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Friday, 21 November 1941


Mr SPOONER (Robertson) .The Leader of. the Opposition . (Mr. Fadden). has made a complete statement of the probable effects of this bill, and I do not wish to elaborate it. The Minister has said that the Opposition "agrees with the bill in principle. That is true, and I remind the Minister that the Opposition, when it occupied the Government benches last year introduced this form of tax. My objection is not to the principle of special war-time taxation of companies, but to the action of the Government in having gone too far this year in that direction. About this time last year a representative committee of honorable members considered the Wartime (Company) Tax Assessment Bill that the Government of the day had introduced and recommended that the tax shouldbegin on profits in excess of 8 per cent.and rise, on a graduated scale, as increased profits were shown. The committee considered that that was a fair vote, having regard to the obligations of companies in respect to the additional flat rate of tax which they had to pay, to other difficulties which confronted the company system in the meeting of liabilities, and to the fact that there was introduced last year a new principle in the removal of the rebate in respect of the taxation of dividends on which companies had already paid tax. In thelight of all these circumstances, I contend that the decision of the Government to accept the recommendation of the committee was fair and reasonable.


Mr CONELAN (GRIFFITH, QUEENSLAND) - Have conditions not changed in the interim?


Mr SPOONER - They have. No one expects that in the course of such a war as this is, taxes will be reduced. Rising war costs must impose an additional burden on the community year by year, and everybody will be required in some way or other to share the load. In regard to the war-time profits tax, however, the Government has gone too far. Taking his cue from the Leader of the Opposition (Mr. Fadden), the Minister Assisting the Treasurer (Mr. Lazzarini) has said that the provision of the bill in relation to the starting point of the tax could be considered at the committee stage. I ask, however, that the Government review this point before the bill reaches . that stage, with the object of itself introducing an amendment to provide that the- tax shall begin, not at 4 per cent. as is now proposed, but at 6 per cent., as against 8 per cent. at present. If the 6 per cent. starting point be adopted, the Government will avoid shock conditions on the company system. To drop the starting point from . 8 per cent. to 4 per cent. in one year is too severe. I agree with the

Minister that not any of us can tell what is ahead. It maybe that before the war ends companies and individuals alike will have to pool everything in order to ensure victory. But I ask the Government not to move too quickly in relation to this particular tax, for that would impose extreme hardship upon the industrial structure on which the Government and the country greatly depends. A reduction of the starting point of this tax to 6 per cent. as against the 4 per cent. now proposed would avoid unfortunate reactions.

I am prompted by the remarks of the Minister Assisting the Treasurer to make two or three other observations on the measure, although I do not desire to repeat points made by the Leader of the Opposition. The honorable gentleman stated that this was a wartime measure. I agree with him, but unfortunately the bill does not include a provision to the effect that this taxation will automatically cease to apply six months after the conclusion of the war. Such a provision should have been included in the bill introduced last year. The legislation providing for war-time profits taxation during the last war contained such a provision. I feel confident that I am correct, when I say that similar legislation passed in Great Britain and in other dominions and countries during this war includes a section which provides that such taxes shall automatically cease six months after the conclusion of the war. I raised this point last year, and I know that the previous Government intended to introduce an amendment of that nature, but the step was not taken at the time. I consider that such an amendment should be inserted in this bill. Unless that course be taken specific legislation will be required to repeal the measure after the war. I appeal to the Government to introduce an amendment to cover this point.

The introduction of the bill also serves to bring into relief the need for a far greater measure of uniformity in taxation throughout the Commonwealth. Companies are taxed in varying ways and at varying rates by Commonwealth and State Governments, and that is not a healthy condition calculated to improve and expand the industrial activities upon which the prosperity of the nation so greatly depends. New steps are being taken continually by Commonwealth and State Governments in relation to company taxation and also, for that matter, in relation to the taxation of individuals, and so long as this state of affairs continues, confusion and trouble will be experienced in financial circles. I call to mind the conferences of Commonwealth and State representatives held in the two or three years preceding 1936, and culminating in a conference lipid in this chamber in that year. The object of those conferences was to secure the greatest possible measure of uniformity in taxation by means of mutual agreement, and although complete success was not achieved, a greater measure of uniformity was introduced into taxation procedure in Australia at that time than had ever previously been known. I remember sitting at this table at the final conference in 1936 and listening to the representative of the Commonwealth Government who was in the chair saying, in effect, that now that something approaching uniformity had been achieved, it was to be hoped that all future Commonwealth and State Governments would agree to confer before effecting amendments to their taxation laws.He added that if that were done further troubles would be avoided. I regret that the spirit of the 1936 conference has been forgotten in the last five years. In my view there will be no hope for stability in the finances of industry as they are affected by taxation until further definite steps be taken with the object of arriving, ultimately, at the unification of the taxation systems of the Commonwealth. The introduction of this bill serves to emphasize the need for such action. Although it is proposed that: this tax shall begin when profits reach 4 per cent., I remind honorable gentlemen that the capacity of companies throughout Australia to pay such a tax varies greatly. The capacity of companies in some States is greater than the capacity of companies in other States, and wo ought to do our best to remedy this unsatisfactory state of affairs.

If the Government were to agree to reduce the starting point of the tax to6 per cent. instead of 4 per cent. as is now proposed, approximately £2,250,000 of revenue might be lost, but I do not consider that the whole of that amount would be lost, for the companies would have a greater amount of money to 'distribute in profits and the Government would reap some benefit from taxes . on the additional income people would derive from that source. Al any companies are carrying heavy financial obligations and are using profits to reduce their liabilities. It must be remembered that the companies arc an integral part of the developmental system of this country, and I urge the Government not to impose harsh and undue burdens upon them by calling upon them to pay a war-time profits tax, which is beyond their capacity at this stage.







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