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Wednesday, 27 March 1985
Page: 968

Dr HARRY EDWARDS(10.47) —There can be no doubt that when the Treasurer (Mr Keating) speaks the general tone of the debate gets rougher, if not even closer to the gutter. I say to him and to the honourable member for Charlton (Mr Robert Brown): The people of Australia have passed judgment and returned them twice to government, but watch out, mate, for the third time! They will have to watch out not only in respect of the issue of tax reform but also in respect of the balance of payments deficit, which looks like getting up to over $10 billion this year, with its effect on the depreciation of the Australian dollar, thence on inflation and via their much-vaunted accord, on wage levels, and then further devaluation and so on. Goodness knows what will happen if people lose confidence in Australia, as they did with this Government's volte face on the MX issue. If the inflow of money to this country should dry up, the Government will be in a lot of trouble. Reference was made a while ago to the trilogy. That is something which would be a basis for confidence in the Government's economic performance-if the Government can deliver on it. We will see whether the Government can deliver on it. However, there are no bases for assuming that the Government is going to.

This morning we are debating the Trust Recoupment Tax Assessment Bill 1985 which relates to unpaid company tax. This measure is designed to strike down artificially contrived taxation avoidance schemes. I challenge any one in this Committee to suggest that the former Treasurer, the honourable member for Bennelong (Mr Howard), did not go a long way-virtually the whole way-towards striking down those schemes. The amendment we are considering involves a change to the appropriate date from which the legislation is to become effective. However, we are now discussing questions of tax reform, the central clear cut issue of which is to reduce the burden of personal income tax, which has risen to record levels and to a record proportion of total tax revenue under this Government, in the context, hopefully, of reducing expenditure-this will not happen under honourable members opposite-and introducing a broad-based indirect tax as a major measure of reform.

It is important to recognise that tax may be avoided through the contrived schemes that honourable members have been talking about and focusing on. However, a much larger amount of tax is being evaded by people who never declare income, income which never gets anywhere near the notice of the Commissioner of Taxation. One of the very important reasons why the tax burden should be transferred to indirect taxes in any upgrading of our taxation system is that, in an appropriate form, this tax is very difficult to evade. If the Government were really interested in lifting the burden of taxation off the pay as you earn taxpayer, the appropriate way to do it--

Dr Charlesworth —Why didn't you do it?

Dr HARRY EDWARDS —Our Treasurer attempted to do it on a number of occasions but was stopped in the other place. If there is real interest on the part of the Government to lift the burden of taxation off the back of PAYE taxpayers, this is the way to do it.

I agree that there are difficulties in the way of introducing a broad-based indirect tax. There are problems in relation to its impact on lower income groups. However, there are ways of going about that. For instance, one can introduce at the same time-and I think this is a very important point-a form of tax credit which applies only at lower income levels and tapers off; in that way the impact on low income groups is minimised. I hope that the Treasurer might take on some ideas like that because we wish him well in his battle to change the form and structure of the tax system in this direction.

Again, I think it worth reminding the Committee that along with this change must go genuine attempts to reduce expenditure, otherwise the ultimate impact will not be altered to any extent. We do not hear anything said about expenditure. There is no way in which the Government can say that it is not the highest taxing, the highest spending and the highest borrowing Government in the history of this country. One can talk, as did the Treasurer and the honourable member for Charlton, about the transfer of medical insurance to the public sector. It would have been best left in the private sector where it would have been handled much more efficiently and effectively and at less cost to this country. As I said, the Government is the biggest taxing, biggest spending and biggest borrowing Government in our history. I say again: 'Strength to your arm in your efforts to implement your so-called trilogy' because, if the Government does not do what it says it will do, the economic management of this country will be in a lot of trouble.