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Wednesday, 20 May 1936

Senator LECKIE (Victoria) .- The object of this bill, which is long overdue, is to consolidate and simplify the taxation acts; consequently, to every business man it will be very welcome. Some of the clauses are not exactly consolidating in purpose, because they embody some alterations which will require more investigation and explanation during the committee stage than has yet been given. "While this bill will be of great advantage to the Australian taxpayers by simplifying the various acts, it seems to perpetuate the present unfair distribution of the taxation areas between the Commonwealth and the States. Australia has drifted into a most peculiar state of affairs; the Commonwealth has almost the whole area of taxation, and the States have to take the leavings. Only this week honorable senators have been treated to the spectacle of the Treasurers of the several States meeting in Canberra to beg for financial assistance from the Commonwealth. That occurs repeatedly, and the Commonwealth is obliged to pay grants to them in order to enable them to carry on their essential services. I do not know what would have befallen some of the States if the Commonwealth had not granted nearly £2,000,000 to South Australia, rendered substantial assistance to Tasmania, Western Australia and Queensland, and even distributed various sums to Victoria and New South Wales. My object in speaking in this strain is to urge the Government to devise at once some method for putting on a permanent and sound basis, the financial relationships of the Commonwealth and the States. At the present time they arc most unsatisfactory to all parties concerned. I do not blame the States for directing attention to the big surplus of £4,000,000 which the Commonwealth expects this year, while declining to yield any of its avenues of taxation. Their area of taxation is so curtailed that they cannot carry on without large grants from the federal exchequer. This bill seems to me to perpetuate that disability. In reply the federal authorities say in effect : " We are in the income tax field for good, and we shall not get out of it." In the first place, income tax was introduced as a war measure, and for no other reason. The Commonwealth should be in a position to relinquish a certain field of taxation to the States.'

Senator Guthrie - It should have relinquished the land tax long ago.

Senator LECKIE - I do not think that there is much of the land tax left to relinquish to the States.

Senator Guthrie - About £1,000,000.

Senator LECKIE - Income tax seems to be one of the things that the Commonwealth should not touch, if it can recoup itself in some other direction for the loss of revenue. It should be prepared to say to the States: "The Commonwealth is voluntarily relinquishing the income tax to you ; but do not ask for further assistance." I offer this suggestion, because I consider that within the next few years some effort will have to be made by the Commonwealth Government to simplify the financial relations between the Commonwealth and the States.

Senator Duncan-Hughes - We have wanted a federal convention for years.

Senator LECKIE - We are ' drifting along in the same old way year after year. The States are increasing their taxation, but they are getting poorer, and are depending more and more upon subsidies granted to them by the Commonwealth. This year the federal surplus will approach £4,000,000, which is equivalent to nearly half of the collections of federal income tax. The administration should be working towards the goal of relinquishing income tax or some other field of revenue to the States. In suggesting the income tax I am not dogmatic; I do not lay it down as my final opinion.

I commend the Government and those responsible for the consolidation and simplification of the law, but I also remind the Government that this is not the final stage. Before long it will have to grasp firmly the nettle of the financial relations of Commonwealth and States. The sooner it works along these lines, the sooner will the States be made happy. and the Commonwealth removed from that unenviable position of having almost to offer bribes or sops to obtain their goodwill and ease the relations between the several governments. I do not desire to dwell on this point; but for many years it has seemed to me that the Government which will tackle this problem firmly and quickly will be deserving of the gratitude of the whole of the community. In this regard the Federal and State taxpayers are exactly the same set of persons. The reference sometimes to the great burden imposed upon the State taxpayers by federal taxation is absurd. Federal and State taxpayers are the same people. No State can start along a path of improvement unless it knows that its financial position is secure, and that there are certain fields in which it can exercise its powers of taxation, untrammelled by the Commonwealth. Therefore, I hope that the Government will at an early date undertake the reform I have suggested.

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