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Thursday, 8 December 1927

Senator KINGSMILL (Western Australia) . - I have very few remarks to make on this bill. Of course I ambound to welcome it; at all events politeness compels meto do so, although the very mention of an income tax is enough to make a man think very seriously about the future and also, so far as that goes, about theimmediate present. I must say that, for reasons which I shall dwell upon presently, I do not like the bill now as well as I did when it was introduced in another place. I am pleased to be able to agree with Senator Hoare and Senator Findley, that, after all, an income tax is the fairest tax that could be imposed, or, as Senator Hayes has said, inflicted." It is true that occasionally extremely ingenious commissioners of taxation turn what an ordinary individual would look upon as a loss into, for taxation purposes, an apparent profit; and, while that might be a comfort to the taxpayer, it is not a comfort .when he has to pay taxation on it. But taking it by and large, I think the principle which underlies income taxation, in that it does first find out whether the taxpayer has anything with which to pay a tax before he is asked to pay it, is a good one. It is one that does not apply to all forms of taxation, more particularly to laud taxation. I do not know whether honorable senators recollect that I have expressed a preference for a form of taxation which differentiates between the sources of income. For instance, there are some pursuits in life which undoubtedly are good for the community as a whole, and those, unfortunately, are, as a rule, not too remunerative for the persons who follow them. There are other pursuits in life or sources of income which are undoubtedly deleterious to the community, and it is a most peculiar thing - I have been thinking over the matter for years, and I cannot see any instances to the contrary - that the less useful the pursuit is' to the community the most money is made in it in the easiest manner. Take, for instance, the pursuit of hotelkeeping. No one can call that an arduous task. The hotelkeeper is favoured by legislation in every possible way. He is the owner of an asset which returns him a very fine revenue, and increases in value the whole time, yet he is called upon to pay tax et the same rate in the pound as the struggling farmer who has to work extremely hard for everything hSenator Hayes's word, from which we are suffering to-day. I said at the outset that I did not like this bill as well as the bill which was introduced in another place I believe that on the whole it is a very legitimate and earnest effort to reduce taxation in the best possible way. But there is still one way. It appeared in the bill when introduced) but it is not there now, having disappeared in it3 passage through committee in another place. Every one who thinks on the subject will know that a great deal of tins development of this) country is carried on with the aid of money obtained from outside Australia. It must necessarily be so. The demands of such bodies as harbour trusts, municipalities, and other semi-public bodies absorb of th.-; floating capital in Australia required foc developmental purposes. A great deal has to be done by private individuals to develop Australia, and consequently the demand for money from outside the Commonwealth is ' becoming greater an 1 greater. In its anxiety, some years ago, to make overseas lenders pay interest on money invested in Australia the government of the day introduced a bill imposing income taxation on English moneylenders in respect of interest on such loans. The action was not calculated to contribute to the progress of this country. Legal complications soon presented themselves. It was disclosed that there wa* no obligation on English lenders to pay taxation on the interest they received from Australian investments Thereupon an attempt was made to place thE burden on the Australian borrower. Letus consider the position of an Australian company which relies for some of its capital on the sale of debentures in England at, say, 6 per cent, or 7 per cent. The sale of those debentures is a definite contract between the Australian company and the purchaser in England Obviously the latter expects to get 6 pe/ cent, or 7 per cent., whatever the agreed upon rate may be, on the money that he lends to the Australian companies. If the government of the day hnd had its way the English money-lender would have received his interest, less income taxation; but the English courts ruled that the' deduction could not be made legitimately. Accordingly the tax has to be paid by the company in Australia. This s.imply means- that instead of income tax on the interest earned here being collected from the English money-lender the unfortunate company has itself to pay it. The object of this bill when it was introduced in another place was to make this form of taxation impossible. I regret very much that the: provision to achieve this purpose' has disappeared from the measure, but r have had printed and circulated a:j amendment which I hope the Senate will accept, to remedy this foolish state of affairs. If we cannot collect this taxation of interest from the English lender, and that obviously is impossible, it should not be levied on the Australian company or an individual Australian borrower who is using English money. As 'the law stands it is farcical. I hope that the Senate will see its way, wher th-j bill is in committee, to amend the biU in the way I have indicated. The complicated nature of taxation legislation, which has been evolved principally owing to the successful efforts by various individuals and associations to avoid taxation on incomes, and which, < f course, has necessitated further amendments to an already complicated act, render the discussion by a layman of a measure such as this almost -impossible. This warecognized by the Leader of the Senate, who wisely read notes prepared for him by his technical advisers. It is almost impossible for honorable senators to discuss the provisions of this bill unless they get an outline of absurdities, such as I have alluded to, and which I shall endeavour to lop off However, in the hope that the Senate will take some steps to eliminate the obvious inconsistencie > which appear in the parent act, I have pleasure' in supporting the second read ing of the bill.

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