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Wednesday, 20 May 1936

Senator BROWN (Queensland) . - Under this measure, itis proposed to take a step in the right direction, even if it is only a small step. Thousands of persons in the community pay very little income tax, and thousands of the supporters of the Labour party have no taxable income, yet the Opposition appreciates any action taken to simplify our taxation laws, and to eliminate the irritating features of the act which the taxation authorities are called upon to administer. Although we constitute the Opposition, we realize that on occasions the Government can take a step in the right direction. When they come to deal with their income tax returns, many of my friends get into a Serbonian bog. With the Minister, I hope that the day will come when we shall have a uniform income tax return for both Federal and State authorites. Why should it not be possible to arrange for one collection and then divide the total amount collected between the Federal and State governments according to their needs? Some States, of course, might want more than others. There seem to be conflicting interests at work. Some States cannot come into line with the Federal Government, and sometimes the Federal authorities cannot accept the States' ideas. These difficulties, however, are not insuperable, but they emphasize what my leader, Senator Collings, has claimed - the need for unity which will ultimately lead to unification. Senator Johnston described this ideal as the dream of visionaries, whilst Senator Arkins referred to it unfavorably in many ways, but I believe that eventually uniformity will be achieved in income tax matters. It will certainly be welcomed by the Labour movement. It may take many years to accomplish, but we are now steadily moving in that direction. Every one directly interested in legislation realizes that this need is paramount.

Unfortunately, many people who support the Labour party have no income on which taxes can be levied. If a government believes in taxation as a means of obtaining revenue, I should imagine that one of its first aims would be to see that the people as a whole have something to tax, but to-day thousands of our fellow citizens are, so to speak, left on the shelf financially, being dependent solely on wages for relief work, which are not taxed.

Since 1930-31, State income taxation has increased by £600,000. In the same period, Commonwealth income taxation has increased to £8,300,000, the detailed figures in respect of the latter collections being as follows : -


These figures are particularly interesting to members of this Opposition, because we feel that, in the remission of taxation by this Government, the richer people have been more than favorably treated. This conclusion must be drawn from these figures, because, whilst they show a diminution in income tax collections, they reveal an increase of collections from indirect taxation, which is generally paid by the workers. Some peoplecontend that it is the rich people who pay the bulk of the taxes. Dealing with this matter, the Sydney Sun, under date the 18th May, 1936, says in a leading article, in which it attacked the leader of the Labour party (Mr. Curtin) -

Dues any working nian or woman believe that the sales tax, or the wages tax, or, for thu matter of that, the income tax, increases his spending power? liven the taxation of the richer people curtails the general wage-fund. It may result in thu employment of a few more public servants, but these produce nothing, while those employed in industry outside do. ... It is tho pom- who are the real taxpayers, and they pay in less food and less chances of employment, lt is safe to say that if the governments of Australia - which take to-day nearly £200,000,000 a year out of the public wages fund of £450,000,000 - were to cut down their taxation by £50,000,000, there would not be an unemployed man or woman in Australia (except for a few unemployables ) . and there would be increases of wages and higher spending power all round.

This is the sort of criticism we read in such papers a3 the Sydney Sun, which took the leader of the Labour party to task because ho expressed the opinion that the time was not opportune to consider any diminution of taxation of those who could well afford to bear it, because we were not yet right out of, the depression. We know that no matter how we may juggle with taxation methods, the work of the community is done by the workers generally. This fact remains, no matter under what monetary system a community may operate, whether it be the Douglas credit system or any other-

Senator DUNCAN-HUGHES (SOUTH AUSTRALIA) -hughes. - Does the honorable senator mean the manual workers ?

Senator BROWN - No ; I mean all those who contribute useful service which enables the community to carry on. From that point of view, the workers pay taxa tion. There can be no doubt about that, because if we are compelled to have a number of non-productive workers, these naturally have to be fed, clothed and housed, and they are fed, clothed and housed by the people engaged in producing food, clothing or housing. I admit that, by a process of juggling with methods of taxation, it is possible temporarily to inflict a financial injury on the workers, because for a time the workers as a whole must bear the burden of any additional taxation However, I admit also that eventually through our arbitration system, under which our industrial courts base their judgments on the cost of living, this burden may be lightened. Such statements as that which I quoted from the Sydney Sun seem to me to be absurd. This paper estimated the public wages fund at £450,000,000 per annum. Actually it represents the total income of the community, so that in that respect it has made a mistake. Its claim that if taxation were reduced to the extent of £50,000,000 per annum the community would be enabled to employ every ablebodied man is absurd ; because under the present economic system it is impossible for private enterprise to find work for all our people, and it has become necessary for governments to impose taxes for the purpose of undertaking public works with the idea of providing work for the unemployed, whilst at the same time, developing the country. Whether the revenue of the Government is derived through income tax or any other form of tax, if it is used in such a way as to add to the productive capacity of the country it not only enables employment to be increased, but also makes possible an improvement of the standard of living in the community. The idea propounded by the Sydney Sun that under the present economic system a diminution of taxation by £50,000,000 per annum would automatically increase employment is an obsession which cannot be supported by reasonable argument. It does not follow that the people relieved of the payment of taxes will use the money remitted in providing employment. If, for instance, the taxation of the Commonwealth were reduced by £50,000,000 per annum - and I suggest that the bulk of the remission would benefit the rich - and the people so relieved used this extra money in travelling abroad, a reduction of taxation would not automatically mean an increase of employment here.

I am not suggesting that the Labour party stands for taxation merely as taxation or that it .suggests that increased taxation will solve our economic problems, l t says nothing of the kind. It takes cognizance of all the economic relationships in modern society and says emphatically that a wise government can use its revenue from taxation for the purpose of improving the general economic position of the country by providing work and wages for all of its people. Supporters of the Douglas Social Credit System contend that taxation can be done away with altogether. They argue that all the finance necessary for the continuation of the necessary functions of the State can be produced under a uniform financial system of social credit. By that means they claim that the taxation of both rich and poor can be eliminated. The Single Tax League believes in a uniform tax, namely, a tax on the unimproved value of land. The single-taxers have been promulgating their ideas for many decades, but do not seem to have made any headway. Recently in the Sydney Domain, I heard one of their spokesmen, Mr. Huie, still preaching the same old story which T heard him preach in the same spot 20 years ago. I understand that adherents of this school of thought are subsidized from a fund bequeathed for the purpose of advocating this particular idea.

Senator Arkins - I understand that they are financed from the Fell endowment.

Senator BROWN - Whether the supporters of this school are actuated purely by the ideal they preach, I do not know; however, they are still advocating the same old theory their predecessors propounded many years ago.

I am pleased that the Government is taking steps to overcome duplication in respect of income taxation. We would like to see such duplication abolished altogether. Perhaps all of us would like to see all forms of taxation abolished. That would be indeed a lofty ideal, although I suppose that Senator Johnston would describe it as very visionary.

Senator E B Johnston - Income taxation should be reserved to the States.

Senator BROWN - There is something in the honorable senator's suggestion, but the present Government would describe it as visionary. Once a government lays its hands on any form of taxation it is unwilling to loosen its hold. A tax may be imposed in special circumstances such as those which existed when the sales tax legislation was enacted, but as the years pass various excuses are offered for its continuance. Some day, however, when the Labour party is in power it will no longer be imposed.

Senator Arkins - The Labour party imposed it.

Senator BROWN - Yes, in a time of financial crisis. Even Mr. S. M. Bruce said that in the circumstances no other action was possible. Only recently the Leader of the Senate (Senator Pearce) said that if something were not done to correct Australia's adverse trade balance, similar steps to those taken by the Scullin Government might have to be taken The introduction of a measure of this kind reveals the way in which various interests seek to transfer the burden of taxation from themselves to other sections of the community. The primary producer complains that he is unfairly taxed; the brewer says that his product is overtaxed, traders complain of heavy restrictions on their trading activities; landlords complain of the heavy taxes on property. Representatives of the various interests bring pressure to bear, in an endeavour to unload their burden and place it on others. The Labour party recognizes the need for lightening the burden of taxation oh the poorest sections of the community. It is not so greatly concerned with those who can afford to paytaxes. I believe that there will come a time when taxation, as we know it, will no longer be imposed, and that some other means of obtaining revenue to meet governmental expenses will be found. But whilst- taxation in its present form remains, the Labour party stands for making its incidence such that the burden will fall most lightly upon those least able to bear it and most heavily upon those with large incomes.

Sena.tor Herbert Hays. - The honorable senator should sit with us.

Senator BROWN - I do not think so. The honorable senator supports a party that believes in increasing indirect taxation, which bears most heavily on the wage-earners, whereas the Labour party would lighten their burden, even if by so doing those with larger incomes would have' to pay more.

Senator Arkins - Does the honorable senator support the Lang faction or the Garden party?

Senator BROWN - The Senate is not now dealing -with that little interlude in the great march of the Labour movement towards its ' goal. Similar happenings take place in all political parties; there is jealousy, bitterness and struggle going on all the time.

Senator Arkins - The honorable senator said that he believed in direct taxation.

Senator BROWN - So long as the present system of taxation remains the Labour party will favour direct taxation in preference to indirect taxation. It believes that those who derive the greatest incomes from the community should pay most towards the maintenance of the community.

Senator Arkins - Is not that the case now?

Senator BROWN - Those persons in the community who are not producers, and are not helping to develop the country, should bear the greatest part of the burden of taxation. That is not so today. The Leader of the Senate has told us that, to a great extent, Government bonds are free of income tax. Governments must have money, and, accordingly, they have encouraged investors to lend it to them by making the conditions as attractive as possible. Theoretically, a man who exercises initiative, either in primary or secondary production, and uses his money for the betterment of the community, should have greater consideration than a man who does nothing for the community, but merely lives on the interest derived from his investments.

Senator Herbert Hays - The honorable senator supports high customs duties, which are a form of indirect taxation.

Senator BROWN - The present Government has so altered the incidence of taxation that those least able to pay have to bear the heaviest burden. The Labour party will support any step towards the elimination of unnecessarily obscure and involved methods of taxation ' which harass the community. Some day a better system will be in operation, but so long as the existing system remains, the Labour party will favour the simplification and unification of our taxation laws.

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