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Wednesday, 19 November 1941

Senator KEANE (Victoria) (Minister for Trade and Customs) .- I move -

That the bill be now read a second time.

This bill is designed to implement that portion of the Government's proposals in relation to sales tax which concerns the re-grouping of goods into the different schedules to which the varying rates of sales tax apply. The complete proposals may be briefly stated as follows: -

(1)   Those goods which are at present exempt will retain their exemption.Some items will be added to the exemption schedule. (2), Most of the goods now taxed at 5 per cent. will be taxed at 10 per cent. An exception is being made of drugs, medicines and surgical instruments and appliances, certain goods used in the fishing and other primary industries, and goods for use in universities and schools.

(3)   The 15 per cent. rate will be increased to 20 per cent. This increase of rate is being effected by amendments of the acts fixing the rates of tax.

(4)   The schedule of goods formerly taxed at 15 per cent., but now to be taxed at 20 per cent., is to be added to by the transfer of certain items from the 10 per cent. schedule.

All of the goods in the existing 5 per cent. schedule are goods which, although taxable originally, were exempt in the period immediately prior to November, 1940.When these goods were brought back into the taxable field last year, they were taxed at 5 per cent. only, and not at the normal rate of 10 per cent. With the increasing need for more revenue, it is now found impossible to continue that preference, ana it is proposed that, with some exceptions which will be explained later, the 5 per cent. schedule will be incorporated in the 10 per cent. schedule. The exceptions referred to are -

(1)   Drugs, medicines and surgical instruments.

(2)   Pumping and other water and irrigation equipment for use in agricultural industries.

(3)   Saddlery and harness; iron or steel wire of gauges 6 to 14; and nets, netting, hooks and such like equipment for use in the fishing industry.

(4)   Goods for use in universities and schools.

The above-mentioned goods will remain at 5 per cent. until revenue requirements have so far eased as to permit their total exemption. Certain surgical appliances for use by persons with grievous physical afflictions have, however, been exempted. These appliances are - artificial eyes; artificial limbs; abdominal belts; crutches; invalid chairs, carriages and tricycles; surgical boots, braces and irons; trusses and umbilical belts. I am confident that the preference which has been accorded to these items will not be challenged for, without exception, they have claims for exemption beyond the normal.

For the sake of consistency with the policy of exempting plant and machinery used by primary producers, item 6 of the 5 per cent. schedule, insofar as it relates to windmills, pumps, tanks, troughing, &c, for use in the agricultural industry, is being transferred to the exempt list. Maps for use in schools are also being exempted.

Certain goods now included in the 10 per cent. schedule are to. be included in the schedule of goods which will bear tax at 20 per cent. The items to be so transferred are set out in detail in a statement which is being circulated for the information of honorable senators. The sale value of goods in this list is estimated at £6,500,000 per annum.

The existing law provides for the exemption of goods sold retail by a person whose total average sales of all goods does not, or would not, in the opinion of the commissioner, exceed £1,000 per annum. This exemption was provided to enable small manufacturers to escape the burden of sales tax and, at the same time, to free the administration from the task of obtaining returns from a large number, of persons conducting small businesses. The exemption has been well justified in the past. However, with the increasing rates, taxpayers whose average sales are slightly over £1,000 per annum complain that an undue advantage is obtained by taxpayers whose average annual sales are a little under £1,000 per annum, and that, consequently, business is being diverted from taxpayers because of the better price quotations which can be obtained from exempt manufacturers. It is proposed, therefore, to exempt only those manufacturers whose total turnover does not exceed £700.

The opportunity has been token to correct an anomaly which has been revealed since the creation of the 15 per cent. schedule in November, 1940. In that schedule, baskets were included without distinction as to the kind of basket, and, therefore, tax at 15 per cent. was charged on all baskets. The fact that many types of baskets are used for industrial and commercial purposes was overlooked. With the proposed increase of the rate to 20 per cent., this anomaly, if not corrected, would be aggravated. It is, therefore, proposed that the rate of tax on baskets of a kind used for commercial or industrial purposes should be reduced from. 15 per cent. to 10 per cent.

The opportunity has also been taken to provide for the exemption of the following three items: -

(a)   Producer-gas units for use in the production of fuel for land transport vehicles, including tractors, and parts and accessories therefor;

(b)   Goods for use exclusively in airraid precaution services for the protection of the general public, or of property publicly owned ;

(c)   Uniforms for members of the Australian Army Nursing Services, Voluntary Aid Detachments called up for full-time service with the Army, the Australian Women's Army Service, the Women's Australian Air Force, and such other organizations as are prescribed.

TheCommissioner of Taxation was authorized by the previous Government to anticipate the exemption of producergasunits from the 2nd June, 1941, in pursuance of its policy of fostering the use of substitute fuels for petrol. The present Government endorses that policy and submits the proposal for legislative sanction.

As regards goods for air-raid precaution, it is proposed that the exemption shall operate as from the 1st February. 1939, that being the earliest date upon which such goods are known to have been purchased by public authorities undertaking such services. The refunds to be granted under this proposal will not amount to a large sum.

The exemption proposed in respect of uniforms for the various women's organizations is designed to operate from the 1st October, 1938, that being the commencing date of item 74 C ii, which exempts uniforms sold to members of the Defence Forces. The original exemption has been interpreted as covering uniforms, &c, purchased by the Australian Army Nursing Service in the belief that the members of that service were, in fact, members of the Military Forces of the Commonwealth. It has now been discovered that, technically, that is not so. The amendment ratifies the interpretation which has been adopted.

When all of the adjustments proposed above have been effected, it is expected that the extra revenue to be obtained from sales tax in the current financial year will amount to £1,900,000. For a full year, the amount will be about £3,300,000. I trust that honorable senators will not regard the present as a suitable opportunity to press claims for the exemption of particular goods, but will, on the contrary, await the time when Australia's commitments for the war effort have become less pressing.

For the convenience of honorable senators in their consideration of this measure, I have had prepared a statement showing in much greater detail than has been possible in this speech, the effect of the proposed changes. Because of the length of the statement, it has not been considered necessary to repeatthe particulars of items making up the existing 5 per cent. and 15 per cent. schedules of the Sales Tax (Exemptions and Classifications) Act 1935-1940. A study of the statement in conjunction with that act will give to honorable senators a clear picture of the details of the proposals.

Debate (on motion by Senator McLeay) adjourned.

SALES TAX BILLS (Nos. 1 to 9) 1941.

Bills received from the House of Representatives.

Motion (by Senator Collings) put -

That so much of the Standing Orders be suspended as would prevent the questions with regard to the several stages for the passage through the Senate of all or several of the Sales Tax Bills Nos. 1 to 9 being put in one motion, at each stage, and the consideration of all or several of such bills together in committee of the whole.

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