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Tuesday, 26 March 1985
Page: 782

Senator PETER RAE —I refer the Minister for Finance to the answer that he gave to me last week, in which he denied being committed to any particular mix of taxes, including a capital gains tax, as part of a package involved with a move to greater emphasis on indirect taxation. Does the Minister agree that he was rather more definite in a speech that he made to the Commonwealth and State women's advisers in Canberra on Friday last, when he said that it would be difficult to see how desired changes to the tax system could be achieved 'without some form of capital gains tax'? Will the Minister now explain what he sees as the virtues of a capital gains tax and indicate, without committing himself of course, whether he has now a personal preference for this means of obtaining extra revenue in the same way as has the Leader of the Government in the Senate expressed his personal preference?

Senator WALSH —Half of this Senate-people such as Senator Peter Rae, the Liberals, the National Party, the Australian Democrats and Senator Harradine-continues to pursue a policy which allows people who plunder the public purse to keep the money that they have already pinched after they have been found out, but says: 'We will take it off them if they keep pinching money from the public purse', as distinct from the policy of the present Government, which says: 'If you are found out pinching money from the public purse you will have to pay it back; you have got to pay back what you have pinched, as well as that which you may pinch the next day'. In other words, Senator Peter Rae and his ilk refuse to pass effective legislation which will take back from tax evaders the money that they stole yesterday as well as that which they may have anticipated stealing tomorrow. As long as they continue to pursue such a policy it is difficult to see how blatant tax avoidance schemes of the type endorsed by just over half this Senate last week can be closed off in any way other than by putting in place a mechanism which ensures that receipts or cash flows which are, in fact, income, but which are disguised as something else, are taxed as income.

Senator Peter Rae correctly quoted my answer of last week. I said that I do not see how it is possible to close off tax avoidance without some measure which changes the definition of capital gain, as it has been laid down by the courts and is accepted, and converts it to income. If Senator Peter Rae can suggest some way of dealing with that problem and thereby closing off the conversion of income into capital for the clear, explicit purpose of avoiding taxation, I should be very pleased to hear it. But at this stage, I cannot think of any other way of doing it. I can only assume from the implicit criticism-explicit criticism often comes from the Liberal Party and other Opposition parties on this question-that their favouritism towards tax evaders and tax avoiders is more general than that which they normally express; that is, not only will they refuse to issue a credible threat of retrospectivity to close off tax avoidance, but also they will stop any other means of closing off tax avoidance.

Senator PETER RAE —By way of supplementary question, will the Minister, instead of abusing his colleagues in another place who have engaged in tax avoidance and calling them plunderers of the public purse, answer the question I asked him, which was: Will the Minister, without committing himself necessarily, state whether he has a personal preference for a capital gains tax as a means of obtaining extra revenue? Does he or does he not have such a personal preference?

Senator WALSH —I have a very strong personal preference for putting a steel trap under tax avoidance and tax evasion. I just wish that members of the Opposition shared that preference.