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Wednesday, 19 November 1986
Page: 2505

Senator COONEY(4.50) —As I understand it, the Opposition is saying that when it gets back into office-if it ever gets back-it will abolish the fringe benefits tax. If we take that to its logical conclusion we get to this point: The fringe benefits tax is simply a tax on income, not in terms of financial income but in terms of benefits such as school fees, free cars, free and cheap loans, and so on. Does the Opposition intend to abolish income tax? Given some of its arguments so far, one might well expect that it will. As Senator McKiernan says, it will abolish so many taxes that there will be nothing left to pay for the running of the country. If it is not going to abolish income tax, why does it seek to abolish tax on certain forms of income? What is the difference between getting income in cash and getting it by way of a free car, schools fees being paid, free rent, free mortgages, and so on? Why should one section of the community have to pay income tax in respect of all income and others not?

The point has been made that employers pay the tax on fringe benefits. Then under the pay as you earn scheme, they pay tax on the ordinary income that is brought into the household by way of cash. They pay it and, of course, collect it from the employee. There is nothing to stop them from doing the same in this respect. So what it amounts to is a lot of rage, tumult and shouting over very little. It is hard to see why there is so much hubbub about it. We pay income tax, a tax whereby income is reduced in order to contribute to the upkeep of this country. After all we live in this country, whether in Queensland, Western Australia or elsewhere, and we take the benefits from it. We use the roads and enjoy the law and order which is maintained in the community. Why should we not contribute to that? Why should we not contribute by way of taxation?

If some of us pay tax on the income we earn, why should we not all pay tax on income? If we all do that taxes can be reduced. As has been pointed out here today, that is exactly what will happen. From 1 December the tax rates will be reduced for everybody in the community. This year nobody will pay more than 55c in the dollar and next year more than 49c in the dollar. After 1 December if one is earning less than $35,000 but more than $25,000 one will pay 46c in the dollar and next year one will pay 40c in the dollar, where previously one paid 48c in the dollar. So everybody will benefit. We can only benefit if everybody pays his or her fair share. If people had done that over the years we would not now be in the situation we are in. That is really what it is all about. We are simply asking people to pay their fair share.

Let us take as an example an ordinary working man who has taken from his pay an amount by way of pay as you earn tax-one cannot go into tax avoidance schemes if one is in the pay as you earn system-at the rate of 48c in the dollar on an income of between $28,000 and $35,000 or 46c in the dollar on an income between $19,500 and $28,000. If he had read the Sydney Morning Herald on 29 October this year he would have read that some of Australia's biggest and most profitable companies paid less than 5c in the dollar tax this year. Ordinary people who earn up to $12,500, who come home having worked hard for this country, for themselves, and to keep their families living in a decent style-humble though it may be-having read this would wonder why they should pay 25c in the dollar. They will see that the study looked at tax paid as a percentage of pre-tax profits for Australia's 150 top companies ranked by market capitalisation. They will see that John Elliott's Elders IXL Ltd paid 10.35 per cent.

Senator McKiernan —He is the Liberal Treasurer.

Senator COONEY —Yes. They will see that the Bond Corporation paid 13.95 per cent, and that George Herscu's Hooker Corporation paid 16.8 per cent-all less than they have to pay on their $12,500 a year. The article goes on:

Although the company tax rate is 46c in the dollar, the Herald study shows that the top 150 companies, taken as a whole, pay tax at an average rate of just over 28c in the dollar in 1986. These same companies paid tax at the rate of 37.12c in the dollar in 1980.

If those 150 companies had paid 46c in the dollar tax in 1986, the Government would have collected an extra $902 million-a significant sum given that we are talking about only 150 companies.

So this Government says that something has to be done about this. We have to redistribute income to help the ordinary decent citizen in this country who has one car perhaps, and two or three children whom he is attempting to bring up and send on school excursions for which he has to pay, who wants a reasonable amount of food and decent clothes. He does not want much beyond that; his ambitions by necessity are fairly limited in material things-I do not speak of ambitions he has in other areas. He says: `What is this all about? Why should I have to pay all this tax while other people and companies who earn vastly more than I earn do not have this tax imposed on them? They do not pay anything like I have to pay'. Is that not conducive to a feeling of dissatisfaction, a feeling that the community is not hanging together as it should? Some people are doing very well and others are not because of the tax impost. He looks at this principle and asks why this income should not all bear the same rate of tax. He is told: `There is an exceptional case if you do this and an exceptional case if you do that, and because of these exceptional cases the general principle of fairness is thrown out the window'. Is that fair?

The Opposition can bring up any tax it wants to-income tax, a tax on a property, a consumption tax, a tax on gifts or anything else-and find individual examples of how that tax hits hard. Income tax in many cases must hit hard, but the general principle, if there is to be a taxation system at all, must be based not on looking at the exceptions but on looking at the general thrust. The general thrust of the fringe benefits tax is simply that people who earn income, whether by way of cash or cash and other things-it does not matter how they earn it-ought to bear the same level of taxation. What is wrong with that as a principle? Why should the Opposition persistently raise exceptional cases that it thinks are hard and say: `This tax ought to go overboard'.

People talk about housing on farms in the outback and say: `Isn't this outrageous that people who get free houses should have that counted as income?'. What about the ordinary worker in the city who has to pay rent? Why should he or she get income to pay that rent and not have that income taxed? It is extraordinary that by some magic waving of a wand money that is paid by way of remuneration is to be taxed, according to the Opposition, whereas remuneration paid in other ways ought not be.

The other point is this: If there is to be an alternative to what the Government is doing-this has been brought out again and again by various Opposition speakers, and Senator Vigor raised this as well-what is it to be? The man who read the Sydney Morning Herald on Wednesday, 29 October 1986 might have also read the Daily Telegraph on 6 November to find this:

There is anxiety in many senior Liberal minds that John Howard has not cleared up public confusion on the Opposition's tax policy . . .

While the focus was on the Government and its tax policy, the pressure was lifted off Opposition leader John Howard to detail the Coalition's tax policy.

But what is that policy?

Senator Brownhill —It is going to give incentive for people who want to work and produce things for Australia.

Senator COONEY —If that is so, why does the honourable senator not say it? Instead of shouting an interjection across the chamber, why does he not get up and give the Opposition's policy? Obviously, the Opposition has policies. Senator Watson said `We are going to abolish the Labor Government's fringe benefits tax', implying that the Opposition has a fringe benefits tax which it will not tell us about. It is no good the Opposition announcing its tax policy by interjection across the chamber. With great respect, if it wants to keep going that way, we are happy to do it that way; but we would like to know what the Opposition's tax policy is. The ordinary man or woman reading his or her newspaper would read:

One of the other reasons they want to keep their policy under wraps is to avoid a lengthy period of criticism by the Government.

I can understand the Opposition being apprehensive that when it puts its policy forward it will be very much subject to criticism. But, if there is to be genuine debate across the chamber and discussion so that the people of Australia can understand exactly what the various tax policies are, the Opposition should put its policy forward. When people take the initiative and go in for great reforms, as this Government has done, of course there will be criticism. An illustration of that is the Income Tax Assessment Act itself. It is a very thick Act because of the way income tax provisions have been modified over the years, and quite properly so. But at least this Government has taken the initiative. It is trying to do something for the country. It is trying to make the tax system fairer. But the Opposition has not, at any stage I can think of recently, put forward a policy in respect of which people can make a judgment and ask: `Is it a fair policy, or are we being asked to elect a government which will bring in a policy which will distort the taxation system the way it was distorted previously and, apparently, the way it is to be distorted in the future?'.

The ordinary men and women reading the newspaper will say: `These companies are getting away with a lot. There is no policy on the part of the Opposition. We are left with the Government's policy which, in any event, brings down the rates at which we have to pay tax now and again next year'. They will see an economy which, because of the fairness with which the Government has approached the question of remuneration, has averaged a growth of 4 to 5 per cent over the last few years and people have had their real wages reduced. But in spite of that there is still an attempt by the Opposition to get rid of the fringe benefits tax; and, if the fringe benefits tax goes out, so do the tax cuts. That is what it is all about. That has not been denied by the other side. Honourable senators opposite have not indicated the machinery or mechanism by which there can be tax cuts and an abolition of the fringe benefits tax. The only conclusion is that, when honourable senators opposite proclaim the abolition of the fringe benefits tax, they are also saying that the tax cuts have to go. That is something that Senator McKiernan, this Government and I will not allow to happen. We will give the tax cuts on 1 December, and next year we will give more.