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Tuesday, 25 November 1941

Mr SCULLIN (Yarra) .- The Government does not require to be convinced of the importance of the mining industry, and of afforestation^"' I agree with what the honorable r/ember for Barker (Mr, Archie Cameron) has just said. He has made a very valuable contribution to the debate, in stressing the importance of these industries. The latter part of his speech, particularly in regard to forestry, struck a responsive chord in my heart. I agree, and so does the Government, that both mining and afforestation are important. But the Government is faced with the problem of financing a war. It has inherited high taxation, and has increased it, solely for the purpose of fighting a war. The question arises, whether the concession in respect of taxation which has been granted to the mining and forestry industries over the years that have gone, should continue at the same rate, or should be stepped up in the same abnormal proportion that taxation for war purposes has been increased. That was the issue which confronted the committee ap pointed from both sides of the House to consider this bill. The decision was that tax concessions on calls for mining and afforestation should not exceed the prewar rate. I hope that I shall not be regarded as presuming, if I pay my tribute to each member of the committee for his approach to the subject and for the broad, impartial, and fair manner in which he faced the facts.

The honorable member for Barker said that we should encourage companies to use their money for mining and afforestation purposes. I agree with the honorable gentleman, but it is one thing to encourage a private company to use its own money, and quite another to subsidize it in respect of the great bulk of its investment. That is what the honorable gentleman's proposal would amount to. We must look at this subject in proper perspective in order to consider what may best be done. Ever since income taxes have been imposed, provision has existed for the deduction from taxable income of calls paid to mining companies. Consequently no taxes have hitherto been paid upon this purely capital expenditure. In consequence of war conditions, we have now reached a period of abnormal taxation. This factor was carefully reviewed by the committee which considered the Government's taxation proposals, and figures presented to it convinced it that the country could not continue to allow the deduction which has so far been permitted. The following table compares the amount of tax deductions allowed under pre-war rates and the amount which would have been allowed under present rates if no amendment were made. The figures, I believe, will convince honorable members of the soundness of the committee's view: -

If a man with an income of more than £2,500 a year were permitted to deduct mining calls in the ratio of the above table, he would enjoy a tax rebate of 16s. 8d. in the £1. If the Government encouraged the investment in mining and afforestation enterprises of the amounts represented, by caLls, it would be contributing S3 per cent, of the capital so invested. We may therefore pertinently ask: If the Government is to contribute 83 per cent, of the investment, why should it not contribute the whole of it? If it is to contribute five-sixths, why not also the extra one-sixth? If it can afford to contribute £83 of every £100 invested in afforestation under such conditions, I suggest that it could afford to contribute the total amount and take over' the undertaking.

Mr Fadden - Although contributing £S3 in every £100 it would still get none of the profits.

Mr SCULLIN - Quite so; neither would it own any of the assets.

Mr Paterson - That is assuming that all of the investors would be on the £2,500-a-year mark.

Mr SCULLIN - If the honorable gentleman will refer to the table which I gave he will see that I dealt with income cases of from £500 a year to £5,000 a year. I then took the middle income of £2,500 a year in order to get at my percentage of 83 per cent. Let me give an instance of the kind of thing that is happening. I have not been given the exact, figures, but those I shall use will be in true ratio. It would not do to give the exact figures, for that would identify the company.

Mr Fadden - I take it that the right honorable gentleman's figures willi be relative?

Mr SCULLIN - They will. A company was formed to explore leases and to prospect. The £1 shares were issued on the basis of 2s. on application and 2s. on allotment. The remaining 16s. was obtained' by calls and the whole of it was exempt from taxation. The company, in the course of its exploration, discovered gold-bearing quartz. A new company was floated,, probably of the members of the old company, which took over, or bought, the rights of the old company. The whole, of the 16s. in the £1 called up by the old company was exempt from tax, and the whole of the capital represented in the £1 shares in the new company was paid by calls and was also exempt from taxation. While it might be all right in times of low, or moderate, taxes to grant full exemptions on mining calls, it would be quite improper^ in my opinion, to continue that policy in a time such as the present, when the results would be as stated in my table. In present circumstances no one could justify a continuation of these- exemptions.

The honorable member for Barker criticized the gold tax. That tax was- not imposed, originally, by this Government. I do not desire to criticize the' tax, which provides that when the price of gold exceeds £9 an oz., half of the excess shall be taken in taxation-. In other words, with gold as it is to-day at £10 14s. a-n oz., the tax is 17s. an oz. I point out that the price of everything except gold is controlled. The price of gold, alone, is allowed to soar. It is a good thing for- Australia that the price of gold has increased1. I agree that gold is important in relation to our overseas funds, but as a means: to. conduct the war in the physical sense, it is: not nearly so important as copper.

Mr Paterson - Or oil.

Mr SCULLIN - Quite so. We could not put another gun on the battlefield overseas,, even if we had a- mountain of gold in Australia. We are getting from America all the wai; material that country can send. It is true that we can pay for munitions from America with, gold, but gold is not a physical instrumentality for- the conduct of the1 war. It is, after all, merely a means of finance in these days.. Metals, such as copper, are infinitely more precious for war- purposes. We need finance,, and if we- could get more finance by getting more gold, it. would be a good thing;. Goldmining is not a factor to-day as an industry for absorbing labour. The- big gold-producing State of Western- Australia is short of labour for the goldmines which are- already in operation. Sufficient men cannot. be obtained to develop these mines. Wood-cutters cannot be obtained to provide timber for the mines. So it is not a question, to-day, of encouraging gold-mining as a means of employing labour. 'Gold, at present, is important as a means of finance, but not otherwise. The immediate need of the Government is to obtain cash resources to pay for the things that it requires.

The committee which investigated the taxation proposals of the Government considered the whole subject with a full sense of responsibility and it came to the conclusion that under the present abnormal rates of taxation, complete exemption of calls by mining companies could not be tolerated. In support of that decision I again refer honorable members to the table which I cited earlier in my speech. Such an exemption, whilst justifiable in periods of low or even moderate taxation, becomes entirely unjustifiable in days when the Government is charged with the grim responsibility of finding money with which to conduct the war. I therefore commend the decisions of the committee to the favorable consideration of honorable members. I pay my meed of praise to the committee for the manner in which it discharged the important duty placed upon it.

Clause agreed to.

Clause 13 agreed to.

Clause 14 -

Section eighty-six of the principal act is amended -

(a)   by omitting from paragraph (b) of sub-section (1.)the word "less" and inserting in its stead the words " not more ";

(b)   by omitting from 'paragraph (a) of sub-section (2.) the word "or"; and

(c)   by inserting after paragraph (a.) the following paragraph: - " (ab) where a premium or premiums for the lease is or are payable in each of three or more years of the lease; or".

Amendment (by Mr. Fadden) agreed to-

That the following sub-clause be added to the clause.: - " (2.) The amendments effected by the last preceding sub-section shall not apply to any premium in respect of any lease granted, assigned or surrenderedprior to the thirtieth day of October, One thousand nine hundred and forty-one.".

Clause, as amended, agreed to.

Clause 15 -

After section one hundred and one of the principal act the following section is inserted: - "101a. Where inthe year of income, the trustee of the estate of a deceased person receives any amount which would have been assessable income in the hands of the deceased person ifit had been received by him during his lifetime, that amount shall be included in the assessable income of that year of the trust estate.".

Amendment (by Mr. Fadden) agreed to-

That, after the words "trust estate", the following words be added : - " and shall be deemed to beincome to which no : beneficiary is presently entitled."

Clause, as amended, agreed to.

Clause 16 agreed to.

Clause 17 -

After Division6 of Part III. of the principal act, the following Division is inserted: - "Division 6a. Husband andwife. "102a. Where the spouse of a taxpayer (not being a spouse who lives apart from the taxpayer in pursuance of a decree, judgment, order or deed of separation or in circumstances which, in the opinion of the Commissioner, arc analogous thereto) derives taxable income, the Commissioner shall assess the taxpayer to paythe amount of tax which would be payable by the taxpayer if the rate of tax applicable to the taxableincome of the taxpayer were the rate of taxwhich would be applicable if there were added to that taxable income an amount equal to the taxable income derived by the spouse, and the taxpayer shall be liable to pay the amount so assessed.".

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