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Tuesday, 23 October 1984
Page: 2220


Senator MAGUIRE(4.21) —I rise to speak in the discussion of the matter of public importance which has been raised by the Opposition; that is , the so-called concealment by the Government of its real intentions on taxation . I wish to point out that our actions in government on taxation speak for themselves. They indicate our taxation policies and the future direction of taxation in this country. We have already changed the taxation system in Australia. The income tax structure which will apply from 1 November will be different from that which exists at the moment. The tax system will be fairer, more equitable and more progressive. We have removed taxation concessions for the wealthy. We have attacked tax avoidance and tax evasion. It would have been an all out war on tax avoidance and tax evasion had it not been for the obstruction of certain members of this chamber who have tied our hands on the matter of getting revenue back from tax avoiders and tax cheats. We have lost $ 570m as a result of those actions. We would have been able to give greater tax relief had it not been for the blocking of our legislation by Opposition members and three members of the Australian Democrats.

Our new taxation system, our new system of income tax, will reduce the share of personal income tax in Australia's gross domestic product. I have cited figures on the share of income tax before in this chamber and I will do so again. Under the Fraser-Howard Government, in its last year in office, 1982-83, the share of gross pay as you earn income tax collections to gross domestic product was 12.7 per cent. Under this Government, in 1984-85 this share will be 11.9 per cent. That is a clear reduction in the share. Clearly this Government is not a high tax government as was claimed by the Leader of the Opposition, Senator Chaney, earlier this afternoon. We have moved away from the high tax policies of the previous Fraser-Howard Government.

As I have pointed out before, a key element of our reform of the income tax system is the move to a new lower 25c in the dollar tax bracket. It is the lowest tax bracket in Australia for years; in fact, since 1977-78. The best the Liberal Party could do in government was a bottom tax bracket of 30c in the dollar. As a result of those changes and as a result of the five-step system which we have introduced, most Australians will receive a tax reduction of $7.60 a week. Many will pay tax at that 25c in the dollar rate. In fact, as a result of that change 2 1/4 million taxpayers will move to a lower taxation bracket. We have heard claims about taxpayers moving into higher tax brackets. The Opposition has studiously ignored the fact that as a result of our reforms 2 1/4 million Australian taxpayers will move into a lower tax bracket after 1 November . That will have an effect in holding down the average rate of taxation which is the more important concept-not the marginal rate of tax, or rate of tax which is paid on the last dollars which people earn; the tax rate on all of their income.

We have introduced new rebates for social security beneficiaries. We have relaxed the income limit for the Medicare scheme. Our total reduction in income tax this year will be $2,100m in a full year. Our policies have been clearly demonstrated by the fact that we have raised the tax threshold for a number of Australians. In a full financial year 85,000 Australians will no longer pay income tax as a result of the measures introduced by the Government in this year 's Budget. Eighty-five thousand Australians will no longer pay income tax because of the introduction of new rebates for social security beneficiaries and also the combined effect of the new 25c in the dollar tax rate and the existing taxation rebates-for example, the sole parent rebate and the dependent spouse rebate. As I have already pointed out, we could give more relief if the Opposition and three of the Democrat senators would support us in our efforts to crack down on tax cheats by passing the recoupment legislation. On four occasions that legislation has been blocked in this chamber. The cost to revenue has been $570m, which could have resulted in very significant tax cuts for the remainder of the community, the honest taxpayers of this country.

Looking ahead, we see that our policy intentions are clear. I have referred to the income tax reductions which will apply from 1 November. I am sure that the Government's prices and income accord with the Australian Council of Trade Unions, which was drawn up over 18 months ago, has been subjected to great scrutiny by honourable senators opposite. The accord clearly provides for a tax review. Over 18 months ago that accord clearly provided for a review of the Australian taxation system. The review at which we are looking is not something which has come out of the air in the last few weeks. It has been a matter of policy for over 18 months. That review of the taxation system will be conducted by the Economic Planning Advisory Council. The Prime Minister (Mr Hawke) has made it quite clear that there will be no examination of specific tax options or particular taxes, until after that review has been completed. I hope that that review of the taxation system will lead to a national taxation summit. I think that would be a very interesting exercise.

It has also been made clear by the Prime Minister that as a result of that review of the tax system there will be no lift in the total taxation burden on the community. To spell it out in words of one syllable for the benefit of honourable senators opposite, if there are to be any extra tax collections on some account there will be reductions elsewhere in the taxation system, so there will be no overall increase in the burden.

It has also been made clear by the Government that there will be allowance for full public consideration of any proposed changes in the taxation system. There will be maximum consultation with the community. The Liberal Party and the National Party of Australia are scaremongering on the matter of taxation. In this respect I simply quote from the editorial in the Australian Financial Review of Monday, 15 October:

Taxation reform is, indeed, one of the real issues of this election campaign. The Opposition is determined to conduct a rather shabby course of instilling fear into whatever sections of the electorate have an interest in opposing rational tax reform . . .

That is what the Australian Financial Review said last week. The Liberal Party is now specifically focussing its attention on a capital gains tax. Senator Messner did so this afternoon. Of course, honourable senators opposite find it very convenient to ignore the fact that Australia already has a capital gains tax. A capital gains tax existed under the Liberal-National Party Government. Anybody who buys and sells assets within a 12-month period is liable to pay a capital gains tax under the income tax system. That provision has existed for many years. Anybody who purchases assets with the intention of making a profit on the purchase of those assets is liable for a capital gains tax under the income tax system. That system has existed for many years. I do not recall on any occasion members of the Liberal and National Party Opposition proposing that those provisions be done away with. I put on the record the fact that Australia already has a significant capital gains tax in those two areas.

I now turn to the Liberal Party policy which was supposedly released to the Australian electorate yesterday. On reading that policy I find that the intentions of the Opposition are well and truly concealed. I think that it will try to keep them concealed until after the election. Of course, after the election they will be very well concealed because the Opposition will lose the election and the policies will be buried forever. Last week we had a debate in this place on taxation. We on this side of the Senate asked the Opposition what it would do regarding taxation. The Opposition said that all would be revealed the following Monday. It said that it would tell us everything on Monday of this week, which was yesterday. Nothing of the sort happened. We simply need to read page one of the Melbourne Age this morning and an article written by Mr Russell Barton which stated:

. . . the Liberal policy is deliberately short of detail.

Last week various Opposition senators, including Senator Dame Margaret Guilfoyle , criticised the Government in the matter of tax indexation; that is, the adjustment of income tax brackets for inflation in the community. Is there to be tax indexation in the Liberal Party's tax policy? The Government has been castigated and chastised over this matter for weeks now. Will the Liberal Party index taxation brackets for inflation? We need answers to that question. The electorate needs answers to that question. Last week Senator Dame Margaret Guilfoyle told us that one million Australians had been pushed into higher tax brackets. Is the Liberal Party going to do anything about that situation if it is true? We have not had an answer on that. In this place and in the House of Representatives on a number of occasions motions have been moved and questions asked regarding the 46c in the dollar tax rate. Will something be done about the 46c in the dollar tax rate in the unlikely circumstances that the Liberal Party is elected to government? Will it reduce that tax rate? I looked through that Party's policy and I cannot find any suggestion that the 46c in the dollar tax rate would be reduced in the unlikely event that the Opposition won government.

How is the Liberal Party to finance its program of income splitting? Mr Howard referred to a value added tax, a retail turnover tax and the extension of the existing wholesale or sales tax. Which of those taxes would be increased? Which sections of the community would pay a burden as a result? I suppose that an extension of the wholesale tax is the most likely, judging by Mr Howard's performance in his 1981 and 1982 Budgets in which we saw unprecedented inceases in that tax with its extension to a wide range of new products and very sharp increases in the rates charged for existing products. In just two Budgets collections from the wholesale tax rose from $2,100m to $3,490m, a very large increase of 66 per cent. The average effective rate on taxed goods rose from 13 per cent to 17 per cent in just two years. That is how the present Opposition when in government went about fighting inflation; it increased wholesale tax and raised the prices charged to consumers.

In spite of Mr Howard's March 1981 taxation statement, he did the things to which I have already referred, such as increasing wholesale tax. It is very interesting to reread Mr Howard's 1981, tax statement. By indirect taxes I mean value added taxes, retail turnover taxes and the wholesale tax to which he referred yesterday. He said that they had effects on the consumer price index, that they increased inflation. He said they had further consequences as a result of any anti-inflationary measures which needed to be taken to hold down price rises. He said that those taxes could be regressive, that is, they would take more from lower incomes. What I found particularly interesting in Mr Howard's taxation statement of March 1981 was the very categorical statement that every additional $500m collected from indirect taxes added one per cent to the consumer price index. He said that on 12 March 1981.

We turn to the centrepiece of the Liberal Party's taxation policy which was announced last night-income splitting. In Mr Howard's March 1981 taxation statement he is on record as saying that full income splitting would cost $1, 100m in a full year, that is, over a billion dollars, based on 1981 figures. The Liberal Party's taxation policy refers to $18,000 of income being available for splitting, but which $18,000 is it? Is it the first $18,000? It is not clear. Is it the last $18,000? Clearly there was great confusion last night between Mr Howard and Mr Peacock on which $18,000 it would be.


Senator Peter Baume —It is the first $18,000. You know that.


Senator MAGUIRE —The honourable senator should look at what the Financial Review said. Is the honourable senator saying that Mr Howard is wrong? Today's Australian Financial Review states:

But last night Mr Howard conceded the accuracy of Mr Keating's claim at his press conference that on an income of about $60,000, he would receive a net benefit of $3,270 . . . while a person on $18,000 would get less than $400.

Mr Howard said there was nothing new in persons on higher incomes gaining greater benefit under tax changes.

That is what the Opposition's taxation spokesman, its Deputy Leader, said. There is so much confusion on the Liberal Party's tax policy that it does not know where it is going. The statement attributed to the Deputy Leader of the Opposition last night shows that he does not know what his tax policies mean.

What is to happen in respect of people who do not have incomes high enough to get taxation rebates for child care? That is what we need to find out about. It seems to me that the Liberal Party's taxation policy is targeted at people in the work force but does nothing in respect of child care costs for people who do not have incomes high enough to receive taxation rebates. That point was made by the Asprey Taxation Review Committee a number of years ago. The Opposition's policies on taxation are incredibly vague. I have indicated that our policies can be demonstrated by our actions to date. Our policies include ensuring that there is more progressivity in the taxation system, making sure that income tax is no longer a voluntary tax for the wealthy and ensuring that the ability to pay principle is restored to the taxation system.