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Thursday, 8 December 1927

Senator J B HAYES (Tasmania) .-I welcome this bill because it makes a very substantial reduction in taxation amounting to over £1,000,000, and because it is a proof ofthe fact that the Government is not unmindful of the load of taxation that the people have to bear. I am also pleased to welcome the billbecause it takes into consideration largelythose who are making a living on the land, and allows some very desirable deductions for money that is spent on improvements and in other ways. It has also made much simpler the intricate problem dealing with sales of sheep in the wool. I cannot agree with Senator Hoare and Senator Findley that the proposed reduction in taxationwill not confer any benefit on the workers or relieveunemployment. It is the almostincessessant complaint of business people that the high taxation they have to pay prevents them from extending their operations This reduction should at least encourage them to enlarge their businesses and afford more employment. AlthoughI welcome a reduction of 10 per cent. as shown in this bill,I hope that similar reductions will be made at frequent intervals until the income tax is wiped out altogether, because I have long held the principle that it isthe right of the States to inflict an income tax.

Senator Sampson - " Inflict " is a good word to use.

Senator J B HAYES - I used it advisedly. But if itsuits the honorable senator better I can substitute " impose.'' I think that the States ought to have this field of taxation to themselves for their own activities. I hope that the Government will amendclause 17, which is the provision under which the income tax comes into conflictwithprobateduties, and in some cases inflicts an injustice. If a man dies just about the time hissheep arebeingshorn, probate duty hastobe paidonthe wool as capital, andincome tax on the wool as income, andin additiontothaton the amount already paid as probate duty. I have a case which makes the point clear. The sheep with the wool on their backs were worth 3 2s. ; shorn they were worth £1; consequently the wool was worth 12s. The probate duty paid on the wool as capital was 2s. 5d. , the beneficiaryreceiving the balance of 9s. 7d. This9s. 7d. should have been free from income tax, seeing that it had been regarded as capital upon which probate duty was paid, but under the present law, and this bill does not seem to alter it, immediately the wool wasshorn the whole 12s. was taken as income arising after the death of the owner, and the beneficiary had to pay income tax upon it. Thus the beneficiary paid income tax not only on the 9s. 7d. balance after the payment of the probate duty, but also on the 2s. 5d. which he did not receive, that amount having already been paid in probate duties. I do not think it fair that a man should be called upon to pay income tax on what is obviously capital, and is regarded as such for probate duty purposes, and it is certainly unfair that an amount already paid as probate duty should be regarded as income.

Senator McLachlan - Surely that is already provided for.

Senator J B HAYES - I should like the honorable senator, who is a lawyer, to look into the matter. When this case came under my notice it seemed so unjust that I thought I had only to bring it under the notice of the Government to have it rectified in this bill.

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