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Thursday, 28 May 1942

Mr FADDEN (Darling Downs) (Leader of the Opposition) (11:23 AM) . - I move -

That paragraph 1 be postponed.

This amendment, if carried, is to be regarded as " a direction to the Government to reduce the rates of tax and to raise an amount equal to the consequential reduction in the estimated revenue by means of a national contribution to be levied by way of loan on the incomes of persons whose taxable incomes exceed £100 ".

My reason for submitting the motion is to take this unique opportunity to bring before the committee the necessity and desirability of combining with the uniform system of taxation a system of national contribution whereby post-war credits shall be created in the form of loans to be repaid to taxpayers after the war. It is not necessary for me now to go into details concerning the initiation of this reform of national contribution. I ask the Government to consider it on the lines embraced in the motion. It is not a new form of national contribution. It has been successfully used in Great Britain. A few days ago, I pointed out that the Chancellor of the Exchequer in Great Britain had referred to the success of that scheme, and I indicated that, out of the sum of £125,000,000 that had been contributed by those earning the lower ranges of income in the United Kingdom, £60,000,000 constituted post-war credits. The advantage of a post-war credits system must be obvious to every honorable member. Grave responsibilities must be faced during the war, but greater responsibilities will have to be shouldered after the war. Post-war reconstruction of our services, industries, economic policy and fabric generally will cause great concern to Australia and its people. Therefore, a post-war credits scheme would give the added advantage that, in addition to compulsory saving during the war period, whereby purchasing power would be diverted from civil to war requirements, a fund would be established by which post-war reconstruction could be financed. The employees of Australia will assuredly be confronted with a grave situation when the war ends. Employment will be hard to obtain, war industries will no longer continue, and there will be a tremendous diversion from war activities to civil activities. In addition, a system of national contribution would provide an opportunity for every citizen of Australia to become a practical or an expectant shareholder in Australia Unlimited. It would enable him to contribute towards the war effort by providing some of the finance necessary to wage the war successfully. At the present time, the rates of tax proposed are of such a nature that certain ranges of income are totally relieved of any contribution to the war effort by way of taxation. This is not the time to give such relief. This is the time when all the resources of Australia, physical, material and economic, should be marshalled to achieve the best possible result. Consequently, it is inconsistent with the system of uniform taxation to relieve from responsibility for contribution to the national effort ranges of income which are at present taxed by the States, and not lightly by certain States. I mentioned in my secondreading speech on the principal bill certain aspects of this matter which I shall not repeat. The facts stand out like a lighthouse on a dark night. Out of a total taxable income of £800,000,000 in Australia, the amount of £560,000,000 represents the incomes of those receiving £400 a year and under. I realize that that range includes low rates of income which should not be taxed, but the Government seeks to get out' of that field only 3.892 per cent of the total revenue to be raisedby income tax. Under the scale, only £28,800,000 is to be obtained from the field of taxable income amounting to £560,000,000. I maintain that it is ridiculous to seek such a small contribution from that income field. Just as the total taxable income in Australia increased from £700,000,000 in the previous year to £800,000,000 last year. I am sure that the total taxable income capacity in the field represented by the sum of £560,000,000 has increased considerably over the same period. The decision of the Government against obtaining more income tax revenue from the lower ranges of income is not sound, particularly when the Government is scratching for money. It says that a uniform system of income taxation is necessary so that every available field may be exploited in order to provide the money required for the war. But it is inconsistent, because it proposes not to tax a group of incomes which ought to be taxed. That group is to be relieved of an amount of £750,000, which it pays under existing Commonwealth and State tax rates. . Taxes amounting to £20,700,000 are to be taken from the group of incomes between £401 and £1,000 a year. That will represent 14.275 per cent of the group's capacity of £145,000,000. Taxes amounting to £7,000,000 will be taken from the group between £1,001 a year and £1,500 a year. Under the old rates, that group is taxed £6,500,000. The new tax will represent 25 per cent, of its capacity of £28,000,000. Incomes of £1,500 a year and more will be taxed an amount of £35,000,000, an increase of £1,000,000 over present rates. This will represent 52.239 per cent, of that group's capacity of £67,000,000. What further evidence is required to prove conclusively that the Government is not only failing to distribute the burden of taxation equitably, but also is unfairly relieving small incomes of impositions. The low income group must be taxed. The Treasurer has said that he contemplates a deficit of £70,000,000 for this financial year, yet the proposed tax on the low income group represents less than 4 per cent, of its capacity. The Government has an excellent opportunity to derive revenue from that field, because the majority of earners of low wages and salaries are willing to contribute their mite to the war effort. They want to contribute to the security of Australia. An integral part of any uniform taxation scheme should be a system of post-war credits, which would give the low income earners an opportunity to contribute to the war effort and to set aside a nest egg for the days of post-war reconstruction. The merits of post-war credits scheme are undoubted ; they virtually speak for themselves. There is no novelty about the proposal. The Government of the United Kingdom has effectively implemented a post-war credits system in order to derive revenue from a group of incomes which in times of peace it would not dream of touching. It realizes that every person must contribute to the winning of the war. This depends upon the provision of adequate finance. Every citizen should have the opportunity to contribute adequately, effectively, and sensibly not only to the war effort but also to the rehabilitation of the nation after the war.

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