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Wednesday, 3 June 1942

Opinions of State Ministers on Tax Compensation.

The Premier (Mr. Cosgrove) and the Treasurer (Mr. Dwyer-Gray) are pleased with the result of their representations.

The Premier said last night that the Government would be well satisfied with the latest proposals by the Commonwealth. The Commonwealth had met the State on both requests put up to it, and it demonstrated that the

Commonwealth realized the importance of ensuring that the smaller States were maintained on a footing comparable with that in the larger States.

That gives the lie direct to the Leader of the Opposition and his colleagues, who have stated that the Tasmanian Government was opposed to these proposals. In reply to Senator Leckie, who said that Tasmania regarded these proposals as general taxation proposals, I quote from the second-reading speech of the Minister in charge of the bill (Senator Keane) -

The Government takes the definite view that the increased national income should be used solely for national defence. The purpose of this bill is to provide the machinery for the establishment of a single income tax authority which will make available to the Commonwealth for taxation the increased field of income resulting from war expenditure.

As a member of the Joint Committee on War Expenditure, I do not find it difficult to visualize "the vast increase of revenue which has been made available to the States through Commonwealth defence expenditure, and the States which have benefited most from such expenditure are New South Wales, Victoria and South Australia.

Under a proper financial system we should not find it necessary to levy income tax at all. The main purpose of a war-time tax is to withdraw surplus purchasing power from the people. Under a proper banking system, we could use the national credit of the country to finance the war effort. We have already pegged wages and prices; and, under a unified system of rationing, nothing should prevent us from putting into operation a ticket system that would be operated in much the same way as bank notes. Actually, there is no need for loans, or taxes, except for the purpose of withdrawing from the community the extra purchasing power made available through government war expenditure.

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