implement the results of the inquiries that some of us have spent the last 10 years contemplating.


Senator Messner —How can you bind another parliament?


Senator JACK EVANS —Senator Messner may not have got even to the stage of contemplating them. Another parliament could be bound in exactly the same way as Senator Messner has endeavoured to bind his next government, if he should be re- elected. I am suggesting that we all bind our political parties to accept the need to review fully the tax system. We have got the background. We do not need to go through the whole exercise again. We are three parts of the way down the road, but there is not a political party which has the courage to pick up the results of all those inquiries, and to act on them and completely reform Australia's tax system.

Let us look at what are the real intentions on taxation and that is what this matter of public importance is about. First of all let us look at the real intentions on taxation of the Australian Labor Party, the Liberal Party of Australia and the National Party of Australia. The National Party's taxation policies are different from those of the Liberal Party because it is still comprised of a majority of flat earthers who are undisguised tax reducers for the multinationals and do not have much interest in the rest of the tax regime. the Labor Party's real intention is to carry out the bidding of the unions and to stay in government. The Liberal's and National's real intention on taxation is to do the bidding of big business and to stay in government when it wins back government. The Australian Democrats have a real intention-I am not enunciating it for the first time today; I have been spelling it out from the day I was elected to this Parliament-to get agreement from all parties to a sensible tax strategy with long term benefits for all Australians, not just one vested interest group.

Why are we having a big tax debate at this time? Why are we having our second MPI on taxation in a few days? It is because some people in this Parliament believe that it is possible to fool some of the people, particularly swinging voters, for some of the time, particularly for the next five and a half weeks until election day. There may be another ulterior motive, and I suspect that there is: We are having this big tax debate to keep the vital issues off the campaign agenda. Practically everybody outside this Parliament would agree that the biggest issue, which is receiving very little publicity, is unemployment, the tragedy of unemployment in this country, the tragedy of three million people living under the poverty line. Here we are contemplating whether or not we will have a capital gains tax.

Over the next few weeks we should be considering whether we have an adequate defence system. It is a huge question mark that has recently been raised but it is getting no running from either of the major political parties in this country . We should be looking at Australia's inability to educate its youth but instead we are talking tax hypotheses. We should be looking at how to reduce our health costs and how to stop the declining health of the nation. There are many more important issues-far more important than these half-baked half promises that are coming up on taxation.

Let us consider the issues on taxation that have been raised in this campaign so far. First of all we had capital gains raised as the big issue on this election. The Liberal Party and the National Party threatened that the Labor Party would introduce a capital gains tax. I said earlier in this speech that nobody really understands the tax laws in this country. It might be a remarkable revelation to the Liberal Party and the National Party to learn that we already have a capital gains tax. How can Labor introduce something that we already have ? It exists today. We do have a tax on capital gains. In fact-here is a surprise for the Liberal Party-it taxes the family home. For quite some years the Liberal Party lived with a capital gains tax on the family home. There was never a word, never a whisper that such a tax existed. Perhaps it did not know. Perhaps only the Commissioner of Taxation and the people he taxed knew and they did not tell the Liberal Party. However, it has been there all the time. It was aimed at taxing speculative gains and it is a quite useful tax in that regard. It could be extended under the existing laws. Right now the Tax Commissioner, without any support or guidance from any government, is looking at the potential for expanding the existing laws on capital gains taxes. The question is not if we are going to have a capital gains tax but how much further it will go and when it will be expanded.

After the capital gains tax debate the next episode was the Liberal Party's policy, a policy which quite deliberately concealed a lot of important issues. It talked about a consumption tax. Again, that is a tax we already have, so to pretend that the Liberal Party will suddenly introduce a new tax that will solve the problems of the nation is a nonsense. The Liberal Party talked about three options: Firstly, a value added tax, which it downplayed because it has heard that it is unpopular in other parts of the world, where it has been very poorly and badly administered; secondly, a retail consumption tax; and, thirdly, a wholesale consumption tax, and again we already have such a tax. It concealed the amount of tax reductions there would be for those who would be able to split their incomes. Some very interesting things came out of the introduction of the Liberal Party's tax policy. The first was that it became quite obvious that this was an election ploy because it would benefit mostly middle and high income earners-those who are likely to swing their votes around from one side to the other. The contradictions that have come out of the policy are fascinating-for example, the rejection today of the claim by the Treasurer (Mr Keating) that he would benefit by 60c in the dollar under the Opposition's proposals. According to Mr Howard, if Mr Keating split his income his benefit would be taken from the bottom $18,000. That is fascinating, because yesterday the same Mr Howard was talking about benefiting those who have moved from the 30c bracket to the 47c bracket. How is it that one section of the taxpaying community will have its benefit from the top or the high rate and the other will be able to take it only from the bottom or the low rate? That is an interesting question and I will be fascinated to hear the answer. Perhaps the Opposition has two answers, depending on the audience. Obviously it has two answers on another aspect of taxation policy, the consumption tax. The Liberal and National parties have talked about a consumption tax without revealing any rates. So we do not have the slightest idea what its effect is likely to be. Mr Risstrom told us exactly what its effect was likely to be and one suspects that there is a crystal ball in his office that only he can read.


Senator Messner —He has a computer.


Senator JACK EVANS —Yes indeed, into which he puts all the variables. The taxation items are unknown in relation to this consumption tax. For example, we do not know whether the coalition will try in some very skilful way to reintroduce a tax on the necessities of life, which the Australian Democrats and the Labor Party rejected when it was tried last time. We do not know whether this consumption tax would tax services. The coalition has indicated that it would, but how far will it go? Would a tax be added to our dentist's bill, to our doctor's bill, to milk deliveries and to lawyers' services? Would it tax preachers for marriages, funerals and christenings, because these are all services? Would the coalition really spread the services tax right across the board or would it be very selective in order to make sure that its friends are not taxed, because that has been the pattern of the Liberal and National parties in the past. They look after their friends when they are in government. I might add that it is also a pattern of the Labor Party to look after a different group of friends when it is in government.

What would the effect be on the consumer price index? There would be no real impact, according to Mr Howard. He says that he would make a one-off adjustment. That is a fascinating solution for a tax that would be phased in. Whoever wrote page 5 of the Opposition's tax policy did not know what was typed on page 4. It is obvious that this is another policy which is being introduced to be discarded . Like all the coalition's past promises, like tax indexation, this is a promise to be broken if the coalition is ever elected.

The Labor Party's policy is that there will be another inquiry after the election. This inquiry will embrace broadening the tax base. How? Will it include capital gains taxes, wealth taxes, death duties, consumption taxes, the cash economy, more taxes on petrol, resource rental taxes? There is a whole range of possibilities with no specific proposals. In the event, what will come out of this whole campaign and this debate on taxes will simply be some electioneering. It has nothing to do with reform of the tax system. It has nothing to do with genuine commitments to take this tax system, turn it upside down and inside out and make it into something that will really benefit Australians. No one has talked about some of the vital issues in the tax system that concern people at present. The reason for that is that everyone is afraid to raise these issues in a pre-election period.

I suggest that rather than getting stuck into each other we should all accept that we need a new system and that if it is to mean anything to the people of Australia it will have to be a system that will outlive one government. It will have to be a system that is reformed, probably over a period of seven or eight years, and therefore it will need a bipartisan approach. To assist this, last week on behalf of the Australian Democrats I introduced a Bill to provide a timetable for a bipartisan tax reform for Australia to build on the wonderful work that was done by Asprey and Mathews and many others who have looked at our tax system and its complexities. Instead of letting all this lie on the back burner for eight years as the Liberals did, and for 18 months as this Government has done, I believe that we are now mature enough as a nation to accept that taxation has to be non-partisan. We need a strategy that will take us through at the very least to the turn of the century-a tax strategy that will be acceptable not just to the politicians but to all the people of Australia.