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Wednesday, 27 March 1985
Page: 1008


Mr HALVERSON(3.42) —Madam Deputy Speaker, I remind the Treasurer (Mr Keating) that snow bunnies have a habit of coming in from the cold. They multiply and eventually take over. When they do, real value will be returned to government. We have a government which is increasingly in disarray. Factional infighting and developing leadership crises are all contributing to elector concern. Our longstanding friends and allies see a nation in turbulent seas, tossing and turning, taking on water and without direction as to the course to steer or the whereabouts of safe harbours.

Taxation generally and taxation reform are a topic of major significance to all Australians, as we all, in one way or another, pay too much tax. The existing taxation system is unjust and grossly unfair. This has been a major theme of Opposition comments over the past two years. Interestingly, the Treasurer and the Prime Minister (Mr Hawke) will head their much vaunted tax summit beginning on 1 July in an effort to reassure Australians that all is well and that, in the age of consensus, we are in good and safe hands. They will argue correctly that the income tax bill for ordinary salary and wage earners is much too high and that the position must be redressed. And redressed it will be, because it is certain that average Australians will no longer tolerate the levels of income tax with which they are presently confronted.

There has been a striking increase in the marginal income tax rate for taxpayers on average weekly earnings and their average tax rates. For example, in 1954-55 the marginal tax rate for a full time adult male was 19 per cent. This rose steadily so that by 1969-70 the rate was 35 per cent on average weekly earnings of $4,051. Estimates for 1984-85 are for average weekly earnings of $22,285 with a marginal rate of 46 per cent. Over this 30-year period the marginal tax rate for full time males-very often the sole breadwinner in increasingly impoverished families-has more than doubled. Moreover, and perhaps more significantly, the average rate for this period rose from 10 per cent in 1954-55 to an estimated 25 per cent for this current financial year.

This ever-growing income tax burden is even more dramatic when one considers that, in 1954-55, the taxpayer had to earn 18 times average weekly earnings before he was hit by the then top marginal tax rate of 66.7 per cent. Fourteen years later this figure had been halved so that, in 1968-69, people earning 8.6 times average weekly earnings found themselves in the top marginal tax rate. The screws tightened even further over later years. This year the top marginal tax rate applies to less than double average weekly earnings, so the Government gains little through the operation of the 60 per cent rate.

Just as the size of government has increased over the past 30 years, so has its share of the value of economic activity. Associated with this has been the inevitable rise in the community's overall tax burden. This period has also seen a dramatic change in the composition of government revenue, with personal income taxpayers shouldering a growing proportion of the burden. Significantly, middle income earners have found increasingly that they shoulder a disproportionate share of this burden.

The marked increase in the share of revenue provided by income tax is dramatic. Between 1954 and 1963, personal income tax usually fell as a proportion of total revenue. But then the rot set in so that, 10 years later, 43.1 per cent of revenue needs was met from income tax. In 1973-74, the rate jumped to 45.9 per cent. But the story does not stop there for, in the next year, an even more dramatic rise took place, to 50.4 per cent, due mainly to a wages explosion and double digit inflation under another big-spending expansionist government, hell bent on economic and political self-destruction. Today, two years into another big spending Labor government, the rate for 1984 is set to rise to 53 per cent.

Over the 30 years being reviewed, the share of revenue provided by company tax, sales taxes, excise duties and Customs duties has fallen, although this has been partly offset by substantial increased revenue obtained through the crude oil levy introduced by the Fraser Government in 1975-76, which today provides approximately 6.4 per cent of government revenue-a fall of approximately one per cent over the past year. Commenting on these trends, a noted economist from the Centre of Policy Studies at Monash University, Professor Michael Porter, said in January last:

. . . between 1956-57 and 1981-82 the revenue collected from taxpayers with earnings in excess of twice average weekly earnings has dropped from 53 per cent to 16.5 per cent of total revenue from personal income tax. In other words, the growth of government over this period has been financed by placing an increasing proportion of the burden on those with earnings around the mean, with the higher fliers of our community bearing increasingly less of the burden. The growing push for a general indirect tax system is a direct result of this development.

The Opposition realises that action must be taken to lift the yoke from middle income groups which, coincidentally, make up the bulk of the electorate. We propose to reduce the overall size of the tax take. After much reflection and lengthy research, the Opposition parties have developed a taxation policy designed to remove inequity and the intolerable burdens of the present. This new policy has clear directions and commitments and comprises four major elements. There will be no increase in the overall taxation burden and, over time, this will be reduced as a proportion of gross domestic product by a combination of lower spending and greater economic growth. The present heavy reliance on personal taxation as a source of revenue will be reduced by broadening the tax base to a greater reliance on indirect taxation. Families with children will receive priority for personal tax relief through income splitting and child care rebates. Tax relief will be extended to non-family taxpayers as budgetary circumstances allow. There will be no taxes on capital gains and assets and there will be no reintroduction of Federal death duties. The Hawke Government legislation taxing lump sum superannuation payments will be reversed.

We see it as fundamentally important that the people of Australia know exactly where we stand on the issue of taxation. In contrast, the Hawke socialist Government has for the past two years muddied the water, dreamed up yet another summit and confused the population to the extent that its restlessness grows more voluble and persistent daily. The last thing we need now is a 'now you have it, now you have lost it' government hoodwinking people increasingly disenchanted with promises that reduce the burden of tax, on one hand, only to impose an iniquitous tax increase, on the other, such that their overall taxation commitment actually increases.

The Prime Minister must reduce government spending. We do not need any platitudes or promises that cannot be met. What we want, what we demand, is positive action on behalf of all the oppressed taxpayers in the nation. We want this big spending Government-so big on expansion in the public sectors-to come to its senses and introduce an equitable, just and fair income tax policy so that growth, expansion, confidence and new entrepreneurial activity return to the market place and help position Australia to regain its economic health and further its destiny.