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Wednesday, 23 November 1938


Mr CASEY (Corio) (Treasurer) .- I move- 1. (a) That a tax shall be imposed upon all flourmanufactured in Australia by any person and, on or after the fifth day of December, One thousand nine hundred and thirty-eight, sold by him or used by him in the manufacture of goods other than flour.

(b)   That the rate of tax, not in any case exceeding Seven pounds ten shillings per ton of flour, shall be such rate per ton of flour as the Minister, from time to time, and in accordance with a recommendation by the Wheat Stabilization Advisory Committee, constituted under the Wheat Industry Assistance Act 1938, declares, by notice published in the Gazette, to be the amount by which the price per ton of flour based upon the price of wheat per bushel free on rails at Williamstown in the State of Victoria, at the time of the recommendation by the committee, is less than what, in the opinion of the committee, the price of flour would be if the price of wheat per bushel free on rails at Williamstown were Five shillings and twopence. 2. (a) That a tax shall be imposed upon all flour in excess of One thousand pounds in weight held in stock on the fifth day of December, One thousand nine hundred and thirtyeight, by any person, not being the manufacturer of that flour.

(b)   That the Tate of tax, not in any case exceeding Seven pounds ten shillings per ton of flour, shall be such rate per ton of flour as the Minister, in accordance with a recommendation by the Wheat Stabilization Advisory Committee constituted under the Wheat Industry Assistance Act 1938, declares, by notice published in the Gazette, to be the amount by which the price per ton of flour based upon theprice of wheat per bushel free on rails at Williamstown in the State of Victoria, at the time of the recommendation by the committee, is less than what, in the opinion of the committee, the price of flour would be if the price of wheat per bushel free on rails at Williamstown were Five shillings and twopence. 3. (a) That a tax shall be imposed upon all flour, biscuits, buckwheat flour, cakes, cremalt, macaroni, molestella, Passover bread, spaghetti, and vermicelli, imported into Australia and, on or after the tilth day of December, One thousand nine hundred and thirty-eight, entered for home consumption under the law relating to customs.

(b)   That the rate of tax in respect of flour so imported or used in the manufacture of the other goods specified in the last preceding paragraph, not in any case exceeding Seven pounds ten shillings per ton offlour, shall be such rate per ton of flour as the Minister, from time to time, and in accordance with a recommendation by the Wheat Stabilization Advisory Committee constituted under the Wheat Industry Assistance Act 1938, declares, by notice published in the Gazette, to be the amount by which the price per ton of flour based upon the price of wheat per bushel free on rails at Williamstown in the State of Victoria, at the time of the recommendation by the committee, is less than what, in the opinion of the committee, the price of flour would be if the price of wheat per bushel free on rails at Williamstown were Five shillings and twopence. 4. (a) That a tax shall be imposed upon all wheat exported from Australia on or after a date to be fixed by proclamation, not being wheat upon which tax is imposed in accordance with the fifth resolution of these resolutions.

(b)   That the rate of tax, not in any case exceeding One shilling per bushel of wheat, shall be such rate per bushel of wheat as the Minister from time to time, and in accordance with a recommendation by the Wheat Stabilization Advisory Committee constituted under the Wheat Industry Assistance Act 1938, declares, by notice published in the Gazette, to be the amount which bears the same proportion to the excess of the price of a bushel of wheat free on rails at Williamstown in the State of Victoria, at the time of the recommendation by the committee, over Five shillings and twopence as the quantity of wheat which, in the opinion of the committee, will be consumed in Australia (whether as wheat- or as products derived from wheat) during the twelve months following the preceding first day of October bears to the total crop which, in the opinion of the committee, will be harvested during that period. 5. (a) That a tax shall be imposed upon wheat grown in Australia and, on or after a day to be proclaimed, sold to a wheat merchant.

(b)   That the rate of tax, not in any case exceeding One shilling per bushel of wheat, shall be such rate per bushel of wheat as the Minister from time totime, and in accordance with a recommendation by the Wheat Stabilization Advisory Committee constituted under the Wheat Industry Assistance Act1938, declares, by notice published in the Gazette, to be the amount which bears the same proportion to the excess of theprice of a bushel of wheat free on rails at Williamstown in the State of Victoria, at the time of the recommendation by the committee, over Five shillings and twopence as the quantity of wheat which, in the opinion of the committee, will be consumed in Australia (whether as wheat or as products derived from wheat) during the twelve months following the preceding first day of October bears to the total crop which, in the opinion of the committee, will be harvested during that period.

The place of these taxing bills in the wheat price stabilization scheme has already been largely explained by the Minister for Commerce (Sir Earle Page) in his second-reading speech on the Wheat Industry Assistance Bill. It remains fdr me to explain the present motion and supporting bills merely as part of the legislative machinery for the collection of revenue by means of a flour tax.

The subject-matter and the scope of the legislation is much the same as in the case of the flour tax legislation, which I introduced in 1933, and again in 1934. While the price of wheat, f.o.r., Williamstown, is less than 5s. 2d. a bushel, the effect will simply be to authorize the collection of a tax on flour consumed in Australia.

The three features of this scheme which distinguish it from previous flour tax legislation are -

(1)   The variable rate of the tax.

(2)   The more orless permanent character of the tax, that is, a tax designed to stabilize the price of wheat for home consumption for an indefinite period of time.

(3)   The provision for a tax on wheatgrowers when wheat prices rise above the point - 5s. 2d. a bushel f.o.r. Williamstown - at which the tax on flour consumed in Australia will become unnecessary and will disappear.

The significance of these three variations of the earlier flour taxes will appear upon an examination of the speech which the Minister for Commerce has just delivered when introducing the Wheat Industry Assistance Bill. Perhaps I should add a few explanatory remarks about the variable rate of tax, and the provision for a tax on wheat-growers in times of high wheat prices.

For an indefinite period of time the taxwill be confined to flour consumed in Australia, supplemented by a com pensating tax on the more or less negligible imports of flour, and of goods manufactured from flour. The rate of tax in this field will be designed to provide a fund sufficient to return to wheatgrowers as a whole - and, in the main, on the basis of wheat individually produced - the equivalent of what they, as a whole, would receive if wheat for home consumption were sold at 5s. 2d. a bushel, f.o.r Williamstown.

The rate of tax will vary according to the fluctuations of the price of wheat. It will increase when wheat prices fall, and will decrease when wheat prices rise. The tax on flour for home consumption will disappear when wheat is 5s. 2d. a bushel f.o.r. Williamstown. The variations of the rate, and the period for which any particular rate will be operative, will depend upon the recommendations of the Wheat Stabilization Advisory Committee as to the amount by which, and the time when, flour prices ought to be increased or decreased in consequence of rises and falls of wheat prices during the period in which the price of wheat does not exceed 5s. 2d. a bushel f.o.r. Williamstown.

It should not be assumed that the operation of the tax is at the discretion of the Wheat Stabilization Advisory Committee. The terms of the imposition make it quite clear that the tax is imposed by Parliament, and the control exercised by Parliament over the rate of the tax is evinced by the provision of a maximum rate of £7 10s. a ton of flour, and by the provision of a rigid formula for the variation of the rate within the limit set by the maximum. The only real discretion delegated by Parliament to the committee is the selection, with due regard to fluctuations of wheat prices, of the appropriate times for variations of the rate of tax. The maximum rate of £7 10s. a ton is conceived as the rate which would be appropriate if wheat prices fall to the lowest point - about 2s. a bushel f.o.r Williamstown - to which they could reasonably be expected to fall.

The legislation provides that, in the event of wheat prices rising above 5s. 2d. a bushel, f.o.r. Williamstown, a portion of the excess shall be levied as a tax on the first purchase of wheat from the wheat-growers in Australia, and upon the export of wheat which has not, prior to export, been the subject of a sale to a person in Australia.

This is the farmers' contribution to the stabilization scheme, and is an essential feature of the longrange scheme visualized and recommended by the State Premiers. Its effect will be that, whereas consumers of certain wheat products, for example, bread and macaroni, will, in the interests of wheat-growers, bear the burden of the tax in times of unprofitable wheat prices, wheat-growers, in times of high wheat prices, will provide a fund designed to prevent increases of the prices of those products when wheat prices are high and, of course, profitable.

Normally, this wheat tax will not amount to more than from one-fifth to one-fourth of the excess over 5s. 2d. of wheat price a bushel, f.o.r Williamstown. As in the case of the flour tax, the rate of tax depends, subject to the specified maximum of1s. a bushel, upon the recommendation of the Wheat Stabilization Advisory Committee.

Parliamentary authority for the rate will be preserved by limiting the recommendations of the committee to a rate equal to such part of the excess of Williamstown wheat prices over 5s. 2d. a bushel as is proportionate to that part of the total Australian production of wheat, during the harvest year commencing on the preceding first day of October, which is used for home consumption.

The supporting machinery for the collection of tax imposed by the four separate taxing measures will be contained in the Flour Tax (Wheat Industry Assistance) Assessment Bill which will be introduced shortly. The four taxing measures are as follows: -

(1)   The Flour Tax Bill, which im poses the tax on all flour sold by millers or used by them in the manufacture of goods other than flour: for example, bread, selfraising flour.

(2)   The Flour Tax (Stocks) Bill, which imposes the tax on all flour held by persons other than millers, such as bakers and storekeepers, &c., at the commencement of the tax. This bill is necessary, not only to ensure that the tax is imposed on all flour for home consumption after the commencement of the tax, but also to obviate dislocation of the flour market by forward buying of flour in anticipation of the tax.

(3)   The Flour Tax (Imports and Exports) Bill: This provides, in the first place, for a tax on imported flour, and on the flour content of imported goods manufactured from flour. Such imports are at present almost negligible, but they would, no doubt, reach considerable proportions, and would also impose a serious competitive disability on. local flour, if they were not made subject to the tax. The same bill provides, in the second place, for the taxation of imported wheat. This part of the bill is complementary to the tax imposed by the Wheat Tax Bill on sales of wheat in Australia. The operation of the export tax, which, like the imports tax, is a duty of customs, and is, therefore, associated with that tax in the one measure, is a matter for the uncertain and, according to appearances, the fairly distant future when wheat prices rise above 5s. 2d. a bushel f.o.r. Williamstown.

(4)   The Wheat Tax Bill, which will impose a tax on the first sales of wheat to persons in Australia, and which, like the export tax, will only operate when, if ever, wheat prices rise above 5s. 2d. a bushel f.o.r. Williamstown.

The machinery for the collection of the taxes covered by the Assessment Bill, except for the export tax, which will be automatically collected by the Customs Department at the point of export, is practically the same as that provided by the earlier flour taxes, and is substantially borrowed from the sales tax law.

The scope and subject-matter of the tax for the present, and until the time when wheat prices, if ever, rise above os. 2d. a bushel f.o.r. Williamstown, will also be practically the same as the scope and subject-matter of the earlier flour taxes.

Broadly, the exemptions from the flour tax to millers and to holders of flour at the commencement of the tax, are -

Flour for use as or in the manufacture of certain foodstuffs for human consumption, viz.,

Breakfast foods.

Foods for infants and invalids, if exempt from sales tax.

Foods for the use of public hospitals, public benevolent institutions, religious organizations and organizations for the relief of the unemployed.

Flour for use as or in the manufacture of foods for animals and birds.

Flour for use in the manufacture of goods other than foodstuffs.

Flour for export or for use in the Northern Territory.

Bran and pollard.

The general scheme of the exemptions is to remove the burden of the tax from flour when it is used to produce goods directly competitive with goods which are not produced from flour; that is, breakfast foods produced from other cereals. Nearly the whole of the tax will fall on flour which is used in the production of bread, and the remaining field of the tax will be principally represented by flour for use in the manufacture of biscuits, macaroni, spaghetti and vermicelli. It is considered that the goods within the field of the tax are not in anydirect or appreciable sense competitive with other goods.

Millers, as formerly, will be required to furnish returns and to pay tax within 21 days after the close of the month in which they have sold the flour or used it in the manufacture of other goods. Persons - for example, bakers and storekeepers - holding flour in stock in excess of 1,000 lb. at the commencement of the tax, will be required to furnish a return and pay the tax, if it does not exceed £5, on or before the Sth December, 1938. If the tax exceeds £5, they will be permitted to pay £5 or 20 per cent. of the tax, whichever is the greater, on or before the 8th December, 1938, and the balance by equal monthly instalments of 20 per cent. of the tax or £5, whichever is the greater, except where, in any month, the unpaid balance is less than £5, in which case the instalment shall be the amount of the balance.

Flour in transit to any person on the 5th December, 1938, shall be deemed to be held in stock by him on that date.

Tax is payable on flour produced by millers from wheat supplied by wheatgrowers for gristing, and will also be payable by wheat-growers, if wheat prices should exceed 5s. 2d. a bushel f.o.r. Williamstown, on wheat supplied by them to millers for gristing.

Flour will be deemed to be sold by a miller at the time when he parts with possession of the flour.

With the exception of certain cases in which the property in wheat is transferred without a contract for the sale of the wheat, wheat will be deemed to be sold at the time when the contract for the sale of wheat is entered into, and the rate of tax applicable to the sale will be the rate in force at that time.

Severe penalties are provided for the evasion of tax by failure to furnish returns or by furnishing false returns. The legislation provides for reference to the Income Tax Board of Review as a means of settlement of disputes between taxpayers and the Commissioner of Taxation. The legislation contains secrecy clauses similar to those contained in the sales tax law.


Mr Green - Has the Treasurer received any communication from the master bakers in respect of the 30 lb. of flour in a ton, for which they pay, but do not receive?


Mr CASEY - I saw the master bakers yesterday and they explained their position. With all respect, I think that the difficulty can be smoothed over.


Mr Scully - Will this legislation apply only to the wheat harvest for 1938?


Mr CASEY - At the moment that is the intention.


Mr Scully - Millions of tons of wheat were carried over in New South Wales from last season.


Mr CASEY - I shall be in a better position in the committee stages to answer questions.


Mr Beasley - It is an important point.

Motion agreed to.

Resolutions reported.

Standing Orders suspended; resolutions adopted.







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