Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
 Download Current HansardDownload Current Hansard   

Previous Fragment    Next Fragment
Wednesday, 18 March 1987
Page: 886


Senator RICHARDSON —Is the Minister for Industry, Technology and Commerce aware of remarks made by Mr Bob Oser, national director of taxation services for Price Waterhouse, about business tax which are reported in today's Australian Financial Review? Does the Minister agree with Mr Oser's reported concern about the Opposition's tax promises and with his views on the Government's tax reform measures? Could the Minister also indicate whether Mr Oser's views are widely held in the business community?


Senator BUTTON —The report in today's Australian Financial Review has been drawn to my attention. Mr Oser, a tax expert, apparently has expressed concern over the uncertainty created in the business community by coalition promises to scrap elements of the Government's tax reforms, while failing to outline details of its entire tax package. While the Opposition thrashes around on these issues, I remind the Senate that the Government has undertaken unprecedented tax reform measures.

Opposition senators interjecting-


Senator BUTTON —I pause for a moment to listen to the interjections, just to confirm the suspicion I have often had that the Opposition is thrashing around still looking to deal with the symptoms rather than the cause. There is no doubt that that is so. The Opposition flaunts itself around this country, trying to pick up any element of tax policy it can get from any fringe group in the community and closet it all together and call it a policy, but it is a very difficult thing for it to do. I remind honourable senators of the steps taken by the Government, in particular the new company tax imputation system which will commence on 1 July this year and will provide the most significant business tax reform in the post-war period in Australia. This new system, known as full imputation, will mean that profits will be taxed once at a company level, but not a second time at the personal level when those profits are distributed as dividends. This is a revolutionary change for business, as well as for ordinary shareholders, and will give Australia one of the most advanced and efficient tax regimes in the world for business purposes.

The combination of personal income tax cuts, imputation and other complementary changes will result in reductions in the tax burden for shareholders and small business people by up to 40 per cent. This will be an enormous benefit to the entire community, but particularly to business people. This is combined with the $4.5 billion worth of personal tax cuts, $2 billion worth of 5/3 depreciation and $140m worth of research and development tax concessions this year. The direct cost of imputation credits and the abolition of Division 7 of the Income Tax Assessment Act will be almost $500m in a full year.


Senator Chaney —In Ballarat last night they talked of nothing else but this.


Senator BUTTON —Senator Chaney says that in Ballarat last night they talked of nothing else but this. I am fascinated by that. I do not think that people in Ballarat would have thought that there was much point in talking to Senator Chaney about this. The gross cost of all these changes will be met in part by the 3 per cent increase in the company tax rate to 49 per cent on 1 July this year. However, this will still leave a net benefit to taxpayers of $300m a year.


Senator Messner —What about the fringe benefits tax and the capital gains tax?


Senator BUTTON —I turn to Senator Messner on this issue, preoccupied as he is with the abolition of the taxpayer-supported free lunch. On top of the $4.5 billion personal tax relief, these concessions will be paid for in part by closing the holes in the income tax base relating to capital gains, fringe benefits and the substantiation of tax deduction claims. There is an increasing understanding of these benefits. As Mr Oser is reported to have said, the business community has started to adapt to tax reforms, in particular capital gains and fringe benefits taxes, except when the business community is psyched up by the Opposition, which is concerned to create an issue of this matter. In the reported view of Mr Oser the existing tax regime is preferable to the uncertainty generated by the coalition's vague promises and inadequate explanation of what changes would be made to other elements of the corporate tax system. Mr Oser, if he had the benefit of interjections in this place, would add that as another factor generating uncertainty. Mr Oser's views are quite widely held. From 1 July 1987, when the imputation system will be introduced, more members of the business community will see real benefits in the considered and comprehensive approach this Government has taken. As Constance Campbell, the director of a financial consultancy, wrote in the Weekend Australian:

The imputation system is a fundamental restructuring of our taxation system . . . it is astonishing that comment and discussion about tax reform can continue without cognisance of the watershed changes that have occurred as a result of this and other tax-package reforms.


Senator Messner —But where is your legislation? You have changed it once or twice already. How do we know what we are going to get?


Senator BUTTON —I appreciate that Senator Messner has on open mind on these issues, both at the back and at the front, but, if he would cease interjecting for a moment and listen to what I have just said, that commentator said it is extraordinary that the discussion about tax reform can continue without an understanding of the watershed changes that have occurred as a result of this and other tax package reforms.


Senator Chaney —Every shop and factory is agog about this.


Senator BUTTON —Senator Chaney is telling me that everybody is excited about this. I am not excited about it; I just think that it is a very important reform. I would be much more excited about it if the Opposition showed some understanding and appreciation of those changes which have been made. There has not been a question here on tax matters which has been based upon anything else than greed of a particular fringe group. That is what questions on tax matters are about in this chamber. Some better understanding of the changes which have been made is very important.


Senator Chaney —I ask the Minister to table the paper from which he quoted.


The PRESIDENT —Will the Minister table the document?


Senator Button —Yes.