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Wednesday, 19 October 1949

Mr FALSTEIN (Watson) .- I do not propose to dispute the accuracy of the statements that have been made by the honorable member for Fawkner (Mr. Holt). If sales tax is to be retained, it is inevitable that it will give rise to anomalies. It appears to be the intention of the Government to retain the sales tax as a means of raising revenue. If that be bo, the tax should be viewed in its proper perspective in relation to other revenue producing devices.

The bald fact is that sales tax is another form of customs duty or, in relation to 'locally manufactured goods, another form of excise duty. If it is imposed on imported goods, it is tantamount to the imposition of an additional customs duty. If it is imposed upon articles that are manufactured in this country, it is tantamount to the imposition of an excise duty. The, Treasurer has estimated that this year customs duty will yield approximately £60,500,000 and that excise duties will yield approximately £60,000,000. It is apparently expected that a sum equivalent to approximately 30 per cent, of the estimated revenue from customs and excise duties will be derived from the operation of the sales tax. If sales tax is to play such an important part in the finances of this country, regard should be had, when considering its application, to decisions that are made in relation to customs and excise duties. Under the customs legislation, provision is made for exemptions and the waiving of duties and primages in certain instances, but I understand that the sales tax legislation does not contain similar provisions. Irrespective of the arguments that may be advanced in support of a claim for the waiving of sales tax, the Commissioner of Taxation, unlike the Comptroller-General of Customs, must insist upon getting his pound of flesh. Under the customs legislation, goods that are not commercially manufactured in this country may be allowed to enter Australia free of duty and primage, and provision is also made for the waiving of excise duties upon goods which have for some reason or other become almost unmarketable, and have to be sold at a loss, but the Commissioner of Taxation has no authority to exempt from sales tax goods that fall within the categories to which I have referred, although it might be desirable for that to be done.

Having drawn attention to the relationship between sales tax and customs duties, I point out that, under the present system, sales tax is, in effect, an ad valorem customs duty or an ad valorem excise duty. The amount of the sales tax that is payable upon an article increases as the cost of the article increases, because it is based upon a percentage of the selling price. That is one reason why it is difficult for the Treasurer to estimate with any accuracy the revenue that will be derived from the sales tax in any year. Although it is estimated that during the current financial year the revenue from the sales tax will be £35,000,000, and that the concessions that are proposed in this bill will cost £6,0,0,0,000, it might very well be that, if costs increase for reasons that are entirely beyond the control of the Government, the revenue from the tax this year will be £41,000,000, or the sum that the Treasurer has estimated would be collected if the concessions had not been made.

If sales tax is to be retained as a means of producing revenue, it ought to be related to customs duties and excise duties. If it were so related, proper schedules should be prepared. At the present time the sales tax exemptions and classification lists are entirely different from the customs tariff schedule. I realize that there would be administrative difficulties in the way of complying with that suggestion, but if the Government desires to take certain action, administrative difficulties are not regarded as being an insurmountable obstacle. If sales tax were related to customs duties and excise duties in the way in which I consider that it should be related, it ought not to be imposed as an ad valorem duty but should be levied at a fixed rate, irrespective of the price of the articles upon which it is imposed. I believe that if that were done, the Treasurer could forecast with considerable accuracy the amount of revenue that would be derived from the tax in any year. If that proposal is not acceptable to the Government, I suggest that it would be possible to reduce the number of items upon which the tax is imposed. That would play an important part in preventing increases of the cost of basic articles, some of which have been mentioned by the honorable member for Fawkner. I believe it is high time that sales tax was viewed in its proper perspective and related to customs duties and excise duties. The suggestion is that pro vision should be made for the tax to be imposed at fixed rates. At the present time it is, in effect, an ad valorem duty. That is a vicious practice at a time when costs are increasing, as they are now.

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