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Wednesday, 31 July 1946

Mr HARRISON (Wentworth) . - The procedure of interrupting a debate of this kind to permit the introduction of other business robs argument of its proper sequence. [Quorum formed.] Last night the Minister' for Immigration (Mr. Calwell) attempted to refute the arguments advanced by honorable members on this side of the chamber in favour of a reduction of taxes. The honorable gentleman drew attention to the fact that in the- years 1931-36 a continued series of remissions was made by the Government then in office - a Government supported by honorable members on this side of the chamber. He asserted that these remissions were for the benefit of large property holders, big business interests and wealthy and influential sections of the community. The right honorable gentleman displayed a complete lack of knowledge of economics. Surely, at that time when we were in the throes of a depression the greatest incentive should be given to businessmen and industrialists to expand their activities and so provide additionalavenues of employment. Surely the honorable gentleman does not deny that remissions of taxes to private enterprise in times of depression must constitute the best incentive to increase production and provide employment for the workless. The honorable gentleman is apparently unaware of what is an elementary principle in political economy. For a responsible Minister of the Crown to claim that such a policy was unsound is mere " clap trap " and will not influence thinking people. At a time like this when the people are short of almost every commodity they require for the maintenance of their standard of living, it is a great pity this Government has not been prepared to make similar remissions of taxes, in order that production may be stimulated and new industries established. Responsible Labour leaders in the United Kingdom and the United States of America have been unanimous in urging increased production as the solution of the economic problems that confront those countries. The reduction of taxes would assist materially in bringing about an increase of production and the consequential improvement of the standard of living of the workers and would be sound in every sense. The Goverdnment should give every encouragement to industry by granting substantial remissions of taxes wherever it is possible to do so. It is an acknowledged fact that there will not he found in the community to-day one professional man or tradesman who is prepared to earn beyond a certain limit of income because he knows that if he does so his tax will increase and so make the additional effort almost worthless. As has been said again and again by responsible officials of the miners organizations the principal question agitating the minds of the miners to-day is how many extra days they will " work for Chifley ". The, whole problem of the slowing down of production arises from the strangling effects of high taxes on private enterprise. The same problem confronts other countries. In an attempt to tackle it the United States of America introduced a system of incentive remissions designed to encourage certain sections of industry to produce goods which were in short supply; The introduction of remissions of a similar kind might well have to be considered in this country before very long. If such a system were introduced production of goods in short supply would rapidly expand and we would quickly he able to revert to our former high- standard of living.. If we discourage initiative we breed inefficiency, increase costs of production, and bring about a form of economic slavery. Because of that, honorable members on this side of the chamber are repeatedly urging the Government to " slash " taxation to such a level as will offer encouragement, not only to industry, but also to individual taxpayers.

Having disposed of the comments of the Minister for Immigration about the tax remissions made by the Lyons Government during the. depression in order to encourage production and to encourage industry to absorb the workless, I now desire to refer to the strange anomalies that our taxation procedure breeds. The anomalies have been referred to by several honorable gentlemen on this side, but I toss a couple into the ring for good measure. The first affects a former prisoner of war. On his return to Australia from a German prison camp he decided to go on the land and, as a preliminary, he took a course in agricultural science at the Sydney University, in respect of which he receives an allowance of £3 5s. a week under the Commonwealth Re-establishment Training Scheme. In order to give him a start in civil life and to provide a part of the capital that he will need for the purchase of a property, his father gave him a block of shares in his company. He received a dividend in 1945. He realized that he would have to pay income tax on it in respect of the financial year 19.45-46, but when he was compiling his income tax return in consultation with a taxation expert, he found not only that he would have to pay tax for the year referred to on his university allowance and the dividend, but also that he would have to pay provisional tax on the whole amount to cover 25 per cent. of the previous year, despite the fact that for ten months of that year he was a prisoner of war in Germany. He has been informed by taxation advisers that the income tax, plus the provisional tax, will be little if anything less than £600, leaving him £350 to pay insurance, living expenses, &c, with no surplus out of two years' income to go towards his re-establishment in civil life, about which the Government professes to be concerned.

Mr Bryson - He is still doing pretty well.

Mr HARRISON - Doing pretty well! Why, this man was a prisoner of war for ten months. He is not doing so well as the honorable member is doing on his £1,000 a year, and the honorable member has never been in the Army.

The second anomaly that I bring to the notice of the Government affects a widow whose former husband purchased for her an annuity. The Treasurer is dealing with the case at the moment ; but, for the life of me, I cannot understand why the Taxation Department arrived at its decision. When the husband died, the widow drew the annuity. She has now been advised that, notwithstanding that the annuity was taken into account as a part of her husband's estate for assessment of probate duty, she must pay income tax on the annuity.I do not know how that decision is reached. I understood that insurance benefits were not taxable. The two anomalies that I have cited are extraordinary, but, owing to the complexity of our tax laws, anomalies are always cropping up. It is high time tha t the whole of our tax procedure was reviewed in order that anomalies might be avoided. It is also necessary that the returns on which tax is assessed be simplified so that taxpayers may know, without having to go to experts for advice, just what their liability will be when caught in the tax mesh. That would reduce the number of attempts to evade taxes, because people would be aware of their tax liability from year to year and make provision for it, instead of resorting to evasion when finding themselves likely to be short of cash with which to meet their tax commitments.

Question put -

That paragraph 1 be postponed (Mr. Fadden's amendment ) .

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