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Thursday, 28 May 1942

Mr SPENDER (Warringah) .- I rise to support the bill. As a New South Welshman, I realize that this legislation does not find favour with certain States, but the representatives of Now .South Wales will advance very substantial reasons for according their support to it. Some honorable members have declared that we who represent New South Wales are actuated solely by the fact that, under a uniform income tax, our State will be better off than it is under the existing system. Those who have criticized the measure have clearly been actuated by State motives, and have not directed their remarks to the problem that confronts the Commonwealth Treasurer (Mr. Chifley). As one who has had experience of being Commonwealth Trea surer in war-time, I appreciate the difficulties that beset him. Apart from those who have airily advocated the Fadden plan of post-war credits, no critic of the bill has dealt with those difficulties. We, as a democracy, are indeed fortunate that we can in war-time, when an invasion of the country is threatened, debate this proposal at such length in the peaceful atmosphere of Canberra. I view the legislation against its proper background. Personally, I am satisfied that the Government is not concerned with introducing some form of unification, but is resolutely facing its responsibilities for the conduct of the war. For the current financial year the estimated collection by the Commonwealth from the taxation of the incomes of individuals and companies, including 'war-time (company) tax, super tax, and undistributed profits tax, amounts to £75,150,000, and the estimated expenditure for the same period is from £395,000,000 to £400,000,000. The Commonwealth Treasurer must, by various means, endeavour to bridge the gap between revenue and expenditure, and, to that problem, every honorable member who speaks upon this legislation should direct his attention.

No one who has had experience of wartime finance can fail to admit that the Commonwealth has a well-nigh hopeless task in its endeavour, in war-time, properly to tax individuals and companies, because of the operations of conflicting and varying systems of State taxation. Those who criticize this legislation should examine the facts. On more than one occasion since the outbreak of war, the figures have been made available to them, and they should study the statistics. The information discloses how different rates of tax are applicable to different ranges of income in the various States. The right honorable member for Kooyong (Mr. Menzies) failed to answer me when I asked him at what stage could it be said that the Commonwealth power to tax ceased. In certain ranges of income in certain States, people are called upon to pay income tax exceeding 20s. in the £1. The Commonwealth has already endeavoured to meet this type of case, but the States have made no attempt to assist.

Evidently, some honorable members wish this system to continue.

Critics of the bill have declared that the Commonwealth's proposal will restrict the power of the States to impose taxation, but in this period of grave crisis, State taxation is inhibiting the Commonwealth. In time of war, the Commonwealth stands predominant and has prior claim on the national resources for the purpose of defending the country. The simple question that I ask is whether the war effort, including, as it does, Commonwealth finance, shall be conditioned by the States. Is the method of raising money by way of income taxation to be conditioned by the States? I have no hesitation in saying that it must not be, and shall not be.

During this debate, some honorable members have discussed at length the so-called sovereignty of the States. One would be justified in assuming that the sovereignty of a State is some concept that can be measured with some degree of 'accuracy. To speak, however, of Tasmania, for example, as having equal sovereignty with the Commonwealth in war-time is to whistle against the wind. The honorable member for Bourke (Mr. Blackburn) referred to the sacred thing called "State sovereignty ". What does it mean?

Mr Blackburn - I did not use that phrase.

Mr SPENDER - -Then another honorable member used it. From time to time the phrase " sovereignty of the States " has been uttered in this chamber, and the Commonwealth has been criticized for invading the rights of the States. Opponents of the bill have declared that this legislation will force the States to vacate the field of income taxation. This right of the States is regarded as sacrosanct. In war-time I am not concerned about such concepts. I am not concerned, for example, whether the spirit of the Constitution means one thing or another. I point out one elementary truth, that what the Constitution permits is constitutional. The honorable member for Bourke declared that the spirit of the Constitution will be infringed by this legislation.

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