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Thursday, 28 May 1942

Mr HOLT (Fawkner) (1:31 AM) .The ostensible object of the measures which are now under discussion is to establish a scheme whereby, allegedly for the duration of the war, the Commonwealth will become the sole taxing authority in respect of incomes. As put to the House by the Government the proposal has certain obvious merits. The Government claims that the scheme will simplify our tangled taxation system and will result in a saving of man-power. It is claimed also that, as a result of this measure, additional revenue will be available to the Commonwealth for war purposes. There is even the claim running right through the speeches of many honorable members on both sides of the chamber, that this proposal has a direct constitutional appeal because it is the first big step along the road to complete unification to which they aspire. These may be very desirable objectives, and, personally, I have no quarrel with any of them; my quarrel is with the unfair means employed by the Government to achieve these objectives. It is no new thing for a government to camouflage an unfair and unpopular scheme with a popular' catch phrase. High-sounding principles make a useful smoke screen for those who have not. the interest or energy to inquire too closely.

Perhaps Dr. Johnson had something of that kind in mind when he described patriotism as the last refuge of a scoundrel. Here we find the Prime Minister (Mr. Curtin) using the phrase " uniform taxation " as a password to victory. Considered as an ideal, no one can feel perturbed about the principle of uniform taxation. The phrase conjures up notions of fairness, simplicity and national unity. "With this magic phrase, the Prime Minister has embarked upon a course of national hypnosis. When he succeeds in mesmerizing the honorable members for Warringah (Mr. Spender), Wentworth (Mr. Harrison) and Parramatta (Sir Frederick Stewart) none of whom is lacking in political astuteness, it is no wonder that he has trapped the gullible and unwary. That brings me to my first objection to this scheme. It is quite obvious that despite its high sounding title, this scheme is not one of uniform taxation at all. At the most, it is a scheme of uniform income taxation, and there is a, very important distinction between the two descriptions. Other taxation avenues are left completely untouched, and as the honorable member for Lilley (Mr. Jolly) has pointed out, difficulties can follow if the Government does not bring down a complete system of uniform taxation. I shall give the House an illustration which will indicate the importance of this distinction. The State of Victoria - I speak in no parochial spirit, but merely because that State happens to provide an effective illustration of the point that I propose to make - has never relied entirely upon income taxation to finance its activities. Of course, no State has done that, but some States have raised a bigger proportion of their revenue by means of income tax than others. It so happens that in Victoria income tax represents about 50 per cent, of the total taxes collected for the purposes of the State. In New South Wales income tax represents approximately two-thirds of the total tax collections. Quite obviously a. scheme which merely deals with a uniform income tax, and ignores the principles of uniformity in relation to other forms of taxation, must create anomalies as between the States. For instance, it must leave in the hands of the State which has imposed the smallest degree of taxation other than income tax, the capacity to tax the people of that State to a greater degree, than is left in the hands of another State which has had a comparatively light degree of income taxation, but has seized more in the way of other forms of taxation.

Mr SPENDER - Would the honorable member be in favour of the Commonwealth taking over all forms of taxation?

Mr HOLT - If the Commonwealth is to embark on uniform income taxation, I should prefer it to adopt uniform taxation generally rather than attack the problem in a piecemeal fashion. Briefly, my first objection to this proposal is that as this scheme is not complete in its approach to the problem of uniform taxation it will create serious anomalies as between the States. My second objection is that the scheme does not provide uniform benefits, although it claims to exact uniform taxes. Honorable members have already referred to the differences which exist in the social services of the various States. In reply to that, those who support the measure have claimed in effect, 'Well, we are getting along the road pretty fast now. We have a child endowment scheme, an invalid and old-age pension scheme, both of which operate throughout the Commonwealth, and recently we have added a widows' pension scheme which carries the programme one stage farther." However, I remind the House that the real social benefits which shape the youth and meet the growing needs of the community, are not those to which reference has been made, but are essential activities such as public health, education, and other matters of that kind. No provision has been made by the Commonwealth to take over all responsibility in respect of health and education, and if it is to peg the income tax fund which is available to any one State, at its present level, without having any regard to the differences that exist in the amount of income that is available to the various States for health and education, it will perpetuate an unsatisfactory condition of affairs in many of these States, which, in the view of some honorable members, are making inadequate provision for those important services. Of course, the dif ferences are not confined to social benefits of this kind. Some States give to their public servants much higher wages than do other States. Queensland is a good illustration of that point. There is no doubt that Queensland public servants profit to a very much more generous degree than do public servants in Victoria - again I cite the extreme case. Victoria has never been as generous to its public servants as many people think it should have been, nor has it been so generous as other States.

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