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Thursday, 11 December 1930

Senator LYNCH (Western Australia) . - The second reading of this hill furnishes an opportunity to draw attention to the claims of a company which has exhibited a generous spirit towards those who have had dealings with it. I refer to the Midland Railway Company of Western Australia, which sells land and collects a certain percentage of the purchase money from the purchaser, leaving the balance tobe repaid over an extended period up to fifteen years, with interest at the rate of 4 per cent. On behalf of that company I appeal to the Senate. The Leader of the Opposition has previously referred to this company, and showed how severely it has been dealt with at the hands of the Federal and State income tax authorities. This company charges its clients 4 per cent. on the outstanding balance of the purchase money, which is sometimes 90 per cent. of the value of the land. Although nominally the rate of interest charged by the company is 4 per cent., in practice it works out at £3 13s. per cent. This further additional tax of7½ per cent. would bring down the rate of interest to about £3 8s. per cent. Out of that amount the company will have to pay a further State tax, which will reduce its interest earnings to about 3 per cent. on the outstanding balance payable on the land. Some years ago, when the Government of Western Australia was in financial difficulties, it persuaded this company to construct a railway about 300 miles long. In the early stages of its existence, the company became financially embarrassed. Nevertheless, it carried out its contract, and obtained a grant- of land in payment for building the railway. As the years slipped by the company's relations with its clients were almost the same as those of a government or a local -governing authority. I bought a piece of land from the company, but I have long since transferred by responsibility to other agencies. I know, however, that it has 500 contracts running, and that both in respect of the construction of the. railway and its dealings with the land,, it has been losing money for years. ; .Indeed, it has been unable to meet* its 'interest commitments. Lately, how.ever, owing. to careful management, conditions have improved, with the result that those who bought land from the company-have benefited. Those of us who Bought' land from that company were placed'.- for years at a disadvantage as compared ' with the lot of Crown tenants nearby. - For instance, we had to find our own water. If we applied to the State Water Board for assistance, we were told that that body existed, but not . for us. The Government would not construct roads for us, and, consequently, we had to cut our own tracks. The Agricultural Bank was established in the time of Sir John Forrest, but it would not assist the Midland settler. Consistently other State instrumentalities refused them assistance. Notwithstanding that withholding of assistance by the State, almost as soon as I had bought my land, even before a camp had been pitched, I received a demand from the Taxation Department for payment of land tax. Crown tenants in the same district were exempt from taxation for periods up to five years. The only attention the Midland settler got from the State was a series of demands for the payment' of taxes. I have said before, arid I now repeat, that the company has treated its clients' fairly, even indulgently. " It treated leniently every man who was' a'' trier. Land which the company' sold for 4s. an acre soon went up to 10s. or 12s. ah acre, notwithstanding that a reserve was placed on it.. Considering the proximity of the land to the railways, the land sold by the company was a- cheap as relatively situated Crown land, while the quality was better. In respect of the unpaid balance of the purchase price of the land, the company is hard hit by this bill. I want to relieve the company of the burden of the tax of ls. 6d. in the £1. If the screw is put on by both Federal and State Governments settlers who purchased land from the company will not be able to approach it for assistance as in the past. It will be unable to assist them. If the Government presses for this tax it will not really be pressing the company, but the men who go to the company for the concessions which others nearly always succeeded in getting from the State. The company has always treated its clients fairly; it has charged them a low rate of interest and assisted them in other ways. Something should now be clone to show the company that the Government appreciates its live and let live policy. I appeal to the Government on its behalf. In committee, I propose to move an amendment to exempt this class of taxpayer from the tax of ls. 6d. in the £1.

SenatorPAYNE (Tasmania) [11.11). - The introduction of' this bill provides an opportunity to discuss the heavy imposts upon those who derive incomes from property. Honorable senators will remember that the Minister in charge of the bill stated that there is- to be a 15 per cent, increase in the rate of tax on incomes of £500 and over derived from personal exertion. There is also to be an additional tax of ls. 6d. in the £1 on all income from property. If honorable senators will refer to the schedule exhibited yesterday, they will see that a person with a net income of £350 from property now pays only £1 in taxes. Under the proposal in this bill the same person will be called upon to pay £21 12s., or an increase of over 2,000 per cent. 1 do not think that the Minister responsible for framing this legislation realizes how cruel it is. A person with an income of £500, derived from personal exertion, .pays the same tax as last year, plus an increase of 15 per cent. A man with an income .of £150 less from property, instead of paying about £3 10s. as he would under the personal exertion provision, will be called upon to pay £21 12s., because his income is derived from property. At present, a person with an income of £500 from property pays £5 17s. 8d. income tax.Under this bill he will pay £45 19s. 5d., an increase of over 700 per cent. Seeing that these increases represent a standard increase of 15 per cent, with an enormous addition of1s. 6d. in the £1, in the case of income from property the Minister should realize the unfairness of the proposal. I consider that every honorable senator should take the opportunity to protest against this excessive taxation of a very deserving class who have only small incomes.

Question resolved in the affirmative.

Bill read a second time.

In committee:

Clauses 1 and 2 agreed to.

Clause 3 -

After section seven of the Principal Act the following section is inserted: - "7a. - (1.) In addition to any tax (including additional tax, super-tax and further tax) payable under the preceding provisions of this Act, there shall be payable upon the taxable income derived by any person -

(b)   by way of interest, dividends, rents or royalties, whether derived from personal exertion or from property : and

(c)   in the course of carrying on a business, where the income is of such a class that, if derived otherwise than in the course of carrying on a business, it would be income from property, a further tax of seven and one-half per centum of the amount of that taxable income.

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