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Thursday, 21 June 2001
Page: 28311


Ms HALL (1:38 PM) —The Howard government is a high taxing government, one that has made an art out complicating the tax system and the tax act. That is why this New Business Tax System (Simplified Tax System) Bill 2000 is unique. It actually simplifies the tax act, and that is something new, something very, very new for this government, something that this government has been promising to do whilst their actions have in fact complicated the act. I will talk more about that later.

The government portrays itself as the party of small business, the party that looks after its interests. Unfortunately the Howard government has been a real disappointment to small business, and I hear about this every day in my electorate as small business operators come and talk to me about their plight. It is a government that has sent many small businesses to the wall and a government that has many more small businesses struggling to keep their head above water. This legislation seeks to simplify the tax system for small business and provide a uniform system of capital allowances for various types of assets. The simplified tax system refers to an optional simplified bookkeeping and income tax compliance package recommended by the Ralph review of business taxation. The STS is available to small businesses, which are defined as those having a turnover of $1 million or less a year. There are three components of this: cash accounting, simplified depreciation and simplified trading stocks.

Under the cash accounting section, businesses can adopt cash accounting so that income is recognised when received, not when an invoice is issued, and deductions are allowed when the expenses are paid—all very sensible. Under simplified depreciation, assets costing less than $1,000 are immediately deductible, assets costing $1,000 or more and lasting for less than 25 years are pooled and written off at 30 per cent per year, and assets costing $1,000 or more and lasting for 25 years or more are pooled and written off at five per cent per year. Under the simplified trading stock regime, taxpayers do not have to account for changes in the value of trading stocks or do stocktakes at the end of the financial year where those changes are $5,000 or less. These are changes that will actually simplify the system and changes that will be appreciated by small business. It is my understanding that the STS has generally been welcomed by small business and accountants and has the potential to reduce the income tax compliance burden where taxpayers are eligible to join it. It will remove a lot of the complications. That said, there is still room for improvement, I am sure.

This legislation seeks to combine over 37 separate capital allowance regimes, which will offer simplification of benefits, a more comprehensive regime that provides a framework under which black hole expenses can be recognised. These are good things. These are simplifications and these are things that small business will appreciate. These changes appear to be positive and should benefit small business by actually simplifying the act—and that makes a pleasant change. This has been a government that has increased the workload for small business, and businesses have struggled under the weight of change this government has forced on them. The Howard government has forced change after change on small business and left small businesses reeling. I have heard about it every day in my offices. One operator after another comes to see me. I will talk more about that later.

The member for Rankin most ably detailed the government's achievements in this area—the GST legislation, the legislation that was going to simplify the taxation system for small businesses. It was the advent of a new age. Unfortunately, it has not delivered what it promised. There have been 1,869 amendments to that act. Since the legislation was passed there have been 1,869 amendments that weigh 7.1 kg, with the thickness of three telephone books. That is quite an achievement when you look at the purpose of the act: to simplify our taxation system. If that is simplification, I would hate to see what complication was. The tax act before the Howard government came to power was 3,000 pages, quite a weighty document. Now it is 8,500 pages. Quite an achievement for a government that is working to simplify the tax act! It is a government for accountants and lawyers, not for small business. I talk to accountants I know and they are telling me how they are struggling to keep up with their workload because of the fact that small businesses have been forced to utilise their service at a much higher level. The business activity statements have had enormous implications for small business. They have complicated the way small business operates. Small business implored the government to bring about changes, but unfortunately the government failed to listen to them initially. They did not respond to the concerns that small business were passing on to the government. Instead the government said, `It's a good system. We will leave it the way it is.'

The government has actually changed its mind and has brought about some changes. When that sort of thing happens, I always ask: what is the reason for that? The answer is that the catalyst was the results in the Western Australian election, the Queensland election and the Ryan by-election. If the government had not been delivered the walloping at the polls, it would never have moved to help small business cope with the heavy burden of the BAS, a burden that this government that tries to portray itself as a friend of small business had imposed on them.

This is a government that will stop at nothing to win an election. It is a government that has been noted for its massive advertising campaign. This time last year, we were presented with the Unchain My Heart advertising campaign, which cost Australian taxpayers millions and millions of dollars. Now it is unleashing another advertising campaign on the Australian people which is once again costing many millions of dollars—in fact, $20 million per month. This is not good enough. A lot of this advertising is designed to get around the hurt that this government has caused small business and the Australian people by its changes to the tax act—its GST that has inflicted pain on so many small businesses and so many people within Australia.

The government designed a tax act that is complicated. It is so complicated that businesses have to contact the tax office on a regular basis. Every time they need information on a particular application and the way the new tax system will affect their business, they have to get a private ruling from the tax office. When they ask the tax office to provide them with a more general response in writing so they do not have to contact them on such a regular basis, they are told that cannot be done because they need to contact the tax office and get a private ruling on all matters relating to their business. There is no broad based approach under the GST. It is certainly not a simple system, and it certainly has done nothing to cut red tape.

This is a government that has complicated the tax system and increased red tape. John Howard promised the Australian people and businesses that he would cut red tape by 50 per cent. Instead, he gave us the GST and legislation that has been amended almost 2,000 times. Yesterday in question time the Prime Minister admitted that the GST was a complex tax. He said, `The GST is not a simple tax.' Small business can attest to that. Small business has been reeling under his GST since it came in last year. But I would like to say that I welcome this legislation. It is refreshing to see this government introduce legislation which simplifies the tax system and simplifies our tax laws.