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Thursday, 28 May 1942

Mr CONELAN - That is not so in Queensland.

Mr SPOONER - Yes, that applies to Queensland also.

Mr Marwick - That can be only an assumption.

Mr SPOONER - I can tell the honorable member something about Western Australia, too. In that State, gold-mining is coming under a cloud, because of ' manpower difficulties, and production will be limited. The Government of Western Australia depends very largely on income tax from the gold-mining industry. Were it not for this compensation scheme, Western Australia would suffer very severely in 1942-43. Assuming that conditions remain the same as they were in 1938, every State will, under this scheme, receive more than it would have raised from its own income tax, assuming that the rates remained unaltered. The States will be compensated for vacating the income tax field, and to those who have raised the matter of compensation to the southern States I say this: By what sound reasoning can they hope to receive in war-time some additional millions of pounds, calculated on a per capita basis, that they would not have raised even if the machinery of taxation had been left in their hands? They are asking the Commonwealth to compensate them on a per capita basis for something that they never had, and never would have.

Mr Conelan - Who is asking for that?

Mr SPOONER - Victoria and South Australia have asked for it.

Mr Conelan - The honorable member should specify the States to which he is referring.

Mr SPOONER - The honorable member for Griffith (Mr. Conelan) seems to have a guilty conscience. Some of the States have remembered at long last the social services which they have consistently forgotten during the last 42 years. Victoria, which has reduced its taxation during recent years, and announced another reduction during the last few weeks, now finds that it needs more revenue in order to improve the conditions of school-teachers and public servants ; yet this very State is to receive in compensation £256,000 more than the amount which it hoped to raise from income tax during the year 1941-42. I say to Victorians that the way to improve the conditions of their school-teachers and public servants is to accept this scheme, from which they will receive an extra amount that they could never have expected. During the last eighteen months, the Commonwealth Parliament, has given to five of the States such benefits as family endowment and widows' pensions, which those States did not provide for themselves during the 42 years of federation, and which they could not provide to-day without increasing taxation. I hope that honorable members who represent southern States will take note of that. The compensation to New South Wales has been described by some aa over-generous.

Sir Frederick Stewart - I rather think it is.

Mr SPOONER - Evidently the honorable member has not worked it out carefully. The proposed compensation to New South 'Wales is fair, and in that respect it is similar to the compensation offered to all the other States. New South Wales will not receive £256,000 more than the estimated income tax receipts, as Victoria will. It will receive £1,300,000 less. New South Wales is to vacate a field of taxation that was estimated to yield £17,200,000 this year. New South Wales has chosen in the past to use income tax more extensively than other States, and therefore is being proportionately compensated for retiring from that field.

Sir FREDERICK Stewart - Yet New South Wales has budgeted for a surplus

Mr SPOONER - This is the first year in which that has happened for some time, and any reconstruction of State finances will be possible only after the 30th June.

Why are South Australian members so childishly jealous of New South Wales? As big brothers, the people of my State have already treated South Australia generously. When the State had no heavy industries, we sent the Broken Hill Proprietary Company Limited there. When it had no cricketers, we sent Bradman there. We are constantly praising their patriotism and war effort, and we are sending plant, technicians and men to help them.

Mr Stacey - New South Wales did a lot to prevent the establishment of heavy industries in South Australia.

Mr SPOONER - The honorable member has a suspicious mind. As big brothers, we advise South Australians to mix among bigger States, and become more broad-minded. We desire to help them to grow up, but they must not be spiteful.

The nation requires an all-Australian .plan of finance and taxation, because it is vital to the war effort at this stage. I do not like high taxation any more than other people do, but I like even less a system which enables a section of the -people in various parts of Australia, under cover of State income tax immunities, to obtain protection from the contribution that they should make to the cost of the war. Still less do I like a system where certain income groups are taxed so heavily in parts of Australia that it is impossible to ask them to pay higher Commonwealth tax for the conduct of the war. Because they cannot be more heavily taxed for war purposes, the corresponding groups throughout Australia cannot be taxed.' Unless we alter this position, we cannot wage war efficiently. We are playing hide-and-seek all over' a huge continent.

It has been suggested that these difficulties can be overcome by a uniform national contribution. I can speak impartially upon this matter because taxation in New South Wales is approximately the average of all taxation in

Australia. The fluctuations are to he seen in other States. Last September I supported the proposal for a uniform national contribution as the next best thing when uniform taxation did not seem likely to eventuate. But when uniform taxation is possible, the national contribution scheme falls short of the most, desirable way of financing Australia for victory. The effect of a national contribution, while varying State taxes exist, would be that for the time being, all taxpayers would find an equal sum of money. After the war, some taxpayers would have a post-war credit, the amount of which would vary according to the accident of where they happened to earn their income during the war. The inherent weakness of the scheme is that the taxpayer) whether a company or an individual, who, during the war paid more State tax than others, would have the smallest post-war credit to assist his rehabilitation. Conversely, the taxpayer who pays substantially less in State taxes, would have the largest amount to collect. As a method of collecting cash for the purpose of financing the war, the postwar credits scheme has distinct merits and I would support it again if the proposal to introduce a uniform tax had not been made. But as a system of taxation, the national contribution scheme would perpetuate all the anomalies and inequalities of the present position. When uniform taxation is achieved, the way will be clear for the introduction of a sound system of national contributions under which every Australian taxpayer will make a proportionate contribution, according to his income group," and there will be only one tax, and one tax gatherer.

I am not attempting to advise the Government as to the best method of raising finance for the war effort, but the subject °f post-war credits is bound to arise gain, and I lake this opportunity to offer my views upon it. When the uniform tax is established, the inequalities that I °ave described will be removed. It will 'hen become possible for a post-war credits scheme to be imposed upon the present rates of taxation, and the post-war credit mat will result to each taxpayer accord"*g to his income group, will be the same wðer he lives in Brisbane or in Perth. &"er the passage of these bills it will be possible for the Government, if it so decides, to introduce such a system and to take money by compulsory loans until after the war so as to reduce the surplus spending power in certain income groups that is now a menace to Australia. If the Government will do this, I shall support the proposal with enthusiasm, because there will be far less need for rationing, and the complicated rationalization .of industry that will throw Australian industry into confusion. Proposals dealing with a uniform income tax do not provide the opportunity to deal with post-war credits. The time will arise in the near future for the matter of post-war credits to be dealt with. Post-war credits are worthy of consideration by the Government, but not till the uniform tax legislation has been cleared out of the way. I take this opportunity to make my position clear. I shall vote for all these bills, and for every aspect of them". I shall vote against all amendments in principle that may be moved upon them. If I vote for any amendment, it will be because some technical detail may arise in respect of which improvement may be desirable, but I do not know of any such detail at present. I shall reserve till the committee stage the reasons that actuate me in supporting certain details of the bills of which full explanations have yet to be offered. I say that particularly in regard to the method of granting rebates in respect of concessional reductions, of which there has been criticism. The second-reading stage hardly provides the opportunity to deal with that matter. I have no doubt, however, that the right honorable member for Yarra (Mr. Scullin) will be able to convince critics. I shall help him to show honorable members that there is a sound reason for the method adopted and thai there are equally sound reasons for any other variations of income tax principles and law proposed to be introduced under this new scheme.

I desire to make one final observation concerning the rates hill. It should be well known that I held the view that the economic and financial safety of Australia demands that there shall be larger contributions to the federal Treasury by certain middle and lower income groups. I do not care whether it is done by "taxation or post-war credits or by a combination of both. Until this be done, not only will the Treasury be short of some of the moneys that it needs, but also t.b ere will be danger to war production, to ;>rice levels and to Australian currency. I have said so on several occasions this year, f hope the position will soon be rectified. This will not be properly achieved either by appeals for voluntary saving or by com-> plicated economic controls. The uniform tax legislation, however, is not the place for such a reform. The object of the uniform tax scheme is to cement several conflicting taxation systems into one plain and comprehensive plan, and to provide a foundation for a sound and fair system of war finance. In the course of laying this new foundation, it is inevitable that there be advantages and disadvantages to some taxpayers by comparison with their present tax liabilities. The uniform tax committee did its best, to iron out as many anomalies as -possible. For whatever anomalies still remain the blame lies not with the uniform scheme, but with the screaming inconsistencies of the seven existing watertight systems of taxation. The uniform scheme is the best effort the committee could make in the mathematical re-organization of seven systems that had little in common. It was not tho committee's function to import policy into the uniform scheme. Policy can only bo u matter for the Government. Tt was the committer's job to create one uniform scheme out of several conflicting schemes, aud it tried to do so. The rates bill as it stands is not, therefore, the considered view of the committee as to what taxation should ho pair! by different income groups. It. is the committee's view as to the fairest method of bringing into certain tables of rates the existing inequalities of seven income tax acts as well as the development tax, unemployment taxes and other taxes of the States, and the new war tax of tho Commonwealth. I thank the Government for having provided me with the opportunity to serve the country on the committee. I thank the right honorable member for Tarra for his friendship, assistance and great practical help and knowledge during our work. We both join in congratu- latina Professor Mills, the third member, who, unfortunately, cannot be hero.

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