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Wednesday, 24 October 1956

Mr CLARK (Darling) .- This measure deals with taxation rates for the current financial year. My complaints are that the rates of taxation, particularly on the lower income groups, are too high, imposing a great burden on many people who can ill afford to bear it, and that indirect taxes are far too high and should be reduced.

I believe that taxation rates can be substantially reduced. I propose to indicate several avenues through which the Government could make substantial savings which would lead to a reduction in taxation. The money collected from taxation is being expended in many wrongful ways, and I propose to deal with them during the course of my speech. The national income should be more equitably distributed so that those in need would receive social services and other benefits. The increasing cost of living is adversely affecting invalid and age pensioners and other recipients of social services benefits. But the Government has not done anything to assist them. Money raised by taxation should be used to provide a better way of life for those people.

One important aspect is that receipts from taxation, both direct and indirect, are being used to finance public works. The budget papers show that about £106,000,000 is being used for this purpose, but I believe that other substantial amounts in departmental votes, which are not so easy to detect, will also be used. I should like to know how much of the money collected from taxation during the present financial year will be used to finance capital works, the provision for which should be made from loan moneys or moneys made available by the issue of treasury-bills through the Commonwealth Bank. I believe that a substantial amount is being wasted in this way. Apparently about £30,000,000 will be spent on capital works associated with the War Service Homes Division. That money will be returned to the Government over a period of years, but the proceeds of direct taxation collected from the people are being used to finance those capital works. The money for works of this class should be regarded as capital expenditure, and revenue should not be used for the purpose. Some millions of pounds will be expended on the Snowy Mountains Hydro-electric scheme. Many generations to come will receive the benefit of that scheme, and I believe that posterity should pay for it. The scheme should not be financed from the proceeds of direct taxation. The use for this purpose of revenue obtained from this taxation is an unjust imposition on the taxpayer.

In budgeting for a surplus of £109,000,000 to provide for capital works, the Government is reducing the spending power of the less fortunate sections of the community. Many people are prevented from acquiring their own homes or the necessary furniture and fittings for those homes, and their capacity to buy many goods produced in Australia, particularly primary products, is reduced. I have examined the budgets of other years, and I shall take, for the purposes of comparison, the pre-war budget of 1938-39. The total direct taxation raised at that time was £74,000,000 or £10 13s. 9d. a head. The total revenue from all sources was £95,000,000 or £13 14s. 3d. a head. In the current financial year, taxpayers are called upon to pay about £11 10s. a head for capital works. As I said before, taxation receipts should not be used for capital works. It is a very unjust imposition.

If the' £100,000,000 which is to be spent on capital works were raised from loans or similar sources, rather than from direct taxation, a substantial reduction in the rate of tax could be effected. For instance, sales tax could be reduced, thus making life easier for many people who are unduly oppressed by sales tax to-day. Income tax could be reduced and pay-roll tax, which increases the cost of production and, therefore, the cost of living, could be abolished. In that way, many benefits could be given to the people.

Revenue, which is being used to finance capital works, could be devoted to provide a better way of life for the people. Living standards could be improved without increasing the cost of living. For instance, money that is used to pay various social services does not add to costs; it is merely a distribution of the national income. Living standards could be improved by a fairer distribution of national income. The improvements would include increased social services, reduced direct and indirect taxes on the family man, higher taxation allowances in respect of children, particularly for the second and subsequent children, increased child endowment payments, reduced sales tax on essential home requirements, particularly furniture, the provision of finance for housing, which is being refused to many people to-day, accommodation for the aged, and loans for home requirements at reasonable interest rates, which would prevent the high costs and the exploitation, of the family to-day by high interests rates on time payment purchases.

In this way, the living standards of our people could be substantially improved without the cost being passed on' to essential requirements, such as food. Young people would be encouraged to marry and rear families. There could be no sounder national investment than that which would bring more happiness and prosperity to our people. Increased spending power would assist primary and secondary industries by creating a better home market for our production, This, in turn, would increase employment, and demand.

I wish to mention another matter, which I have discussed here on many previous occasions. I again make a plea for the invalid pensioners and persons qualified for invalid pension, who are called upon to pay taxes. Age pensioners and persons qualified to receive the age pension are exempt from the payment of taxes on incomes which do not exceed £7 10s. a week. But invalid pensioners do not receive the same benefits, lt would be a very great blessing to many persons in receipt of the invalid pension, or physically qualified to receive it, if they were given the same tax exemption as is given to those qualified for the age pension. I have discussed this matter with the Treasury, and the taxation authorities before. I believe that invalid pensioners are entitled to the same income tax exemption as age pensioners receive. Many people in receipt of compensation for injury and retired from industry are called upon to pay tax on the miserable pittance they receive. I believe a very simple method of rectifying this anomaly could be adopted, lt is pointed out in a note on the salary and wages income tax return form that a deduction from taxable income may be claimed for the support of an invalid relative. The definition of " invalid relative ", which . could easily be applied to a person eligible for an invalid pension, reads - . . " Invalid Relative " means a person . . who is in receipt of an invalid pension or for whom a certificate of invalidity has been obtained from the Commonwealth Department of Health. or a doctor approved by the DirectorGeneral of Social Services.

I think there is no difficulty in clearly defining, in that way, a person who is entitled to an invalid pension. If a person is already in receipt of an invalid pension, and has other income besides, he is qualified by the mere fact that he receives an invalid pension. If he can obtain a certificate of invalidity from the Department of Health or a doctor approved by the Director-General of Social Services, he could present the certificate with his income tax return and receive the benefit of the taxation reduction. So, the matter presents no real problem. I think this proposal is very just. Some of the £100,000,000 which it is proposed to expend on public works and other activities which are to be financed out of taxation could be used to finance this proposal without any increase of budget expenditure. 1 should like to direct the attention of the House, also, to a matter relating to allowable deductions for the education expenses of children and for donations for charitable purposes. I have made representations to the taxation authorities on behalf of the Tibooburra memorial hostel for bush children. In the outback areas of New South Wales, in my electorate, some 40 or 50 children who live far from- established schools cannot be educated at home because their parents, in most instances, are illiterate and are not capable of supervising their, education by correspondence. They can be educated only if they board in Tibooburra or some other town and attend school there. Representations have been made for the exemption from taxation of donations made to finance the construction of a hostel at Tibooburra where these children may be accommodated while they are being educated. But the authorities have rejected the request. Mr. Thompson, the Deputy Commissioner of Taxation in New South Wales, in a letter dated 10th September last, wrote -

Referring to your letter dated 1st August, 1956, you are advised that gifts to the abovenamed Hostel will not be allowable deductions under the provisions of Section 78 (1)(a)(vii) of the Income Tax and Social Services Contribution Assessment Act, 1936-1956.

The plan of the proposed memorial hostel is returned herewith.

In other words, the representations have been rejected out of hand. If the Government sincerely desires to assist in the essential education of the children of Australia it should give sympathetic consideration to requests such as this.

I wish to mention another matter also. Provision is made for firms to claim as deductions from taxable income business losses made in previous years. I am well aware of the manner in which advantage is being taken of this provision. Recently, the firm of W. E. Bird Limited in Sydney became insolvent. I understand that its business was bought by the Myer Emporium Limited, which paid approximately £299,000 for it. I was informed that the chief " assets " were an import quota for goods to the value of £240,000, and accumulated losses of £400,000. I understand that the Myer Emporium Limited, by incorporating the acquired company in its own activities, has become entitled to claim as a deduction from taxable income the accumulated losses of the acquired firm. That is one specific case that I can cite. I have in my hand an advertisement which appeared in the Sydney " Sun " on 30th August last It states -

Tenders are invited for the purchase of the Assets and Shares of a Company engaged in the Crockery Glassware and Gift Trades.

Situated in Clarence-street, the company is at present being carried on by a Receiver and "Manager, and holds relevant import licences, and has substantial Accumulated losses.

This advertisement is freely available to the Government if it wishes to see it. It is deplorable that companies should be able to sell their losses as an asset to enable other firms to evade taxes. If the Government wishes to reduce tax rates and the evasion of taxes it should investigate these matters. I am sure that if investigations were made, substantial reductions of taxation could be given and more money could be spent on the essential matters that I have mentioned. I am prepared to hand this advertisement to the Minister for the Interior (Mr. Fairhall) who is now at the table. It was lodged apparently by a Mr. Dulhunty, a chartered accountant, of Burgoyne-street, Gordon, over whose name it appears.

This is not an isolated case. I understand that the practice is general and that substantial sums have been paid and are still being paid for the purchase of accumulated losses by companies which are seeking to evade taxes. Tax instalments are deducted from the wages of the ordinary working man before he receives his pay every week, and he has no chance of evading taxes; but companies, by manipulating books and taking over accumulated losses, can evade substantial sums in taxes, and in so doing evade their responsibilities. Is the Government going to stand by and allow this sort of thing to continue? For how long will it allow tax evasions on a large scale in this fashion while it continues to inflict heavy taxation, both direct and indirect, on the less prosperous sections of the community? These heavy taxes weigh particularly heavily on the family man, who is less able to bear them than are others. When the Labour government was in office the family man in receipt of the basic wage paid no tax, but to-day he pays substantial taxes. I appeal to the Minister for the Interior to bring this matter to the notice of the Government and to urge it to investigate these companies which are evading substantial sums in taxes and thereby imposing heavier tax burdens upon those in the community who are least able to bear them.

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