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Wednesday, 31 July 1946

Sir EARLE PAGE (Cowper) .- I rise to refute certain statements of the Minister for Immigration (Mr. Calwell). The first is that no Labour government had imposed a means test in regard to the payment of maternity allowances. I remind him that in the budget introduced on the 10th July, 1931, the Treasurer of the Labour Government, Mr. Theodore, provided for the reduction of the amount of the maternity allowance from £5 to £4, and it was further provided that no maternity allowance would be payable to any mother if the combined income of her husband and herself during the preceding twelve months exceeded £260. That was the first application of a means test to the maternity allowance since it was introduced by the Fisher Government.

I wish now to expose the fallacy of the argument that certain specified millions of pounds have been lost to Commonwealth revenue as the result of the reduction of income tax rates. As a matter of fact, it would be profitable for the Treasurer to reduce taxation, especially on lower incomes, in the case of men with families. There was a reputed reduction of income tax last year by 12 per cent., but the actual result was that the receipts declined by only £500,000 - from £215,000,000 to £214,500,000. Moreover, the Treasurer admitted that £43,000,000 of income tax remained uncollected, while a further £50,000,000 was unassessed This indicattes clearly that with a reduction of income tax at a time of expanding economy, when war-time controls are being lifted and industry is, free to overtake the war-time lag of production, the national revenue must increase. The returns from income taxation will probably remain steady, or may even increase, as the' result of a reduction of rates, and it is quite certain that the total revenue collected by the Government from all sources will increase. In the year before the last reduction of income tax, the total taxation receipts amounted to £345,000,000, whereas last year, according to the financial statement just released by the 'Government, revenue from all sources amounted to £360,000,000, and this notwithstanding the non-collection of income tax amounting to £43,000,000, and the non-assessment of tax amounting to £50,000,000. All the talk of the millions that have. been foregone in remissions of taxes is sheer nonsense. I proved during the . 1920's that if rates of tax imposed in respect of certain income groups, particularly the lower groups, were reduced the spending power of the' people would be so increased that greater revenues would be derived from indirect taxes and thus the total revenue of the Commonwealth would not suffer. High taxation has always brought about diminishing returns; the higher the rate of tax the less will be the buoyancy of industry and the ultimate collections by the Government. I seek substantial improvement of the lot of taxpayers in the £400 to £700 income group, ns well as of those in the lowest income group. When I was Treasurer I* increased the exemption for single men to £300.

Mr Conelan - When the right honorable gentleman was Treasurer the average worker did not earn £300 per annum.

Sir EARLE PAGE - If the honorable member will examine the statistics he will find that in 1927-28 there was an all-time high record in employment and wages.

I have brought before the Taxation. Commissioner a specific case of hardship which I believe merits his most sympathetic consideration. Under the uniform taxation law which was introduced in 1942, a taxpayer whose wife earns £50 a year has her income added to that of her husband in order to determine the rate to be applied to both incomes. The result of that is to increase greatly the tax paid by a man whose wife has an income from her own personal exertion. The case which I brought before the Taxation Commissioner concerned a teacher whose wife, as a patriotic gesture, accepted an appointment as sewing mistress at a school at an annual salary of £52. She was appointed to the post by the' Education Department in April, but because of a mistake on the part of the department she was not paid salary for the first quarter until some time during the succeeding income tax year when she was paid a total of £65. However, the addition of that £13 in the succeeding year so increased the rate applicable to the income of the husband that he had to pay an additional £30 15s. Since then the law has been amended, and a wife may now earn up to £100 without affecting the rate of tax imposed upon her husband. In these. days very few women in employment receive less than £100 a year. A wife should be able to earn much more than that before her income is added to that of her husband in order to determine a common rate to be applied to both.

Mr Conelan - The right honorable gentleman is in error. The income of the wife is not so added now.

Sir EARLE PAGE - I have discussed the matter with officials of the Taxation Department who have assured me that it is. The Taxation Department has refused to make any refund in respect of the additional tax imposed, notwithstanding the fact that the husband was in receipt of a salary of less than £700 a year. The innovation under which the income of a wife is, in effect, added to that of her husband, by eliminating the deduction- of £100 for a wife, in order to determine a common rate to be applied' to both was brought about by the exigencies of the war and its continuance is imposing unnecessary hardship. The wife of a taxpayer should be permitted to have an income of at least £200 a year before the rate of tax applicable to her husband's income is interfered with. The Government might well consider reverting to the former practice whereby for taxing purposes the earnings of a wife were regarded as entirely separate from those' of her husband, insofar, as concessional deductions were concerned.

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