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Tuesday, 9 November 1976
Page: 2433

Mr Keith Johnson (BURKE, VICTORIA) -My question is addressed to the Treasurer. Is it true that company tax payments for the first 4 months of this financial year are approximately $500m below those for the same period last year? Is it also true that if these tax payments had been collected the annual rate of growth of the broadly defined money supply would have been approximately 1 1 per cent? Would such a growth in the money supply have meant that the latest monetary measures would have been unnecessary and the consequent fears of renewed recession would have been averted?

Mr LYNCH (FLINDERS, VICTORIA) (Treasurer) - The honourable gentleman has drawn too simplistic a nexus between the suspension of the quarterly company tax mechanism and the overall change which has taken place in M3 in recent months, which the Government's monetary package has been designed to overcome. The Government recognised early the need for immediate relief for companies which had been hard hit by inflation and decided in that context to suspend the payment of quarterly company tax in 1976-77. As the honourable gentleman mentioned- I do not deny it- this did result in a greater upswing in liquidity in the first part of this financial year than otherwise would ave been the case. While this requires greater attention to the administration of monetary policy, the fact in itself must be balanced against, firstly, the boost to confidence arising from a single collection of company tax and, secondly, the availability throughout the year of funds that otherwise would have been paid by business to the Government in the form of tax. The Government is fully confident that this year's monetary consequences arising from the suspension of quarterly company tax payments can be administered without difficulty.

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