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Wednesday, 24 November 1965

Mr DEPUTY SPEAKER (Mr Lucock (LYNE, NEW SOUTH WALES) - Order! I ask the honorable member to keep to the subject matter of the Bill.

Mr CREAN - I am trying to keep to the structure of the rates. You will see, Sir, that a number of the things that are complicating the Income Tax Act are doing so purely because of the existing rates structure. Whether a certain thing is done or is not done is not so much a matter of its merit in itself but of whether it is a saving. It seems to me, taking into account the tax deduction that is available, not to be a very logical sort of proposition on which to frame certain social assumptions.

Mr. Deputy Speaker,I will sum up briefly some of the aspects of this matter. We on this side oppose this measure because we think it flies in the face of progression. When an increase in taxes is to take place and it is deemed that some of the burden should fall in the income tax field, it flies in the face of progression that the increase should be a flat increase. It ought to be so framed that those with the greatest ability to pay provide a higher proportion of the increase than do those lower down on the scale. I invite honorable members to look at the new tax scale which is contained in "Statutory Rules, 1965, No. 133, Regulations under the Income Tax and Social Services Contribution Assessment Act 1936- 1965 ". This is the document that anticipates the particular rates that we are contemplating at the moment. If honorable members take the case of that healthy animal in the community that is described as the average wage earner - a very useful statistical device when people are trying to say how prosperous a country is - they will find that the average weekly wage at the moment is approximately £25. If the average wage earner is a single man he pays under the new tax scale £3 8s. per week out of his £25 per week. So, his average wage is whittled down by £3 8s. a week. If he is married, he is allowed a deduction of £143 a year for his wife. This has the effect of reducing his tax liability by 13s. per week. It is beyond my comprehension, to say the least, if anybody thinks there is any reality about allowing a married man to pay 13s. per week less tax than a single man. If the married man has one child, the amount of tax he pays is reduced from £2 15s. only to £2 7s. per week. In other words, he saves 8s. per week in tax by reason of his first child. If he has two children, he pays 5s. per week less in taxation. But his income tax is still £2 2s. per week. This example highlights the whole question of a progressive tax scale. Does anybody think that there is equity, justice or anything else in the fact that a married man, on £25 per week, with a wife and two children - I would find it difficult to manage on £25 a week - has to pay £2 2s. per week in income tax compared with the payment of £3 8s. per week by a single man? To my mind this is indicative of the sort of injustice that has crept into the tax scale.

If there is such an unfortunate person in the community as the basic wage earner who receives £16 per week, he does not escape. A single man in those circumstances pays £1 9s. per week in income tax. If he has a wife, the amount is reduced to £1 per week.

Mr Chaney - That is assuming that he has no deductions.

Mr CREAN - Yes. I am arguing about the position of this man with a wife. Does the Minister for the Navy think there is any equity in a man on £16 per week paying £1 per week in income tax? If this man has one child he pays 15s. per week instead of £1 per week. If he has two children, he pays lis. 6d. per week. Can a man in our civilised community live as a human being, bearing in mind Mr. Justice Higgins' concept of an ordinary human being, if he is in receipt of £16 per week and, with a wife and two children to support, still has to pay lis. 6d. per week in income tax? I know somebody will say that he receives £1 or 15s. per week in child endowment. To my mind that only highlights the contradictory things that are going on. The Government drags in child endowment when it suits the Government to do so. But nobody is prepared to make this sort of analysis of the contradiction between what we are purporting to do by raising social service payments and what in fact we are doing by these concealed bonuses that are contained within this taxation nexus - nexus is a very popular word at the moment - that nobody sees and people seldom want to reveal.

For those reasons, Mr. Deputy Speaker, we oppose this measure. We regard it as inequitable. I have taken the opportunity here to try to point to some of the things that have come into our tax structure for the simple reason that we have not bothered to change it for more than 10 years. Equality, common sense and human decency demand that something be done about these things.

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