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Thursday, 28 May 1942

Mr FRANCIS (Moreton) (3:54 AM) . - I regard the proposal of the Government to introduce a uniform income tax system as the most revolutionary proposition that the Parliament has been asked to consider for at least two decades. Before I deal with the proposal, I shall refer briefly to the observations of the honorable member for Griffith (Mr. Conelan), who stated that Queensland has not experienced a financial impetus arising out of Commonwealth, war expenditure.

Mr Conelan - Until a few months ago.

Mr FRANCIS - Lest the honorable member is not aware of the explanation, I shall add to his knowledge of the subject by quoting from a statement by Mr. Leggat, a prominent member of the Australian Labour party and an advocate of the Engineers Union. The transcript of the evidence given before the Commonwealth Arbitration Court at the basicwage hearing in March last contains the following passage: -

I make the definite assertion that this State will face up to the post-war problems better than any other State because we have prevented, to a great extent, the introduction of temporary repetition production works in this State because we could see that after the war this repetition reproduction will go out of existence and the State that indulges in it at present will then be faced with a surplus employable population.

If Queensland has not experienced the impetus, the explanation lies in the fact that a deliberate effort was made to avoid it. Incidentally, Mr. Leggat is a member of the Board of Area Management, which deals with the production of munitions and the allocation of munitions annexes.

Tho proposal of the Government to introduce a uniform income tax system is similar in principle to the proposal which the present Leader of the Opposition (Mr. Fadden) when Treasurer submitted to a conference of Commonwealth and State Ministers. His plan was rejected ; only the Premier of South Australia, Mr. Playford, supported it. Later, Mr. Fadden, when Prime Minister and Treasurer, proposed an alternative scheme, involving post-war credits. A national contribution was to be assessed on every income in excess of £100 per annum earned by single men and women. From the national contribution was to be deducted Commonwealth income tax payable in the current year, and State income tax payable in the previous year. The balance was to be collected as a loan, and known as " post-war credits ". Under that scheme practical uniformity would be achieved, and disparities between lower and higher taxed States would be avoided. The principle of post-war credits is infinitely preferable to the present proposal. The introduction of a compulsory savings plan would indicate to each individual the minimum amount of savings that the Government expected him to contribute to the war effort. Such a plan would be equitable if it were applied- in strict proportion to the capacity of every individual to contribute. Whilst it would achieve the main objectives of the Government's plan, it would have the added advantage of establishing equality of sacrifice in war-time, and creating a nest-egg for taxpayers resident in States that have been frugal and careful with their finances.

The proposal of the Government aims not only at stabilizing the finances of the nation in a period of great emergency, but also at effecting far-reaching economies in taxation administration. The reform if adopted will save taxpayers considerable labour and expense in preparing their returns. The report of the special committee on taxation claims that the adoption of the Government's proposal will result in a reduction of administrative expenses amounting to £250,000 annually, and will release 1,000 men for the fighting forces. As an example of the simplification of procedure and the resultant reduction of expense, I quote the following passage from the Bulletin: -

As things are, not only concerns hut individuals drawing income from two or more States have to waste time and money preparing unnecessary returns, writing unnecessary letters, stamping them unnecessarily and making out unnecessary cheques. In the case of companies with interstate connexions these superfluous operations not only amount to chronic business worries but make no inconsiderable addition to annual expenditure, especially as they an always accompanied by unnecessary arguments.

One case - one of a thousand - has been stated -

My company operates in every State. We prepare seven returns and pay fifteen different income taxes - three federal, twelve State. We find it necessary to lodge objections against at least half of the assessments, because of departmental interpretation of sections of the various acts. At present we have objections outstanding in respect of Queensland income tax for 1930, 1940 and 1941. It will take at least a further year to clear these up. Recently we were able to come to a satisfactory arrangement with the New South Wales Commissioner for the adjustment of assessments for 1938, 1939 and 1940. We were congratulating ourselves on having acquired a good knowledge of the New

South Wales statute when along came Mr. McKell's new act. Our 1941 assessment for tax under this act has just been received. It has so many errors that, judging from past experience, it will take at least a year to straighten it out.

But comparatively small taxpayers are not pared.

Take the case of a man who draws £250 or £300 per annum from a job in New South Wales and £150 or bo from an investment in Victoria. Three sets of income tax papers are required from him - one by the New South Wales Taxation Department, one by the department in Victoria and one by the Commonwealth Central Office in Melbourne. That means three assessments, arrived at in the tedious official way by three lota of government employees, and three cheques. If the victim claims medical or hospital payments as a deduction from taxable income he is expected to send his receipts to the New South Wales department, get them back and post them to the Commonwealth Central Office, otherwise the claim will not be allowed. And if he thinks he has been overtaxed by one or more of the three collections of departmental bosses, as he often does, he has to engage in more correspondence or decide in bitterness that it isn't worth the trouble.

Those are good examples of the problems and annoyances which beset people when they try to make out their income tax returns under present conditions. Whilst these proposals fall short of those contained in the Fadden budget, they will certainly relieve taxpayers of considerable inconvenience. The failure of the State governments to submit alternative proposals makes their opposition to these proposals all the more deplorable. I emphasize that this legislation is limited to the duration of the war and one year thereafter, and that it has been submitted for the sole purpose of ensuring that the Commonwealth shall have at its disposal the moneys essential for the successful prosecution of the war, which is now costing about £1,000,000 a day. The Commonwealth Government's expenditure of £350,000,000 per annum on the war has greatly increased the revenue of the States, and it is rightly claimed that, since this extra revenue is owing to Commonwealth activities, the Commonwealth should have first call on it. The terrific task which war has imposed on this nation should be borne equitably by all sections of the community. The pooling of Commonwealth and State taxes and the imposition of a uniform rate of income tax will re move anomalies and equalize the burden. The imposition of a uniform income tax will mean increased payments by some taxpayers and reduced payments by others. The effect in Queensland will be that all taxpayers will enjoy reduced income tax payments. Under the uniform scheme the total collection of income tax in Queensland will be £16,504,000. Of that amount £5,982,000 will be paid to the State Government in compensation. The net contribution to the Commonwealth will therefore be £10,522,000 or £10 6s. 8d. a head. The net per capita contribution to the Commonwealth in all States will be as follows : -


The total income tax collections from each State and the compensation to each State are as follows: -


The following table sets out the proposed uniform income tax compared with present total taxes on income from personal exertion of a Queensland taxpayer with a dependent wife and one child: -


There will be similar reductions on ail other incomes. It will be seen that, of the three most populous States, Queensland taxpayers pay less per capita to the combined income tax revenue and receive more per capita in compensation than formerly. The rates proposed will return the same revenue on the same level of incomes existing in the last two years. It is clear, however, that incomes are rising appreciably because of the huge war expenditure, and it is estimated that the increased taxable capacity will return from £12,000,000 to £15,000,000 additional revenue. For defence reasons it is important that all this extra money should flow into the Treasury of the Commonwealth, 'because the Commonwealth is responsible for the prosecution of the life-and-death struggle in which we are now engaged.

The States have raised the issue that these proposals are an infringement of State rights. Everything we are doing to defend ourselves infringes the former rights of some one or other. Many thousands of young men have been called from their studies or work, into the defence forces, and almost all have suffered considerable financial loss. Many industries are being closed down on the ground that man-power and material used by them are essential to the war effort, whereas the industries are not. Men are compelled to work in war industries, and cannot leave their employment without permission. All that is an infringement of the liberties of the individual. The war demands that all our resources be marshalled, and, but for the war, my vote on these measures might be different. The only thing that counts with me to-day, however, is the winning of the war, for, if we do not win it, all our rights and liberties will go for ever. As a principle, however, it is wrong for one government to collect money and another government to expend it- The government that expends the money should be the government that legislates for its collection. The Government's proposals are far from ideal. I support the principle of uniform taxation, and this is a step in that direction. I shall support these proposals, although I do not ap prove some of the details. I much prefer the post-war credits of the Fadden budget, which provided for equality of sacrifice during the war and the provision of funds to assist the taxpayers in the difficult days of post-war reconstruction. I conclude with the hope that in the committee stages these proposals will be amended in such a way as to make them more equitable.

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