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Tuesday, 22 November 1938

Mr HUTCHINSON (Deakin) . - This measure has been introduced because of the need to find money for defence purposes. I have, on previous occasions, said that taxation for this purpose should be levied on the principle of ability to pay, while at the same time seeing that no one escapes his responsibility. I regret, however, that the Government has seen fit to increase this tax, when the money could have been raised in a different way. It is true that the great bulk of the tax is paid by city land-holders, but it is also true that, apart from certain institutions, most of the city firms are able to pass the tax on to the public in the price of the goods they sell. Thus, at a time when costs should be reduced rather than increased, the Government is, by this increase of taxation, tending to force costs still higher. Taxation is always passed on, if possible, to those who buy the' goods. At this time, when a business recession is setting in, when export values have fallen and when unemployment is tending to increase, we are not helping the position by imposing extra taxation of this kind. Since the depression, the only year during which the price of wool has been at a payable level was the year 1936-37. The Royal Commission on the Wool Industry declared, and this I can bear out from my own experience as a grower, that woolraising was not a payable proposition when the price of wool was less than 14d. per lb. Last year, in many parts of New South Wales and Victoria, there was a drought which, unfortunately, still continues. The price of wool since the commencement of the sales this season has averaged just under lOd. per lb. Even the price of lid., which has ruled at late sales, is well below the cost of production. Unless the grower has other sources of income, such as fat lambs, wool-raising does not pay at the present time. The position in regard to wheat is worse, and yet the Government is imposing additional taxation on the two industries upon which, more than on any others, depends the prosperity of Australia. Another objection to this tax is that the man who improves his property, and makes it more productive, has to pay the greatest amount of tax, while the man who neglects his property often escapes the tax altogether. Thus it is a penalty on those who most improve their land.

I realize that those who pay land tax are among the wealthier people of Australia, but there is an alternative method of raising this money which I suggested to the Treasurer (Mr. Casey) some time ago, but which, I regret, he did not sufficiently study. I suggested that a super tax on dividends over a certain amount should be imposed on all companies which are making exorbitant profits. The honorable member for Riverina (Mr. Nock) pointed out that certain firms have been making profits of as much as 80 per cent., and, in one case, 100 per cent., while dividends of 10 per cent., and up to 15 per cent., have been quite common during the last twelve months. Those wealthy companies, which are deliberately exploiting the Australian people, and, in some instances, sending the profits abroad, should be compelled to pay a super tax which, I suggested, should be based on dividends over 12£ per cent. If such a tax were imposed, it would result in a substantial return to the Treasury, or the price of goods would be reduced. Probably it would have both results. I admit that there are certain difficulties in the way of collecting such a tax from those companies that have watered their capital, but there are ways to overcome them. If it is necessary to raise still greater amounts for defence purposes, or if another crisis should arise similar to that of September last, it will be imperative to resort to a taxation measure of this kind. Had the Government examined my suggestion, it would probably not have been necessary to increase the land tax.

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