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Thursday, 3 December 1959

Mr HAROLD HOLT (Higgins) (Treasurer) . - by leave - I informed the House earlier in the session, Mr. Speaker, that 1 hoped to be able to convey to it the terms of reference of the proposed committee of inquiry on taxation, and also to indicate the members of the committee. It is perhaps of advantage, in one sense, that this sitting of the House has occurred, because I was not able to give that information earlier.

I now wish to inform the House of the membership of the Commonwealth Committee on Taxation which the Government has decided to appoint, and of the terms of reference to be given to the committee.

There will be five memebers of the committee and the Government has been fortunate in securing, as chairman, the Honorable Sir George Ligertwood, a distinguished former Judge of the Supreme Court of South Australia. With him there will be: Mr. D. B. Lewington, of Sydney, who is a business man of considerable experience in commerce, industry and finance. He was formerly chairman of the British Tobacco Company (Aust.) Ltd.

Mr Curtin - How long has he been naturalized?

Mr HAROLD HOLT - I suppose that the honorable member would not have had much experience of matters of this sort, but I suggest that such experience gives Mr. Lewington a suitable background to undertake an inquiry of this kind. The other members of the committee will be: Mr. D. G. Molesworth, of Sydney, a chartered accountant who has also had wide experience of business affairs, especially in the field of processing and marketing primary products; Mr. F. C. Bock, of Sydney, who is a principal of one of Australia's leading accountancy firms, and Mr. J. A. Neale, of Melbourne, who was formerly Deputy Commissioner of Taxation in Victoria. I believe that, in a committee so constituted, the Government has been abb to obtain a body of men particularly well suited by their abilities, attainments and experience to carry out the important and difficult functions to be entrusted to the committee.

The formal terms of reference for the committee are as follows: -

(1)   The functions of the inquiry are, subject to paragraphs (2) and (3) of these terms of reference:

(a)   to examine and inquire into the existing laws of the Commonwealth relating to taxation of income, and the operation of those laws, for the purpose of ascertaining any anomalies, inconsistencies, unnecessary complexities and other similar defects that exist in, or arise out of the operation of, those laws, and to formulate proposals for remedying those anomalies, inconsistencies, complexities and other defects and for simplifying thoselaws;

(b)   to inquire into any matters relating to the taxation laws of the Commonwealth, other than the laws relating to duties of customs or of excise, that are, from time to time, referred to the committee by the Treasurer of the Commonwealth; and

(c)   to report and make recommendations to the Treasurer of the Commonwealth concerning the matters dealt with by the committee.

(2)   In making recommendations with respect of the laws relating to the taxation of income, the committee shall have regard to the cost to Consolidated Revenue of giving effect to the recommendations and shall take it to be necessary for the Commonwealth to continue to receive, from the taxation of income, revenue not less in total than the revenue that might be expected to be received under the existing laws.

(3)   The functions of the committee do not extend to the matters dealt with in the report made by the Commonwealth Committee on Rates of Depreciation appointed in 1954, or, except as approved by the Treasurer, to any matter dealt with in a report of the Commonwealth Committee on Taxation appointed in 1950.

I may say that the Government has given a good deal of consideration to the scope and nature of this taxation inquiry. It will be remembered that, in his policy speech in October, 1958, the Prime Minister said that the Government would set up a competent and independent public investigation of the taxation laws. This clearly envisaged a wide inquiry. At the same time it will be realized that, unless such an investigation is to be almost inimitably wide and go on almost indefinitely, it is necessary to define its scope in such a way as will concentrate attention on those aspects of the taxation laws which are most in need of review. Hence, the Government reached the conclusion that, in the first instance at any rate, the committee should direct its attention to the laws relating to taxation of incomes, both of individuals and of companies.

On the whole, it seemed inadvisable to bring customs and excise within the purview of the inquiry because, although customs and excise represent one branch of taxation, they are also very closely involved with policy on trade, tariffs and external economic relations generally.

While we do not contemplate that the committee will, at least in the earlier stages of its investigation, undertake a general review of sales tax, pay-roll tax or estate and gift duty, we have recognized that there will inevitably be certain issues relating to these taxes which might be proper subjects for investigation and therefore we are providing in the terms of reference that such matters may from time to time be referred to the committee by the Treasurer of the Commonwealth.

Income tax law constitutes by far the largest body of taxation law and it undoubtedly offers the widest, and probably the most complex, field for investigation. It is primarily for that reason that the Government has designated it to be the principal subject for study and report by the committee. At the same time, we had in mind that in recent years various aspects of taxation law have been investigated by other bodies and that recommendations made by these bodies have, in a good many instances, been the subject of amending legislation. I refer here to the work of the Commonwealth Committee on Taxation appointed in 1950, and of the Commonwealth Committee on Rates of Depreciation appointed in 1954. It has seemed both unnecessary and undesirable that the committee now to be appointed should again traverse the ground covered in a competent way by these earlier inquiries and we have therefore decided that except in special cases, the particular matters dealt with by those bodies should be excluded from the field to be covered in the forthcoming investigation.

We believe, therefore, that in drawing up the terms of reference I have announced we have been able to strike a suitable balance between the aim of having, on the one hand, an inquiry of considerable breadth and, on the other hand, of concentrating its work on areas in which its studies are most likely to be fruitful of practical benefits.

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