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Thursday, 30 April 1942


Mr CHIFLEY (Macquarie) (Treasurer) . -I move -

1.   That in lieu of the rate of tax imposed by the Sales Tax Act (No. 1) 1930-1941 sales tax be imposed upon the sale value of goods, manufactured in Australia by a taxpayer and on or after the first day of May, One thousand nine hundred and forty-two, sold by him or treated by him as stock for sale by retail or applied to his own use. at the rate of-

(a)   in respect of the goods covered by the Third Schedule to the Sales Tax (Exemptions and Classifications) Act - Twenty-five per centum; and

(b)   in respect of goods not covered by the Third Schedule to that Act, and on the sale value of which it is not provided by that Act that sales tax shall not be payable - Twelve and one-half per centum.

2.   That in lieu of the rate of tax imposed by the Sales Tax Act (No. 2) 1930-1941 sales tax be imposed upon the sale value of goods, manufactured in Australia and sold on or after the first day of May, One thousand nine hundred and forty-two, by a taxpayer who purchased them from the manufacturer, at the rate of -

(a)   in respect of the goods covered by the Third Schedule to the Sales Tax (Exemptions and Classifications) Act- -Twenty-five per centum; and

(b)   in respect of goods not covered by the Third Schedule to that Act, and on the sale value of which it is not provided by that Act that sales tax shall not be payable - Twelve and one-half per centum.

3.   That in lieu of the rate of tax imposed by the Sales Tax Act (No. 3) 1930-1941 sales tax be imposed upon the sale value of goods, manufactured in Australia and sold on or after the first day of May, One thousand nine hundred and forty-two. by a taxpayer not being either the manufacturer of those goods or the purchaser of those goods from the manufacturer, at the rate of -

(a)   in respect of the goods covered by the Third Schedule to the Sales Tax (Exemptions and Classifications) Act - Twenty-five per centum ; and

(b   ) in respect of goods not covered by the Third Schedule to that Act. and on the sale value of which it is not provided by that Art that sales tax shall not be payable - Twelve and one-half per centum.

4.   That in lieu of the rate of tax imposed by the Sales Tax Act (No. 4) 1930-1941 sales tax be imposed upon the sale value of goods. manufactured in Australia and sold to a taxpayer who has, on or after the first day of May, One thousand nine hundred and fortytwo, applied those goods to his own use, at the rate of - (a.) in respect of the goods covered by the Third Schedule to the Sale's Tax (Exemptions and Classifications) Act - Twenty-five per centum ; and

(b)   iu respect of goods not coveredby the Third Schedule to that Act, and on the sale value of which it is not provided by that Act that sales tax shall not be payable - Twelve and one-half per centum.

5.   That in lieu of the rate of tax imposedby the Sales Tax Act (No. 5) 1930-1941 sales tax be imposed upon the gale value of goods, imported into Australia by a taxpayer on or after the first day of May, One thousand nine hundred and forty-two, at the rate of -

(a)   in respect of the goods covered by the

Third Schedule to the Sales Tax (Exemptions and Classifications) Act - Twenty-five per centum; and

(b)   in respect of goods not covered by the Third Schedule to that Act, and on the sale value of which it is not provided by that Act that sales tax shall not be payable - Twelve and one-half per centum.

6.   That in lieu of the rate of tax imposed by the Sales Tax Act (No. 6) 1930-1941 sales tax be imposed upon the sale value of goods, imported into Australia by a taxpayer and. on or after the first day of May, One thousand nine hundred and forty-two, sold by him or applied by him to his own use, at the rate of -

(a)   in respect of the goods covered by the Third Schedule to the Sales Tax (Exemptions and Classifications) Act- Twenty-five per centum; and

(b)   in respect of goods not covered by the Third Schedule to that Act, and on the sale value of which it is not provided by that Act that sales tax shall not be payable - Twelve and one-half per centum.

7.   That in lieu of the rate of tax imposed by the Sales Tax Act (No. 7) 1930-1941 sales tax be imposed upon the sale value of goods imported into Australia and sold on or after the first day of May. One thousand nine hundred and forty-two.'by a taxpayer not being the importer of the goods, at the rate of -

(a)   in respect of the goods covered by the Third Schedule to the Sales Tax (Exemptions and Classifications--) Act - Twenty-five per centum : and

(b)   in respect of goods not coveredby the Third Schedule to that. Act.and on the sale value of which it is not provided by that Act that sales tax shall not be payable - Twelve and one-half per centum.

8.   That in lieu of the rate of tax imposed by the Sales Tax Act (No. 8) 1930-1941 sales tax be imposed upon the sale value of goods, imported into Australia and sold to a taxpayer who has, on or after the first day of May, One thousand nine hundred and forty-two, applied those goods to his own use, at the rate of -

(a)   in respect of the goods covered by the Third Schedule to the Sales Tax (Exemptions and Classifications) Act - Twenty-five per centum; and

(b)   in respect of goods not covered by the Third Schedule to that Act, and on the sale value of which it is not provided by that Act that sales tax shall not be payable - Twelve and one-half per centum.

9.   That in lieu of the rate of tax imposed by the Sales Tax Act (No. 9) 1930-1941 sales tax he imposed upon the sale value of goods in Australia, including goods which have gone into use or consumption in Australia, leased by a taxpayer to a lessee on or after the first day of May, One thousand nine hundred and forty-two, at the rate of -

(a)   in respect of the goods covered by the Third Schedule to the Sales Tax (Exemptions and Classifications) Act - Twenty-five per centum; and

(b)   in respect of goods not covered by the Third Schedule to that Act, and on the sale value of which it is not provided by that Act that sales tax shall not be payable - Twelve and one-half per centum.

10.   That, for the purposes of the foregoing resolutions, "Sales Tax (Exemptions and Classifications ) Act " means the Sales Tax (Exemptions and Classifications) Act 1935- 1941 as proposed to be amended by the Sales Tax (Exemptions and Classifications) Bill 1942.

The effect of these motions, shortly stated, is to increase the rate of sales tax upon goods in the general field from 10 per cent, to 12½ per cent, and, upon less essential goods which are specified in the third schedule to the Sales Tax (Exemptions and Classifications) Act 1935-1941, from 20 per cent, to 25 per cent. In other times, such increases as are now proposed might have been regarded as unduly burdensome, but, in the present circumstances, it is considered that they are quite justifiable. Never before in the history of the Commonwealth has spendingpower been so freely and widely distributed amongst the people as it is to-day, and never in the Commonwealth's history has there been such freedom, of spending as now obtains. Since this increased spending-power is almost wholly owing to mounting government expenditure on essential war materials and services, it is not inappropriate that a greater part of it should be diverted back to Revenue when it is used, as it is being used, to increase the personal com forts of individuals. To the extent to which the higher rates of tax will discourage persons from purchasing goods which they can possibly do without, good service will be rendered, for, in that manner, the man-power available for essential war services will be increased; raw materials required for essential wax goods will be freed, and additional savings will be available for investment in war loans.

It is appropriate, here, to mention the fact that it is proposed in another bill, which will be introduced to amend the Sales Tax (Exemptions and Classifications) Act, to restore exemption to all goods which at present bear tax at the 5 per cent. rate. In future, therefore, only two rates of tax will operate, namely, 12½ per cent, and 25 per cent. All goods at present taxed at 5 per cent, were exempt from sales tax before the 22nd November, 1940, when, with numerous other classes of goods, they were transferred to the second schedule and became taxable at the rate of 5 per cent. After the adjustments of the 30th October, 1941, relatively few classes of goods were left in the 5 per cent, group. In respect of all these goods there are strong grounds for granting exemption. Having regard to the rel atively small value of the annual sales of these goods, it is now considered that their restoration to the exempt class is justified, the resultant loss of revenue being made good out of the additional revenue to be gained from the higher rates of tax to be charged in respect of other goods.

The goods in respect of which exemption is to be so restored are specified in a statement which will he circulated with the appropriate bill for the information of honorable members. They may be briefly described as follows: -

1.   Equipment used in the fishing industry.

2.   Drugs and medicines.

3.   Surgical instruments and appliances.

4.   Dental instruments and appliances, and dentures.

5.   Scientific instruments, &c, for use in universities and schools.

6.   Axes and tomahawks and tool handles of wood.

7.   Saddlery and harness.

8.   Iron and steel wire of gauges 6 to 14.

In deciding to discontinue the 5 per cent, rate, the Government has in mind the difficulties of merchants in preparing their sales tax returns, as the result of the existence of three different rates of tax. It is recognized that considerable work is involved in the classification of goods into the three separate rate groups, and it is hoped that a substantial measure of relief will be afforded by the reduction of the number of rates of tax from three to two.

From the revenue point of view, the effect of these proposals is estimated to be as follows: -

 

In accordance with the usual custom, the proposed amendments of rates will operate on and from the day following this announcement, namely, the 1st May. 1942. As has been explained on previous occasions, this course is adopted to obviate the dislocation of trade which would occur if there were any delay between the date of announcement of the amendments and the date of their coming into operation. The existing law contains provisions which will protect vendors of goods who pay tax at the higher rates on and from their date of commencement. When the amendments become law, these vendors will have full power of recovery of the additional tax from those purchasers who may have refused to accept the higher charge.

Progress reported.







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