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Tuesday, 9 December 1930

Senator PAYNE (Tasmania) . - I cannot allow this bill to pass to the committee stage without expressing my complete disapproval of it, and my intense disgust at the attitude of the Government. The bill imposes an iniquitous burden upon thrift. If we pass in review the history of this country we must be forced to the conclusion that the thrifty section of our people has been behind every progressive movement for the expansion of our industrial and commercial activities. By practising rigid economy in their every-day affairs, they were able to accumulate a certain amount of capital which they invested in one or other of our numerous industrial or commercial concerns, with the idea of providing- for their old age. Now the Government has decided to look upon all those who have incomes from property its criminals. When he made his financial statement, the Acting Treasurer (Mr. Lyons) said very little about this tax, but what he said was very important. He said -

The new income tux proposals relate principally to income from property. The object aimed at is an increase in property taxation, which, with increases by the States, will result in property bearing a fair burden in thu plan nf I budget re-adjustment.

Ever since income taxation has been adopted by the Commonwealth Parliament, provision has been made that income from property shall always pay a higher rate of tax than income from personal exertion, and the differentiation has not been small, particularly in the case of incomes amounting to over £500. The increase under the existing act is as high as 50 per cent, in the case of an income of £1,000. Surely that should be sufficient, but apart from the confiscatory increased rate of tax proposed in this bill, the amount of tax to be paid by a person whose income from property exceeds £200 is very much higher than it has hitherto been in Australia. This result is brought about by a reduction' in the exemption in the case of income from property. On a net income of £350 from property, after all deductions, except the statutory exemption, have been made, the present rate of tax is £1, but under the provisions of this bill, it will be £4 14s. Od. in addition to which a super tax of ls. 6d. in the £1, amounting to £16 17s. 6d., has to be paid. The in: crease would have been sufficient if it had amounted to £4 14s. 6d.

We have heard it said that the bloated capitalist is fair game for taxation in order to meet the engagements of the Commonwealth Treasurer. During the hist eighteen months, people who have, by dint of hard work and frugal living, been able to accumulate a competency, have invariably invested it in bank or industrial shares. To some extent, they have invested in mining shares, but as mining investments are looked upon by the average individual in the community as more or less a gamble, I content myself by referring to the holders of bank or industrial shares, and 1 want honorable senators to ask whether they can justify the taxation proposed in this bill in view of 'the enormous losses that have been sustained by those who have put their savings into bank and industrial shares, thus helping, materially, to carry on the industrial activities of Australia. The market values of bank shares and a group of ordinary industrial shares at the end of June, 1929, were, respectively, £89,574,632 and £39,618,024. The respective values on the 1st of October, 1930, were: £55,352,100 and £19,161,865. There was a decrease of £34,222,532 in the case of bank shares, and of £20,456,159 in. the case of industrial shares, or a total depreciation in value of £54,678,791. If it be reasonable to assume, and I think it is, that at least 50 per cent. of the holders of bank and industrial shares have had to realize upon them to meet their engagements, they have sustained the enormous and irrecoverable loss of £27,339,000. Day after day, we meet friends who last year were financially warm and to-day are shivering, and when we make inquiries we find that, in order to meet engagements, they have had to dispose of their shares at depreciated values. The greater part of the wealth that they acquired over years has disappeared, and the Government is further penalizing them by taxing the few miserable pounds that they have left. I warn the Government that the time has arrived when it must realize that Australia will not be taken out of its present difficult position by the taxation of the people.

Senator O'Halloran - It will be principally by reducing interest.

Senator PAYNE - There is no interest to-day in hundreds of thousands of cases. Millions of pounds are locked up in concerns which have for some time past failed to pay dividends, and are not likely to do so for some time to come. On the advice of bankers and people high up in the commercial world, men who have invested their money in supposedly giltedged investments for the purpose of getting a reasonable 5 or 5£ per cent., to-day find that their holdings are not worth even 40 per cent. of the amounts originally invested. The decline in the market value for the first three quarters of 1930, as compared with the average market value for 1928-29 in respect of bank shares, has been 38.2 per cent., and in respect of industrial shares 51.6 per cent. The position is appalling. This is the time to talk not of imposing extra taxation, but of rigid economy. A private individual, finding that he is not making ends meet, will apply the pruning knife. Honorable senators have spoken to-day of the standard of living. I have seen in Sydney, Melbourne, Adelaide, and even in Tasmania, thousands of men who have no standard of living. Surely it is better to bring down the average so that all may have some means of living, than to maintain a few in lucrative and soft positions.

I propose now to show how this tax will apply to a great number of people, principally to persons of comparatively small means, who have, over a very lengthy period, worked hard and denied themselves many things in order that their children may receive a decent education, and so that they may themselves have some provision for their old age. I am referring to a class of people who at all times are determined to be independent of government support in their old age. Nothing would hurt them more than to have to depend on an old-age pension. They are a class of people who have been exceptionally helpful to Australia. If it had not been for their independent attitude, our invalid and oldage pensions appropriations would have been larger by many scores of thousands of pounds. If they had been extravagant, if they had spent every penny they earned on all things they desired, whether they needed them or not, as many others do, there would probably be no one to-day to whom this taxation could apply. The amount of the tax on property has been increased considerably through the raising of the exemption; but when we go further than that we find that a person with an income of £300 a year from property is hit very heavily. Property means interest on any investment, rents collected from property, interest paid on fixed deposits in the bank, and interest paid on current account in the savings bank. Australia prides herself on having the largest percentage of savings bank depositors in the Empire ; but that spirit is no longer to be encouraged. At any rate, if the people continue as they have for a long time past - to place their savings in the savings bank - the Government will confiscate a great portion of them. On an income of £300 from property the ordinary tax proposed in the bill before us is £2 l1s. 8d. To this has to be added £11 5s., at the special rate of 1s. 6d., making a total of £13 16s. 8d. On an income of £400 from property, the total tax payable is £29 8s. 4d. An income of £400 is not a very large one. I heard an honorable senator to-day say that he would not think of touching public servants earning under £500 a year, yet he is prepared to tax a man, perhaps 70 years of age and possibly with a wife and home to maintain, who has an income of £250 from property. On an income of £600 a year from property a total tax of £67 9s. 2d. is imposed as against £10 6s. 3d. last year, or an increase of 600 per cent. Can the Minister in charge of the bill (Senator Barnes) justify such an increase? The other day, while sitting in an office in Melbourne and feeling the effects of a long train journey, I had a vision in which I saw a court. The Bench consisted of the Acting Treasurer (Mr. Lyons) as the Chief Justice, theActing Prime Minister (Mr. Fen ton) and other Federal Ministers. I was anxious to ascertain the name of the accused and the nature of the charge. On making inquiries, I found that the accused was John Brown, a citizen whom we have all known for many years. Although the proceedings had commenced before I arrived I was just in time to hear the charge read by the Chief Justice, who, as I have said, was the Acting Treasurer. He said -

Prisoner at the bar, you are charged with many heinous offences, to wit, that when a young man and duringyour middle age you worked hard. You were sober and industrious, frugal in your living, persistent in your endeavours to save something for your old age, so that you and your wife should not be a burden on the country. You succeeded so well, although depriving yourself of many things that you desired, that at the time of your retirement from active work brought about through advancing years or ill-health you were assured of an income of £500 per annum. This, you contemplated, would enable you to carry on comfortably to the end. We have unanimously found you guilty and to mark the serious nature of your offence you are fined £40 6s. 3d. per annum for an indefinite period.

Imagine the consternation of the accused when he heard such a cruel sentence imposed. Similar cases were dealt with and the following penalties were imposed: - Persons in receipt of £350, penalty £20 12s.; £300, penalty £13 6s. 8d.; £600, penalty £57 3s., and £1,000, penalty £82 12s. It was almost unthinkable that a court should inflict such sentences upon men who were charged, not with a crime, hut with action taken in the best interests of their country. A perusal of the bill has shown me that such taxes are actually being imposed by this Government. If this measure becomes law, and I am afraid it will, the Government will have to accept the full responsibility. I do not believe that the Government or its leader in this chamber (Senator Daly) believes that the measure will in any way assist us to overcome the difficulties with which we are confronted. The Leader of the Opposition (Senator Pearce) said, that instead of the measure being helpful to the country, it will have a most detrimental effect upon the community and will seriously retard a return to prosperity. In the first instance the Government proposed to collect £1,600,000, but by its socalled generous act in raising the exemption from £100 to £200, it expects now to raise £1,000,000. I do not see how it can be termed a generous act to increase the exemption to £200, seeing that last year it was £300. As the Leader of the Opposition stated, the amountwhich the Government proposes to collect will be withdrawn from industry and consequently development will be seriously retarded.

Senator McLachlan - I do not think the Government will raise £1,000,000.

Senator PAYNE -Whatever amount is collected will be withdrawn from industry, thus causing further unemployment. I know many persons in Melbourne and Sydney, and in the part of Tasmania in which I reside, who, from the small incomes they receive, are able to provide casual employment; but who will now be unable to do so.

Senator Herbert Hays - Many of them will be seeking employment.

Senator PAYNE - Yes, and many will be obliged to draw the invalid and oldage pension. The bill has my strongest condemnation, and I sincerely trust that the first year of its operation will prove to the Government its disastrous effect upon the community. Instead of helping to stem the tide of adversity, it will actually accentuate it.

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