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Thursday, 4 December 1930


Senator BARNES (Victoria) (Assistant Minister) . - I move -

That the bill be now read a second time.

This measure is a very distasteful one, because it proposes to tax salaries.


Senator Sir George Pearce - It has already been subjected to rather severe criticism in another place.


Senator BARNES - It has, and I suppose the process will be repeated in this chamber. The bill has been introduced in accordance with the decision of the Government to impose a tax on the salaries of members of Parliament and Ministers, and also of higher-paid Commonwealth officials. The first group comprises parliamentary allowances and salaries, and, in this instance, the tax will apply to the allowances of all senators and members. In the case of the Speaker of the House of Representatives, the President of the Senate, the Chairman of Committees, and the Leader of the Opposition in either House, the tax will apply to the salary attaching to the office which he holds. The officers in the second group will include every public servant whose salary exceeds £725 per annum, and is paid from the Commonwealth public account or the North Australia Commission Fund, unless the officer concerned is employed by the Commonwealth in any territory which is not part of the Commonwealth, and where the revenues are raised within that territory for its own purposes. This group embraces officers of the Development and Migration Commission, the Council for Scientific and Industrial Research, the Commonwealth Railways, the War Service Homes Commission, the Repatriation Commission, the North Australia Commission, the Naval, Military and Air Forces, and the Public Service generally, as well as the High Commissioner, and the CommissionerGeneral in the United States.It does not include officers of the Commonwealth Bank, the Commonwealth Shipping Board, the Dried Fruits Control Board and the Commonwealth Oil Refineries. The Administrator of Norfolk Island and the administrators and officers of the Papuan and New Guinea services are also excluded. It does not affect any person whose salary is not paid directly from the public account, as, for example, officers of a semi-governmental institution such as the Amalgamated Wireless Australasia Limited.

Officers who have been rationed in any financial year on or after 1st July, 1930, will not be subject to the tax during that financial year. Should there be cases in which the amount of rationing is not equal to the amount of tax it will rest with the administration to see that the same sacrifice is made by rationed officers as is made by others. Generally speaking, the rationing which has taken place so far is at least equal to the tax which it is proposed to levy.

The basis of the tax is expressed in a separate taxing bill, which provides for the following taxes: -

On allowances of senators and members - a tax of 10 per cent. of those allowances;

On allowances and salaries of Chairmen of Committees and Leaders of the Opposition, in both Houses - a tax of12½ per cent. of those allowances and salaries ;

On allowances and salaries of Ministers, the Speaker of the House of Representatives and the President of the Senate - a tax of 15 per cent. of those allowances and salaries.

On salaries of Commonwealth officials -

(a)   where the salary exceeds £725, but does not exceed £1,000, a tax of 10 per cent. of salary, but so that no salary is brought below £725 ;

(b)   where the salary exceeds £1,000, but does not exceed £1,500, a tax of12½ per cent. of the salary, but so that no salary, is brought below £900 - the net income remaining after payment of tax on £1,000 - and

(c)   where the salary exceeds £1,500 a tax of 15 per cent. of salary, but so that no salary is brought below £1,312 10s.- the net income remaining after payment of tax on £1,500.

The tax will be deducted at the source from each payment of salary or allowance and will begin with the first payment of salary after the 1st December, 1930, but only in respect of salary earned after that date.

It is possible that the salaries of some Commonwealth officials may fluctuate during the course of a year, and in order that the amount of the tax shall be definitely ascertainable in respect of each payment of salary in such cases, it has been found necessary to provide that the annual salary, for the purposes of the rate of tax to be applied to each payment, shall be calculated at the rate of the official's salary at the time of the payment. The salary of a taxpayer who is a Commonwealth official is defined to mean the annual remuneration paid to the official in respect of the office occupied by him, and any annual allowance paid in respect of any duties performed in addition to those of that office.

Although, technically speaking, the salary or allowance of any person affected by the tax remains unaltered, the practical effect of the tax is to reduce that person's salary or allowance. In the circumstances, it is considered that the salary of any person, to the extent that it is subjected to a reduction by way of tax, should not form a part of his income for the purposes of ordinary income tax, or of any other form of taxation of salaries or allowance.

The subject is a very controversial one. Members of Parliament have been criticized because of their alleged disinclination to tax themselves while being prepared to tax everybody else in the community. They are subjected to considerable criticism chiefly because the general public does not understand the peculiar circumstances which attach to the occupation of a member of Parliament, Parliamentary representatives are put to agreat deal of expense which does not apply to those who follow other occupations, and their position is a very precarious one, giving no security of tenure. An honorable senator might remain in. office for his full term of six years, while a turn of the wheel of fortune might bring about a double dissolution and terminate his appointment within a month. However, members are a philosophical lot, and endeavour to accept without undue complaint anything that fate has in store for them. This measure imposes a pretty severe tax upon members of Parliament, and it is a definite indication that the Government is endeavouring, as far as possible, to spread the burden of taxation evenly over the community.


Senator Sir George Pearce - With one exception, the public servants.


Senator BARNES - They are subjected to State taxes and many other forms of expenditure, but they certainly have security of tenure. I commend the bill to honorable senators.

Debate (on motion by Senator Sir George Pearce) adjourned.







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