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Wednesday, 3 June 1942

Senator BRAND (Victoria) .- The broad principle that in war-time the Commonwealth Government must have first call on taxable incomes and the capacity to pay is not open to challenge. The great mass of Australian citizens place State rights in the background while the nation is fighting for its existence. Not being a lawyer, I do not propose to voice an opinion from the constitutional aspect regarding the proposals under consideration. Lawyers, like doctors, often differ when professional advice is sought. I intend to vote against the second reading of the bill on the ground that it does not tend to assist in the production of a total war effort which the present Government has consistently and rightly urged. This is an opportunity to force States spending their revenue very freely to curtail their expenditure on non-essential commodities. This is an opportunity to tax the incomes not subject to direct taxes or to treat them very tenderly. The Government has not given effect to the policy for a total war effort that it has proclaimed over the air from time to time. Ministerial appeals for equality of sacrifice in order to win the war are mere words.

State revenue and expenditure have increased considerably during the war, yet this uniform income tax bill condones extravagant and free spending habits and penalizes prudent administration. By careful administration Victoria has kept its income tax rate the lowest in the Commonwealth. When the Commonwealth Government, under this bill, collects the proposed uniform State and Commonwealth income tax in the forthcoming financial year, thrifty Victoria will be handed back £3 Ss. Id. per capita to carry on essential State services, whilst New South Wales and Queensland will receive £5 13s. 9d. and £5 14s. lOd. per capita respectively, because they have continued or increased their pre-war expenditure during the last two years of the war. Is it not surprising that Victoria is appealing for more equitable treatment? About one half of Victoria's revenue in past years has been derived from State income tax and the other half has been collected by means of various imposts such as land tax, estate duties, stamp duties and similar charges. New South Wales acquired the bulk of its revenue by means of income tax. This fact was not mentioned by the Minister (Senator Keane) in his second-reading speech on this measure. Victoria collects £500,000 a year from land tax as against £2,000 collected by New South Wales. When these imposts are taken into account, the taxpayers of Victoria will, under the so-called uniform proposals, pay taxes far heavier than those paid by taxpayers in New South Wales.

The bill should be re-drafted with the object of putting Victoria on a fair basis. This measure is only half baked. I admit that the problem is a difficult one; but until there is a clear cut division of the field of taxation, under which income taxation is left to the Commonwealth and land and other forms of taxation are reserved to the States, the unfair discrimination will not bo eliminated. The Commonwealth Government must have all of the money that it needs to prosecute the war, and if it be wisely expended, the public will respond. All of the States have commitments to honour, but the expenditure on non-essentials should be regulated by the sum collected annually from sources other than income tax. The emergency which has given rise to the present uniform income tax proposals lies in the fact that Commonwealth taxes on Queensland taxpayers cannot be raised, because after the Government of Queensland has collected the taxes due by them they have little or nothing left. I repeat that the present Government has in this so-called uniform income tax bill, failed to tap the incomes which are either excluded from direct contribution to paramount war needs, or are very tenderly handled. This category of earnings, relatively immune, from direct taxation or obligation to make a proportionate contribution to war costs has been increased substantially by the vast disbursements on war industries. The Government's uniform income taxation plan applies only to taxpayers who are at present liable to pay Commonwealth income tax. In other words, persons without dependants, receiving up to £3 a week are not to pay anything, although in four States they have hitherto paid some income tax. The existing immunities for, or light imposts on, incomes up to £300 or £400 are to be preserved. The incomes of many families with individual members within this income range have been greatly expanded by war employment, yet in many instances it may be found that only one person in a family is making a direct contribution by means of income tax. Lavish private spending seriously detracts from the efforts of a country fighting for survival, and organized for total war. Exemptions from taxation in respect of the lower levels of income are justified where there are dependants, but many of those benefiting by employment in war industries and defence services are either married and without dependants, or single persons with no obligations other than their own maintenance, in whole or in part. Before the recent selfish rush for clothing began, there was evidence of heavy spending on nonessential and luxury goods. Such conduct was wholly inconsistent with the maximum use of the people's resources for war purposes. It showed, moreover, a taxable capacity still untapped, or at least very lightly treated. A system of compulsory savings in one form or another offers the obvious solution. If such a system were adopted there would be less need f for complicated rationing devices. These arise because numbers of people enjoy spending power in excess of the goods available. The Fadden Government's scheme for post-war credits was a good one, as a proportion of the money received as taxes would have been placed in a big war expenditure pool, and returned, with interest, to contributors after the war. If the proposals of the present Government in respect of uniform income taxation become law, the legislation will operate during the war and for twelve months afterwards. But what guarantee have we that similar proposals will not again be enacted? Measures imposing additional taxation usually remain on the statutebook. There must, therefore, be a definite provision to ensure that the period during which this system shall operate shall not extend beyond a year after the termination of the war.

When the bills reach the committee stage, I intend to seek from the Government an assurance - it has already given it to me personally - that the status and promotion rights of transferred State taxation officers who are serving in the fighting forces shall be adequately protected, either by regulation or otherwise.

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