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Wednesday, 8 May 1985
Page: 1516

Senator CHANEY —My question is directed to the Minister for Finance. I remind the Minister of his acknowledgment in a debate in the Senate recently of the principle of horizontal equity in the tax system, that is, the need to make allowances for the fact that people at the same income level might have quite unequal responsibilities, for instance, responsibility for dependants. Now that the Treasurer's preferred tax package has been published in the Sydney Morning Herald, will the Minister give a guarantee that the proposal to abolish the dependent spouse rebate will not further disadvantage single income families already discriminated against by the tax system?

Senator WALSH —I am not going to respond to the second part of that question. If I were to respond to anything like that, Opposition members would embark on a fishing expedition asking one after another what is or is not going to be in the May statement, and so on; so I am not going to respond to that at all. As to the first part of the question about the story reported in the Sydney Morning Herald, the Treasurer, as it is well known, has for some time canvassed the view that the income tax base is in need of repair and that there should be some broadening of the indirect tax base. The latter part, of course, is also endorsed by some people in the Opposition, although I do not know about the Opposition per se. In reference to the story in today's Sydney Morning Herald, it is in fact riddled with error and is substantially different from the discussion which took place with the Australian Council of Trade Unions. It should be assessed as being little more than guesswork.

Senator CHANEY —I ask a supplementary question. Does the Minister still defend the principles of horizontal equity in the tax system and its application to taxpayers with dependants?

Senator WALSH —The principle of horizontal equity is quite an important principle but I do not believe that any particular principle ought to crowd out at all times every other principle. I do not say that in any particular context of the principle of horizontal equity or any principle at all. For example, I think there is some merit in the principle of avoiding retrospective legislation. However, when people have plundered hundreds of millions of dollars from the revenue and when they continue to plunder the revenue to the extent of at least tens of millions of dollars by way of fraudulent and highly contrived tax schemes, I believe the principle of no retrospective legislation ought to be abandoned because only a credible threat of retrospectivity will stop people plundering the revenue in that way. The Opposition and half of the Australian Democrats, and Senator Harradine of course, these days take the view-although in Senator Harradine's case he does not always take this view-that if people have been caught robbing the till, anything they pinch from the till in the future they will have to pay back, but what they have already pinched from the till they are allowed to keep. That is a view which, notwithstanding the principle of non-retrospective legislation, I am not willing to endorse in all circumstances. It is a matter for judgment as to what principle or set of principles ought to take priority over one or other principles.