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Tuesday, 21 March 1961

Mr HAROLD HOLT (HigginsTreasurer) . - by leave - I move -

That the bill be now read a second time.

The purpose of this bill, in conjunction with the resolution which will follow, is to reduce the rate of sales tax on passenger motor vehicles from 40 per cent. to 30 per cent., and the rate on motor cycles and motor scooters from 25 per cent. to 162/3 per cent.

Mr Whitlam - From what date?

Mr HAROLD HOLT - The increases in the rates of sales tax on these vehicles were among the economic measures adopted by the Government in November to abate the pressure of excessive demand in the domestic economy and to reduce the flow of imports from abroad.

Registrations of new motor vehicles had, by the September quarter, 1960, risen sharply to a rate in excess of 330,000 a year. In November, 1960, the month in which the increased tax was applied, they were 23 per cent, higher than in November, 1959. The rapid expansion of activity in the motor vehicle industry to meet this inordinate demand had set up heavy pressures on manpower, on the many associated industries and on imports. Resources in excess of what we could afford, having regard to other requirements of the economy, were being swallowed by the industry. Imports of petroleum products and other items clearly attributable to the motor industry and motor transportation were running at an annual rate of £200,000,000 in the September quarter of 1960 compared with a rate of £152,000,000 in the September quarter of 1959.

Some immediate cut-back in demands in this area was obviously necessary. The general measures adopted were expected to moderate these demands but it was considered that supplementary action in the sales tax field would also be required to ensure quick results. Accordingly, we increased the sales tax. I made it clear at the time that we would review the rate as soon as the situation warranted it. As intended, the measures had immediate effects. November registrations were at the all-time high of 31,865. 'In December, registrations came down to 22,368 and in January, when the seasonal low point is normally reached, they totalled 16,254. After examining the position in February the Government was satisfied that the general measures would now be sufficient to keep the demands of the industry within reasonable bounds. In accordance with its public assurance the Government decided that the additional sales tax should be removed forthwith. Earlier the Deputy Leader of the Opposition (Mr. Whitlam) asked from what date this measure would take effect. The purpose of this bill is to give to that decision force of law as from 22nd February, the day following the announcement of the Government's decision.

Mr Calwell - That means there will be no refund of the increase of sales 'tax actually collected?

Mr HAROLD HOLT - I will come to that. It has been suggested that the Government should refund the additional tax collected between 16th November, 1960, and 21st February, 1961. As I have previously informed the House, I cannot support that suggestion.

Mr Calwell - Why?

Mr HAROLD HOLT - The Leader of the Opposition asks me why. He should be in a very good position to answer his own question, since at no time when his Government was in office did it ever refund a sales tax in any comparable circumstances. The fact is, of course, that on no occasion since sales tax was first imposed in 1930 has any Commonwealth Government made a refund of this kind.

Mr Calwell - What about Ansett-A.N.A.?

Mr HAROLD HOLT - You are not trying to draw a parallel between the circumstances of those two airline organizations and this particular matter?

Mr Calwell - Of course I am.

Mr HAROLD HOLT - I do the honorable member the credit of thinking he is talking with his tongue in his cheek.

Mr Calwell - Do not be insulting.

Mr HAROLD HOLT - No. It would be even more insulting if I put the alternative. I do not think the honorable member is so lacking in intelligence or realism as to wish that. Parliament had the opportunity to resolve that issue at the time and Parliament will have the opportunity to resolve this one. Whenever sales tax is increased some people gain an advantage, and when rates are reduced some are put at a disadvantage. The consistent practice adopted by Commonwealth governments has been to make no refund in cases of this kind. After full consideration of the position the Government decided that no departure should be made from the established practice. I commend the measure to honorable members.

Debate (on motion by Mr. Calwell) adjourned.

SALES TAX BILLS (Nos. 1 to 9) 1961.

In Committee of Ways and Means:

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