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Tuesday, 11 April 1961

Mr CAIRNS (Yarra) .- This is an important piece of machinery which gives effect to the Government's change of policy on the increased sales tax between 16th November and the date when this resolution brings the increase to an end. The sole reason given by the Treasurer (Mr. Harold Ho it), who is no longer in the House to continue with the debate, for the change in this procedure and the refusal to consider a refund of the tax to those who paid it, was that there is no precedent for such a refund. The Opposition wants to say quite clearly that there is no precedent for this tax, either. There is no precedent for a refund, but there is no precedent for a 98-day sales tax in the history of the Commonwealth of Australia. This places 50,000 or 60,000 persons in the special position of being affected by a 98-days sales tax; and a good many of those people found it necessary, because it happened to be the beginning of the year, to replace vehicles which normally required replacement at about the beginning of the year. They were especially affected by this tax. They were not people who could have chosen to buy a car then or delay the purchase, but people who were especially obliged, as this was the beginning of the year, to take the action they did.

If this had been a normal change in the sales tax, one that would have lasted for half a year or a year, there would be no case for a refund. But it is quite wrong for the Treasurer to rely upon the noprecedent argument. There is no precedent for a refund of sales tax paid, but there is no precedent for a sales tax increase and then an elimination of this kind, lt is not a matter of being wise after the event. When this measure was proposed on 15th November last year the Opposition gave consideration to the proposal to increase sales tax on motor vehicles by 10 per cent. The Opposition was quite clear in its attitude to that matter and said that it would not be necessary to increase sales tax to achieve the effect the Government wanted to achieve; and I think events have proved the Opposition's claim. The increase in sales tax by 10 per cent, was not for revenue purposes. At the tune of proposing this increase the Treasurer made it quite clear that it was not being imposed for the purposes of revenue but was being imposed to divert resources from the motor car industry where the Government had suddenly found there were excess resources.

Had this tax been imposed for revenue purposes there would be a case to retain that revenue, but as it was imposed for a purpose other than revenue it seems to me that there is very little justification to retain the revenue. Assuming that this tax has had the effect which the Government says it has had - that is to remove resources out of the motor car industry - then the effect has been achieved. If the Government did not impose this increase for revenue purposes why does it not agree to the amendment now proposed by the Opposition? But of course this removing of resources - this afternoon the Treasurer used the expression " removing of resources from the industry " in the economic jargon he is in the habit of using - meant that men lost their employment and for some weeks had little or no income. Perhaps they had to move from a place like Geelong to a place like Broadmeadows, and when they arrived, their jobs were gone.

Mr Osborne - What has that to do with the refund of the tax?

Mr CAIRNS - I am dealing with a matter that was raised by the Treasurer when the Minister was absent. This economic jargon that Ministers have the habit of using is something they ought to have second thoughts about. My remarks at the moment have precisely this to do with giving the tax back: If the tax was not imposed for revenue purposes but for these other purposes the Government should refund the tax. One final point that I want to make is that the Government adopted two measures to deal with the motor car industry, an industry that it had waffled expand for ten years, which it had encouraged to expand and had taken pride in expanding, and then, all of a sudden, found that it had expanded too much. Tt then adopted two measures to deal with the situation. One of those measures was the credit squeeze and the other was the sales tax increase. If it was necessary to have both to achieve this effect we have now not got both but only one. If it was necessary to have the sales tax increase -to take resources out of the motor car industry, what is to prevent them going back into the motor car industry now? If the credit squeeze was not enough, why will not those resources go back and create the very condition .that the Government wanted to prevent by .this legislation If the sales tax, on the other hand, was necessary, why is the Government removing it by this resolution?

The Government's position on this question is quite contradictory. The Government cannot have it both ways. If the sales tax increase was necessary it should still toe necessary, and if it was not necessary it should never have been imposed. The probability is that the credit squeeze was the real factor which affected the motor car industry; and if that is so that is all the more reason why the tax collected from those persons who were affected under this legislation- some £4,000,000 to £5,000,000 - should be refunded to those who paid it. I there/ore support the amendment moved by the honorable member for Melbourne Ports (Mr. .Crean) which would have the effect of refunding the amounts paid in tax by those persons who were unfortunate enough to be affected by the stop and go policy of the Government.

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