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Friday, 21 November 1941

Mr DUNCAN-HUGHES (Wakefield) . - I do not desire to take up the time of the House for any considerable time on this bill, but. I cannot let it pass without again expressing my opposition to the legislative measures of which this tax, with the land tax and the estate duty, are parts, and which are aimed at the richer classes. Measures of this kind are penal legislation against certain classes arid are extremely unfair. This bill will hit that class again, but, incidentally, it will also hit a large group of people who undoubtedly are not rich. The Treasurer (Mr. Chifley) in introducing this bill, almost with pleasure, indicated that the larger companies, a3 well as the more favoured classes 6f individuals, must be prepared to contribute to the point of sacrifice, and he appealed to the companies to accept loyally and uncomplainingly their quota of the national war effort. I have said before, and I say again, that, if contributions to that war effort were distributed over tlie whole of the nation, no one would or could properly complain, but it, is extremely unfair that certain groups, some of which may be rich and others of which may not be rich at all, should be savagely attacked whilst, other groups arc allowed to escape entirely or almost entirely. If that is the Treasurer's idea of a fair contribution to the war effort, it is not mine, and, although no one would think of comparing the Treasurer to a butterfly, I cannot help thinking of Kipling's lines -

Thu toad beneath the harrow knows

Exactly where each tooth-point goes;

The butterfly upon thu road.

Preaches contentment to that toad.

I quote that simply to show that it is very easy for anyone, who is not himself paying a fair share of taxation, to say to others, who are paying very heavy taxes, that they should loyally and uncomplainingly accept their part of the war effort. Why should a large company be regarded as an accumulation of rich men? That is very far from being true. Statistics have been obtained of a number of large companies, and they show that the average holding of contributors is perhaps about 300 shares to each individual. The company system has grown tremendously in recent years. Why has it grown? Has it grown because people with a little money want to invest it with the money of those who have large amounts? I do not think so. It has grown because those who control these great companies are men who have been selected owing to their business acumen, judgment and integrity, and because peop'e are prepared to follow their lead! I myself, if I had money to invest in a company, should want to know, not so much the details of the company's finances, but who were the directors, and whether they were men of good judgment and probity. That is what the general public follows, and that is why those companies become stronger and stronger as time goes on. I emphasize, as the honorable member for Boothby (Dr. Price) and other honorable members have emphasized, that a great many people in a small way, people with a few hundred pounds or even a few thousand pounds, look around to see what they shall do with their money. They make inquiries and learn that such and such a company is a good safe investment, from which they will receive a higher return than that which they would get from gilt-edged securities. They also follow general confidence. Many of the investors in large companies are people in or near to the lowest groups of incomes. Those are the people who, in addition to others, are, under this legislation, to be taxed to an entirely undue and unreasonable extent. It will be grossly unfair if nothing is done on the lines suggested by the honorable member for Boothby to ensure that they shall receive a rebate of their tax if they are not up to the taxable standard. That would be more equitable than to bring them in on the high standard, as if they were people of great wealth. That is absolutely unjustifiable, except on the excuse that, if the big fish are to be caught, some little fish must also be netted. Why should the little fish in one group be caught and the little fish 4in another group escape?

My attention has been called to the relative rights of the ordinary shareholder and tlie preferential shareholder. That was dealt with to some degree in the act of last year, but, of course, the additional imposition this year will make the position much more acute, as between the different shareholders in the same company. As anybody can see quite well, there is bound to be a difficulty between these members if the matter be left as it is at present for the directors to determine. If the number of preferential shareholders be high in relation to the ordinary shareholders - and the' same will be the case where borrowed capital is used, and the proportion is high - the bulk of the load will fall on the ordinary shareholders. Is it not the intention that shareholders of both classes should equally bear the war tax or are the ordinary shareholders to be singled out for specially heavy taxation ? There is something to be said for both sides on that. The ordinary shareholder will naturally say that a war tax -should be equally borne by shareholders of all kinds, but the preferential shareholder is bound to say, "I lent my money on the basis that I was to get a preferential dividend, a fixed dividend taking precedence over everything else, and that I should have ".

The Government should lay it down definitely as to how profits are to be distributed. The board of directors should not be -placed in the awkward position of having to decide as between one set of shareholders and another set. That is the test. Is this tax intended to hit all shareholders alike, or is it intended that the ordinary shareholder should be penalized, if necessary to the point of receiving no dividend at all, whilst the preferential shareholder is left in a much more favorable position? Section 35 of the 1040 act leaves the decision as to the distribution of profits in the hands of the directors, but I think that that should be resolved more clearly by the Government directing a proper distribution. Needless to say, the present distribution does not give satisfaction to both sides ; it will certainly give less satisfaction in the future. This bill, even more than the other bills, seems to me to be one which will not. succeed in its objective. It adds to the load to be borne by a, few people, and it* will depress unduly a lot of small people. The bill is sufficiently important for the Minister assisting the Treasurer to have replied to the points advanced by the Leader of the Opposition (Mr. Fadden), to answer whom the Minister was presumably put up. The whole of his argument was to the effect that the sooner the bill was taken into committee, the better it would be. I do not think that that is the case. At any rate, the real point which matters in this bill is not so much the detailed work of the committee, but that the general public - not the richer group, because there will be no need to tell them that they arc being hit hard in different ways at the same time, but the small people, whom the Labour party, ordinarily would claim to represent - should be made to understand that they will be treated with gross unfairness by this legislation.

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