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Thursday, 8 December 1927

Senator Sir GEORGE PEARCE (Western Australia) (Vice-President of the Executive Council) [8.0]. - The debate on the second reading of this bill has been somewhat restricted owing to its technical nature, and, as it is a measure which can be more effectively debated in committee, I need not refer at length to points raised on the second-reading speeches. I wish, however, to refer to some assertions of the Leader of the Opposition (Senator Needham), who enavored to justify his opposition to the measure, on the ground that owing to our large debt the Government is not justified in remitting a portion of this form of taxation. His argument, however, concerning the Commonwealth debt, is based on wrong premises. First of all, there has been a substantial reduction in the dead-weight debt. The Leader of the Opposition pointed out that taking our dead-weight debt and our revenue producing debt, the net debt has increased by some two millions. That is quite corect but whilst the revenue producing debt has increased, the dead-weight debt has been reduced. The revenue producing debt represents money borrowed for the extension of postal buildings and services, leaving out of account, of course, money borrowed for the States, which I understand the honorable senator did not include, as that has tobe repaid by the States. The revenue producing debt not only pays interest on the capital involved, and working expenses, out also pays a fixed amount to a sinking fund, which will extinguish the debtinthelifeofthe asset. That is soundfinance. We are reducing the dead-weight or non-revenue producing debt at a very fair rate, and the revenue producing debt, as I have said, will be extinguished in a given period of years. If allthe State Labour Governments had proceeded on these lines, Australia would be in a much better financial position than she is today. The Leader of the Opposition went on to make a comparison between direct and indirect taxation, and endeavored to make it appear that the wage-earners of this country paid the whole of the indirect taxation, and that only the wealthy people paid the direct taxation. He suggested that by reducing direct taxation, the Government is relieving the burden on the wealthy and leaving the poorer section of the community still to shoulder the same financial responsibilities. The honorable senator knows quite well that, under the tariff proposals now before another place, the Government proposes reductions of revenue to the extent of £400,000 per annum. When we analyse the position to see who pays the bulk of customs duties, we find that it is not as he states. There are many persons who do not look into the figures, hut jump to the conclusion that indirect taxation is paid largely by the wage-earners of this country. If those who hold that opinion would only study the statistics supplied from time to time, and analyse the figures concerning the imports upon which duty is payable, they would see how false that argument is. A cursory glance at some of the figures is interesting. Bulletin No. 23 of overseas trade for the year 1925-26, which is the latest available, shows some interesting facts. I have taken the value of imports from that year, as given in this publication, as being approximately £60,000,000. We must remember, however, that Australia has a very large free list. Of the imports for that year, valued at £60,000,000, motor vehicles represent nearly £12,000,000. These are dutiable, but the wage earners do not pay that duty. Included in the £60,000,000 there is also nearly £4,000,000 worth of tea, on which there is no duty. Petrol and other liquid fuels represent £6,500,000. Does the worker pay the duty on those commodities? Metal manufactures of various kinds total £9,500,000, the duty on which, again is not paid by the workers. Finally we have imports of iron and steel to the value of £5,500,000, on which also the duty is not paid by the wage earners. The amounts I have mentioned represent £37,000,000 of the total imports of £60,000,000 for that year, and as I have said, there are other items which are not dutiable. If the Leader of the Opposition studies these figures he will cease to repeat the parrot cry that the whole of the customs duties are paid by the workers. He spoke also of the increasing burden of customs revenue - again, of course, on the assumption that it is borne by the workers. Let us assume that it is - which is not correct - and refer again to the Quarterly Summary of Australian Statistics issued by the. Commonwealth Bureau of Census and Statistics, bulletin No. 107, for the year 1927. In this we find a very interesting comparison. I was unable to get the figures for 1921. which the Leader of the Opposition quoted, but I find that from 1922 to 1926 the increase in the basic wage was equal to £18 4s. a year, whereas the increase in customs duties was £1 10s. 6d. per head. Assuming, as is done when fixing wages, that every wage earner is married and has a family of three children, which is altogether a false assumption, since a considerable number of men are not married and the average family of a wage earner is under 1 per cent. - the amount would be £7 12s. 6d. per year. As the basic wage has increased by £18 4s., taking the premises of the honorable senator the wages increase was more than double that which took place in the customs duties during the same period. Before the honorable senator makes such assertions, he should study the facts. If he did, he would not be so free in making them.

Question resolved in the affirmative.

Bill read a second time.

In committee :

Clauses 1 to 8 agreed to.

Clause 9 (Average years for income tax).

Senator Sir GEORGEPEARCE (Western Australia - Vice President of the Executive Council) [8.10]. - This amendment is required in consequence of the a new sub-section 11, to be added to secfirst part of amendment d, which provides tion 13 of the principal act. Amendment a means that as regards the excess of allowable deductions over assessable income, all taxpayers, whether carrying on business or not are to remain on the same equal footing as they are at present.

Clause agreed to.

Clauses 10 to 12 agreed to.

Clause 13 -

Section 20 of the Principal Act is amended by inserting at the end of sub-section 1 the words " or as rebates based on purchases by shareholders from the company."

Section proposed to be amended -

20.   - (1.) In calculating the taxable income of a co-operative company there shall be deducted, in addition to amy other deductions allowed under this act. so much of the assessable income of the company as is distributed among its shareholders as interest or dividends onshares.

2.   In addition to any otherincome tax payable by it, a company shall also pay income tax on - (b)the interest paid or credited by the company to any person, who is an absentee, on money raised by debentures of the company and used in Australia or on money lodged at interest in Australia with the company; and

Provided thai a company shall be entitled to deduct and retain for the use of the company from theamount payable to any of the persons referred to in paragraph (b) of this subsection such amount as is necessary to pay the tax which becomes due in respect of that amount.

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