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Tuesday, 5 May 1987
Page: 2292

Senator FOREMAN —My question is directed to the Minister representing the Treasurer. Is the Minister aware that both the Business Review Weekly of 10 April and Australian Business of 27 April ran issues with cover stories about tax shelters? Is the Government concerned about these two business magazines promoting tax avoidance in this way?

Senator WALSH —I am aware that the articles were published. In reply, may I say that there are two types of tax advising. The first involves providing taxpayers with sufficient information about the workings of the tax system to enable them legitimately to arrange their affairs so that they can pay the amount of tax they ought to be paying but not more. The second involves encouraging taxpayers to enter into contrived rearrangements of their affairs with the goal of paying less tax than they ought to pay. The first, of course, is quite acceptable and the second is not. I understand that the two articles mentioned fall into the first category, although in the case of the Business Review Weekly article, the magazine cover might lead people to expect the article to come into the second category.

The Australian Business article makes it clear that although the great days of tax avoidance in Australia are not entirely finished, the golden years are gone. The Australian Business article states:

The authors, led by national technical director of tax, Geoff Lehmann-

I interpolate that Geoff Lehmann is from KMG Hungerford's-

admit the days of driving trucks through tax legislation are over, pointing out that the infamous ``RATS attack''-

RATS being an acronym for reform of the Australian tax system-

of September 1985 (the Federal Government's Reform of the Australian Tax System statement) has blocked most of the big loopholes.

In contrast, when Mr Howard was Treasurer, he looked idly on while the country's tax system was subject to massive abuse. Now that it has been very largely cleaned up, instead of giving the Government credit for having done so, he promises to turn the clock back. If, for example, negative gearing were to be dequarantined and the capital gains tax were to be abolished, that would, once again, make income tax paying a voluntary activity among Australia's well-to-do. If one were an airline pilot or an Australian Capital Territory doctor-especially if the doctors got their $350 a week wage increase for their part time jobs, which the doctors union in the Australian Capital Territory is currently demanding-or someone in that sort of category with a very high income, it would be quite simple to buy some rental property with enough interest charges on the borrowings to wipe out most or all of one's tax liability and then sit back and wait to realise a tax-free capital gain on the property by selling to another airline pilot, another Australian Capital Territory doctor or whatever. Then, if one felt like it, to celebrate one could go to the most expensive restaurant in town and make the taxpayer pay half the bill for one's lunch.

I think it is most unfortunate that some people are still giving solace to tax avoiders. It is not the BRW article or the Australian Business article but people such as Senator Messner, Mr Howard and Bjelke-Petersen who want to turn the clock back on this Government's tax reforms.

Senator Jessop —I ask the Minister to table the documents from which he was quoting.

The PRESIDENT —Will the Minister table the document?

Senator Walsh —Sure. It is three pages.