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Wednesday, 16 August 1989
Page: 137


Senator LEWIS —My question is directed to the Leader of the Government in the Senate as Minister for Industry, Technology and Commerce and as Minister representing the Minister for Industrial Relations: What is the estimated cost to business of the further 3 per cent compulsory superannuation contribution foreshadowed in the Treasurer's Budget Speech last night? What will be the total cost to business in this financial year of the changes to company tax and pay as you earn (PAYE) collections, changes which amount to a disguised increase in the rate of company tax? Why in an allegedly pro-savings Budget has the Government decided to attack corporate savings in this way?


Senator BUTTON —There are a number of incorrect assumptions--


Senator Watson —Where were you when the Budget was drawn up?


Senator BUTTON —I was there, Senator. There are a number of incorrect assumptions in this question. While I might surprise Senator Lewis, he does not surprise me. I might say at the beginning that the Treasurer in the Budget Speech only flagged the possibility of a further 3 per cent superannuation round next year. That would be a matter which would have to be addressed in the run-up to those arrangements and not at this time.

There is in the question a second assumption which is incorrect: describing the changes to the business taxation arrangements as a disguised increase in company tax. It is nothing of the sort. The revised company tax collection arrangements alter the timing of payments within the financial year, but they do not--


Senator Lewis —An extra $1.4 billion.


Senator BUTTON —They do not alter the amount payable.


Senator Lewis —If you rip off--


The PRESIDENT —Order! Senator Lewis, you have asked your question.


Senator BUTTON —Senator Lewis could perhaps argue this question out in the sticks on behalf of ordinary taxpayers, who do not get the benefit which companies get of interest accruing on the tax payments which they have to make much later in the year.


Senator Lewis —A great help to industry!


Senator BUTTON —The honourable senator says that it is a great help to industry, but something that he has scarcely been prepared to acknowledge is that in the last four years in the period of this Government company profitability in this country has been at record levels. That is the second point I would make in relation to this matter.

If I might recapitulate: revised company tax collection arrangements alter the timing within the financial year but not the amount payable. There is no change to corporate tax rates. From next year the initial instalment of company tax will be payable in the first month after the end of each company's 1989-90 income year, with the balance due nine months later.

There is an equity issue in this, as I have just pointed out. The tax deferral available to companies is not available to individuals and other taxpayers. What we are doing is removing essentially interest-free loans from the Government to companies, something which is not available to individuals and something which, of course, affects the level of aggregate public savings. I would also make the point that from 1 December 1989 certain employers with annual PAYE remittances-some 800 employers; the largest in Australia-will be required to make payments twice a month rather than once a month. This also increases equity by removing the benefits to large businesses from the deferral of tax payments. After all, corporations are in business. They have core businesses, and their core businesses are not usually gleaning interest from deferred tax payments.

These two changes have been made, as I pointed out, at a time of historically high company profits. If we are going to make these changes in the interests of equity and in the interests, if you like, of increasing revenue in one year, it is not a bad time to do it when company profits are at an historically high level. The changes are aimed at increasing equity in the tax system, not at increasing corporate taxation. I do not believe any particular damage will be done as a result of these changes.