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Tuesday, 2 June 1942

Senator KEANE (Victoria) (Minister for Trade and Customs) . - I move -

That the bill be now read a second time.

This is the last of the four bills designed to establish a uniform income tax throughout the Commonwealth. The 'bill imposes rates of income tax based on the recommendations of the special committee on taxation, and these rates are estimated to yield approximately the same amount of revenue as is collected under the present Commonwealth and State income tax systems. The general effect of the proposed rates, coupled with the amendments to the Income Tax Assessment Act, will be that only those persons at present liable to Commonwealth income tax will continue to be subject to tax under the uniform income tax plan. Incomes below the present Commonwealth minimum of £156 will not be brought within the scope of the uniform tax. The estimated . yield from the new scale of rates, based on 1940-41 incomes, is £129,000,000, which will approximate the yield of Commonwealth and State income taxes on these incomes. Additional war expenditure will, however, substantially increase incomes in 1941-42, and the increased revenue which, under the uniform income tax plan, will accrue wholly to the Commonwealth has been tentatively estimated at £12,000,000 to £15,000,000.

The tables which have been prepared and circulated amongst honorable senators compare the amounts of tax that will be payable under the proposed uniform taxing plan with those payable at present to the Commonwealth and the States. A study of the tables will provide a clearer understanding of the incidence of the proposed rates than any explanation that I might attempt. It may be stated, however, that on income from personal exertion the rate commences at 8d. in the £3 and increases to 12s. and 4.445d. in the £] when the taxable income reaches £4,000. For every £1 in excess of £4,000 the rate of tax is 18s. in the £1. The rates of tax on incomes from property are, as formerly, 25 per cent, greater than the personal, exertion rates on taxable incomes up to £2,100. Where the taxable income exceeds £2,100, the rate of tax is 10s. and 4.7619d. in the £1 on the first £2,100 and 18s. in the £1 for every £1 in excess of £2,100.

As incomes of £156 and under will no', be liable to tax under this bill, provision has been made to ensure that there will be no abrupt increase of the tax liability on incomes slightly above £156. This provision is made by limiting the amount of tax payable to one-half of the amount by -which the taxable income exceeds £156.

With regard to the rate of tax payable by companies, the Government proposes that the rate be increased from 4s. to 6s. in the £1. No alteration is being made in the rate of super tax payable on that part of the taxable income of a company which exceeds £5,000, or in the rate of tax payable on the undistributed profits of public companies. These rates remain at Is. and 2s. in the £1 respectively. In the course of my speech on the Income Tax Assessment Bill I stated with regard to the incomes of mutual life assurance companies, and the mutual income of partly mutual companies, that a special rate of 5s. in the £1 was being imposed on those incomes. Provision to give effect to that proposal is contained in this bill. The other provisions in the bill do not call for special explanation as generally speaking they will be a re-enactment of similar provisions that have been embodied in taxing bills for many years past. It will be obvious to every honorable senator that, short of the measures proposed by this Government, it is impossible to strike a satisfactory and equitable Commonwealth rate of tax while the present varying rates of State income tax remain. For these reasons alone the single uniform income tax plan deserves the whole-hearted support of honorable senators.

Debate (on motion by Senator McLeay) adjourned.

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