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Tuesday, 14 September 1971
Page: 1284

Mr SNEDDEN (Bruce) (Treasurer) - I move:

That the Bill be now read a second time.

This Bill, with 2 other taxation Bills 1 shall shortly be introducing, results from the agreement between the Commonwealth and the States, at the June Premiers' Conference, for the transfer of pay-roll tax to the States. These Bills give effect to the transfer itself, and are being introduced now with a view to their speedy passage in order to facilitate the transfer of the pay-roll tax to the States. This is necessary because of the State governments' budgetary planning.

At the June meeting the Commonwealth accepted the States' need for some greater flexibility and freedom in revenue-raising. The Commonwealth also indicated that, after careful consideration, it had confirmed its previous conviction that it would not be advisable to re-open the field of personal income tax to the States. Nevertheless, it accepted the view previously expressed by the States that they needed access to a new area of growth taxation to assist them in financing the services which they provided. In these circumstances, the Commonwealth offered, and the States accepted, the transfer of pay-roll tax as a useful addition to State resources for revenue-raising purposes. The Commonwealth made it clear that the transfer of pay-roll tax would have to be accompanied by an offsetting reduction in the financial assistance grants payable to the States, although the extent of the reduction will, for various reasons be less than the addition to State revenues resulting from the imposition of pay-roll tax.

I shall be introducing separately, as soon as possible, what is therefore to be regarded as complementary legislation to give effect to the reduction in the amount the States would otherwise have received in the financial assistance grants for 1971- 72, and I shall explain in detail at that time the precise arrangements which we have come to with the States in that re spect. I should also make it clear that, while payroll tax is being transferred to the States, the Commonwealth will continue to operate the export incentive scheme so as to give exporters the same benefits, based on the existing rate of 2½ per cent, as they now enjoy. Separate legislation to provide for this will also be introduced in the near future.

I turn now to the purposes of the Pay Roll Tax (Termination of Commonwealth Tax) Bill. Under the Agreement reached with the States, the Commonwealth will cease to impose payroll tax except in relation to the Australian Capital Territory and the Northern Territory; all States will bring down legislation under which they will impose and collect their own payroll taxes. The date the Commonwealth will vacate the payroll tax field will coincide with the date of commencement of the legislation imposing the tax in each of the States and in the Commonwealth territories. Provided the legislation to give effect to the agreement has been enacted by the Commonwealth Parliament and by all State Parliaments in time for it to be done, it is proposed that the payroll tax will be effectively transferred as from 1st September 1971, enabling the States to receive the first of their monthly payroll tax collections in October 1971.

The main purpose of this Bill is to terminate the operation of the Commonwealth payroll tax levied under the provisions of the Pay-Roll Tax Assessment Act 1941-1969 and the Pay-Roll Tax Act 1941-1966, thereby clearing the way for the introduction of separate payroll taxes for the States and the Commonwealth territories. Following its enactment, the measure will commence on a date to be fixed by proclamation, the proclaimed date being 1st September 1971 or the first day of a subsequent month. The Bill provides that the existing Commonwealth payroll tax will cease to apply from the day immediately preceding the proclaimed commencement date.

The Bill proposes also to terminate the payroll tax export rebate scheme with effect from the close of the 1970-71 financial year. I have already foreshadowed the later introduction of a separate Bill to provide a system of direct grants based on exports until 30th June 1973 when the present rebate scheme was due to expire. To facilitate the transfer of the tax to the States, the Bill contains provisions to authorise the Commissioner of Taxation to furnish information to the authorities who will administer the State payroll tax laws. The provisions of the Bill are explained in detail in an explanatory memorandum being circulated to honourable members. I commend the Bill to the House.

Debate (on motion by Mr Crean) adjourned.

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