|Title||A NEW TAX SYSTEM (TAXATION LAWS AMENDMENT) BILL (No. 1) 1999
|Source||House of Reps
|Speaker||Thomson, Kelvin, MP
|System Id|| chamber/hansardr/1999-08-31/0070
Mr KELVIN THOMSON (8:42 PM) âAs I was saying last evening when the debate was adjourned, this is an extraordinarily complex piece of legislation for something which the government styles as not a new tax but a new tax system and wants to talk about its simplicity. I suggest you try telling the people involved in small business that this is a new tax system and something which will be simpler and better when they have to do battle with some of the paragraphs which I will read to the House. For example, 2.111 says:
An entity is not required to make additional payments when it chooses an instalment rate higher than the instalment rate it used in the previous instalment quarter but it may choose to make additional payments.
Then there is 2.116:
An entity is liable to a penalty for each instalment quarter in which it chose to use an instalment rate under section 45-205 (varied instalment rate) that is less than 85% of the instalment rate that should have been used. The Commissioner works out that rateâthe benchmark instalment rate âhaving regard to the entity's instalment income and assessed tax for that year.
Or 2.117, which says:
The Commissioner works out the benchmark instalment rate. An entity does not need to work it out, but an understanding of how it is worked out may help an entity to work out the instalment rate it chooses to use under section 45-205.
We have over 100 pages of similar description concerning the pay-as-you-go legislation, which the government describes as not a new tax but a new tax system. Try telling that to small business which will have to do battle with this legislation as it progressively comes into effect.
Try telling that too to some of those people who have experienced the kinds of difficulties that Mr Michael Quis of Conder, ACT, has in relation to his disability income replacement benefits concerning a claim he made under a Colonial income cover policy. Mr Quis was being paid a monthly benefit, arising from an injury which resulted inâ
Mr Tuckey âMr Deputy Speaker, I raise a point of order. I have looked at the Notice Paper and I think the bill we are dealing with is A New Tax System (Taxation Laws Amendment) Bill (No. 1) 1999 , but we are suddenly getting into social security. Is that the member's intention, or does he want to go on misrepresenting the issues of the complexity of the tax? Is this a tax problem? Is it part of the bill?
Mr KELVIN THOMSON âOn the point of order, Mr Deputy Speaker, I am sure that the Minister for Forestry and Conservation has not read the bill and is not familiar with what is in it. But paragraph (c) of proposed section 12-120 `Compensation, sickness or accident payment' refers to a payment which `is not a payment made under an insurance policy to the policy owner'. I intend to direct my remarks precisely to that part of the legislation.
Mr Tuckey âOn the point of order: again, the member is giving a specific example of someone who has a problem now and wants to apply it to legislation yet to be applied to the community. I think it is reasonable that he sticks to the bill and does not try to introduce extraneous matter.
Mr DEPUTY SPEAKER (Hon. I.R. Causley) âThe member, I think, was dealing with the section of the bill which relates to compensation. If in fact he is outside the ambit of the bill, he will be judged on that, I am sure.
Mr KELVIN THOMSON âI intend to relate my remarks precisely to the fact that this provision is in the legislation before the House. Mr Quis has been receiving this monthly benefit arising from the injury which has resulted in his being disabled and not able to perform his usual occupation. He received benefits going back to 1994âindeed, as the minister points out, under the operation of previous legislation.
He has been receiving a monthly statement concerning his benefits, and at no time was any reference made to the fact that tax was payable on these benefits and that tax had not been withdrawn. As a result, more recently he has been sent an enormous taxation liability, which is causing him a great deal of distress. He has taken this matter upâ
Mr Tuckey âMr Deputy Speaker, I rise on another point of order. The member is now telling us that a person has received a tax bill. What is the relationship between the application of tax under the present discredited system, which we are trying to change, and the application of tax under the system that is before the House, which the member is trying to talk to? It is patently obviousâand that became clear from the beginningâthat he wants to run a constituent issue in addressing prospective tax legislation, and that is not appropriate. He has just said that he got a tax bill.
Mr KELVIN THOMSON âOn the point of order: I will explain the relationship between this case and the bill if the minister stops endeavouring to gag me, thus enabling these serious issues to be debated in a serious fashion.
Mr DEPUTY SPEAKER âOrder! I have now heard the argument that is being pursued. It does not seem to relate to the bill. It is necessary for the member to relate his remarks to the bill.
Mr KELVIN THOMSON âThe relationship between this unsatisfactory situation and the bill is quite clear. In reference to withholding tax, proposed section 12-120 states:
An entity must withhold an amount from a payment of compensation, or of sickness or accident pay, it makes to an individual if the payment:
. . . . . . . . .
(c) is not a payment made under an insurance policy to the policy owner.
In other words, this government, which says it is doing something to fix up the tax system by introducing pay-as-you-go taxation, leaves in place precisely this problem where people can receive regular compensation payments, not have the tax withdrawn and subsequently face that taxation liability. I suggest to the House that the government ought to be seriously considering section 12-120 to see whether the policy rationale for that provision to remain there still exists.
This piece of legislation is being brought before the House by this government. I urge the minister at the table, who says this is a new tax system, to examine these provisions and see whether there is a legitimate policy rationale for them or whether they ought not to be addressed in the interests of people like Michael Quis who, as things stand, is facing back taxation liabilities of a kind that he really should not be facing.
It gets worse, and I refer the House to running balance accounts, which is another significant aspect of this legislation. The running balance accounts refer to the process where different taxation liabilities of businessesâtheir income tax, their fringe benefits tax liabilities, the PAYE moneys they owe on behalf of their employees and their other tax liabilitiesâare merged into a single account to simplify both tax compliance and tax administration. Labor has not opposed the principle of this new system, and we see that it has some potential to provide benefits for taxpayers and the Commonwealth. But, extraordinarily, accompanying this, the Taxation Office has had taken away from it its discretion concerning fines or penalties for late payments.
The member for Cowan has provided me with three different examples of taxpayers who have been sent penalties imposed for late payment by the tax office of the following amounts: in the first case, a bill for $9.85; in the second case, a bill for $5.45; and, in the third case, a bill for $1.35.
Mr Tuckey âMr Deputy Speaker, I rise on a point of order.
Mr KELVIN THOMSON âYou are a disgrace! You just want to gag this speech. That is all you are good for.
Mr Tuckey âHe is defying the chair.
Mr DEPUTY SPEAKER âThe member for Wills!
Mr Tuckey âThe legislation before the House is A New Tax System (Taxation Laws Amendment) Bill (No. 1) 1999 . The member at the dispatch box keeps telling us about the failings of the present tax system, for which they were responsible for 13 years. All we ask the member to do is comment on the implications of the new tax system. If he is trying to tell us that we have not corrected all their mistakes, let him admit to it.
Mr DEPUTY SPEAKER âI have heard the point of order. The member for Wills does seem to be reflecting on the old tax system.
Mr KELVIN THOMSON âI am doing nothing of the kind, and this is a transparent attempt to stop the facts of this government's failures from being brought before the House. The system of running balance accounts is covered by this legislation.
Mr Tuckey âWell, why give us examples of your taxes?
Mr KELVIN THOMSON âNo, this is an example of what this government has doneâ
Mr Tuckey âNo, it isn't, because we haven't got it in yet.
Mr KELVIN THOMSON âNo, this is a system which this government has introduced in the last few months. The running balance accounts are being amended by this legislation. The running balance accounts are things which this government has introduced and, as a direct result, these constituents of the member for Cowan have had late penalty payments of $9.85, $5.45 and $1.35 imposed.
This is a disgrace. Anyone who knows anything about public administration can tell you that it costs of the order of $100 or $200 for a body like the tax office to send out correspondence of this kind and check these payments. Yet the tax office has said it has no discretion as a result of changes made by this government and has instructed those constituents to contact their local member. I urge the government, rather than seeking to gag debate as they have done here, to take action to make sure that the tax office has a discretion to deal with those late penalty payments and to enable constituents to go about their tax affairs in a more appropriate and professional way.
This is a bill which essentially deals with some administrative reformsâfor example, as I have indicated, the pay-as-you-go system and amendments to the running balance accounts arrangements. Regrettably, the minister does not seem to understand that they are part of this legislation.
As I have indicated, we do not oppose these proposals in principle, but we have moved a second reading amendment which relates to the process surrounding this legislation. We believe that, because this is part of the business tax reform process, it should be dealt with in conjunction with the other parts of that process. The most important elements are those which have been reviewed by the Ralph committee, but we have seen a situation where the Ralph committee report has been sat on by this government for a month now. The government has not released the report. We have been consistently arguing for a full debate on these issues, but the Treasurer, for reasons best known to himself, has decided he does not want one.
The Ralph process is something we have supported until now. What happens here is that we get to the business end of the process, the time when the decisions are going to be made, and suddenly this government's obsession with secrecy takes over. We know from the Federation Fund scandal that this is a government which is afraid of scrutiny. We know that you want to rort proper processes. We know that you are afraid of open governmentâyou run away from operating transparently.
Frankly, this is not good enough. The Ralph final report should be released immediately. It should have been released a month ago, and that would have given us the opportunity to debate the real business taxation proposals at the same time as we are considering this legislation. We are concerned that this legislation, in many cases, will make life for small business more complex than it already is. As a result, we have moved a second reading amendment which I urge all members of the House to support.