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Tuesday, 29 September 1942

Mr HOLT (Fawkner) . -I regret that the Government has not reviewed the policy under which company tax is assessed, the individual income taxpayer being refused the right to treat as a rebate the amount of tax paid by the company of which he is a shareholder. The effect is to cut right across the traditional policy of taxation according to capacity to pay. Perhaps I anticipate the Treasurer (Mr. Chifley) when I acknowledge that a government of which

I was a supporter first introduced this principle when it taxed companies at the rate of 2s. in the £1.

Mr Scullin - Was not the honorable gentleman a member of that Government?

Mr HOLT - I accept the charge if the memory of the right honorable gentleman is more accurate than is mine. I am quite sure that had we known or considered that the rate of tax would rise to 6s. in the £1, apart from excess profits tax, there would have been a very different state of mind in regard to it. The policy is now working an injustice, in that rich and poor alike are taxed at the one rate. The significance of the operation of the policy was not brought home to me clearly until the proposal to limit profits to 4 per cent, was ventilated and given some notoriety in the country. In common with other honorable members, I received a large number of letters from persons who would have been affected had that policy been pursued. That the largest proportion of these communications was from, first, women, and secondly, persons of very moderate means, was most noticeable. I, perhaps, realize clearly for the first time just how serious would be the effect of this policy on such shareholders. One must assume that the effect is to lay an unduly heavy burden on persons with moderate capital invested in companies. I do not think that this policy should be continued for long. It was introduced as a means of raising revenue for war purposes and, with the same idea in view, the present Government has increased the rate. Nowhere else in the Empire is this system practised. Elsewhere, if taxation is levied on companies, a rebate is allowed to the shareholders. I suggest to the Treasurer that the matter might be reviewed in. the light of our experience since the outbreak of war. As things stand, it works an injustice, and the longer it continues the greater will the injustice be.

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