14th Parliament · 1st Session
Mr. Speaker (Hon. G.J. Bell) took the chair at 2.30 p.m., and read prayers.
– Has the Acting Prime Minister received from the Victoria-Riverina Stock and Meat Exporters’ Vigilance Association, a communication stating that the producers had no voice in determining whether Australia should agree to a levy on exports of meat to Great Britain, that such a levy would, ‘sound the death knell of the mutton and lamb industry, and that the association is opposed to any tax on meat imports? Will the right honorable gentleman make a statement to the House in regard to the matter?
– Although I have no knowledge of any such communication, I am glad that the honorable member has asked the question, because the Riverina and Victoria Graziers’ Association has advised me that it is solidly behind’ the policy of the Government.
Everyone - in Victoria, at any rate - is aware that the agitation in that State was fathered by the two exporting companies which have foreign as well as Australian interests.
- In view of the abbreviated report which appeared in the press to-day as to the nature of the representations made by the Prime Minister to a section of the British Cabinet, will the Acting Prime Minister make a detailed statement of the manner in which the case for Australia was put?
– I have received no communication from the Prime Minister in regard to his conduct of the case. The lines upon which the delegation should act were fully discussed before the members of it left Australia, and I have no doubt that they were followed in the negotiations that have since taken place.
– I ask the Acting Prime Minister why this “Parliament is being kept in complete ignorance of the activities of the Australian delegation in London, which is discussing matters of considerable importance to the meat industry of this country with representatives of the British Government? Why is it that honorable members are obliged to obtain such information as they possess from reports’ appearing in the press that seem to be released from reliable sources overseas? I ask this question because I feel that, as this Parliament is in session, it should not be necessary for honorable members to depend upon information from such sources.
– The attitude of the Government on the subject of meat exports is well known, having been fully stated both in this House and in the press. The reports which appear in the press from overseas are quite unauthorized and probably incorrect. I do not think that any good purpose can be served by the public discussion of the negotiations that are in progress.
Mr.CURTIN.- Can the Minister for Defence say whether or not the Department of Defence has reconsidered its refusal to permit the establishment of an additional oil tank at NorthFremantle, so as to place the applicant company on a basis of equality with the three companies which already have oil tanks there ?
– A Consideration of the defences of Australia caused the department to review the location of oil tanks, and the conclusion at which it arrived was that the present location of the oil tanks at North Fremantle is not in the interests of the defence of this country. It has, therefore, decided that any additional oil tanks shall be placed in a less dangerous position. The company which seeks this privilege has only recently come into existence. It considers that the major oil companies enjoy a trading advantage over it, and has asked whether the Government proposes to remove their oil tanks from the present site. That is the only question which now has to be decided. The department is not prepared to take action along those lines at the moment, and the decision in the matter must be regarded as the considered view of the Defence Department.
– Has the attention of the Anting Prime Minister been drawn to a statement in the Queensland Producer of the 20th March last, which reads:
Arrangements are being made by the Acting Prime Minister (Dr. Earle Page) for a meeting to be held at Canberra early this month, when plans for the reorganization of the dairy industry will be discussed, including a proposal to impose a tax of 3d. per lb. on margarine….. Figures prepared by the Statistician’s Department show that 10,000,000 lb. of margarine arc produced locally each year, and it is probable that an excise duty of 3d. per lb. will be imposed. This would provide £250,000 a. year towards the expenses of the organisation controlling the dairying industry.
Will the right honorable gentleman say whether the Government proposes to place an excise duty on margarine, and indicate why the margarine industry should pay for the organization of the dairying industry?
– The first portion of the statement read by the honorable member, which says that a. meeting is to be hold in Canberra in the early part of this month, is quite inaccurate. The meeting in question is to be held in Sydney. The subsequent statements are equally inaccurate.
– Has the Acting Prime Minister received from the secretary of the Victorian Master Bakers’ Council a telegram stating that, if relief from sales tax is not granted, it will be necessary to increase the price of bread? Has the right honorable gentleman also noticed the statement that no reply to this telegram has been received? What action does the Government propose to take in the matter?
– The press asked me this question about 1 o’clock to-day. I am endeavouring to trace the telegram referred to.
– In view of theinquiries that are being made with the object of developing an export trade to Papua for dark leaf tobacco grown in Australia, and the fact that such tobacco costs 6s.10d. per lb. ex Sydney, of which from 4s. to 5s. represents excise duty, will the Minister for Trade and Customs endeavour to have the excise removed from tobacco grown in the tropics so that in that portion of Australia development may be promoted, local costs may be reduced, and the growers may be enabled to market a crop for which there is both an internal and an external demand?
– There is no excise on tobacco exported to Papua. If the honorable member refers to the Northern Territory when he speaks of the tropics, I would inform him that a uniform excise duty, which amounts to 4s. 6d. per lb., or approximately 33/8 d. per ounce is imposed throughout the Commonwealth. In Darwin, tobacco is sold in hermetically sealed tins, and the price is only 2d. per 2oz. tin higher than in Sydney. Obviously, therefore, the Government could not waive the excise duty of 33/8d. per oz. on tobacco sold there.
– Is the Minister representing the Acting Attorney-General able to inform me whether the Acting Attorney-General has been able to take any effective action with the object of facilitating the hearing by the Arbitration Court of the case of the Adelaide Municipal Tramway Employees against the continued rationing of their employment ?
– I shall bring the matter under the notice of the Acting Attorney-General, and let the honorable member have a reply to-morrow.
– Yesterday, the honorable member for Darling (Mr. Clark) asked me a question regarding the amount allocated by the Commonwealth Government to the Government of New South Wales for the assistance of prospectors engaged in metalliferous mining. I am now able to inform him that included in the grant of £42,500 to New South Wales for the assistance of the metalliferous mining iudustry is an amount of £5,000 for prospecting. An amount of £15,000 has already been made available by the Commonwealth to the Government of New South Wales for the purposes of the general -scheme, of which £1,500 has been spent on prospecting.
– Has the Acting Prime Minister been informed that the Victorian Chamber of Agriculture holds the view that a M’eat Board, with statutory powers, should be appointed to fix and enforce standards for the grading of meat, to regulate the shipment of meat for export, to develop methods of processing meat, to impose levies in connexion with meat exports, and to engage in scientific research? Will he inform the House of the Government’s attitude to this proposal ?
– I am unaware of the attitude of the Victorian Chamber of Agriculture on this subject, but the Australian I .M.eat Advisory Committee is considering it.
– Is the Minister representing the Postmaster-General able to inform me whether a sum of money has been, or is to be, made available by the Government for the erection of a new post office building in Rundle-street, Adelaide ?
– I have no information on the subject at the moment, but I shall make inquiries and let the honorable member know the result.
– In view of the fact that the winter season is approaching, will the Acting Prime Minister do his best to hurry on the negotiations with the Victorian Government for the promised construction of shelter sheds on the Melbourne waterfront for the use of the waterside workers?
– The honorable member is well acquainted with the difficulties at present in the way of negotiations with Victoria, but I shall endeavour to accede to his request.
– I direct the attention of the Acting Prime Minister to a statement appearing in to-day’s issue of the Sydney Daily Telegraph to the effect that the Commonwealth Government has made available the sum of £50,000 for the inauguration of a Jubilee Memorial Fund that it is proposed to launch for the purpose of welfare work among mothers and children. Has the right honorable member any statement to make to the House on the subject ?
– The statement published in the press was quite unauthorized. The Government will make an official statement when it is ready to do so.
– In view of the fact that the Minister for Repatriation has, from time to time, expressed his willingness to consider the advisability of introducing amendments of our repatriation legislation, with the object of making provision for tubercular soldiers and other ex-service men who do not fall within the present law, and that he recently voiced his sympathy with these men to a deputation which waited upon him in connexion with the matter, will he introduce an amendment of the Australian. Soldiers’ Repatriation Act before the Easter adjournment so that the men to whom I have referred may be helped ?
– I have already answered a similar question though it was not couched in the same language as that of the honorable member. I have stated that this subject was submitted to me last week with great force and logic by a deputation of honorable members representative of all parties in this House, and that I gave a considered reply to their request. I said yesterday that the whole matter was now before the Government which was giving it consideration.
CO-OPERATION OF IMPERIAL AND
Dominion Governments - Pacific Island Services
– In view of the fact that Australian, New Zealand and British shipping is meeting with severe competition from foreign-owned, government-subsidized vessels, will the Acting Prime Minister inform me whether he has any information from the British Government and/or the Government of New Zealand regarding the intimation given some time ago by the Commonwealth Government that it was willing to co-operate with them in seeking to overcome this disability? I also desire to know whether, in view of the fact that steamers subsidized by the German Government to the extent of over £100,000 a year are competing against Australian-owned vessels trading to the Pacific Islands, the Government will consider imposing an export duty of 10s. a ton on all exports from the islands carried in. foreign bottoms ?
– Some months ago, ‘when the representatives of the Government of New Zealand were in Australia, this subject was- carefully considered and joint representations on it were made to the British Government. The negotiations then set on foot will be continued during the visit of the Prime Minister of New Zealand and the Prime Minister of Australia to England to participate in the King’s Jubilee celebrations. The second part of the honorable member’s question involves matters of policy which it is not usual to deal with in reply to questions.
– In view of the fact that Papua, New Guinea and Norfolk Island are looked upon as part of the Commonwealth of Australia, will the Vice-President of the Executive Council consider the advisableness of making the coasting trade provisions of the Navigation Act apply to those territories ?
– Papua and Norfolk Island are considered parts of the Commonwealth for some purposes, and a royal commission which sat in 1926 made a recommendation in regard to the Mandated Territory. I understand that the honorable member desires the Government to take some practical action as the result of his question. I shall ascertain to what extent that is possible, and give the honorable member a considered reply to-morrow.
– Has the attention of the Acting Prime Minister been drawn to a newspaper report that the meeting of the Australian Agricultural Council, which was to take place in a few days’ time, has been postponed until May? If that is so, does it mean that none of the questions on the agenda paper can be discussed until then?
– The imminence of an election in Queensland has made it very difficult for the Queensland members of the council to be present on the 15th April, and they have asked that the conference be postponed until after the election. Recent political events in Victoria have also made it difficult for Victorian ministers to get ready for the conference, and they, too, have asked for a postponement. However, the executive of the council, consisting of representatives of the Council for Scientific and Industrial Research, of the Department of Commerce, and the heads of the Departments of Agriculture of the various States, will meet in Sydney on the 11th April, to discuss those matters with which it is competent to deal. In addition, conferences in connexion with the dairying industry and the citrus fruits industry, will he held on Friday week and Saturday week. It is hoped that the responsible ministers in the States most vitally affected will be present, and that progress will be made in directions that will facilitate the deliberations of the Council of Agriculture.
– With regard to the statement of the Acting Prime Minister at the opening of a show some time ago when he expressed the fear that the exports of butter from Australia would be restricted, will the right honorable gentleman state whether he has received any communication on this subject from overseas?
– I have received no communication from overseas recently in regard to this matter.
– On a previous occasion when I asked the Minister for Trade and Customs when we might expect to receive the report of the Tariff Board on oregon, I was informed that the matter was being held up pending negotiations for a trade treaty with a particular country. Can the Minister tell me the name of the country ?
– I regret that I cannot tell the honorable- member any more now than I could when he last inquired.
– Is the Acting Prime Minister aware that there are in Australia returned soldiers with incomes ranging up to £2,000 a year who are drawing full pensions, while other returned soldiers, who were injured in the war, and are now suffering from tuberculosis, ; are destitute, and will he, before the
House rises, bring down legislation to amend the Repatriation Act so as to put an end to this glaring injustice?
– I am not aware that what the honorable member stated in the first part of his question is true, and in regard to the second part, the Government will give the matter consideration.
– Is the Acting Prime Minister yet in a position to disclose to the House the name of the Minister which the Government proposes to send this month to New Zealand for the purpose of negotiating a trade treaty? If the Minister has not yet been selected, will the Government make a choice as soon as possible so that the Minister will not have to make a hurried preparation of the case which he is to submit to the Dominion Government?
– It is hoped that the Minister for Trade and Customs (Mr. White) will be able to make the trip.
– Has the attention of the Acting Prime Minister been drawn to the reported newspaper statement of an employee of the Sydney Harbour Trust that outward wharfage rates on wheat at Sydney were 9d., less 20 per cent., while, on flour they were1s. 6d., less 20 per cent.? Will the Minister state whether this large disparity is, in his opinion, justifiable, and will he also compile a complete list of the concessions which have been granted to the wheat industry with regard to transport as compared with those obtaining in regard to other industries?
– . The matters referred to by the honorable member are the concern of State governments; but, if he so desires, I shall endeavour to obtain the information from State sources.
– This morning there was exhibited in Canberra a film dealing with the visit of the Duke of Gloucester to Australia, but nowhere in that film is there any record of his visit to Tasmania. Can the Acting Prime Minister explain this omission?
– The Government is not the producer of the film. I can give no reason why the producers should have omitted any reference to the Duke’s visit to Tasmania.
– In view of the very disconcerting telegrams which have come from Tennant’s Creek gold-fields to the effect that £90,000 worth of ore is awaiting treatment, can the Minister for the Interior state whether his department granted water rights over a government bore without consulting the miners who pioneered the field? Is it a fact that the Afghan who was granted this water right asked £4 10s. a ton to crush ore, and that the residual sands assayed 2 oz. as against only 11 dwt. at a modern plant at Peterborough? Has the Minister invoked the aid of the Council for Scientific and Industrial Research to solve technical problems at Tennant’s Creek, and if not, why not?
– There are already two batteries at Tennant’s Creek, and permission has been granted for the erection of a third at the only site where water is available. Before other batteries can be erected, it is necessary to determine the location, quality and quantity of the water that can be found. The honorable member’s suggestion that the aid of the Council for Scientific and Industrial Research should be invoked will receive consideration.
Debate resumed from the 21st March (vide page 230), on motion by Mr. Casey -
That the bill be now read a second time.
.- This is a bill which arises from a recent High Court judgment with respect to sales tax on second-hand goods, or what are described in the bill as “ goods or commodities that have gone into use or consumption in Australia.” This legislation proposes retrospective action to enable the
Government to retain the moneys, collected under the Sales Tax Acts, which the High Court has declared there was no authority to collect. We have become accustomed to legislation patching up the punctures that have been made in taxation laws, particularly with respect to income tax. Since I came into this Parliament upon the second occasion in 1922, I cannot recollect one year passing without some retrospective legislation to correct legal flaws discovered in the Income Tax Act, such retrospective legislation being necessary to protect the revenue. I think the right honorable the Acting Prime Minister (Dr. Earle Page) brought down a bill for that purpose every year during his occupancy of office as Treasurer, and, if my memory serves me rightly, the Opposition supported him on all such occasions. Those retrospective laws were passed to correct mere legal technicalities that had been discovered and taken advantage of by tax evaders. There had been set up., for instance, in connexion with the income tax on companies, whole series of holding companies which were organised for the sole purpose of evading the tax that they should justly have paid. For that reason, Parliament supported the retrospective legislation in all those cases where tax evasion was being carried on because of flaws discovered in the law. Dozens of that kind of case could be quoted from the history of the last ten or twelve years. This measure, however, is not analogous to any preceding legislation, and for that reason I think the action proposed to be taken by the Government is wrong. The tax that was collected has been shown by the High Court judgment to be not only illegal, but also inequitable. Illegality can always be corrected by Parliament, because Parliament is the authority to make illegal measures legal, so long as the illegality consists in a mere legal technicality; but, according to the judgment of the High Court - as is plain to any one reading it and examining the incidence of the tax - its collection in this instance was inequitable. That aspect was emphasized and brought out in the test case that was before the court recently, and the judgment is a very clear statement of the whole sales tax procedure.
I have given very careful and anxious thought to this matter, because I amnot one who throws off his responsibilities in relation to the revenue upon changing from the Government to the Opposition side. I supported retrospective legislation to protect the revenue when I led the Opposition, and I should support this legislation to protect the revenue if I thought it could be done justly. This case, however, is, in my opinion, in a special category. My view is that the proposal of the Government is wrong, and, although a large amount of money is involved, I do not think we should agree to wrong doing in order to retain it.
-What is the actual amount involved?
– A quarter of a million pounds. I should like to take this opportunity to dissociate myself and my party from some of the views that have been expressed in opposition to the action of the Government in this connexion. I have read that those protesting against this measure have referred to the “ sinister figures lurking in the background - an allusion to the officers of the Taxation Department. I repudiate such a suggestion, which is offensive to the officers and to every government. The Government after all takes the responsibility of its policy, and the taxation officers carry out the policy set for them. It is true that the officers give advice, which is what they are there for, because they. are experts; but the policy and the decision are the responsibility of the Government. It is quite wrong to make attacks upon loyal and efficient officers.
Objections are also raised to this bill which, so far as I can gather, seem to be based upon a general objection to all sales taxation. I know that the sales tax is not popular, but I should like those who complain so loudly to show an alternative method of raising £8,000,000 a year in an emergency. The real reason why the sales tax has become unpopular is that those who pay it can see what they are paying, although it is an indirect tax. A good deal of indirect taxation is paid without people being aware of it. I think it is a virtue in a tax that those who pay it should, if possible, know how much they are paying, and why. Others again, object to any legislation which has retrospective effect, particularly with regard to taxation. I do not take that objection, either. Legislation may be retrospective and at the same time well justified. Everything depends upon the merits of the case. Frankly, I do not deny that the Government of the day, and parliament then and since, intended that second-hand goods should be taxed. The original Sales Tax Act was brought in by the Government which I led. As a matter of fact I was the Treasurer that brought it in. What the Assistant Treasurer (Mr. Casey) says is quite true - that it was the definite intention that second-hand goods should be taxed. When, however, the incidence of a tax is found to be inequitable, it is our duty to rectify it, so soon as the discovery is made. Anomalies were discovered, while we were in the process of framing this legislation, which would discriminate unjustly between different classes of taxpayers. We rectified every one of those, so far as it was humanly possible to do so, as we proceeded. No tax was knowingly imposed that would discriminate between different classes of taxpayers with respect to the same goods, as this tax is proved to have done. The injustice in respect of the goods covered by this bill should have been corrected at the moment of discovery which, of course, may not have been until the High Court judgment was given. Still, it can be corrected now. In order to illustrate my meaning, let me describe some of the anomalies which cropped up. We discovered - I think before the tax was imposed - that a retailer importing goods would pay the tax upon his invoice value plus the duty, whereas a wholesaler, when he imported goods and sold them for retail, would pay the tax upon the wholesale value, which would be something in addition to the landed invoice price plus the duty, because his profits would come in. In order to do as even-handed justice as was possible, it was decided to add 20 per cent, to the retailers’ landed cost in order to arrive at what would be considered a fair wholesale price. A representative of the wholesalers advised us to add 50 per cent. but I replied, “ Any wholesaler who adds 50 per cent, for his profit and his handling in a wholesale business ought to pay a little more taxation than anybody else.” I had no sympathy with that claim, and I was the Treasurer of the day. We had another anomaly where a wholesaler was selling an article retail. Under the law he would be taxed on its retail price, and power had to be given to the Commissioner to enable him to find out the wholesale value of the retail sale. I emphasize that wherever a tax is imposed which does not hold the scales fairly between the same classes of business men selling the same kind of goods it cannot be regarded as a just tax. To that I make one exception. There is dis.crimination in the law, deliberately pur, in, exempting traders whose turnover comes only to a certain amount, say, £500 or £1,000, so as to avoid having dealings with a large army of small manufacturers or small wholesale people’. That discrimination can be justified on the ground that the big traders have greater facilities for handling their goods than have the small manufacturers or wholesalers.
Parliament intended that all the goods in commerce that were not specifically exempted in the exemption schedule should bear tax, and these included second-hand goods. If second-hand goods had not been included under the original sale? tax, there would have been an opening left for considerable fraud. Whilst I believe that the majority of traders are honest, nevertheless we have reason to know that a percentage of traders are not honest. Particularly is this the case when they are dealing with the Taxation Department. It would be quite easy, for instance, for a sale to be entered lip and dated prior to the imposition of the sales tax, and for those goods to be sold nominally as second-hand. Furthermore, in the case of a motor car which may have run 100 miles, £1 or £2 might be knocked off the original value, and the tax thus evaded. That danger still exists, but not to the same extent as originally, and it will exist if this bill is passed, and tax is not collected on second-hand goods. A large quantity of valuable goods, such as pianos, pianolas, and the like, which are sold as second-hand, will escape the tax. It will be possible for traders to “ring in” as goods of that description new articles, and say that, they have been used only a week or two. It may be said, of course, that such goods could be traced, but the danger exists to-day as it did when the hill was first introduced.
I have said that this bill is not analogous to any thing that has preceded it. There have been dozens of bills of a retrospective nature - to correct flaws in the legislation, to cover cases in which collections have been validated, and no refunds have been made to make taxes retrospective, and to continue their collection. There were dozens of such bills in the term of the Bruce-Page Government, and some in the term of my own Government. Further, there was a case last year, not exactly on all fours with the others, in which an anticipated flaw was patched up by the present Acting Treasurer. None of these cases, however, I emphasize, was analogous to this now before us. Past validations differed from this in three important respects. In the first place, that which was validated had been universally applied without discrimination between traders, and therefore was equitable. Secondly, what was made retrospective was to continue. Thirdly the unpaid taxes that were outstanding were to be collected. None of these apply to the present bill. This tax has been proved not to be equitable; its collection is not to continue; and those who refused to pay this tax in the past are not to be called upon to make good their default. The general policy of this legislation according to the judgment of the High Court is to levy this tax upon the last sale by wholesale, that is, the sal» to the retailer by the wholesaler. This is not a turnover tax; it is not a tax on every sale; it is only one tax on the sale of one article, and it is imposed upon the last sale, which is the sale by the wholesaler to the retailer. That being the general scheme of the tax, the High Court has held that second-hand goods, because they are second-hand, are goods that have gone into consumption and have therefore either paid the tax before or, if they have not, have gone beyond the stage when their sale may be covered by this legislation. If they have previously paid tax there is provision for a refund. That is to some extent an assumption that this law was only intended not to tax any subsequent sale after the imposition of the tax on any goods sold after the passing of this legislation. But against that is the court’s decision. We are here not to dispute that but to correct the position. The High Court pointed out that, but for the fortuitous circumstance that there were cases in which the men handling and retailing the goods were either wholesalers or manufacturers and therefore had to be registered, second-hand goods would not have been taxed. If that anomaly had been discovered, it could have been provided against. Manufacturers or wholesalers, or both, have to register; retailers have not to register. Those who are registered have to pay the tax on goods they sell and therefore can pass it on ; but those who are not registered do not have to pay the tax. In the second-hand business there are a large number of retail men, not registered, and a large number of men, wholesalers or manufacturers, who take into their business, as second-hand, goods which are handed in as part payment on the sale of new goods. Where such a transaction is done by a man who is a retailer only, he has not to pay tax; but where the transaction is done by a man who is both a wholesaler and a retailer, he has to pay. This is an anomaly which inflicts an injury. It is unfair competition. It is discriminating between persons who may be carrying on precisely the same business. I am putting forward this criticism not as an attack upon the Government, but rather as a criticism of the original acts, and the law as it has been continued from the beginning until to-day. It is legitimate criticism. It judges the merits of the Government’s proposals in the light of the anomalies I have pointed out. I am showing that it is not equitable, inasmuch as the tax cannot be applied to all traders engaged in the same class of business. It may be suggested that, after all, second-hand dealers are small people, and that the manufacturers could afford to pay where the others cannot. That, I submit, is not a sound basis for argument, because w« know that some of the biggest men engaged in this business, that is, in new and second-hand businesses, have separated their business entirely so far as new goods and second-hand goods are concerned. They carry on their second-hand business through the agency of one concern, and their wholesale business through the-, agency of another, thereby escaping tax on the second-hand goods. I refer, not to the smallest, but to the largest tradersdoing this class of business.
Because of the recognition of its inequity, this tax is to be discontinued. The Acting Treasurer (Mr. Casey) has said that one of the reasons for that is that the Government believes that it cannot legally, and within the powers - conferred by the Constitution, amend the existing laws so as to continue the tax. As a layman, my opinion is that that is probably correct. But I see nothing whatever to prevent the enactment of a new set of laws to tax second-hand goods specifically. If that be so, there is no legal or constitutional bar to the continuance of the tax. Why is it not being continued? The reason is that it is felt that it cannot be applied equitably, if it is applied to the same class of people previously taxed, and to them only. I believe that it could be applied equitably by the registration of all second-hand dealers whose sales exceed a certain amount per annum. The claim of those who have paid this tax - and this, after all, is the basis of the matter - is that they were unable to pass it on, and, consequently, were not in fair competition with their competitors. If they did pass it on, they lost trade, “i admit that the standard of values is not the same in the case of second-hand goods as it is in the case of new goods; hut, after all, when dealing with furniture, shrewd buyers can compare values and prices just as intelligently with secondhand as with new goods.
This legislation may make an illegal tax legal - I entertain certain doubts as to that - but it certainly cannot make &? inequitable tax a just one. This is both an unjust and an illegal tax. For that reason. I suggest that the money collected under it should be refunded. When the tax was imposed, all goods were taxable if not specifically exempt. Anomalies revealed by experience should be corrected either by adjustment or by repeal. Where the discrimination is glaring as well as illegal, refunds are fully justified, irrespective of the cost to the Treasury. The injustice of the present position is further emphasized by the fact that unpaid tax is not to be collected. Those who defied the law are to escape, while the money obtained from those who paid the tax promptly is to be retained by the Government. That is a very bad practice to adopt in connexion with taxation. We should encourage prompt payment and discourage those - there are many of them - who defy the law and evade tax. I do not refer to those who legitimately believed that they were not liable to pay this tax. What I have in mind is the practice that has grown’ up of employing taxation agents who make a special study of the taxation law, with a view to discovering where it may be punctured. Such persons ought not to be encouraged. Encouragement is given to them if they are allowed to escape while the moneys collected from those who paid voluntarily and promptly are retained.
I shall give one illustration of the way in which this has worked out. I may say that I do not know, personally, one firm that has applied for a refund. But I have received a letter on behalf of a Sydney firm, which in 1930, asked for a ruling from the department. It was engaged in the sale of musical instruments and similar goods, including both new and second-hand. It received from the department a correct ruling, which stated -
Regarding the resale, after repair by you, of instruments which have been traded in as part payment or exchange for other goods, no tax will be payable by you on such retail sales.
The firm interpreted that to mean that no tax was payable on second-hand goods. It was wrong in that assumption. There is a distinction between a tax on the resale of traded-in goods and of others that are not traded in, because tax has already been paid on the traded-in article. If you sell a motor car for £600 and accept £500 and an old car in payment for it, you are taxed on the £600. Therefore, it would not be just to tax again upon the sale of the second-hand car. The whole of the facts in this case prove that the firm was honest. For four years it paid no .tax upon sales of second-hand goods. Last year, noticing in the press paragraphs to the effect that the department was. pressing for payment of tax on second-hand goods, it voluntarily approached the department for another ruling. After a considerable amount of correspondence had taken place and a number of interviews had been held, it was informed that it must lodge a return within 21 days. The preparation of a return covering a period of four years is a big task, and this firm could reasonably have delayed its completion. Instead of doing so, however, the proprietor worked night after night upon it, and eventually the tax was paid. He could legitimately have asked for time to pay. Had the matter been delayed until after the 13th December last, the firm would not have been called upon to pay one penny. I do not think that such experiences encourage men to approach the department voluntarily and display honesty in their dealings with it. The act at present contains a provision in regard to overpaid tax. Section 26 of the Sales Tax Assessment Act, No. 1, reads -
Where the Commissioner finds in any case that tax has been overpaid and is satisfied that the tax. has not been passed on by the taxpayer to some other person, or, if passed on to some other person, has been refunded to that person by the taxpayer, the Commissioner may refund the amount of tax found to be overpaid.
I submit that that principle should be applied in this case, which involves the payment of money which there was no authority to collect. I should say that the onus of proving that the tax had not been passed on, or, if passed on, had been refunded, should be on the taxpayer.
– Also the onus of proving that they did not know that they were liable to pay the tax.
– The major provision of the bill is contained in the proposed new section 12 a, which deals with refunds. With certain reservations, that section provides that a taxpayer shall not be entitled to have refunded to him tax paid on second-hand goods prior to the 13th December, 1934, unless he succeeds in an action for the recovery of the amount. I have not had an opportunity to obtain legal advice upon the matter - and I have not the slightest doubt that the best legal advisers available have been consulted by the department - but I have the temerity to express a doubt as to whether that provision will stand. I shall not dogmatize - that would be somewhat presumptuous - but I put this point to the Minister for further consideration by the legal advisers of the Government. The result of the court’s judgment is that there is no legal authority for either the assessment or the collection of the tax. The act that we believed was legal has been declared to be not legal. Therefore, there never was an act of Parliament under which this tax could be legally collected ; and it is not proposed to enact one. Consequently, there will not be in existence in the future, and there has not been in the past, any law under which this tax could be either assessed or collected. I ask, then, how can we legalize the holding ofmoneys already collected? In the past, when moneys have been collected under an act that the court has held to be faulty, the fault has been corrected and the correction has operated retrospectively. In such cases the law under which the tax was imposed and collected has been declared to have been in existence from the original date, and therefore, applied when the collections were retained. In this case, however, there is to be no assessment or collecting act, but merely an act authorizing the retention of moneys collected illegally. As a layman I do not believe that that will stand. It must be borne in mind that the validity of this legislation will be tested. I for one do not want the Taxation Department to be involved in heavy legal costs.
It is not sufficient merely to say that Parliament intended that second-hand goods should be taxed. It was never intended that unjust anomalies should continue. This was an unjust anomaly which, when discovered, should have been corrected. The Minister rightly fears that in the future, as in the past, flaws may be found in the Income Tax Act. Personally, I do not anticipate a case arising involving millions of pounds. Any flaws that are discovered could be remedied without loss of revenue, as they have been in the past. I would support any retrospective legislation designed to protect the revenue from demands based on legal technicalities, particularly ‘by those who seek to evade the law. But this tax, in addition to being found illegal, has been found to be inequitable in its incidence. That is the point which I emphasize.
– Parliament is now abandoning its original intention to tax?
– That is only one of the reasons for the introduction of the provision. There are other reasons.
– There may be other reasons, but that is the principal one.
– We do not wish to increase the range of indirect taxation.
Mr.SCULLIN.- Personally I cannot see any reason why second-hand goods as such should not be taxed if the same articles are taxedwhen first sold as new. If a new piano is taxed, there can be no logical reason why a second-hand piano should not also be subject to tax upon sale. That applies to a motor car and any number of other articles. If the Government wishes to limit the scope of indirect taxation, it should consider every article on its merits. If an article is exempt on its original sale, it should also, be exempt on its re-sale as a second-hand article; if it is not subject to tax when new it should not be subject to tax when second-hand. I am not, of course, urging the Government to continue the taxation of this class of goods.
There could be no objection to the bringing down of a bill to tax, in an equitable manner, particular articles. I know that this might involve the registration of certain persons not now registered under our sales tax legislation; but such action would not discriminate against any class of persons, nor would it discriminate between men engaged in the same class of business. The Government could protect the revenue in that way.
I am not prepared to take the responsibility of supporting this provision, for I think it may react adversely upon this Parliament in ways that we do not foresee. I have been as much troubled in reaching a decision on this point as though I were sitting on the Treasury bench. I realize that it is a serious thing to refund large sums of money, for it is a blow to the Treasury; but when all is said and done the honorable course is best.
– I am loath to criticize the Government adversely for having introduced this bill, because of its wonderful record. Its administration of the taxation laws of this country has been most beneficial. I have in mind the extensive remissions of taxation that have been made, the large increase of employment that has thus been provided, and the restoration of confidence thathas resulted from the provision of the employment. But I am afraid that certain provisions of this bill will seriously undermine the prestige of the Government and cause a considerable section of the community to look askance at it. I shall go further and say that if I were not so mild in my criticism of the Government, I should describe the methods proposed to be adopted by this bill as more closely approximating to bushranging than any -other methods I have seen employed for a long time. The Leader of the Opposition (Mr. Scullin), in the course of his speech, said that this form of taxation was intended to be temporary in order to meet a particular emergency. This being so, I do not think there is any necessity to continue it indefinitely, and I suggest to the Government that, rather than tighten up this legislation by the introduction of further amendments which must irritate and fret the business community and destroy its confidence in the management by this Government of the taxation affairs of the country, the whole system of sales taxation should be summarily abolished to overcome the interminable difficulties it causes to the business community. This method of taxation violates particularly the canon of taxation law stated by Adam Smith in relation to ability to pay, for it imposes undue hardship upon people with large families who cannot afford to pay, and lets off lightly people with small families who can afford to pay.
Mr. SPEAKER (Hon. G. J. Bell).Order! The honorable member is now discussing taxation law generally. I ask him to confine his remarks to the bill.
– I am trying to show the effect of this law upon a particular section of the people. If you, sir, rule that I cannot draw attention to the effect that these amendments will have, and to the manner in which they will penalize certain people, I must bow to your ruling.
– I have given no such ruling. I have merely asked the honorable member to confine his remarks to the bill, which proposes to amend the law with respect to the sale of secondhand goods.
– The Leader of the Opposition gave us to understand that he regarded sales taxation as equitable because . it could be seen by anybody and would appeal to people generally as being most generous.
– I said nothing of the kind. I said that some of the provisions of this bill were inequitable.
– By introducing this amending measure the Government is stepping into a field of taxation which was explored by one of the most despotic ofthe old Roman Emperors, Caligula, who, however, found his excursion unprofitable, and summarily discontinued it. Realising the reputation that this despotic emperor had, I cannot understand why the Government should step in where Caligula feared to tread. The speech of the Acting Treasurer (Mr. Casey) in introducing this bill raised a question immediately as to whether these amendments were necessary, equitable or just. As the Leader of the Opposition has said, such justification as there might be for the introduction of this bill has arisen from a decision in the High Court case, Ellis and Clark v. the Federal Commissioner of Taxation; in which certain second-hand dealers tested a ruling of the Commissioner. The finding of the court was in favour of the appellants. It is unfortunate, therefore, that the Taxation Department, through the Acting Treasurer, should at once seek to nullify the effects of the decision of the court, and render nugatory the victory of the taxpayers, concerned. This has tended to inflame public opinion, and to cause a severe reaction against the- Government in commercial circles. Our business community feel that the Government is playing with a double-headed penny, and are criticizing it accordingly.
Let us get the facts of the case into proper perspective. The Ellis and Clark case was submitted to the court in consequence of a decision by second-hand dealers generally to test the legality of a ruling by the Commissioner of Taxation that tax could be levied on the sale of second-hand goods. The court’s judgment favoured the dealers. The Commissioner thus found himself under the necessity, by reason of section 26 of the act, to refund considerable amounts of money to certain taxpayers. This, of course, would have adversely affected the revenue and tended to embarrass the Government, which thereupon decided that, although the money was wrongfully collected, it could not be refunded. I ask honorable members to contrast the attitude of the Government in this case with the attitude it adopted in the Sennitt case which involved refunds of income tax. The Commissioner of Taxation gave a ruling that certain profits of companies could be paid away as directors’ fees without becoming liable to income tax, and, naturally, a number of companies availed themselves of the ruling in order to avoid paying income tax. It was not long before the Commissioner realized that he had made a mistake, and so he took steps to have the matter dealt with by the High Court. The court decided in the Commissioner’s favour and he immediately made fresh assessments in certain cases with the object of bringing within the scope of income taxation, considerable amounts of money in respect of which income tax had not been paid over a long period of years, due, of course, to an erroneous ruling which he himself had given. In the Sennitt case, in which the decision of the court favoured the Commissioner of Taxation, the taxpayers were assessed for several years back.
– Only three years.
– It could be six years if the Government so desired. In the Ellis and Clark case, with which we are now concerned, in which the decision of the court favoured the taxpayers, the Government is taking steps to prevent the taxpayers concerned from benefiting by a decision that was favorable to them. This action disregards all the principles of taxation law, and goes to the very limit of morality. If the Government desires to act justly it will not insist upon the amendments to which I specifically refer, but will go back on its tracks. “With the object of affording it an opportunity to do so, I propose to move several amendments to the bill when it is in the committee stage. Taxpayers generally understood that, pursuant to the provisions of section 26 of the act, any money wrongfully collected from them would be refunded to them if they claimed it. I direct the attention of honorable members to a judgment given by Sir Isaac Isaacs when Chief Justice of the High Court, in the case of MacArthur v. the Federal Commissioner of Taxation, in the course of which he stated that -
A section such as this affords an equitable escape from the common law doctrine that the voluntary payment of a claim without proteat . . . is not to be reopened.
He went on to say that -
It is the moral duty of the commissioner, if he alters his view of the law, or if the court declares it wrong in some other case, to give effect to the true law by allowing the claim.
But in the case that we are now particularly considering, the Commissioner, notwithstanding a declaration by the High Court that he has acted in error, will not refund the money that he has wrongfully collected, and in justification of his action falls back on the argument that money collected by a mistake in law cannot be refunded. He has, therefore, influenced the Government to introduce this amending bill to validate something that has been illegally done. If the bill is passed, no tax collected prior to December, 1934, in respect of the sale of second-hand goods, will be refunded, and no new claims for refunds by taxpayers in respect of subsequent sales will be considered.
I have no objection to certain other provisions of this bill, but I strongly protest against the clauses dealing with refunds of tax on sales of second-hand goods. The Minister, when introducing the bill, said that the persons who paid tax had done so in the belief that the law so provided, and had conducted their businesses on the assumption that the tax was legally payable, and had, as far as possible, recouped themselves for the tax from their customers. If that were so, there would be no need for concerted action on the part of the dealers in second-hand goods concerned. It was because they disagreed with the Commissioner’s ruling that they challenged it, and had a test case stated before the High Court. Moreover, the Minister was wrong in making his statement apply generally. It may apply in specific instances, but it certainly has no geneva1, application. For instance, there are registered and unregistered dealers in secondhand goods. A registered dealer may be a person who carries on some other occupation, such as a small manufacturing concern, in conjunction with his secondhand goods business, while the unregistered man is purely a dealer in secondhand goods. The registered man has to pay sales tax in respect of second-hand goods that he sells, but the unregistered man pays none, so that he is able to undersell the registered man bv at least the margin of the sales tax, which was (5 per cent, and is now 5 per cent. I have here a publication called Rydge’s, dated the 1st March, 1935, and at page 203 there appears an article by H. R. Irving, F.F.I., A.C.I.S. (Eng.),’ in which he cites the following letter: -
I am in business in Sydney, and deal mostly in second-hand goods, and pay no sales tax. All my competitors, who are mainly secondhand traders like myself, because a very small portion of their business consists of manufacturing (for instance, one makes water bags us a sideline), are compelled by the sales tax department to register as manufacturers. Registered persons pay tax on second-hand goods, whereas unregistered persons do not pay tax; consequently, I can undersell them by G per cent, on every second-hand article I sell. I hope the Sales Tax Act goes on for ever - it will do me.
That is the considered opinion of one trader. I suggest that the man who found himself in competition with an unregistered trader, and had been forced by threats from the department to pay the tax, would not be able to pass it on, and if he is able to satisfy the Commissioner that such was the case, the money should be refunded to him. Another case is that of the subsidiary company which decides to go out of manufacturing altogether, and leases its machinery, goods, &c, to the parent company. In that case the tax is certainly not passed on, although it has to be paid. The Commissioner has been apt to take up. an arbitrary attitude, and simply to state that the taxpayer cannot satisfy him that the tax has not been passed on. If the Commissioner will not accept an assurance that the taxpayer can make out a case, he i3 exceeding his powers. The Minister should be prepared to accept an amendment under which the onus will be thrown wholly on the taxpayer to state a case to the satisfaction of the Commissioner.
The Leader of the Opposition said that certain companies were dividing their operation’s, and he was inclined to look askance upon them for that. I remind him that, in some cases at least, this action has been rendered necessary because they have found themselves unable to compete with unregistered dealers who are not under the obligation to pay tax. This legislation is driving business people to subterfuges that they would not otherwise adopt.
– I simply said that some firms that were big enough were able to divide their businesses, and were thus in a position to compete unfairly with others.
– The decision of the Commissioner should not be final in those matters; but should be subject to revision before a board of review on appeal by the taxpayer. I have no doubt that, as the Minister says, it would considerably affect the revenue if this tax had to be refunded. It is true that £250,000 is a considerable sum of money, but the revenue at the moment is very buoyant, and it does not follow that the whole amount would be withdrawn from the Treasury; probably only a part of it would have to be refunded. I am not here to protect the tax-dodger, nor am I carrying a brief for the trader who passed on the tax.
Closely allied to this matter is the power of the Commissioner to declare certain classes of goods to be manufactured goods. Under section 41 of the act the Commissioner has arbitrary powers in this direction, and the taxpayer has no appeal. His only remedy i3 to make a. technical default, so that action will be taken against him by the Commissioner, and then the matter may be heard before the court. Then, on the decision of the court, the Commissioner is supposed to act, though that does not always follow, either. Some time ago a group of photographers challenged the decision of the Commissioner that photographic prints were manufactured goods, while etchings, which are simply printed off a plate, corresponding to a photographic negative, were not manufactured goods, but works of art. The matter was taken up with the Acting Deputy Commissioner in Sydney, who wrote in the following terms in a letter datedthe 16th November: -
I refer to your recent verbal intimation to me that photographers proposeto test before the High Court the question as to whether they are manufacturers within the inclining of the Sales Tax Assessment Act No. 1.
Advice has been received from the administrative office of this department at Canberra in the following terms: - “ The question raised in this case may be readily taken to the High Court only if Mr. Riley defaults in payment of tax in respect of the transaction of a particular month, or in respect of a particular transaction.
This would leave the way open to the department to sue for recovery of the tax, and in those proceedings the decision of the court could be obtained as to whether the production of photographs by a photographer involves the manufacture of goods within the meaning of the Sales Tax Assessment Acts.
The adoption of this course would be preferable to the making of an assessment to enable the taxpayer to lodge an objection, for the department’s disallowance of the objection would have to be referred to the Board, of Review, thus delaying reference of the matter to the High Court (vide section 42 of ActNo.1). 3.I am desired to advise you accordingly, and to say that there should be no difficulty in arranging that the case should be so stated as to remove any implication of evasion or deliberate default on the part of Mr. Riley, it being made clear that the proceedings are taken with the obiect of testing the application of the. law to photographers.
Mr.Riley has seen me in the matter, and I am to advise him as to the month in which he should not pay tax. It is understood that as regards other months tax will he paid pending the decision of the High Court.
That is a most complicated procedure. In this case a group of photographers contributed to a common fund to defray the legal costs -involved, and one of their number defaulted, as advised by the department. The trouble is, however, that, even if the decision goes in favour of the appellant, the benefit will apply to him only, and not to the others whose position is exactly similar.
– That is true only in regard to tax already paid.
– The taxpayers might not always encounter a Deputy Commissioner who is so willing to assist as the one referred to by the honorable member.
– That is so. Moreover, the person who challenges the Commissioner’s ruling must bear whatever penalties are imposed.
– I think they amounted to1s. 9d. in this case.
– May be, but notwithstanding the amount concerned there is a definite principle involved. The department actually advised the tax- . payer to commit a breach of the law, and this he had to do before he could get justice.
– That is the only way in which any law can be tested.
– If that is so, it is time that we amended this particular law, at any rate. The taxpayer should be given the right of appeal against the Commissioner’s finding, and when once a decision has been given by the Court it should apply to all taxpayers whose position is the same as that of the actual appellant. The section dealing with the right of appeal is not under discussion at the moment, but I ask the Minister to alter the long title of the bill in order to cover this section, so that consideration may be given to the claim of the taxpayer for the right of appeal against the arbitrary decision of the Commissioner to a board of review. If then a majority of the board decided against the Commissioner’s wrong rulings, cases of hardship would not come up before us as they from time to time do. There is already a board of review functioning under the Income Tax Act, and that same board of review under the Sales Tax Acts could review the multiplicity of rulings already given by the Commissioner, and statements could be published setting out the reasons for its decisions. This practice might occasionally react to the detriment of the Commissioner; but, on the other hand, it might give considerable satisfaction to the general taxpayer when he learnt that the objection he had lodged was upheld by the considered opinion of the board. He would no longer be at the mercy of the arbitrary decision of the Commissioner, who has a multiplicity of rulings to give with regard to this form of taxation and many others.
I suggest that the Minister should reconsider this bill, and withdraw it, because it establishes a wrong principle. It is unjust in its application, and is not necessary to the carrying out of good and just legislation. The Government is responsible for the morals of the community as a whole, and will set a bad example if it uses every method, correct or questionable, honest or otherwise, to hold what does not rightly belong to it. The procedure now adopted closely approximates the barbaric jungle law, whereby might is right in despite of morality. The Minister should seriously consider the reaction which this bill will have upon the community generally, upon the party, and upon the Government itself. The Government has a good name to protect, and should see to it that all its dealings are just. “When the Leader of the Opposition suggested that the tax should be. continued, the Acting Treasurer interjected, “ There is a reason why the tax on second-hand goods cannot be continued.”
– I did not say that it could not be continued. I said that the Government had many reasons for not continuing it.
– Is there a constitutional difficulty?
– If not, seeing that the collections approximate £250,000 a year, I am surprised that the Government is prepared to abandon this field of taxation. There must be some good reason for its attitude. To bring down arbitrarily a validating law which is entirely opposed to the decision of the High Court is not the way to create confidence or disseminate justice. The High Court, after all, is the only court of appeal to which the ordinary citizen can turn for redress. His respect for the court is not increased if the Government immediately introduces a validating measure to take away from him the judgment which the court gives in his favour against what he considers an injustice. By this legislation the Government is outraging the whole sense of morality of the community, and unbalancing the scales of justice. The consequences must react most unfavorably upon it.
.- The honorable member who has just spoken (Mr. E. J. Harrison) discussed many technicalities regarding the application of the sales tax, and put forward a number of arguments in favour of its abolition; but I think the debate can be easily confined to the main issue, which is whether the Government is justified, on moral and ethical grounds, in bringing forward this bill. It is not entitled to do so merely because it has a majority, and can carry what it likes. The honorable member has suggested an amendment to give the right of appeal by means of a simplified procedure; but if the Government intends to continue this process, no right of appeal will be of the slightest value. In all cases, the taxpayer now has to pay the tax demanded and appeal afterwards. If the Government intends to validate every wrong it does, it might just as well abolish, all rights of appeal, and let the taxpayer make up his mind to pay whatever the Commissioner demands, and make the best of it. I agree with the Leader of the Opposition (Mr. Scullin) that this is an extraordinary piece of legislation. I remember on many occasions assisting to pass validating bills, both when Labour was in office and when it was not; but the object in those cases was always more orless to checkmate schemers, whose whole lives were devoted to devising ways and means of defeating the intention which Parliament had in imposing what it believed to be a just tax. This : is an entirely different case. The High Court has ruled that this tax is not only wrong, but also unjust.
– And the Government now says so.
– The Government admits it by refusing to continue the tax. That was not the position with other validating bills. They not only validated what the Government had done, but also amended the law in order to continue the tax which Parliament intended to impose. The fact that the Government is running away from this tax shows that it means to retain the £250,000 which it has unjustly obtained, and then be a good government and sin no more. Parliament might just as well be asked to pass a bill to confirm the burglar in the possession of his loot, so long as he promised not to sin again. The National Parliament should maintain, in their full integrity, the decisions of the High Court.
Does the Government take up the attitude that it will obey the decisions of the court only when it suits it to do so, and use the power of its majority in this chamber to set aside any judgment which runs counter to its wishes? This high-handed action is being taken by the Government upon an issue on which the people have had no say. I venture to predict that if the people had the opportunity to speak on it, their decision would be against the Government in every detail. Ministers in effect say, “ We have done wrong; the High Court says so; we have taken this money, and as its return would make the revenue suffer to the extent of £250,000, we shall keep it, rightly or wrongly, because we cannot afford to refund it. We want Parliament to validate its collection, and then we shall collect no more of it”. Has the amount involved anything to do with the principle? Does this Parliament measure justice by the amount of revenue concerned? If the sum involved in this case had been £50 or £100, the Government would not have worried about it. Apparently the amount involved is the measure of the Government’s honesty. My view is that, so . far as the principle is concerned, it does not matter whether the amount is £250,000 or £250,000,000. The only issue for us to determine is whether it is right or wrong to retain this money. The Government cannot ask the people to respect the decisions of the courts of this country if it destroys, in this cavalier fashion, any decision that does not suit it, simply because it has, in Parliament, a majority which will vote as directed.
There is a good deal of speculation as to the manner in which refunds could be made. I admit that in many cases the precaution would have to be taken of requiring the person claiming the refund to satisfy the Minister, or the Commissioner, that he had not passed the tax on. But the matter does not end there. If the tax was unjustly collected, we mus» refund it to the best of our ability t» every person who has paid it, so far as hi* payment can be ascertained. In many instances the sales, so far from covering many small untraceable items, have involved large quantities of goods which can easily bc traced. One man to whom I spoke says he can trace every sale that he has ever made. He assures me that he never passed the tax on at all, because he paid it retrospectively on goods which ha sold before he knew he had to pay sale.s tax on them. He is involved to the extent of £60, of which he has paid £20. He will not now have to pay the balance of £40, but the £20 is to him as big an item as £200,000 would be to the Assistant Treasurer or some of his wealthy friends, such as the oil ‘ companies. He Sells new as well as secondhand goods. He had to register as a seller of new goods, and after registering was told by the Commissioner that he must pay sales tax on second-hand goods also. He says that if he had not been selling new goods he would never have registered, and would not have had to pay sales tax at all. He assures me - and I take his word for it, although I do not know the source of his information - that he knows of more than one firm which has resisted the payment of this tax and up to date has not paid it. Those who resisted the law, although they thought they would have to pay the tax eventually, will now be relieved of payment by this legislation, whereas those who showed their good citizenship by registering and paying are penalized. This measure, so far from tightening up the law to prevent tax evasions, will encourage people to dodge their obligations as long as they possibly can, in the hope that legislation of this kind will eventually be brought down. From every point of view the Government would be well advised to withdraw the bill and refund whatever proportion of the £250,000 can justly be restored. If it did that, the matter could be forgotten. I emphasize the injustice that operates with regard to the registered and unregistered seller. The informant to whom I have already referred tells me that he was advised that he must lodge returns going back two or three years. This cost him time, worry, and expense, and on top of it he had to pay the tax, which he had no hope of collecting from those who bought the goods from him, because many of the sales were made before he knew that he had to pay the tax. We know that most taxes are passed on. The intention of Parliament was that the sales tax should be passed on, that it should be paid by ‘ the final purchaser of the goods and not by the dealer ; but many second-hand dealers found it impossible to pass it on. If, from the commencement, they had passed it on, there might have been great difficulty in making refunds to the right persons; but in the numerous cases where the tax has been paid by the dealer and not by the purchaser, the money can be and should be refunded. It is a sorry day for this Parliament when the Government comes down with legislation of this kind, establishing, I submit, a precedent whereby Parliament can simply be used by the majority obtained at elections on issues altogether apart from the particular matters which may be under discussion, to tear to pieces the decisions of the courts of this country, and at the same time commit a grave injustice by providing for unfair legislation to continue to operate. I agree with the honorable member for Wentworth (Mr. E. J. Harrison) that the Government would be well advised to refund the collections, and let the tax on second-hand furniture go by the board. This part of the sales tax legislation, I understand, is, at the moment, a dead letter, but it has been suggested during the debate that it is a phase which might be dealt with later in another way. The Government would be well advised to drop the whole matter. I oppose the measure.
.- I am not prepared to agree entirely with the Government in its proposal in this matter, nor do I think it would be right to adopt the opposite view - that the whole of the taxes collected under this heading should be refunded. For the last two years, at any rate, the position with respect to second-hand goods has not been adverse generally to traders. In that period, I be lieve, the majority of those traders who have paid sales tax have been in a position to add the tax to their prices. If these were to be given a refund now it would amount to nothing more than a bonus, as the refund would not be passed on to the people who paid sales tax on goods purchased by them. However, in an entirely different category are those traders who, during the early stages of the operation of the Sales Tax Act, were not aware, and, indeed, in many cases, had not the means of becoming aware, that they would be liable to pay sales tax on second-hand goods. They, therefore, sold them without making any surcharge to cover the extra 6 per cent, as the tax then stood. Now that the action of the Commissioner and of the Government, with respect to imposing sales tax on second-hand goods, has been decided by the court to have been illegal, it simply means that money bas been wrongly taken out of the pockets of certain people, and under this bill they are to have no compensation for the tax wrongly collected. From the point of view of plain, honest dealing, there seems to be no question but that all those traders who did not pass the tax on during the early stages of the operation of the act, should receive a refund. I strongly disapprove of this attempt to bulldoze through Parliament legislation to cover up mistakes of the past. I have also condemned the manner in which the matter of sales tax on second-hand goods has been treated by those responsible for the collection of the tax. Along with many other honorable members, I have from time to time made representations on this point to the Minister and the Commissioner, but, in no instance did I, or the other honorable members who acted similarly, get tha slightest satisfaction. Time and again, it was pointed out to the Government that this tax was inflicting a grave injustice on those traders, who, because they happened to be conducting a manufacturing or wholesale business, were obliged to register, and on that account had to pay an extra 6 per cent, on all secondhand goods they sold, whereas retailers selling in competition with them paid no tax. Obviously, there Was a flaw in the law. The knowledge that this tax would be payable was not made available quickly enough to traders affected after the operation of the Sales Tax Acts. They did not become aware of their liability until some twelve or eighteen months after the passing of the legislation.
– I should like to deal with that point.
- So doubt the Acting Treasurer (Mr. Casey) will show that the Commissioner, during the early stages of the operation of this legislation, gave a ruling that registered persons would have to pay sales tax on secondhand goods, but this knowledge was not widely disseminated, and I doubt very much whether the taxation officers themselves were aware that the tax would operate in this manner.
– I shall deal with that point also.
– In many cases, applications for information on this point were sent to the department, and erroneous replies were given. As a matter of fact, comparatively little collection of taxation on second-hand goods was made for a considerable time. Furthermore, traders when making returns, did not provide for assessment of this tax. They were not aware that they had to pay it. If the Commissioner had been alive to the position, he should have noted this development and issued a warning with respect to it. On the whole, there seemed to be an atmosphere of doubt, even among officers of the department itself. It has been my experience, and I am sure other honorable members have had similar cases, that a large number of traders did not know for eighteen months after the enactment of this act that this tax would be payable. The first they knew of it was when they were called upon to make returns, and subsequently found themselves assessed retrospectively for twelve or eighteen months. This caused great hardship. Many traders had sold goods and were not able to recover the amount of the tax due on those goods. The Leader of the Opposition (Mr. Scullin) put the position fairly when he suggested that when anomalies are discovered in taxation measures, it is the first duty of the Commissioner or the Treasurer to correct them. In this matter, I contend the Commissioner and the Treasurer have got the Government into a muddle through the neglect of their obvious duty to correct an anomaly in the legislation which was brought to their notice. No one can justifiably defend a procedure where the tax is levied on persons because they are registered, while other persons, because they are not registered, escape the tax. There is no moral defence for such a procedure. The Minister admits my contention, because the Government has decided now not to continue the tax.
– I shall certainly deal with that point.
– The. fact that the Government has now decided not to continue this tax is a very strong admission that the collection of this tax in the first place was morally wrong. That conclusion must have been obvious to the Minister and the Commissioner, because the position had been put before them so often by myself and other honorable members.
– That is not admitted by the Government at all.
– What moral defence can the Commissioner have for his action in charging the extra 6 per cent, to certain traders who sell second-hand goods? Sales tax, for the most part, is paid by retailer-wholesalers, as they are called, or manufacturers who sell secondhand goods in addition to other goods. The class of people who sell second-hand goods by wholesale, is obviously limited. Notwithstanding what the Minister and the Leader of the Opposition have said in this respect, I venture to say it was never the intention of Parliament to tax second-hand goods. Such a procedure is definitely opposed to the general scheme of the Sales Tax Act. This contention is borne out in the judgment given in the High Court. Mr. Justice Dixon said -
To treat second-hand goods as taxable ignores the whole scheme of the legislation (there was to be only one tax). It could seldom be established -that the goods had already paid sales tax. The plan of the acts is to affect trade in goods uniformly and not differentially. It attempts to avoid double tax by a complete system of rebates and dispensations from second tax. In all of these respects it would fail of its purpose in respect of second-hand goods.
Obviously, there should be no substantial taxation of second-hand goods. The scheme of the Sales Tax Acts was taxation of goods when sold by the manufacturer or wholesaler. Honorable members will recall that, at the beginning of the operation of the Sales Tax Acts, all goods in shops at that time were exempted from the tax. In these circumstances, how could it be said that there was any intention on the part of Parliament to levy sales tax on second-hand goods? Millions of pounds worth of goods were in the stores at that time, and these were all exempted from sales tax. The tax was imposed only upon goods sold by a manufacturer or wholesaler after the date of the enactment of the law. That is the scheme of the acts, and, therefore, I say it is entirely inconsistent with that scheme to contend that it was ever intended that sales tax should be imposed on second-hand goods. It would be trifling with the matter, supposing an attempt were made to reimpose the tax on second-hand goods, because there is no substantial volume of wholesale trade in second-hand goods. The number of cases of second-hand goods collected and resold by wholesalers is inconsiderable, and hardly worth taking into account. The only cases of this kind where the Government is collecting this tax is where that procedure has been followed because of the mere accidental wording of the act under the supposedly correct reading of it by the Commissioner. This reading has now been proved to be wrong, and the sales of second-hand goods are not taxable. To tax such sales has been proved to be legally wrong. It is also, I contend, morally wrong, and the Government’s decision not to continue such taxation is proof of that conclusion. If the unregistered persons were exempted from the payment of the tax, it would not be worth the Government’s while to collect it. I reiterate that this sales tax position only arose because the Commissioner was called upon to give a ruling as to the wording of the act with respect to the position of manufacturers or wholesalers who also sold goods retail. This position thus arose in an incidental way. Parliament did not discuss the matter whether second-hand goods should be subject to sales tax.
– They were not specified in the exemption schedule.
– They were not considered at all.
– It was then taken for granted that the principle that a tax shall be imposed only once would apply.
– That is so. That is the reason why the tax on second-hand goods cannot be continued. It is conceivable that, at the commencement of the act, some goods would escape the tax because they had already been sold. That, of course, applied to all the goods then in stores.
– You could go on for another ten years and still have secondhand goods which had not been taxed.
– With the passage of time tax would be paid on the bulk of the goods sold second-hand. The scheme was to have only one tax, and to impose it just before the goods were handed over to the retailer. I assert ‘that the position in regard to second-hand goods was never adequately considered when the legislation imposing this tax was before Parliament. There was no true conception of what the position in regard to the tax would be, and the question arose only when the Commissioner had to give a ruling in regard to second-hand goods that had been sold by registered persons. The Minister has admitted the existence of an anomaly, and has stated that one of the reasons for the discontinuance of the tax is that it cannot be levied without creating an anomaly. Having accepted responsibility in this matter, I hope that the honorable gentleman will explain whether he recognized that an anomaly existed and, if so, why he did not introduce legislation to remedy it. Year after year the Taxation Department submits legislation having a retrospective effect, in order to patch up its own errors and to negative the effect of decisions against it which litigants have obtained in the’ courts. That, of course, is the correct practice. But I contend that when the Commissioner finds that he is acting unfairly against a section of the public he should be equally ready to provide a remedy. This matter has been placed before him by means of correspondence, interviews with honorable members, and deputations, but his only reply has been that he has to administer the act as he finds it. It now appears that his interpretation has been a wrong one. I am afraid that frequently the Commissioner is used as a handy man to do the dirty work of the Government. It is difficult to obtain satisfaction when inquiries are made upon subjects relating to taxation. The Minister generally places the responsibility on the Commissioner.
– In cases where the Commissioner is administering the act, it is his responsibility. It is for the Government to amend the law if it is wrong.
– The practice is to throw everything back on to the Commissioner. Very seldom do we receive from the Minister a satisfactory explanation. Thus it was in regard to this anomaly. Over and over again the matter was raised, but no satisfaction was obtained. That position of affairs would have continued, and the tax would still have been collected unfairly, had some taxpayers not been bold enough to take the risk of appealing to the High Court of Australia. Now that they have succeeded, the Commissioner asks this Parliament to remedy a fault that he ought to have foreseen. I do not say that there should be no retrospective legislation. Probably in the majority of cases the law in relation to taxation should be made retrospective so that there shall be no refunds of tax collected. I know of cases, however, in which it can be established that traders have not passed this tax on, either because they did not have the opportunity or because they did not desire to do so. “Where such a condition exists, there is no justice in refusing to make a refund. The onus, of course, should be on the taxpayer to show that he is bona fide and that he is not making a profit out of a verdict obtained in the courts by another person. I feel sure that there is a substantial number of such cases, and that the persons concerned have every moral right to a refund.
.- This bill raises a very important principle. That principle is not concerned with the question whether there should or should not be retrospective legislation, because the bill proposes none. The merits of sales tax legislation are not in question, because the bill does not propose to extend that legislation in any way. Nor is it a question as to whether sales tax legislation should apply to second-hand goods, because the bill does not propose to extend it to second-hand goods. The important question is : By what standards of morality should a government be guided in its relations with its own people? It is because that principle is raised by the bill that I am interested in it.I am not solicitous for the interests of persons who have paid the tax, so much as I am for the adoption by the Commonwealth of a moral rule for its guidance in its relations with those who are the subjects of Commonwealth legislation.
This measure, it appears to me, does not confer a right upon anybody to obtain a refund of tax that has been paid. I am inclined to the belief that, apart altogether from this legislation, not only the persons referred to in the bill, but also other persons, might obtain a refund. I am speaking from my understanding of the law - I am not sure that I understand it in this matter. One of the difficulties confronting, not only the law departments, but also the courts themselves, is to ascertain what the law means. As I understand it, if I voluntarily make a payment to you, Mr. Deputy Speaker, mistakenly believing that you have the right to require it of me, I cannot afterwards recover it from you. The law says that a payment made under a mistake as to the law is not recoverable, although one made under a mistake as to facts may be recovered. But if, instead of making that payment voluntarily, I make it because of some moral or economic coercion that you are able to exert upon me, and I protest that I am under no legal obligation to make it, but do so for other reasons, I may be able to recover from you. Applying that principle to the relations between the taxpayer and the Commonwealth it seems to me that it works out in this way: If a taxpayer voluntarily pays tax for which he is assessed, believing that the Commissioner has the right to demand that tax from him, then it seems to me that he may not afterwards recover it when he finds that he is mistaken in his view of the law. But if he pays it under some form of coercion, and protesting that he’ is under no legal liability to do so, then he may be able to recover it. Case0 illustrative of that are not uncommon. On one occasion an executor who was assessed for probate duty upon his father’s estate contended that it was being improperly assessed. He could not, unless he paid the duty, get the probate; and, unless he got the probate, he could not administer his father’s estate. He paid the duty under protest, obtained the probate, and subsequently tested the validity of the assessment and succeeded in his claim. The fact that he had paid the probate duty was no bar to his contesting its validity. But at a later stage a person who had voluntarily paid income tax believing that he was rightly taxed, and who subsequently found that he was wrongly taxed, was held to be debarred from recovering by reason of the fact that he had voluntarily made the payment under a mistaken view of the law. In my opinion the only difference between the conception of the law as it applies between subject and subject and between subject and State is that, where the taxing law provides internal means of challenging the assessment, the taxpayer may be told that, instead of protesting and suing the Commonwealth, he should avail himself of the machinery which the law itself has created for internal challenge. That being so, we come to the kind of legislation that we are now considering. As I understand the matter, this legislation does not provide an adequate internal appeal. One may object that the sales value of the goods has been improperly assessed by the Commissioner, but under the’ law itself one has no internal means of challenging the decision of the Commissioner to levy tax upon goods that are alleged not to be taxable. The taxpayer is thus driven to the ordinary courts of the land, where he is confronted with the ordinary doe-trine to which Mr. Justice Isaacs referred in the case cited by the honorable member %f or “Wentworth (Mr. E. J. Harrison) in his very interesting speech. It would be quite clear. I think - it would be as clear as anything is - that apart from this legislation, persons who had voluntarily paid believing that they were under a liability to pay could not recover. This measure does not propose to enable them to recover. Those who paid under protest will be allowed to recover if they take proceedings within a certain time. But there may be other persons who paid under some form’ of coercion who will not be allowed by this law to recover, although the ordinary law would enable them to do so. In my opinion the bill is a limiting bill. Instead of conferring a right upon anybody to recover tax which he has paid, it picks out a certain class of persons and says that no person shall be able to recover who has not made his payment under protest, the grounds of which were stated at the time. That correctly sets out the object of the bill. The person who assumed that the Commissioner had the right to require a tax from him, and paid it without question, will get no protection. But, as I read the amendment foreshadowed by the honorable member for “Wentworth, he will get no protection under that, either. This is a point that we can deal with at the committee stage. I believe that such a person should be protected, and that, as the bill does not protect him, it embodies an immoral principle. A taxpayer is perfectly entitled to assume that, when the Commissioner of Taxation calls upon him to pay a tax, he does so legally. If a taxpayer, in such circumstances, voluntarily pays the tax, and it is afterwards found that it was improperly demanded, the taxpayer should be able to recover it easily. For the Government to refuse to make a refund in such a case would be immoral. The great difficulty is that the Government is attempting to take advantage of a rule which, as between two ordinary individuals, would not be unfair, but as between the Government and its subjects, is unfair. Unfortunately, the Commonwealth Government has frequently used against ordinary litigants, not only all its resources to fight a matter in the Court, but also its resources to take technical advantage of rules which, though not unfair as between subjects, are quite unfair as between sovereign and subject. Unless the Government is to be a non-moral Leviathan, or the “ coldest of cold monsters “ in Nietzsche’s phrase, it should be prepared to act fairly towards the taxpayers. Either some provision should be made in this bill under which persons misled into paying sales taxation which was not legally due by them may obtain a refund, or the measure should be rejected. But I would make it a condition that no person should recover unless he can prove - and I would place the burden of proof entirely upon him - that he did not pass on the tax. Neither the bill nor the proposed amendment of the honorable member for Wentworth will afford any relief to persons who paid this tax without protest. Only two classes of taxpayers will benefit under the provisions of the bill or would under the proposed amendment - first, the class which paid the tax under protest, and secondly, the class which took advantage of section 41 of the act. I hope that the measure will be amended to give protection to the people who paid the tax without protest, relying upon the assumption that -the Government was entitled to collect it. It would be utterly unfair to deny to such people the relief to which they are justly entitled, merely because they failed to take advantage of some rule or law which would have protected them in the case of a common mistake of law.
.- As, at first glance, there seems to be ample justification for opposing certain provisions of this bill on the ground that they are inequitable, I feel called upon to state the reasons why I intend to support the measure. The organization which has been most active in bringing the principal subject-matter of the bill under the notice of the Government is one with which I have often been associated in other representations on taxation matters. But, although I am prepared to agree with those honorable members who have said that it seems moat inequitable that the bill will give exemption from taxation to those who instituted the proceedings in the High Court, while denying it to others engaged in the same class of trading who did not take legal action, it is necessary that we should have regard to the principle, even though it be a principle of expediency, that the revenue of the Government must be safeguarded. In this particular case the amount involved in the making of full refunds would not exceed £250,000.We must realize, however, that if we adopt in this case the principle that refunds must be made to all concerned, because the taxing measure was loosely or inaccurately drawn, we may later, if we wish to be consistent, find ourselves obliged, as a result of imperfectlydrawn taxation laws, to make refunds which the Government could not possibly afford to make. I shall illustrate my point. The association principally responsible for the introduction of this bill has also been active in urging the Government to repeal the federal land tax laws. One ground put forward for such repeal is that the federal land tax is unconstitutional. I think the president of the Victorian Graziers Association advanced the argument that, as the federal land tax was introduced with the object of bursting up large estates, it was unconstitutional because the objective itself was unconstitutional. That is not an argument that I have advanced personally. If, however, the High Court determined that the land tax was unconstitutional, and we had adopted the principle that taxation collected, which was afterwards found to be improperly levied, must be refunded, the Government of the day would be faced with the necessity to refund more than £75,000,000, for I think the federal land tax has yielded more than £3,000,000 a year during the 25 years it has been in force. It would, of course, be impossible for any government to make such large refunds.
– The cases are not analogous.
– It seems to me that they are similar. ‘The Leader of the Opposition (Mr. Scullin) very logically pointed out that he approved of the principle of stopping up loopholes in our taxation laws without feeling obliged to make refunds of taxation to persons who had taken advantage of the loopholes. Let us assume that a government decided to repeal the federal land tax law, but that just prior to the taking of such action the High Court held that the law was unconstitutional. Should we, therefore, conclude that, because the Government could not refund all the money paid in such taxation, under the principle that illegally collected taxation should be refunded it must therefore make the law constitutional and continue the tax, though it did not desire to do so? It seems to me that that is what some honorable gentlemen are suggesting should be done in this case. I realise that certain inequalities mar the administration of our sales tax law, but I do not think that because the Government is not prepared to make refunds to the people inequitably affected it should continue “ to administer an admittedly inequitable law. I think that the taxation of secondhand goods is difficult and liable to cause inequity, and that it, therefore, should not be continued ; but for the reasons I have given, I do not consider that the Government must, of necessity, refund all sales tax paid on secondhand goods. I shall therefore support the Bill.
– The discussion of this bill has indicated clearly that the sales tax law is involved and difficult to administer. This makes it all the more necessary in dealing with this measure to have regard to the circumstances in which this field of taxation was first occupied by the Commonwealth Government. The honorable member for Flinders (Mr. Fairbairn), in the .course of his speech, tried to justify the Government in doing something of which, in his heart, he disapproved ; and to vindicate his attitude he attempted to draw some analogy between the sales tax and the federal land tax. I do not think that he made out a case in any respect. We must remember that, when our sales taxation legislation was first introduced, it was discussed in an atmosphere of doubt and uncertainty. Honorable members of the parliament which passed the original measure realized that anomalies were bound to arise and that difficulties for both the Commissioner of Taxation and the Commonwealth Treasurer would be numerous. The government which introduced the original measure brought to Australia a gentleman from Canada acquainted with this method of taxation in order that he could give expert advice and instruction to the Commonwealth departmental officers whose duty it would be to put the law into operation.
It was realized early that instances might arise of the double taxation of goods, particularly on resale. I do not think that there is any inequality in the fact that secondhand goods in the process of resale at the time the act was passed were subjected to sales taxation because, obviously, no such tax was imposed upon them when they were sold as new. Ho argument can therefore be advanced in favour of the refund of the tax on such goods. It has been* suggested that it would take a long time to determine to whom refunds should be made, and that is probably true. ‘ There is really no analogy between this tax and the land tax. The sales tax was introduced as an emergency measure, when the government of the day was in urgent need of revenue. It was a most unpopular tax from the start, but revenue had to be obtained, and there is no doubt that it has proved a great producer from that point of view, yielding no less than £8,000,000 annually. I do not think that there can now be anything further left to tax. When the sales tax legislation was first introduced, the then Opposition criticized it very keenly, but as many who were in that position are now supporting the Government we do not hear so much about it, and the tax still remains. However, as I have said, the tax was an emergency measure, and the public had a right to expect that, before any other taxation was remitted, this one should be abolished. When the Minister says that the revenue must be safeguarded, I remind him that, important remissions have recently been mn de of long-standing taxes, while the burden of the sales tax still remains on the people.
The honorable member for Bourke (Mr. .Blackburn) informed us that, under common law, if a person enters into an obligation according to the law, and voluntarily does what he believes the law enjoins, he has no remedy should it eventually bo found that the law is wrong.
– Ignorance is penalized.
– Yes, and straightforwardness is penalized also. The taxpayer who accepts his assessment without demur is, in this case, to be made to suffer, while the other taxpayer, who is a shrewd fellow, who goes through life acting on the principle of getting as much as he can and doing as little as he must, who protests against his assessment, obtains extensions, and generally evades his obligations in every way he can, will be entitled to a refund when the law is successfully challenged. The average taxpayer knows little or nothing about the law. As a matter of fact, we have had an illustration here to-day of how even lawyers can differ widely upon matters of law. It is possible that if we carried an appeal from the High Court to another tribunal we might get a totally different decision. It has been suggested that legal decisions are sometimes governed by the mood in which the judge happens to be.
– It may depend on what he has had for dinner.
– The law is not an exact science.
– Opinions are constantly changing, and what would not have been countenanced ten or twenty years ago may be the accepted practice to-day. As the reign of real democracy extends, it will be necessary to interpret many laws in a manner different from what has been the practice in the past. In respect of the legislation now under discussion, there seems to have been a great deal of doubt. The Commissioner himself had apparently much difficulty in making up his mind, though, eventually, he said that the tax would have to be paid. His decision was challenged,, and the High Court ruled against it. In the light of that decision, it seems to me that the Government has no alternative but to accept the court’s ruling.
Some of the speeches which have been made here to-day throw an interesting light on the subject of political morality. The speech of the honorable member for Wentworth (Mr. E. J. Harrison) was particularly interesting in that respect, and, if printed in pamphlet form, and placed side by side with certain speeches against the Labour party during the recent crisis, may prove very useful in the next few weeks.
Many of those engaged in the secondhand trade have not been able to pass on the sales tax. It is claimed on their behalf that competition is very keen, and that the tax cannot be passed on for that reason. If that is so, it is not fair that an additional burden should be placed upon them, as they have to meet all other forms of taxation in their capacity of citizens. I do not favour the improper evasion of taxation by any one, and it is only right that citizens should be compelled to meet their obligations in this regard in order to maintain essential government services.
This is a clear-cut case where the court itself declared that the tax was not only wrong in law, but unjust and contrary to the best and highest traditions usually observed by Parliament. In the light of that decision, although the Government and many of its supporters talk glibly about their morality on public questions as compared wi th that of other people, and their desire always to honour their obligations and to be just, honest, and straightforward in all their dealings, this bill makes it very difficult for them to maintain their alleged prestige - if they ever had it - iri the eyes of the general public. Those honorable members who examine these propositions in the light of their consciences will have great difficulty in supporting the Government on this measure. The vote will show exactly where they stand. I believe the tax collected should be refunded. The Government has no justification whatever for retaining it. This legislation was emergency legislation in the first instance. Prom the point of view of revenue, the case does not stand serious investigation. The Government has already made remissions of taxation in directions which were not justified and for which it had no mandate. On all fronts, the Government’s case is weak, and must fall to the ground, and a majority of the members of this House should have the courage to express that opinion by means of the division list.
– I have been interested in listening to the different speeches this afternoon. They seem to have been transposed, because many on the Opposition side want the money to be refunded whilst others on the Government side also desire it to be returned. I was pleased to hear the speech of the right honorable the Leader of the Opposition (Mr. Scullin). It was a good speech, informative and fair. The right honorable gentleman took whatever credit there was for the original imposition of the sales tax, in which he was supported at the time by a great majority of the members of the House, including myself, although nobody liked the tax. Whilst the speech of the Leader of Opposition dealt with all the points as fairly as anybody in the chamber could have put them, his conclusion - that the Government should not proceed as it is now doing - was not correct. I do not think there has ever been more agitation for refunds of money than has been the case since the High Court’s decision was given a few months ago. I have only two constituents interested in this line of business. One of them came into my office with a grin on his face. I asked him, “What is up?” He said, “ I am going to get a lovely present, about 600 quid “. 1 asked, “ How do you make that out?” and he referred to the High Court decision. I said, “Do you really think you are going to get that money?” He replied, “ I would get the shock of my life if I did get it, but, at the same time, I am going to make a fight for it “. I think that is the attitude to-day of most people who are trying for a refund of all that has been paid during the last three or four years. The court has proved that the money was illegally obtained, and therefore they say, “ I am now going to obtain a refund if possible, and will fight to the last ditch to get it”. In order to understand the positions occupied on this issue by the two parties, who seem, as I say, to have transposed themselves and their ideas, let us look at the converse proposition. If the Government had announced its intention to refund the £250,000, the Opposition, on analysing the proposition closely, would have found many big people being benefited, and many others receiving refunds although they had already collected the tax from the original purchasers. So much of that kind of evidence would- have been available that the Government would have been pilloried and held up, not only to ridicule, but also contumely, for attempting to refund money that had been legally collected - because it was, presumably, legally obtained until December last. I remember that in the day of the Bruce-Page Govern- ment, on a proposition to refund the money paid on Crown grant leaseholds, the Government was actually defeated in committee.
– That money was not illegally or immorally collected.
– It was found almost impossible to collect it; nevertheless, some of it was collected. Counting the credits received, and deducting the refunds which had ultimately to bc made, plus the cost of administration, I venture to say that that tax showed a pretty solid debit. Still, that was a case in which the Government proposed to refund money, and all the arguments that have been advanced by some honorable members on the Government side to-day were brought forward in that debate by members of the then Opposition. I agree with all that has been said about the sales tax. Nobody likes paying any tax. That is particularly true of this one, because it hits everybody, whether he makes a profit or not. I do not blame any person who objects to the sales tax, especially if he does not happen to be in a very prosperous business. At the same time, people became accustomed to paying it, whether they were making profits or not. They looked upon it as inescapable. In theory, the tax on secondhand goods is wrong, because second-hand goods must at some time have been new, and, when they were originally sold as new, tax should have been paid on them. As time went on, that would apply to more and more second-hand goods, until eventually no goods would be sold secondhand which had been sold as new before the tax came in. For various reasons, this tax was imposed, and people paid it, although, as the Leader of the Opposition has said, it was, in many instances, inequitable, and a great deal of trouble had to be taken to trace whether the goods concerned had already borne the tax. Any person claiming exemption had to prove that tax had already been paid, and generally a lot of trouble was created for the Taxation Department. It was also inequitable because some people, being registered, paid it, and other people, being unregistered, did not, even on articles on which it should have been paid. These instances of inequity were discovered gradually.
The honorable member for Wentworth (Mr. E. J. Harrison) mentioned somebody who said he would be glad to get the refund because, being unregistered, he did not have to pay the tax, and, therefore, had an advantage over his competitors who did pay it. I do not think the competition between registered and unregistered traders ever amounted to anything, nor did it occur to anybody that it even existed until now, when the chance seems to offer of getting something for nothing, and all possible pretexts are raked up. Many a man blames taxation, particularly the sales tax, when he makes a heavy loss in business. But sometimes a trader who makes a profit will pay. no tax; at other times he will pay tax when he does not make a profit. It does not necessarily follow that, because a man makes a loss, the cause is the sales tax, nor does it follow that he makes a profit because he does not have to pay any tax. The real reason why one man makes a profit and another does not, lies in management much more than in taxation.
The question of whether the tax was passed on or was not arises. With regard to second-hand goods, I say, quite definitely, that the tax was passed on in every case.
– What proof has the Minister of that?
– Legally, the only way to prove it is to produce the invoice showing the addition of the sales tax percentage, but it is quite -a common practice of second-hand dealers not to include the sales tax in the invoice, because, as the Leader of the Opposition has pointed out, there is no such thing as a standard when dealing with second-hand goods. The dealer may be able to get £50 for one article, and only £40 for a similar article which originally cost the same. He knows he has to pay the tax, and does pay it, but he fixes his prices accordingly, allowing for his profit and the tax, and not bothering to itemize it on the invoice. No second-hand dealer’s books would show even 10 per cent, of the sales with the tax passed on in black and white. In practice, the dealer gets the highest price he can possibly command, in order that the tax may not hurt him.
– What about the man who for three years did not have to pay it and then was called upon to pay it, and did so? Did he pass it on?
– No, he did not. I shall deal with his case directly. I have met similar instances. One man told me, quite honestly believing it - and I suppose I must believe him - that the Taxation Department advised him that he had not to pay sales tax. Cases of that kind should be dealt with individually, but they constitute no reason for refunding money to everybody who can produce a receipt from the Taxation Department showing that he paid sales tax on secondhand goods. I guarantee that 80 per cent, of the money which the Government thus refunded would never go beyond the first recipient. I will go further and say that every penny would go into the pockets of the first recipient, who would make no effort whatever to find any one to whom he sold second-hand goods and charged the tax either directly or indirectly. The act was legal up to the moment of the High Court decision.
– No, it was not.
– In the minds of everybody it was legal.
– Then why did people pay under protest?
– Several honorable members have mentioned in this debate the existence of men who are always on the look-out for loopholes in acts of parliament. These persons are prepared to fight a case, perhaps winning it, where others do not bother. In this instance I am prepared to admit that these men have done a great service to the people who paid the tax in that they will have saved them from having to pay it in the future, because it is in consequence of such a case that the Government has decided to remove the tax on second-hand goods.
– It had no alternative.
– There was an alternative, and that was to legalize the whole thing for the past and the future. It would, however, have been of little use to continue the sales tax on second-hand goods. So few of such goods are taxable, and one has also to bear in mind the ever increasing schedule of exemptions, and the fact that the field of goods on which tax has not been paid once is diminishing every day. Presumably, this tax was legal up to December. At any rate, those who paid it considered that it was due, and it was paid when it was legally demanded. The Government now proposes to make this, tax legal up to the date of the High Court judgment, and at the same time it takes the opportunity to abolish it, because of the difficulty involved in policing and collecting it. Those who paid the tax did so under the impression that it was legally due, and I venture to say they got the shock of their lives, even those who might have thought they were going to get relief, when they learned that the Government had decided to abolish the tax. Difficulty arises as to how money already collected can be paid back. It is impossible to pay it back to all persons who ultimately paid it, because every person who bought goods at that time, except where goods were sacrificed, bought them at such prices as, even where the goods were not marked to allow for the extra six per cent., virtually included sales tax.
.- In defending the measure, the Assistant Minister (Mr. Hunter) has propounded the astounding doctrine that the clever and astute taxpayers affected by this legislation shall escape their obligations to the community, whilst the more innocent and law-abiding persons, those eager to discharge speedily obligations to the Crown, shall be given no advantage whatever.
– They ure getting an advantage for the future.
– The honorable gentleman misses the fundamental point in this matter. His argument is that until the date of the High Court judgment the law was presumed to be valid. The effect of the judgment was to declare the law invalid, and, because of that, the Minister says, it is now proposed by this legislation to make the law valid up to the date on which the High Court judgment was delivered. The position is not nearly so simple as that, because up to the date of the High Court judgment there were a number of persons who -had paid the tax without passing it on at all ; there were a number of other people who had paid the tax but who had passed it on; and there were also a number of others in the same category as those’ who paid the tax, who, although obliged to pay the tax, did not pay it. It is not contemplated by this legislation to recover from defaulters against whom no’ proceedings have been instituted. Their failure to pay the tax is not to result in any penalties whatever being imposed upon them. Nor will this measure impose upon those people any obligation to pay that which they have defaulted in paying. Thus, this measure is unfair inasmuch as it makes it unlawful to pay back to those who have obeyed the law the amount they have paid, and does not contemplate any proceedings whatever against those persons who have hitherto avoided the imposition of this tax. I look at the matter, not from the point of view of a lawyer, but from the point of view of an ordinary citizen with a rudimentary sense of justice and, I hope, some knowledge of the fundamental principles of government. In regard to taxation, I claim that no person in a community should be liable to pay tax unless all persons in the class of which that person is a member are similarly liable - that is a fundamental principle - and no person in a community should escape a tax which is imposed upon the category of persons in which he is a unit. Therefore both the positive and the negative aspects of this argument indicate to mo that the bill is unfair in its incidence. I do not use the word immoral in this connexion. A famous Chief Justice of South Australia declared that no person should evade tax but that any person was legally entitled to avoid tax, the distinction being, I take it, that evasion of tax meant, failure to tell the truth concerning one’s position, whereas avoiding tax was the adjustment of one’s position in order to take advantage of the law.
I feel there is no analogy between this validating measure and other validating measures previously introduced into this Parliament. Previously, I understand, when weaknesses were discovered in the law Parliament, in passing a validating measure, did a number of things in addition to what is contemplated in this measure. First, it validated the weaknesses in the law in order to give effect to and maintain the full intention of the Parliament when it passed the original measure. Secondly, it not only refused to return taxes paid by taxpayers who believed that they should have paid them, but it also recovered from all defaulting taxpayers the amount of tax they should have paid had full effect been given to the original intention of the Parliament. Thus no distinction whatever was made between those who paid tax prior to a judgment of the court upsetting the legality of that particular tax and those who had not paid. All citizens affected by the law were required to satisfy its obligations. But this validating measure, as has been- stated in the course of the debate, does not satisfy the fundamental principle that all citizens should meet their obligations under the law. On the contrary it discharges from their obligations persons who, prior to the High Court judgment,, did not meet their obligations in sales tax, whilst at the same time, it impounds for the Crown the amount paid by those people who presumed that the law was valid and paid the tax. The honorable member for Bourke (Mr. Blackburn) pointed out that rules as between subjects were not necessarily . fair rules “ as between the Crown and the subject.
The commonsense view taken of any assessment issued by a tax commissioner is that it has behind it unquestionably the potential coercion of the Crown. The citizen not only assumes that the law is as the income tax commissioner states it, but also accepts the position that, if he does not satisfy the income tax commissioner by paying the amount, demanded from him within a specified period, legal penalties will be imposed upon him ; that in addition to the tax he will have to pay a penalty. An income tax assessment, whether or not it is accompanied by an intimation that if the tax is not paid within a specified time certain penalties will be imposed is, in its very nature, a demand which must be complied with with despatch. It carries with it the implicit deduction that if the taxpayer does not pay he will become liable to onerous penalties in addition to having to pay the tax itself. Therefore, it is undoubted that those citizens who comply with the tax do so under the normal belief not only that the tax is valid, but also that if they dispute the tax they will be taking very serious risks. The argument advanced that all taxation measures passed by this Parliament will be endangered if this validating measure is not passed is unreasonable and, to my mind, unfair. AH other taxation measures passed by this- Parliament apply to all of the class of persons who are affected by them. This legislation does not do that. It is differential in its nature. It taxes a certain class of second-hand goods and apparently exempts other classes of second-hand goods. It taxes the manufacturer who sells second-hand goods simply because he happens to be registered because of other transaction’s he conducts. That, I contend, is one difficulty to be overcome in determining whether the act could be fairly applied. For a validating measure to be passed it is necessary to do other things than are provided for in this measure. We should pass a definite sales tax act to apply solely to second-hand goods. This would be a reasonable and logical thing to do. Further, we should make such a measure retrospective to the date of the passing of the first Sales Tax Assessment Act and recover from all defaulters the amount of tax they have failed to pay since that date. The dilemma in which the Government finds itself in this case is certainly not a pleasant one. There are important principles at stake in this legislation. There is the fact that the tax has been paid by certain persons and not by others who avoided it, although Parliament did not intend such persons to have been able to avoid i.t. Under these circumstances the only proper course for the Crown to follow, despite the huge amount of money which might be involved, is to pay the money back to those traders who can prove that they did not pass the tax on to the ultimate consumer. I admit that there is a big difficulty to be met in paying back to the purchaser the amount he may have paid to the vendor of second-hand goods. That difficulty is insuperable, and it appears to me to be a bar to returning this’ money to the individual purchaser. But in cases where a trader can satisfy the commissioner that he paid the amount and did not pass it on, it would be in the best interests of law and order, and of public respect for law and order, belief in the fundamental justice of taxation as imposed by this Parliament, and faith in the bona fides and equity of administration of laws would be helped even if we had to pay back a very considerable sum of money to these people. The amount of money involved is not so important to the Crown as the maintenance of the fundamental principles threatened in this legislation.
– Much of this debate seems to have revolved around the morals of departments, governments, and oppositions, and to have been concerned with whether the sales tax should be applied to second-hand goods or otherwise. That matter has already been decided both by the High Court and by the Government. Since the passage of the original acts by the Scullin Government, this tax has been collected in the belief that it was legal. Certain statements have been made regarding the actions - of the Commissioner of Taxation. Any honorable member who has had dealings with the Taxation Department, public servants generally, and Treasury officials in particular, must admit that the Commonwealth has most efficient officers, who discharge their duties in accordance with the acts passed by this Parliament. I know that the Leader of the Opposition (Mr. Scullin) agrees with that sentiment. In discussing this matter, whatever attacks are made should be launched against the Acting Treasurer (Mr. Casey). I do not intend to attack that honorable gentleman because his views differ from mine in regard to one small point in this measure. “We should not, as public men, do anything in support of tax-dodgers. I believe every honorable member will agree that evasion is practised by a considerable number of persons in connexion with all branches qf taxation. Former officers of the Taxation Department have set up in private practice with the sole object of seeking for loopholes in taxation legislation so that they may advise their clients as to the means by which payment of tax may be avoided. I believe that it is most difficult to collect sales tax on secondhand goods. A person receives very little for anything that he wishes to sell either from a second-hand dealer or in an auction mart, but invariably has to “ pay through the nose “ for any article that he purchases. In my opinion, very few second-hand dealers take the sales tax into account. A prospective purchaser may be asked £15 or £20 for a second-hand bicycle and by bargaining have the price reduced to £10 or £15, but the receipt does not show the sales tax. As the honorable member . for Fremantle (Mr. Curtin) has rightly said, the fundamental principle of all taxation should be, that a taxpayer who believes that he is unjustly assessed shall have the right of appeal to a board of review. That applies in regard to both income tax- and land tax, and a similar procedure is suggested in connexion with the sales tax. “While agreeing to a certain extent with that proposal, I believe that its adoption would give rise to tremendous difficulties. The Commissioner says to the taxpayer, “ Let us have an agreement under which you refuse to pay the tax, and I shall take you to the court for a decision as to whether my interpretation of the act is right or wrong”. Certain taxpayers having adopted that course, and the court having said that this tax is illegal, surely we are justified in asking the Acting Treasurer to consider further the making of refunds. I do not believe for a moment that the total amount involved would be anything like £250,000. The Assistant Minister (Mr. Hunter) has said that the proposal is to legalize what was done up to the time of the judgment of the High Court, and that it was to be presumed that the Government had acted legally in collecting the tax. I suppose that both this and the previous Government believed that it was acting within its rights But to legalize what has been done would merely intensify the position. A wrong cannot be made legal. If the High Court has said that the Government had no right to collect this tax, not only should it be wiped out, but in addition a refund should be made to those who can prove that they did not pass the tax on. I would not think of suggesting a refund to a person who had added the tax to the price of his goods.
– Why not be strictly honorable by making a refund to those who have paid the tax after it has been passed on?
– If it could be proved that the second person who handled the goods had paid the tax, there is no reason why a refund should not be made to him.
– Section 26 of the Sales Tax Assessment Act, No. 1, provides for a refund in the case of a person who can show that he has not passed the tax on or, having passed it on, has refunded the amount.
– I believe that those who have administered this law have acted honestly and straightforwardly. I should say that the present Government and the previous Government both administered it according to the interpretation of the Commissioner, and in the manner intended by Parliament. I cannot support the proposal of the honorable member for Wentworth (Mr. E. J. Harrison) to the extent of agreeing to the appointment of a further tribunal to hear objections and appeals against the sales tax.
– The existing boards could do the work.
– It would throw upon them a tremendous amount of work, and they are already behind in the hearing of other taxation appeals.
– Would not the honorable member grant to a “taxpayer the right to any appeal from the decision of the Commissioner?
– Those who have appealed successfully to a legal tribunal are not to be compelled to pay the tax. The Government might also reconsider its decision to retain what has been collected, because, otherwise the honest man will be penalized, and the dishonest man will go free.
– In my electorate, and, I believe, in a majority of the electorates that are in close proximity to cities, many persons will be hard hit by this legislation. I agree with the honorable member for Parkes(Sir Charles Marr) that we should not countenance the evasion of tax by professional taxdodgers. The amendment foreshadowed by the honorable member for Wentworth (Mr. E. J. Harrison) would not have that tendency. The responsibility shouldbe placed’ on the taxpayers themselves to prove that they have paid the tax and have not passed it on.
I have been asked to place before the Government the difficulties that confront certain people. I shall cite a particular case in South Melbourne. It is said that there are three types of persons engaged in the sale and distribution of secondhand furniture, the majority handling pianos, organs and other musical instruments in addition to ordinary furniture. Some arc registered and have had to pay the tax. Others who are not registered were not called upon to pay the tax. The third group consists of persons who are in a small way of business and cannot be traced. Those taxed could not pass on the tax in the ordinary way, because of the unfair competition of the other two groups which were not taxed. It can be shown that in 75 per cent, of all cases the tax could not be passed on. Suttons and other large firms in Melbourne associated with the sale of second-hand musical instruments have for years refused to pay the tax, believing that sooner or later they would prove that it was illegal. Several of these firms pooled their interests and financed the case that went to the High Court. They will not have to pay any tax, because they have been strong enough financially to fight the case and establish its illegality. The people whose interests I have in mind are not financially strong enough to run the risk of allowing sales tax to accumulate, for in most cases they are struggling to make their businesses pay. In some instances the incidence of the sales tax has been so heavy on small traders that, after allowing their dues to pile up for six or twelve months, in the hope that they could eventually avoid the payments, they have found it impossible to meet their accounts, and have discontinued their business. I have in mind the case of a dealer in second-hand furniture whose business yields only a sufficient return to maintain him and his family. He protested continuously against having to pay sales tax on bis operations until, in October, 1933, be was threatened with all kinds of pains and penalties if he did not pay up. He negotiated with the department for some time, and subsequently a compromise was reached by which he paid the tax due for the preceding twelve months. He continued to pay the taxation until a few months ago, and during that period paid £369 to the department. On every occasion he paid under protest, taking his legal adviser with him to the -taxation office when making his payments. I should like to know how he will stand under this measure. He should be entitled, I submit, to a refund of what he has paid. I direct the attention of the Government, now, to the case of another second-hand dealer, who trades specially in pianos and other high-priced musical instruments. His policy is quick sales and small profits. He sold an instrument some time ago for £273 cash, making a profit of only £13 on the deal. He was satisfied, however, until he was required by the Taxation Department to pay £16 sales tax on the transaction. Thus he incurred a loss on the deal as he had not anticipated being forced to pay the tax.
– He was gambling.
– He has been engaged in that kind of business for many years. I submit that it is entirely unfair that the large musical warehouse people of Melbourne, Sydney and other capital cities, who have declined to pay sales taxation for two or three years, should now obtain exemption simply because they had sufficient financial standing to be able to form themselves into a group and fight a case through the HighCourt, while other dealers in the same line of business, who had insufficient money to fight a case, will not be able to ob tain refunds of the taxes they have paid. I agree with the honorable member for Parkes that such people who can prove that they did not pass on the tax should be refunded the amounts paid. If the Government would consent to this course, the revenue would be affected only to about half the extent that full refunds would involve, for I have little doubt that many dealers would be unable to produce accounts of their transactions that would satisfy the Taxation Department that the tax had not been passed on. I shall support any amendment that will provide for refunds being made to people who can prove that they are entitled to them because I shall consider it morally wrong if the refunds are not made.
Sitting suspended from 6.10 to8 p.m.
.- I have listened with interest to the debate because I regard this bill as one of great importance in that a vital and cardinal principle of taxation is involved. I recognize the heavy responsibility on the shoulders of the Acting Treasurer (Mr. Casey) in dealing with the finances of the country, and I appreciatively acknowledge his acquiscence in many of the requests made by the business community in regard to the various phases of sales tax legislation. During the life of the last Government, sales tax to the amount of £2,500,000 per annum was remitted. I now suggest that the Minister go further, and liberalize the legislation to the extent of refunding taxes paid in error if the taxpayers concerned can prove that they have not been able to pass on the tax. The Minister stresses the large amount of money involved. That is admitted; but surely the moral aspect is of far greater consequence than the financial. There can be no question that the sales tax legislation has caused a good deal of irritation and unrest among the trading community, and, therefore, Parliament is morally bound to agree to the repayment of taxes paid by those who can prove that they have not been able to pass on such taxes as the High Court has declared to be illegally collected. In committee, I propose to support an amendment to that effect. A trading organization which overcharged its clients and failed to refund the overcharge when it was pointed out, would automatically be forced out of business. The decision of the High Court entitles taxpayers to a refund of sales tax which they need not have paid. In regard to them, the Government is in the same position as an ordinary citizen of the Commonwealth who regards the High Court as the last court of appeal. It should as readily accept the judgment of the High Court as a player on a cricket field accepts the decision of the umpire. When the High Court gave its decision, the community never doubted that taxes paid in the belief that they were rightly demanded would be refunded. The sales tax has involved trading houses in so much detailed work in the preparation of returns that it has added about 1 per cent., to their overhead charges. The sales tax legislation should be simplified, not only in the interests of the taxpaying public, but also in the interests of those who have to administer it. If taxpayers under the ‘Sales Tax Acts had an opportunity to appeal to a board of review such as that under the Income Tax Assessment Act, no trouble, as in this instance would have occurred. There should be no necessity to resort to law or for taxpayers to be put to the expense of engaging counsel because of the intricacy of the legislation. Before I entered Parliament, I was connected with a trading organization which took exception to one phase of the sales tax law. After much correspondence and many appeals, that organization finally obtained a legal opinion, following which a deputation had to visit Canberra before a decision could be reached. It is not right that taxpayers should be harrassed, or forced to incur expense, as well as lose valuable time, in an effort to secure equitable treatment. I desire to make it clear that I make no complaint against the taxation officials. Tho business community generally is of the same opinion, and, freely recognize the courtesy, and assistance generally, given by the officers of the department. They realize that the officials are there to carry out their duties in accordance with the law. Nevertheless, it cannot be gainsaid that the sales tax has caused both irritation and expense to the trading community. In view of the large amount of revenue obtained from this source, and of the intense feeling against certain phases of the law, the Government should view in a generous light the application for refunds of taxes wrongfully collected.
As a result of the position which has arisen, law-abiding citizens are being penalized. In the main, the taxpayers of this country pay the taxes imposed on them without question, although they may pay with bad grace in some instances. It is not right that those citizens who have paid promptly the amounts demanded of them should be penalized in comparison with those who have not paid at all. A wise business management will always seek to protect its good clients. Similarly, the first regard of a government should be for its law-abiding citizens; and if it finds that they have paid money in error, it should make a refund at the first opportunity. In a matter of this kind Parliament has now arn opportunity to set a high standard to the business community. This Parliament is under a moral obligation, at least, to refund the amount paid in error-. It should do so if only to convince the taxpayers of Australia that those among them who, because of a mistaken interpretation of the law, have paid the amounts demanded of them, will not be penalized. I appeal to the Minister for more liberal treatment, and I ask him to review the position in the interests of the law abiding taxpaying community of Australia.
.- This most interesting debate has revolved mainly around the ethics of certain taxation laws. A measure of this nature calls for introspection, because I take it that every honorable member desires to be guided by right principles The honorable member for Fremantle (Mr. Curtin) said that the fundamental principles underlying this legislation are as important as is the legislation itself. I agree with him. In dealing with the measure before us, we must take into consideration also the amendment which has been foreshadowed. For some years, successive governments have collected taxation from certain registered dealers in second-hand goods, but in December last, the High Court decided that the legislation under which they acted was invalid, and it has been contended that, therefore, moneys paid in the belief that they have been legally demanded should be refunded. In arriving at a conclusion regarding the bill, and the proposed amendment, we must seek to understand the intention of Parliament when the legislation was enacted, and decide whether we shall give effect to that intention or accept the High Court’s interpretation of the enactment. Can we ascertain the intention of the Scullin Government which was responsible for the sales tax legislation in the first instance? To me that is most important. There seems to be some diversity of opinion among honorable members regarding the intention of that government, in regard to the collection of sales tax on second-hand goods. If it intended that the sales of second-hand goods should be subject to sales tax, then all the moneys which have been collected under the sales tax legislation have been collected in good faith, and it is difficult to see where any question of morality or ethics comes in. If successive governments have honestly believed that they were entitled to collect this tax, they have acted in good faith in collecting it, and it seems to me that their action should be validated. If we deny to them the right to retain the money so collected, we threaten the whole system of government. It may be said that in this instance only about £250,000 is involved; but would the principle be any different if the amount, instead of being a quarter of a million pounds, were ten million pounds? Let us suppose that £10,000,000 has been collected in circumstances similar to those which involve only £250,000, and that the refunding of that larger sum would jeopardize the very existence, of sound government in Australia. How would honorable members regard a proposal to refund that amount? I submit that if the same principle is to be followed their decision must be the same, irrespective of the amount involved. Let us suppose that, instead of moneys collected under sales tax legislation being involved, the High Court decision had effected land tax collections. Land taxation has been in operation for a number of years, and although the intention of Parliament in regard to that form of taxation may be clear, the law may be open to misinterpretation, or to another form of interpretation by the court. The original intention of Parliament might be clear to the point that a certain form of taxation should be levied. Suppose this taxation is continued for, say, a period of 20 years, and then the authority under which it is being collected is challenged, and the High Court declares it to be invalid. Would honorable members opposite then deny the Government the right to validate those collections, and remain in possession of the taxes already paid? If they did, they would undermine the practicability of the executive to govern.
Another point which we have to consider is the extent to which the interpretation of the High Court shall determine the principles of our conduct as a parliament. If we are to anchor ourselves to High Court decisions, it is likely that our principles shall be constantly changing. During the dinner adjournment I asked the Acting AttorneyGeneral (Senator Brennan) whether the High Court had ever reversed one of its own decisions, and he told me that it had. He instanced what has become known as the Engineers’ case, in which the High Court, in 1928, reversed a decision it had given in respect of the same matter some years before.
I come now to the proposed amendment, the effect of which is that certain moneys, which have been illegally collected, should be handed back to certain persons. It is not suggested that the money should be refunded to every person who paid it. It is to be paid to only some of them. It seems to me that if it is right that refunds should be made at all, the claims of justice and equity can be satisfied only by refunding the tax to every one who paid it. That is a point which I should like to be determined for my own guidance, because I have yet to decide how I shall cast my vote. I have instanced two matters upon which I desire enlightenment. First, I wish to bc clear regarding the original intention of Parliament when the act was passed.
– How can that intention bc ascertained except by a ruling of the High Court?
– The Leader of the Opposition (Mr. Scullin) admitted that it was the intention of the government which sponsored the original act that the tax should be collected on second-hand goods.
– We have now to ask ourselves whether it is practicable to refund these moneys to every person who has paid the tax. I think I have proved that justice and equity cannot be satisfied merely by making refunds to some and not to all, and it seems to be admitted by all honorable members that it is not practicable to make the refunds to every one entitled to them. It is, therefore, evident that we cannot satisfy the claims of justice and equity by agreeing to the proposed amendment. We must be guided in this matter by definite principles of morality, and justice, and we would not be following those principles by agreeing to the amendment.
.- I believe that Parliament, at the time the act was passed, did intend to collect sales tax from dealers in second-hand goods, and the Government continued to collect the tax in good faith until its authority to do so was challenged before the High Court, whose decision went against it. The honorable member for Indi (Mr. Hutchinson) said that we should not allow our conduct to be determined by decisions of the High Court, because the High Court sometimes changed its opinion. He should know that most of us change our opinions from time to time, and justices of the High Court are no different from the rest of us. It remains true, however, that to the High Court belongs the right of determining the powers of the Commonwealth Government under the Constitution, and it is therefore to the High Court that we must look for guid ance when those powers are disputed or are in doubt. This afternoon the honorable member for Wentworth (Mr. E. J. Harrison) mentioned a case in which the Commissioner for Taxation had ruled that company directors’ fees were not taxable as income, while some time later the High Court overrode that decision, and declared that such fees were to be regarded as income. If it was right to collect taxation in that case upon the strength of a High Court decision, when the decision went in favour of the Treasury, it is surely right now to refund moneys which the High Court has declared to have been improperly collected. I am not concerned about the morality of the matter, but there must be some consistency.
The honorable member for Wentworth has foreshadowed an amendment, the effect of which is that, where it can be shown to the satisfaction of the Commis- sioner that a dealer has not passed on sales tax to his customers, the tax collected shall be refunded, and I can see nothing wrong with that. I can see no force in the objection of the honorable member for Indi that no refund should be made at all because it was not practicable to refund the tax to every person who has paid it.
The Minister for Defence (Mr. Parkhill) asked by way of interjection why the Labour Government did not refund the tax collected from dealers in secondhand goods. I remind him that, under the Labour Government, the money was collected in good faith, the Commissioner’s right to do so not having been challenged. I cannot see that there would be any practical difficulty in making refunds to those persons entitled to receive them, and I shall support the amendment because I think it is a fair one. It is suggested in the amendment not that there should be a refund of the whole amount to individual taxpayers, but that it should be confined to those dealers who can prove to the satisfaction of the Commissioner that they have not passed on the tax to their customers. The honorable member for Wentworth expressed the hope that the whole of this form of taxation should be abolished. I doubt, however, that he expects his wishes to be realized because of the known difficulty to persuade any government to give up revenue which it obtains in this way. Since all governments exist by taxation, they do not encourage proposals that they should evacuate any particular field. This Government has, however, remitted a considerable portion of taxes to a section of the people that can well afford to pay taxation. I hope that the amendment will receive favorable consideration. The proposal is fair, and for that reason I intend to support it.
.- It appears to me that one or two things have been overlooked in this debate, in which some honorable members have evidenced a sudden and unexpected sense of morality, as applied to taxation levied by the Government. The Acting Treasurer (Mr. Casey) in his second-reading speech told the House that a recent decision of the High Court had influenced the Government in introducing this bill.
I do not accept the view of the honorable member for Watson (Mr. Jennings) that High Court decisions must necessarily restrict the actions of this. Parliament. Parliament is the highest tribunal in the land, and if a mistake has been made in legislation passed by it, that mistake can be rectified. Decisions of the High Court are, as we know, subject to appeal to the Privy Council, and on some occasions have been upset. As the honorable member for West Sydney (Mr. Beasley) has pointed out, constitutional issues raised in Commonwealth legislation may be interpreted by different courts in different ways. As to the intention of Parliament in passing this legislation all I need say is that it was imposed by the Government as part of its budget proposals, and it has received the sanction of Parliament. If taxpayers affected by the sales tax legislation had felt that ths impost was unfair, they could have challenged the right of this Government to impose it and had the matter dealt with in the courts. That was. not done except in respect of the tax on second-hand goods. As for the moral aspect of this legislation, it was clearly the intention of Parliament that revenue should be collected from this source. I, therefore, submit that the Government is fully entitled to retain the taxation which it ha3 collected on the sale of second-hand goods. When the sales tax legislation was introduced the then Leader of the Government (Mr. Scullin) mentioned that certain classes of second-hand goods were exempt.
– He did not say that.
– He said that certain classes- of manufactured goods eventually passed into the category of second-hand goods and, as such, were exempted from, the tax. If the Government had known that the validity of the tax on secondhand goods would be challenged it would have made other provisions for the collection of revenue from this source. The Government has now reached the stage at which it feels that it can remit taxation, and rather than go to the expense of testing this matter further in the court it is prepared to forgo its right to tax ‘ certain classes of second-hand goods, although there are some classes of such goods upon which it could continue to collect sales tax. One complaint I have against honorable members opposite who now contend that the Government is morally bound to refund this taxation, is that when they had the opportunity they did not do anything.
– If the honorable member was improperly assessed and paid £50 in income tax, would he not take the matter to the courts with a view to obtaining a refund?
– If any form of taxation is within the ambit of the law it is difficult for a taxpayer to obtain a remission. Taxpayers under our sales tax legislation never get back, in the course of business, the amount which they are required to pay under this legislation. One objection I have to sales taxation is that it presses more harshly upon the small shop-keeper than upon the larger concerns which secure discounts that offset the amount of taxation levied. The small shopkeeper, on the other hand, is obliged to pay the tax and is unable to recoup himself because he cannot pass it on to his customers. If, under this legislation, an injustice has been done to dealers in second-hand goods, an equal injustice is imposed upon small retailers under other sections of the act. Honorable members who support the amendment, to be consistent, should agree to a refund to every person who has been affected by every transaction under our sales tax legislation. That, of course, would be impossible. The issue is quite clear. Parliament, by passing the budget proposals of the Government every year since the sales tax was levied, has sanctioned the collection of this form of taxation as part of the Government’s financial policy.
– Is the honorable member supporting the amendment?
– Certainly not, because I do not consider that the proposal is a fair one. A great deal has been said about the position of dealers in second-hand goods. The honorable member for Parkes (Sir Charles Marr) cited the sale of a secondhand cycle at £15, which represented a reduction of £5 on the original price asked. The man who sold that machine probably got it for two or three pounds, so it did not matter very much if he did lose £5 in sales tax. As a rule the man who sells second-hand goods gets at least 100 per cent, to 200 per cent, on his purchase price, and is not concerned about the amount of sales tax involved. I submit that, because of the complexities involved in the administration of the act, the cost of tracing those who might be entitled to a refund would exceed the amount actually collected under this form of taxation.
.- Elementary justice demands that refunds should be made of those amounts which the High Court has decided were wrongly collected. It is the duty of Parliament to see that equity and good conscience are at all times observed in administering the law. The honorable member for Indi (Mr. Hutchinson) found difficulty in making up his mind as to whether equity and good conscience would really be served by an attempt to make refunds. His main contention was that it would be extremely difficult to trace those entitled to the money. If the honorable member and others who think with him feel that equity is not satisfied because it is impossible to trace the payers of sales tax on second-hand goods, what becomes of the rights of those persons who actually paid the tax, when others who purposely evaded or postponed payment are now exempted? Does not such a system penalize the citizen who is willing to obey the law? In that respect, surely, good conscience demands that what we are prepared to do to benefit the man who has not paid we should be glad to do for him who has paid. If justice and equity are to be the major considerations in determining this issue, as they should be, only one course is open. The Government should not take the path of expediency and attempt to defeat the decision of the High Court by means of a validating measure such as this. The members of the Opposition desire the provisions of section 26 of the principal act relating to over-payment of sales tax to be applied to this case. It is as follows : -
When the Commissioner finds in any case that tax has been overpaid, and is satisfied that the tax has not been passed on by the taxpayer to some other person, or if passed on to some other person has been refunded to that person by the taxpayer, the Commissioner may refund the amount of tax found to be overpaid.
If that is a desirable provision in the case of over-payments, it should be equally applicable to wrongful payments.
I received this evening a telegram from a firm in Adelaide which, when paying this tax under protest, was assured that, if the decision of the High Court went against the Commissioner in the test case, a refund would be made of the amount paid by it.
-Was that a case of second-hand goods?
– Yes, the firm is A. W. Dobbie and Sons Limited, a very reputable firm in Adelaide. It has, I feel, every justification for claiming that the Sales Tax Department in Adelaide, representing the Taxation Commissioner in this matter, did assure it that the tax would be refunded if the case went against the Commissioner in the High Court. In another case, regarding which a letter reached me by to-day’s mail, one of the large agricultural implement making firms in my electorate is concerned. When it first went to the department for advice concerning its liability to pay sales tax upon second-hand machines, it was definitely informed by the department that there was no liability to pay the tax.
– Is that David Shearer Limited?
-No, it is Horwood, Bagshaw Limited. When later the department intimated that it had been decided that the tax must be paid, this firm was required to acknowledge the claim of the department to the extent of several hundreds of pounds.
– Much of which has been paid.
– As the honorable member for Adelaide indicates, substantial instalments have already been paid. Under this validating legislation that money will not be refunded. The firm will simply be exempted from paying the arrears. In other words, if it had been prepared to postpone payment until the High Court gave its decision, it would have escaped completely, but because it tried to meet its liability, and, to some extent, to conform to the requirements of the department, it is penalized to the extent to which it obeyed what the department said was law. Other firms which withheld payment, awaiting the decision of the High Court, will go scotfree. Surely such a position cannot be justified? I earnestly urge the House to direct the Government to meet its responsibility in this matter, so that the law may be uniformly and equitably applied, and justice may be done to every citizen, irrespective of his circumstances.
– I intend to support the second reading of the bill, with a view, at a later stage, to supporting the amendment of which the honorable member for Wentworth (Mr. E. J. Harrison) has given notice. I feel that this is one of the occasions upon which Parliament must take a stand on behalf of the taxpayer. The principle upon which our system of government is conducted, so far as I have understood it throughout my Parliamentary life, is that the rule of law is universal, applying to the Crown with as much force as to the general taxpayer. Under the scheme of this bill I fear that the Government is putting itself in a false position, endeavouring to lay down one kind of law for the taxpayer and an entirely different kind . for the Crown. Most of the big constitutional battles in British politics have raged round the question of whether the Crown is to enjoy special privileges. Only recently a royal commission sat in England to determine the powers of Ministers. There are, in the report of that body, some very illuminating paragraphs, which have a vital bearing on the question before us to-night, but I shall not quote them now. We have also the excellent book published two or three years ago by the Lord Chancellor of England, dealing with what he called “ the new despotism.” One cannot shut his eyes to the fact that there is too great a tendency on the part of administrations to-day to take the law into their own hands and lay down sets of conditions which the average taxpayer finds it extremely difficult to fight. They are difficult to fight because law is expensive, and the cost of an appeal on a question of this description, which must go to the High Court of Australia, is a deterrent to the average taxpayer. Only those with deep pockets can afford to run such an expensive gauntlet.
One other principle which should be “observed by every taxation department, although sometimes I am sorry to say it i3 not honoured, is that the law, being applied equally to the taxpayer and to the Crown, should be so administered that, if the Crown makes a mistake, it should make restitution, and if the department finds that a taxpayer, in making his return of income, has made an error to his own detriment, it is just as much the obligation of the department to point that error out to him for his benefit as to point out any error which he makes against the interests of the Crown.
I desire to emphasize the point raised by the honorable member for Hindmarsh (Mr. Makin) with particular reference to the firm of Horwood, Bagshaw Limited. Notwithstanding what the Assistant Treasurer (Mr. Casey) may say to the contrary, we have in that case the definite statement that the Sales Tax Department in Adelaide explicitly assured this firm of machinery manufacturers that it would not be charged sales tax on second-hand machines.
– I shall challenge that.
– All the evidence in my possession will be available for inspection by the Minister and members. Mr. W. J. Barker, managing director of Horwood, Bagshaw Limited, writes under date 1st April, as follows : -
At the inception of the sales tax, our secretary, accompanied by our cost accountant, took the opportunity of calling on the office of the department here and interviewed a responsible officer in order to obtain rulings on several points in connexion with the sales tax act as it applied to our business.
One of the questions asked was: Is secondhand machinery subject to sales tax? The answer given by the responsible officer was: “ No “. Relying on this ruling we did not charge sales tax on all sales of secondhand machinery.
When an inspector from the sales tax office examined our records some two years later he informed us that we were in error in not charging sales tax on second-hand machinery, and subsequently we received an account claiming payment of sales tax on this class of material amounting to £300 odd.
That is not an isolated case. I have also a letter from the Taxpayers Association of South Australia, over the signature of
Mr. G. T. Clarke, secretary, dated 25th March, as follows: -
The Sales Tax Department does not deny that clients were informed when sales tax was first introduced that second-hand goods were not taxable. The reason given was that secondhand goods must obviously at some time have been new goods and paid tax. This decision was not reversed until after sales tax had been in operation for a very long period. Under the circumstances it is obvious that merchants made no attempt to collect tax for which they were definitely informed they were not liable.
Then there is the case of the firm of David Shearer Limited, agricultural implement makers of Mannum, South Australia. Mr. Shearer rang me up at eight o’clock to-night from Mannum to tell me that he could not locate the letter at present, hut that he knows that the firm definitely understood that it was not to charge sales tax on agricultural machinery of the second-hand class. It seems only reasonable that this should be so, because new agricultural machinery was one of the lines exempted from the sales tax. It is most anomalous for the Crown, whilst exempting new machinery from sales tax, to demand it on secondhand machinery.
– The same machines?
– Yes. No Minister of the Crown can justify administration along lines such as that. It is the duty of the Parliament to express its intentions in unmistakable terms. The law should bo made so clear that there will be no necessity for recourse to the High Court to decide which articles should or should not be taxed. There is far too much laxity in the drafting of taxation measures, and a considerable number of injustices is perpetrated on the taxpayers, simply because they lack the financial resources required to test matters in the High Court. I hope that the Government will see the wisdom of taking time by the forelock in these matters. The amendment foreshadowed by the honorable member for Wentworth will meet the situation. The firm of Horwood and Bagshaw has been compelled to pay sales tax on articles sold in good faith, after having been informed that it would not be charged tax on them. Shearer’s, of Mannum, state that they will enter into a. guarantee to refund to every customer the amount of sales tax collected on behalf of the Crown, provided the Government will guarantee to make a similar refund to them. The Government is not entitled to retain tax that has been collected in these circumstances. The law should be supreme and universal, and should apply with equal force both to the Crown and to the subject.
– I shall support the action of the Government in this matter. We should look back to the time when the sales tax was first imposed, and recall the intention of the Parliament, as shown by its action in supporting the Treasury from time to time in connexion with this legislation, and by the administration of the department up to the date of the High Court judgment. We shall then realize beyond doubt that the Parliament intended to levy tax on the sale of secondhand goods. The honorable member for Fawkner (Mr. Maxwell) has asked: “ How are we to find out the intention of the Parliament V Parliament approaches these matters from quite a different angle from that from which the High Court views them. The High Court merely interprets the statutes. The legality of the sales tax on second-hand goods was considered by the court, and it had to determine whether the collection of the tax was valid or invalid. It had to ask itself whether the Parliament had expressed itself in such terms as to show that second-hand goods were to be subject to this tax. Mr. Justice Dixon, in his judgment, made it perfectly clear that, in his opinion, the intention was that these goods should not be taxed. He remarked -
Upon the true interpretation of the whole series of acts, the general words of sections 3 and 4 of the Assessment Acts Nos. 3 and 7 do not apply to goods which have gone through the process of retailing into use or consumption in Australia, and in this sense are second-hand.
The whole series of acts had to be framed in such a way as to avoid constitutional complications, in addition to expressing the intentions of the Parliament. Parliament intended that these goods should be taxed, but the court thought that the legislature had not employed apt words to express its intention. No question arose as to whether the legislation was moral or immoral, just or unjust. The function of the High Court is not to pronounce upon the policy of Parliament, but to give judicial interpretations. It is for Parliament to express its intentions through its legislation, and to exercise its powers according as its judgment moves it. There is not the slightest doubt that it intended the sales tax to apply to these goods. No question was . raised at the time when this legislation was passed as to whether its action was immoral or unjust. Parliament was faced with the problem of raising adequate revenue, and it had to consider on what articles it should levy sales tax in order to obtain that revenue.
– Did not the High Court say that this tax had been collected illegally?
– It decided that as second-hand goods were not within the wording of the act they were not subject to the tax. Parliament had to determine whether this was a proper tax to impose, and when it was levied the question of its morality or immorality was not raised. The action taken may have been unwise. In good times, it might have been considered inexpedient to impose such a tax. The High Court’s judgment was not a pronouncement upon the morality or immorality of the action of Parliament in levying the tax.
We are now faced with a problem which this Parliament and others have had to consider previously. Seeing that the tax, when it was imposed, was not regarded as unjust, and seeing that, over the whole period, about £250,000 of tax has been collected - about £50,000 annually at the time of the judgment of the court - is it wrong for this Parliament . to validate the legislation of a previous -Parliament ? The revenue must be protected. We cannot pay back £250,000. That money has been used during a period of depression to meet the necessities of the Commonwealth. It cannot now be said” that that action was immoral, and that a quarter of a million of money must now be paid back.
– It was not immoral to collect the money.
– Nor would it be immoral to validate the action taken. Validation merely means approval of the imposition of the tax. If it was proper to impose the tax originally, and a mistake was made in that regard, it is not immoral now to validate it. Suppose we had decided to repeal the whole of the sales tax legislation, would anybody then have asked us to insert a clause providing for the refund of the money already collected on second-hand goods? Of course not.
– That is not putting the matter fairly.
– If Parliament had decided to repeal the sales tax on all goods, including second-hand goods, would anybody ‘then have raised a special plea with regard to second-hand goods, on the ground that the tax had not been passed on? Of course not. If this matter had not been tested in the High Court, and the Government had introduced a bill to repeal the tax on the sale of second-hand goods, I claim that this plea for the return of the tax not passed on would not have been raised. The sole ground on which this exemption is asked for is that the tax has not been passed on. Under our customs legislation, firms pay heavy sums of money by way of taxation upon goods being imported. If a merchant pays the tax, and afterwards that tax is repealed, he is not entitled to a refund of the money that has been collected . from him and which he has not passed on.
– Because it has not been collected illegally.
– Leaving illegality out of consideration, when a customs tax is repealed the money collected is not refunded, even though it has not been passed on. It is admitted that the sales tax collected on second-hand goods was illegal, but all those concerned with the administration of the law believed the tax to have been justly collected. In any validation of acts of administration the rights of individuals who have obtained* judgments are always safeguarded, and that is being done in the present instance. Simply because it has been determined by the High Court that this tax has been collected illegally, there is no reason why this Parliament should not legislate retrospectively to make the collections legal. It has been the regular practice of this Parliament to pass validating legislation “where defects have been found in a taxation statute.
– And that is the practice all over the world.
– That is the proper course to follow.
– How would the honorable member protect the rights of citizens whose only protection is an appeal to the High Court, if the benefits of any such appeal are removed by action taken by this Parliament?
– The right of a successful litigant is protected and you cannot do more. Taxation legislation must apply to all persons included in the statute. The claim is now made for thosepersons who were non-litigants.
– They were litigants, because the traders affected by this tax made that appeal to the court conjointly. All of them were parties to this litigation.
– All of the parties to the litigation are getting the benefit of this litigation.
– The argument used by the honorable member does not alter the case we are considering. In a case in Queensland a few years ago people desired to take action to dispute the legality of certain taxation, and contributions were made by those interested in that litigation. However, the only man who can be recognized officially in any such case is the man who appears before the tribunal and in whose favour judgment is delivered. The procedure we are now following has always been adhered to in this legislature and in every other legislature, whenever mistakes have been discovered in legislation. It may arise from the effect of a practice that has grown up in the Taxation Department in connexion with the collection of a specific tax under regulation. It may be the duty of Parliament to validate the practice by legislation, and no one questions the right of Parliament to adopt such a course in order to give full effect to Parliament’s original intentions. This measure, therefore, seems to me perfectly just. Indeed, the Commonwealth Government is only doing its duty in taking the necessary action to protect its revenue.
. - I have listened with the greatest interest to every honorable member who has spoken in this debate. Undoubtedly, two points have arisen which we cannot overlook. The first is that under the original sales tax scheme it was intended that goods should bear tax once only. The second point, on which I have no doubt, is that it was the intention of the government of the day which was led by the right honorable gentleman the Leader of the Opposition (Mr. Scullin) and also the intention of Parliament, that second-hand goods should be included within the scope of the sales tax law. The right honorable gentleman admitted it this afternoon. One reason why I have risen to participate in this debate is to refer to this aspect of the matter, because the honorable member for Indi (Mr. Hutchinson) seems to have some doubt as to what was the original intention of Parliament and of the government of the day when this legislation was passed. To clear up that point, I shall quote from the debate on the original measure recorded in Hansard of the 7th August, 1930. The honorable member for Swan (Mr. Gregory) said -
Last evening I gave notice of a number of exemptions that I desired to propose in the interests of the mining industry. . . . I further request the exemption of spare parts of mining machinery and plant, as well as second-hand mining and agricultural machinery and implements. I have just received a telegram from Western Australia with regard to the sale of some second-hand machinery, and I am advised by the department that it will be taxable under the bill as it stands. I move -
That the following item be inserted : - “ Second-hand mining and agricultural machinery and implements.”
So far as the other matters to which I have referred arc concerned, I hope that the Prime Minister will consider to what extent he can provide for their exemption.
The Prime Minister (Mr. Scullin) replied -
I shall have to consider the suggestions of the honorable member for Swan (Mr. Gregory). I am afraid that I cannot accept a number of them’. I certainly cannot agree to the amendment he has just submitted.
– I do not deny that.
– I know. My object in reading this quotation is really to set the honorable member for Indi at ease as to what was the intention of the Government at that time. Answering the honorable member for Swan on that occasion, the right honorable gentleman admitted that it was the intention of his Government to include second-hand goods under this legislation. That intention was upheld by the Government which succeeded the Scullin Government. I have always understood that the tax was collected in accordance with the intention of Parliament, and that the collections continued until December of last year in accordance with the law as judicially interpreted until the High Court delivered its finding on the 13th December last. I maintain that, in view of the High Court’s finding …ne Government is following a correct course in removing the tax altogether on second-hand goods. Retrospective legislation of any kind has always been anathema to me, as, I believe, it is anathema to many other honorable members. Particularly is this so in respect of legislation affecting taxation. I recall, as many other honorable members also will recall, that, during the regime of the Scullin Government, certain measures were introduced which were very definite in their effect from a retrospective point of view. For instance, money paid to the Customs Department without protest and without legal action for recovery being taken within six months is not recoverable. The act amending the Customs Act to provide such conditions was only passed in 1930, but was made retrospective to 1901, at the beginning of federation. Another retrospective measure passed by the Scullin Government was the Land Tax Assessment Act No. 1 of 1930, this being made retrospective to July, 1914, to override a decision of the High Court regarding the rent of Crown leases, which carried the right of resumption. There are many other examples of retrospective legislation.
A letter dated 30th March, 1935, which I received from the president of the Taxpayers Association of Queensland, Mr. H. W. Herbert, says -
Although we consider that there is something in favour of the Government’s attitude in view of the Assistant Treasurer’s speech, we certainly think that provision should be’ made for the refund of tax to persons who were not able to pass on the tax, especially those who, though believing that the tax was not leviable and resisting it up to the point short of legal proceedings, yet were compelled to pay the 1 tax after an inspection of their books by sales tax inspectors, and who did not make protest in writing when making payment.
Mr. Herbert in a letter addressed to the editor of the Brisbane Courier Mail dated the 25th March, 1935, stated as follows : -
Although the Treasurer gives good reasons why refunds could not be made indiscriminately, and stresses the fact that it was the definite intention of the Government to tax all such sales, it nevertheless appears that those who resisted the tax, yet actually made payment without stating specifically that such payment was made “ under protest “ and stating their objections, should now receive more consideration.
I take it that the amendment which has been foreshadowed by the honorable member for Wentworth (Mr. E. J. Harrison) will cover the particular taxpayers to whom I refer. If that is so, I sincerely trust that the Government will still find itself able to reconsider the position with the object of assisting these taxpayers. It is quite impossible to make a general refund of this tax. I do. not see how that could be done, even if the Government were in favour of taking such a course. However, I urge the Government to give further consideration to the position of the particular taxpayers to which I have referred. After all, it is practicable. The people concerned would have to prove that they were not able to pass on the tax, that they protested at the time, and that they paid the tax only when told by the taxation officials that they must do so. That being the position, these people are at least entitled -to some consideration, and I trust that the Acting Treasurer (Mr. Casey), even at this stage, will reconsider the matter with respect to this point.
.- I have listened with very great interest to the remarks of the various honorable members who have participated in this debate. The arguments advanced, it seems to me, can be summed up in the contention that two wrongs do not make a right. The High Court has ruled that this taxation on second-hand goods is illegal, and I do not want the Government or this Parliament to pass a hill which would have the effect of creating another wrong. I want the Government to safeguard its position in every way; but I do not hesitate to express my view that this legislation can be amended in such a way as to be made workable. The bill, as now framed, does not meet the position. In its present form it would undoubtedly create legislative history, by validating a wrongful and unjustifiable collection of taxation. It is bad in principle, and cannot be justified. As a member of this Parliament, I do not care to be associated with such a course. Honorable members, and among these I include myself, who believe that the bill is wrong in principle, should not lend their support to any course designed to validate a wrongful action. Parliament has the big end of the stick; it is a law unto itself; but in the making of laws it should always act justly. In this measure, however, I cannot see any justice. If a thing is wrong we should remedy it; but, in the application of that principle, we have set out on a wrong course. The Taxation Department did not deny that, when the sales tax was first introduced, clients were officially informed that second-hand goods were not taxable.
– That is absolutely denied.
– I hope to demonstrate that I am right. The department instructed clients as I have indicated, because it took the view that obviously second-hand goods, being once new, must previously have paid tax. I have no doubt as to that. At any rate, that policy was not disturbed until the sales tax had been in operation for quite a long time. I was a member of this House when this taxation was first introduced. I did not like the principle of a sales tax; I believed that it would be iniquitous, and would hamper industry and trade. It is wrong in principle.
In consequence of the opinion prevailing when this legislation was enacted, traders made no attempt to collect tax on sales of second-hand goods, because they believed there would be no necessity for them to pay that tax. The people engaged in the second-hand trade may be divided into two classes, those who are registered under the Sales Tax Act, and those who are not. I can see no reason why statutory declarations, that sales tax has not been passed on, should not be accepted from registered persons. The Minister has urged that in cases where the tax has been passed on, it would not be possible to reach the people who paid the tax. But unless this tax is refunded, injustice will be done to persons who have accepted the departmental ruling, paid the tax, and conducted their business accordingly. They should not have been asked to pay a tax which they could not recover, and which, in fact, was not recoverable. I desire now to read a telegram which I have received from A.W. Dobbie and Company Limited, of Adelaide.
– I have received a copy of that telegram; there is no necessity to read it.
– I shall read the telegram for the information of honorable members. The telegram is as follows: -
We have paid under protest £217 sales tax during past twelve months on second-hand goods sold by us being assured by department refund would be made if High Court ruled against Commissioner. Alarmed at validating bill. Writing you to see justice is done.
I have also received from the managing director of Horwood Bagshaw Limited, of Adelaide, a letter in the following terms : -
Re Sales Tax on Second-Hand Machinery.
At the inception of the sales tax our secretary, accompanied by our cost accountant, took the opportunity of calling on the office of the department here and interviewed a responsible officer in order to obtain rulings on several points in connexion with the Sales Tax Act as it applied to our business.
One of the questions asked was: Is secondhand machinery subject to sales tax? The answer given by the responsible officer was: No. Relying on this ruling we did not charge sales tax “on all sales of second-hand machinery.
When an inspector front the sales tax office examined our records some two years later he informed us that we were in error in not charging sales tax on second-hand machinery, and, subsequently, we received an account claiming payment of sales tax on this class of material amounting to £306 odd. We protested against payment and took the matter up strongly with the department without avail. Eventually we were forced, owing to threats of proceedings for the recovery of the amount, to agree to payment by instalments, and commenced paying £25 per month in April, 1034, and paid up to November, 1934, £225.
It is unfortunate for them that they paid so much, but they will be relieved from payment of the balancer outstanding. TheLetter continues -
There is outstanding unpaid’ the sum of £8113s. 9d., and it appears, from what wecan. gather this is the only amount on which, it is proposed we ‘can obtain relief.
Surely there is nob one atom of justice in the contemplated action of the Commonwealth Government in refusing to repay sales, tax, which the High Court of Australia has decided’ has been wrongly collected’. Further, where is- there justice in penalizing the firm or person who has been law-abiding and paid, and letting. thefirm or person, off who has refused to pay? We cannot think that the Commonwealth Government will, upon giving the whole question, mature consideration, do other than refund any amount wrongly collected on. second-hand machinery.
Wo intend to bring all the forces in our power against what, in our opinion, can only be termed as- an attempt to retain money wrongly collected. We require a repayment of £225 already made by our company, and’ we strongly appeal: to you to do everything in your power to see that justice is done to us.
These and many other matters should receive the consideration of the Government. I have received many other letters and telegrams, and have selected at random those which I have read as illustrating the injustice which some of these people have-been called upon to suffer. I conclude by saying- that this bill is drafted on wrong lines, and is wrong in principle, and that I do not intend to cast my vote in favour of what I consider to be a wrongful action.
.- The Government appears to have come under a” real barrage of criticism in regard to the proposals now before the House. While some of this criticism may be justified, we should not overlook the fact that some of the features of this amending bill meet with the approbation of the trading community generally. The Government has accepted the judgment of the High Court, and is not amending the act, as it possibly could, if it desired, to enable it to continue to collect the tax on second-hand goods. The tax has always been an irritant to the trading community because of its unfair effect on certain taxpayers. The sales tax was collected on second-hand goods only when sold by a registered dealer. This meant that if a firm or an individual were registered, that firm or individual was placed at a disadvantage when com peting: with a. non-registered dealer. This matter has been brought before, the Commissioner of Taxation and the Minister- on numerous, occasions with a view to- securing relief.. As a. matter of fact, a committee, which, was formed some time ago to: investigate the: matter reported- that,, in its- opinion, the Government would be well advised to. remove this class of goods from the tax. If the Government had at. that time accepted- that recommendation of the- committee there would have ‘been no demand. on thepart of the trading community generally that refunds of the tax previously collected should be made. TheGovernment, however, resisted- the recommendation- of the committee and it has subsequently resisted numerous- applications made by individuals, and varioussections of the community for the exemption of such- goods-. I repeat that in not, amending the act to make this- class of goods subject to- sales tax, the- Government is undoubtedly complying with thewishes of the- great- majority of the com- munity, and’ I congratulate it from that standpoint. It- is. only in connexion with the question of validating- the tax already collected that there can be any call- for criticism at all.. The attitude adopted by the majority of honorable members who have spoken on this bill is justified because of the very unfair advantage which it gives to traders generally. The Government proposes- that in future the tax shall not be levied, but it does not propose to refund any of the tax previously collected. In a number of cases traders have complied immediately with the demands of the department and have paid tax in full. In other cases, I understand, they have combated the assessments of the department and have not yet paid any of the tax assessed against them,, while in still others only portion of the tax levied . against them has been paid. I submit that it is very unfair to penalize those law-abiding traders who have paid the tax levied upon them to the advantage of those who have avoided payment of the tax. I hope that,, in view of all the circumstances, the Government will recognize the injustice of its proposal in this respect. The amendment foreshadowed by the honorable member for Wentworth (Mr. E. J. Harrison) reflects the opinion of the majority of members of this House. The Government can only carry legislation that is acceptable to Parliament. It has a clear indication of the views of honorable members on this matter, and I urge it to reconsider its present proposals and, if possible, to agree to the amendment which will be moved in committee. Ishall give the amendment my whole-hearted support.
– In reply - The proposals of the Government, and the reasons, in broad outline, that actuated the Government in dealing with the situation arising out of the High Court judgment have been made known to honorable members in my speech at the. opening of the second reading debate on this bill. The speeches of honorable members and the representations that have been made to the Government on this measure make it necessary for me to enlarge somewhat on that statement. I shall aim at not wearying the House by amy unnecessary repetition of what I have already said, although it will he necessary for me tosummarize the main points of my argument.
The main purpose of the . amending legislation is to retain sales tax paid on second-hand goodsup to the date of the High Court judgment, and to exempt second-hand goods in future as from the date of the High . Court judgment. The ‘principal reasons . that have ^actuated ‘theGovernment in arriving at the decision . to . take ; this faction are first, that the imposition of . sales tax on secondhand goods was intendedby all . goverments since the inception of ‘the sales tax ; secondly, that this was widely known and understood by the trading community, and, : thirdly, that the . ‘amounts paid in this connexion are so . considerable that the ‘Commonwealth finances would be seriously dislocated if refunds were made.
One point stressed, by some honorable members is that the ‘Government is not attempting ‘to make provision for the recovery of unpaid tax. I invite ‘honorable members to -consider -the reasons for that decision which 1 gave in- my earlier speech. ‘They were, first, that the unpaid tax was relatively small - amounting to only a few thousand pounds compared withthe £250,000 ^that has been paid-; secondly, that a large proportion repre sents amounts unpaid by the litigants who brought the three High Court actions and by persons directly and indirectly connected with them; thirdly, that the cost of collection in these circumstance* would be out of proportion to the amount collected; and fourthly, that the introduction of most complicated legislation having only retrospective effect, would be necessitated.
Perhaps I may be allowed to enlarge upon some of the more important of the points that I raised, and to introduce further matter in confirmation which it was not possible to include in my earlier speech without making it of inordinate length.
I take, first, my assertion that it was the clear intention of all governments and of the parliament that second-hand goods should be subject to sales tax. The basic scheme of the sales tax legislation is that, from the point at which the goods are imported- or manufactured, up to the point at which they go into use or consumption, the tax shall be paid once . and once only. If, by chance, it is paid twice, there is power under the regulations to make refunds of the first payments. That is the -principal object of the sales tax scheme as a whole. But it goes further. The intention was that goods which entered into commerce for a second time in the hands of a registered taxpayer and in competition with new goods, should again be exposed to sales tax. It was this -latter type of transaction, the sales of used or second-hand goods by a registered taxpayer, which gave rise to -the recent High Court case. I have had considerable evidence collected to bear out my contention that it was the clear intention of the Scullin Government that second-hand goods should be taxed, but -since the right honorable the Leader of the Opposition (Mr. Scullin) has freely admitted that that was the intention of his government, I do not propose to weary the House by a repetition of the evidence available to me. I am strengthened in this belief, although I . do not need strengthening in view of the right honorable member’s admission, by the fact that in 1930 he refused to accept an amendment in respect of certain second-hand goods, and that ‘those particular goods were exempted eighteen -months later by a subsequent governmen’t.
I should like at this stage to remind honorable members of the conditions in respect of sales tax which existed in 1930. It was a new tax, and the trading community had no knowledge of the manner in which it would “work out, nor of how it would affect their individual businesses. The Taxation Department was bombarded with requests from all branches of the trading community foi rulings, regulations, and decisions. I am assured by the department that not a day passed without at least one or more rulings and decisions being issued, even before the act became operative, to inform the commercial community as to what they might expect.
– Those rulings and decisions were often withdrawn and replaced by others that were entirely different.
– Not, in the cases to which I am going to refer. A clear thread ran through the whole of the regulations and rulings in respect of secondhand goods. These regulations and rulings were made public throughout Australia through the columns of every newspaper of consequence. I should like to direct attention to a number that were circulated, in some cases actually before the scheme became law. I refer in particular to two that were published on the 15th August, 1930 - the bills became law on the 18th August of that year - the first of which stated in explicit terms that exemptions in respect of secondhand goods would be limited to goods traded in in part payment for new goods; while the second, in response to inquiries from the building trade, stated that registered building wreckers would be taxable on their sales of second-hand materials. During August and September, 1930, numerous other rulings were given dealing with different aspects of the taxation of second-hand goods, and emphasizing the clear intention to tax such goods. As further evidence of the intention of the Government, and of the widespread knowledge pf that intention, I draw attention to the Sales Tax Handbook, published in January, 1933, containing a collection of rulings that had been promulgated by the department between the passage of the bills into law and that date.
I’ may say that thousands of copies of this handbook were circulated and sold throughout Australia. It contains numerous references to the taxation of second-hand goods, but I draw attention to only two paragraphs - 1026 and 1027. The former says-
The Sales Tax Assessment Acts do not distinguish between new and second-hand goods. The latter are therefore in the same position as new goods for sales tax purposes.
The second paragraph says -
Subject to paragraph 1031, whenever secondly nd goods are sold by a registered person to a person who does not quote his certificate, in respect of that sale, tax is payable unless the goods are specifically exempted under the acts.
Those are clear-cut regulations, and I cannot imagine that any one dealing in second-hand goods would be unaware of the position as set out both before the bills became law and subsequent to that date.
I now draw attention to the Searl’s case which came before the Supreme Court of New South Wales in September, 1932, in which the action of the Commissioner in claiming tax on second-hand goods was upheld by the court. This is the only court case prior to the recent High Court hearing in which the legality of the taxation of second-hand goods has been in any way challenged.
It has been publicly stated that persons who paid tax on second-hand goods had no rights of objection and appeal in respect of that tax. These assertions have been made in support of the allegation that the tax on second-hand goods has been collected under duress; that is, that the taxpayers have either had to accede to the department’s demands or incur the risk and odium of refusing to pay the tax. Actually, there were very many cases in which rights of objection did exist. Wherever the department issued a notice of assessment in respect of second-hand goods, the taxpayer had a right of objection entitling him, if necessary and if he so desired, to appeal to the Board of Review and, if he were still dissatisfied, from that board to the Supreme Court of a State or to the High Court.
– Only on the sales value of the goods, not on their taxability.
– That right existed and was not exercised. Such assessments were issued in a considerable number of cases, and, in accordance with the clearly expressed intention of the act, carried with them the right of objection and, in the event of the taxpayer being still unsatisfied, of appeal to the Board of Review. The fact that taxpayers did not at all generally use the means available to them to test the legality of the tax by way of objection and appeal, shows that it was generally assumed that the tax was properly payable.
It may here be observed that the bill docs not seek to take away any refund which may be obtained by way of objection. Hence, in any cases in which objections not yet determined have been lodged with the Commissioner on the ground that sales tax is not payable on secondhand goods, the taxpayers concerned will he entitled to a refund of the tax to which their objections apply.
– That is not actually the fact.
– It is absolutely the fact. I object to these interjections of the honorable member. He was markedly insulting during the course of his speech, and I should be glad if he would maintain silence while I am speaking. I shall deal with his earlier remarks a little later.
I believe that I have now produced sufficient evidence to convince honorable members of the intention of the Government and of the Parliament in respect of second-hand goods, and of the widespread knowledge of the trading community of such intention.
I now address myself to the contention that, whatever the intention of the Government and the Parliament may have been, however widely that intention was known, and however much revenue is involved, the Government should abide by the decision of the High Court and make any and all refunds retrospectively involved. That is the principal contention of those who, outside this House, are conducting the agitation against this legislation. I referred briefly to this aspect in my earlier speech. I then stated that, if this were to be the practice, and the Government were asked to accept and retrospectively to apply all decisions of the High Court, whether or not they were diametrically opposed to its intentions, it would be required to accept the principle that in the last resort it was the function of the High Court to define and limit the policy of governments. Such a principle cannot, of course, be accepted.
– I do not think that that is a fair interpretation.
– If we are to accept the decision of the High Court in the face of the intention of the previous Government, it is not at all an unfair inference to draw. It is a principle that has never been accepted by any government. Invariably governments have legislated to overcome the retrospective effect of judicial decisions where the amount involved would have a serious effect on the revenue, and where the intention of the Government was clear.
– That has not been done in this case.
– I would say also that in no instance has a government failed to take this retrospective action in the circumstances that I have outlined. I could give the House a large number of examples in support of that statement, but shall confine myself to two leading examples that occurred during the tenure of office of the Scullin Government, and two out of those that occurred during the regime of the Bruce-Page Government. In respect of the period of administration of the Scullin Government, I refer to two bills to amend the Income Tax Assessment Act. The first, which was introduced in 1930, relates to the taxation of what are known as casual profits, while the second, introduced in 1931, dealt with rebates on dividends. Both of these amendments of the act were given retrospective effect to enable the Government to retain taxation collected over many years which, following judicial decisions, it would otherwise have had to refund. In each case the amounts involved were large. Not only was the law amended retrospectively to deny refunds, but in addition the taxation was retained for the future. I might mention that, out of its generosity, and for no other reason, the present Government is not taking similar action in respect of the sales tax on second-hand goods. That, decision may -have to be reviewed.
The precedents afforded by these two instances are . so remarkably . similar in substance to the present situation that perhaps I may . be allowed to state what they were Prior to 1931 our law was silent in respect of the taxability of profits made on isolated transactions in which something - notably a piece of land - was purchased by an individual or a firm, and subsequently sold at a profit. The department classed these casual profits as income. There was continual resistance to this practice by a large body of taxpayers. Then came a decision of the House of Lords which definitely classed such profits as capital profits, and not as income. The significance of that decision to Australia was, that it established very definitely the fact that any . taxpayer in Australia who lost his case in the High Court and took it to the Judicial Committee of the . Privy Council, would certainly obtain a decision in his favour. Anticipating this, and faced with such a possibility, the Scullin Government quite rightly amended the law to apply retrospectively over a period of seven or eight years, and prospectively, by amending the definition of “ income so as specifically to include such casual profits, thus blocking any claims for refunds and ensuring the legitimate taxation of such profits for the future.
The other instance arose out of what was known as the Douglass case, in which an income taxpayer won a case before the High Court in which he claimed a higher rate of rebate than the department was in the habit of allowing on company dividends included in his assessable income. The Scullin Government amended the act so as to validate past assessments, thus denying the right to very considerable sums which otherwise would have been payable in refunds. In speaking on that amending bill the right honorable the Leader of the Opposition (Mr. Scullin) said -
With the aid of capable lawyers . and taxation specialists loopholes inthe law were discovered and certain persons -were thereby enabled to escape the legitimate taxation which Parliament intended that they ‘Should pay. The court is not concerned with the intentions of Parliament; it is guided ‘by the language of the law, and by the recent judgment men are escaping ‘taxation -which, they . should pay.
We intend to prevent further escapee. Douglass has escaped because be wen his case . . . He has asserted his legal rights but the action he brought revealed a breach. We are now closing that breach -so thatothers maynot get through it.
The action which the Government proposes to take in this instance is less drastic than the retrospective legislation passed by the ‘Scullin Government in either of the two cases quoted. In both instances the intention of the previous governments and the practice of the Taxation Department was well defined, although the law was found to be defective in carrying out that intention.Not only did the Government of the day legislate to prevent refunds - except to the actual litigants - but continued and maintained the previous practice in the future.
In case it may be assumed that the practice I have indicated was peculiar to the Scullin Government I should like, to refer briefly to a few similar cases during the period of governments other than the Scullin Government. First, there was the amendment of the Income Tax Assessment Actby the Bruce-Page Government in 1924 arising -out of . a High Court judgment in the Cameron case. Briefly, Cameron claimed . that in ascertaining his assessable income the Taxation Department ‘ had not right to bring to account the value of live stock at <the beginning and end of the . year. The court upheld his view. The Bruce-Page Government introduced and passed retrospective legislation validating past assessments, . thus in effect denying any possibility of refund and authorizing future assessments for past years that had not already been assessed. I may also mention the amendment of the Income Tax Assessment Act in 1928 following a judgment of the Supreme Court of Victoria in the Kellow-Falkiner case. In this instance the litigants had won their case in regard to section 21 thus, in effect, denying the Commissioner the right to assess on a period other than a normal . financial year. The legislation was made retrospective to validate the past action of the Commissioner in this regard and . to authorize a -continuance of -the practice. This amendment affected a large number of cases, and the total tax involved was many millions of pounds.
At this juncture 1 may mention that the main point of the right honorable the Leader of the Opposition - as I understood it and as I think others did - was that the sales tax legislation on secondhand goods differs from the examples quoted on three grounds. First, that the act I have quoted contained no inherent inequity as between taxpayers;, secondly, that it was amended to continue the tax; and thirdly, that the tax outstanding was in each case collected I maintain that that is a criticism of the form and not of the substance of this legislation.. The proposed legislation is criticized on three main grounds. First,, that we. are abandoning the imposition of the sales, tax on second-hand goods, that we are not seeking to collect the unpaid tax, and that the tax which has been collected has been inequitable even though Parliament intended that it should be. collected. Taking the right honorable gentleman’s first point. The abandonment of. the tax in the future should not be made the subject of criticism under this bill. The abandonment of the unpaid taxation is, for reasons which I have already given is also a matter apart from the main purpose of the- legislation. In other words, the right honorable gentleman would have no real criticism to offer concerning this, legislation if the scope and effect of these bills- were first to validate the payment of tax. on secondhand goods from the start, and to authorize its retention, andsecondly to continue the taxation of second-hand goods universally in the future.. I do not think that is a travesty of the right honorable gentleman’s remarks. If that were done - I do not wish to misrepresent the right honorable gentleman - he would have no criticism to offer concerning this legislation. It. is certainly a possible alternative* I have to inform the House that if this bill is rejected the Government will seriously consider adopting that alternative so that in the future there would be no differentiation at all between taxpayers. The right honorable gentleman has said that legislation on such lines would not be objectionable to him. If this bill is rejected, the only alternative before the Government is to take action on the lines I have suggested; that is, to withdraw this measure, to pass a bill definitely legalizing in proper form taxation on second-hand goods from the beginning up to the present and in the future, and to pass legislation seeking to collect the amount of tax unpaid. That is clearly the only alternative and one which the Government, will seriously consider if this measure is not passed by the House.
Mr.Rosevear. - Why the future?
– Because of the definite criticism of the right honorable the Leader of the Opposition (Mr. Scullin) who says there is a flaw in the legislation. If it is a flaw it can easily be rectified and the Government is seriously considering it at the moment.
It. has been said that the Government is inconsistent in the matter of amending the law following on High . Court judgments, and that where the- decision is’ favorable to the revenue- the Government will not legislate to prevent such a- favorable decision - unfavorable, to the taxpayers - being applied retrospectively. In evidence of this contention, the example of the Sennitt case is quoted. In- reply to. -this criticism, I may remind honorable members that a decision favorable to the revenue is- almost always one which endorses the previous practice of the Government. Although my experience is limited, I have conferred with others, and I believe that the Sennitt case was. unique in that the court held that revenue intended to be collected in accordance with the general scheme of taxation was not, in fact, collected. It said that, property income should attract tax at property rates as the law intended, and not at personal exertion rates. The Sennitt case arose out of the fact that certain taxpayers- had taken undue advantage of a ruling of the commissioner, and had distributed property income as personal exertion income. Admittedly, thishad been done in varying degrees by the class- of taxpayers concerned. The Government was asked to amend the law tonullify the action, of the commissioner. This, the Government refused to do as such action would have benefited equally the deserving and the very distinctly undeserving taxpayers. Instead, the Government was glad’, to find the commissioner willing and able to re-assess the taxpayers concerned on a basis which did substantial justice to all involved. I submit to honorable members that the Government took great pains in the Sennitt case to discover a way out of an extremely difficult situation, with credit to itself, and, with substantial justice to all concerned.
I have attempted to deal with the accusation that it is unmoral for the Government to amend the law following a High Court decision so as to deny the right to retrospective refunds in cases where the intention of the Government was clear, and in which large sums of money are involved. The Government is creating no precedent in so acting. Governments are obliged to take such action, otherwise the task of budgeting to meet governmental obligations would be impossible. In this instance, the Government is giving up the right to tax secondhand goods in the future so that from the taxpayers’ viewpoint the actions brought before the High Court have been fruitful of results.
Before I leave this aspect of the subject, I should like to deal with the proposal that the Government should make refunds to those taxpayers who have not passed on the tax to their customers. This proposal was considered by the Government, but found to be impracticable, for several reasons. In the first place, it is not obligatory on registered secondhand dealers, except in the very rare cases when they sell by wholesale, to show 0 the amount charged as sales tax as a separate entry on the invoice or account; so it would not be possible to deduce from the records of the transactions whether or not the tax had been passed on. I supopse that quite 95 per cent, of the second-hand goods transactions would fall under that class, and in such cases only the total amount of the sale would be shown on the invoice. It will thus be seen that no proof could be furnished to satisfy the Commissioner that the tax had, or had not, been passed on. The second reason that I will mention is that no fixed value or standard of goods exists in the second-hand trade. The goods dealt in are different as to quality, age, size, condition, use, and misuse, and in practically every other respect.
The experience of everybody who does business with a second-hand dealer is surely that a certain price is asked of, but not acceptable to, the prospective customer, who almost invariably offers a considerably less amount, and, in the end, the deal is made at a figure between the two prices. A customer may be asked £1 for a certain article; he may offer 15s., and eventually he may obtain it for 16s. 6d., and that is the amount that would appear on the invoice. The price’ which the customer is willing to pay is largely a matter of bargaining. In such circumstances it would not be possible for the Commissioner, except in one case in a thousand, perhaps, to be completely satisfied that the tax had, or had not, been passed on.
– If the man could not give proof no refund need be made.
– I discussed this point at great length with the Commissioner, and after we had reviewed many classes of transactions in second-hand goods, the Commissioner assured me that it would be practically impossible for him ever to be completely satisfied that the tax had, or had not, been passed on. In these circumstances we should be fooling the public if we offered a provision of that kind as an enticement to pass the bill. I decline to be a party to the inclusion of an ineffective provision of that description in the measure, for it would have no meaning.
– That is special pleading. The provision would have meaning.
– I am sorry that I cannot convince the right honorable gentleman; but, in view of the many cases that have been examined, I am quite satisfied that it would be almost impossible for the Commissioner to be reasonably assured that the tax had, or had not, been passed on.
– Then it is impossible properly to administer section 26.
– I shall deal with section 26 presently; the refunding of the tax is not really the point at issue at all. We may divide the submissions that have been made into two groups. First, there is the group which contended that they did not know that they could be called upon to pay the tax. My answer is that they certainly should have known it. In all the circumstances they cannot hope to succeed on a plea of ignorance of the law. Secondly, there are those who contend that the sales tax regulations and rules are legion, and that, therefore, no one trader can be expected to keep abreast of all of them. My answer is that only a comparatively few rulings and regulations affect any one business. There may be thousands of rules, covering all the transactions of the commercial world; but only a few have application to particular businesses. The number that affect the sale of second-hand goods, whether the business is connected with manufacturing or wholesale dealing or not, is very small. In this circumstance the people who plead ignorance do little credit to their intelligence. I shall mention several cases which have been cited during the debate. One referred to a music warehouse in Sydney, and was mentioned by the Leader of the Opposition; another related to a firm in Adelaide, and was referred to by the honorable member for Barker (;Mr. Archie Cameron) ; I forget the particulars of the third case at the moment. In each of these cases it has been said that in the very early stages of the sales tax administration the department informed persons connected with these businesses that sales tax was not payable on the sale of second-hand goods. I absolutely deny that officers of the department made such statements.
– I did not make that contention in connexion with the case that I brought under notice. I said that the firm was told that tax was not payable on traded-in goods.
– Letters which appear on the file show that this firm and others alleged that they had been informed by officers of the department that sales tax was not payable on the sale of secondhand goods; but we have written evidence that what the departmental officers said in innumerable cases was that sales tax was payable on secondhand goods sold in the ordinary way, but not on second-hand goods taken in part payment for other goods. These three large firms have each offered as an excuse for not paying sales tax on their second-hand goods transactions the contention that they were informed by departmental officers that the tax was not payable, and on this flimsy pretext they have taken care to pay no sales tax on their second-hand goods transactions over the last four years. In the circumstances I feel justified in asking honorable members not to accept the submissions of these firms. The number of regulations applying to such transactions is so small that it says very little for the intelligence of those connected with the firms that they should have put forward the excuse that they were so easily misled or that they misinterpreted the regulations. Such a contention does not hold water with me. However, notwithstanding what I have said, if representatives of these, or any other, firms can produce satisfactory evidence, convincing to myself, that they were assured that sales tax was not payable on second-hand goods transactions in. the ordinary way, I shall see that any such tax that was paid is refunded. I cannot say anything fairer than that.
– On what authority would the honorable member refund the taxes paid?
– I have consulted officials of the Taxation Department and the Treasury, and am satisfied that it can be done.
I now propose to challenge the proposition that, apart altogether from legality, the imposition of sales tax on secondhand goods has always been unjust and inequitable, and that on this ground alone the Government should make refunds of all such taxes paid. I have sought information from the Taxation Department as to who pay sales tax on second-hand goods and I find that a very large proportion of the tax collected is paid by persons or companies in a large way of business. I should like to disabuse the minds of honorable members of the thought that this tax has been paid by the small second-hand dealer in a back street. In order to be called upon to pay sales tax on second-hand goods transactions at all. the second-hand dealers have to be, at the same time, either manufacturers or wholesalers, either of which occupations entails registration. Stress has been laid on the competitive anomaly inherent in the law, in that registered sales taxpayers have been called upon to pay tax, whilst those not registered under the Sales Tax Acts do not have to pay. This is, or was, of course, the fact; but I maintain that the degree of competitive anomaly that is created was more theoretical than actual. It has been stated that the registered sales taxpayer is, oi- was, at a grave disadvantage in competition with his unregistered rival’ across the road. The very fact of registration presupposes some manufacturing or wholesale business, and! this, in turn, generally entails more capital and organization than that within the scope of the unregistered dealer. This is borne out, as I have said, by the sales tax returns, which indicate beyond any doubt that a preponderating amount of second-hand goods sales tax is paid by relatively big firms with large turnover and extensive businesses. Moreover, the very nature of the second-hand goods trade is that it deals, not with standard articles of known value, but with goods of a wide variety of make, age and quality that have been used, abused, and reconditioned in varying degrees. The sale price arrived at is largely a matter of bargaining. The price received by the second-hand goods branch of an established business is, from the nature of it, likely to be higher than that of an unregistered small dealer in approximately equivalent articles in a back street. It may be of interest to honorable members to know that it is estimated by the Taxation Department that no less than 75 per cent, of the tax on second-hand goods has been collected on motor cars, pianos and, since July, 1933, retreaded tyres. I admit being considerably astounded at the amount of the tax collected on second-hand motor cars. My astonishment springs from the fact that, whether a dealer is registered or not, sales tax is not payable on sales of “ traded in “ cars, and it is my impression that a very large proportion of second-hand cars must be “ traded in “ in part payment for new or other cars. Especially am I fortified in this supposition by the remarkable increase in the sales of new cars in the last two years, and in the known experience of motor car dealers that it is only rarely that a new car deal is consummated without the “ trade in “ of an old car, usually a very old! car. It occurs to- me that there might have existed in the minds of motor car dealers some misapprehension as to- the law in this instance. The law is, and has been, that, a car “ traded in “ in part payment for a new ear is considered to be part of a cash transaction. The old car,, when subsequently sold by the dealer, is not liable to sales tax.. Any sales tax that has been inadvertently paid on such transactionswill be refunded, subject to adequateevidence substantiating- the statement that the vendor received the car as a “ trade in “ upon the taxable sale of. a new car, if the Commissioner is satisfied that tax has not been passed on, or that any refund will be passed on. That decision applies to all manner of goods “ traded in “ including pianos.
Reverting to the main argument with which I set out to deal - the argument that the exaction of sales tax on second-hand goods transactions was unmoral - it must .be remembered that one of the great difficulties with which governments have been faced in recent years has been that of finance. Avenues have been sought in which taxation could be borne. The sales tax was introduced by the right honorable the present Leader of the Opposition (Mr. Scullin) in these circumstances. For over four years this tax has been imposed on second-hand goods sold by registered dealers, as well as on new goods; and I suggest that no appreciable hardship, or, at least, no greater hardship than in the case of new goods, has been suffered by the community or in general by any members of the community because of it. The reason is that a person who tries to sell a used article to a second-hand dealer is normally offered a low price, whereas on the other hand, a person who seeks to buy a secondhand article is called upon to pay a disproportionately higher price. I maintain that the appreciable disparity between the purchase price and the sale price of second-hand goods is such that the imposition of a sales tax of 5 per cent, is by no means unjustified, even if, in many instances, it is claimed that the tax has not in theory been passed on to the consumer.
In committee, I shall deal with tho subject of objections and appeal.
– . There is no amendment with regard to that subject.
– There will be ample opportunity for its discussion.
Before I conclude, I may perhaps be allowed to refer to several individual matters in connexion with this legislation, about which there is evidently some public misconception. With regard to hire-purchase transactions in the case of second-hand goods, as distinguished from ordinary leases in which the goods never become the property of the lessee, the position is that -
The Commissioner will continue to collect sales tax on imported second-hand goods. The judgment of the High Court in express terms applies only to goods that have gone into use or consumption in Australia.
– Could not imported goods come in ? ‘
– Not if they were imported as second-hand goods. The volume of such imported second-hand goods is very small.
It may be of interest to honorable members to know that sales tax will not be payable as from the 13th December, 1934, on retreaded tires, and that any tax paid on them since that date will be refunded. I refer specifically to retreaded tires, as there is reason to believe that the position is not clearly understood by tire retreaders.
I may say, in conclusion, that it has been suggested that in some way this amending legislation is incompetent to enable the Commonwealth to retain moneys paid as sales tax on second-hand goods. That aspect has been thoroughly examined by the Attorney-General’s Department, and by eminent counsel, and the Government is assured that no such doubt can in any way be held to exist.
I regret the necessity for having to enlarge on this subject at such length, but I thought it necessary to deal with a number of the arguments that have been raised, in order to make clear to honorable members the Government’s reasons for the action that is being taken.
I remind the House that up to the date of the High Court’s decision, following legal advice, and, in particular, the judgment in the Searl’s case, it was not only the right but also the duty of the Commissioner to levy sales tax on second-hand goods. As the honorable member for Darling Downs (Sir Littleton Groom) has said, we are in this legislation merely confirming the action taken by the Scullin Government. I submit that that is not an unmoral action. The Government, and, in particular, the officers of the Taxation Department and myself, have been constantly engaged on this subject for the last two months. We have canvassed every line that seemed to offer a possible solution of this difficult question arising out of the High Court’s decision. We have threshed out half a dozen alternative schemes. Finally, we came to this scheme, which I still believe is the fairest way out of a most difficult situation. Yet, after two days’ consideration of the Government’s proposals, the honorable member for Wentworth (Mr. E. J. Harrison) thinks fit to brand us as persons who believe in the rule of tooth and claw. I think the term he applied was “ brigands “ or “ bushrangers “. I resent his remarks, particularly in view of the great amount of time that many of us have given to this subject. The honorable gentleman, after scanty consideration of the measure, brandsus as thieves and robbers merely because we do not agree with the opinion of interested parties.
– The Minister is deliberately misrepresenting what I said.
– The honorable member used the words which I attributed to him, and I resent them. The consideration which he has given to this matter during the last two days cannot possibly be as complete as the consideration which the Government has given to it during the last two months. Moreover, I suggest that the moral tone of the Taxation Department and its officials, of the Government, and even of myself, is no way inferior to that of the honorable member himself. I again commend the bill to the favorable consideration of honorable members.
Question that the bill be now read a second time - put. The House divided. (Mr. SPEAKER - Hon. G. J. Bell.)
Majority . . 15
Question so resolved in the affirmative.
Bill read a second time, and committed pro forma.
Debate resumed from the 22nd March (vide page 293) on motion by Dr. Earle Page -
That the bill be now read a second time.
– I have very little fault to find with this bill. Its only defect is that it does not provide greater assistance for that section of the farmers who have suffered most during the last year. The position is bad enough for those who are generally described as successful farmers, those who have raised a crop, and have been able to sell it at some sort of a price. Provision has been made by the Government, but the amount has not yet been approved by this House, for those wheat-growers who suffered a total loss of their crops this season. Those farmers who averaged 12 bushels an acre have already put in their claims for 3d. a bushel, but farmers who did not harvest any crop this year will not participate in that form of assistance. In Australia there are between 60,000 and 70,000 wheat-growers, but I regret to say that the number is gradually diminishing. In the last three years, approximately 2,000 men have gone off the land in Western Australia, so that only about 10,000 farmers are now working their properties in that State. We are, however, more fortunate than some of the other States, because many of our younger farmers, who have been forced off the land, are now engaging in the mining industry with more prospect of immediate success. The amount available for distribution under the arrangement for the payment of 3d. a bushel for marketable wheat is approximately £1,500,000, but farmers who had no crop this year are anxious to participate in this additional form of assistance for which £573,000 is provided under this bill, making the total amount available by way of bounty and assistance approximately £4,000,000.
– How much money has been distributed to farmers?-
– On a basis of 3s. per acre about another £1,900,000 is to be distributed.
– There is a provision in the act with regard to seed wheat.
– That is so. The quantity of wheat required for seed purposes will be deducted from payments to farmers. Under this measure the amount to be made available for Victorian farmers is £192,000. I understand that the farmers in the Mallee district in that
State Lave suffered severely this year, and I have no doubt that their representatives in this House will state their case during this debate. Western Australia will receive the next highest amount, £137,000; South Australia will get £127,000; New South Wales £100,000; and Queensland £12,000. The average production per acre in Queensland is higher than in the other States, but the total production is not quite sufficient for local requirements.
Farmers in South Australia have been badly hit during the last year or two. Their desperate plight is, perhaps, more apparent to the representatives of Western Australia in this House, who travel regularly through the wheatgrowing areas on their way to and from Canberra, than to the members representing that State. The total production ia South Australia this season is in the vicinity of 22,000,000 bushels, as compared with an average production of 35,000,000 bushels. In Western Australia, there has been a decline of about 7,000,000 bushels, due largely to a partial failure in certain districts, particularly around Geraldton where, in normal seasons, there is a fairly high average production. This year our farmers have to contend with the twin evils of rust and drought. I realize that it was impossible for the Government to make adequate provision for the assistance of distressed wheat-growers until the commission had submitted ite report, because until the harvest was gathered, it was impossible to say what was the position in the various States. In South Australia, apart from loss due to the grasshopper plague, which was serious enough in its way, the farmers have been seriously affected by drought. The man who had an average crop of 12 bushels got on an average only 2s. 3d. a bushel at railway sidings, so that with a bounty of 3d. a bushel, his return was only 30s. an acre. In the aggregate, the farmers who harvested their crops will receive approximately £3,000,000, whereas in Western Australia the men who are dependent on this bill for assistance will get only £137,000, equivalent to one twenty-fourth of the amount paid to the more fortunate growers who harvested their crops. In South Australia the men who are on the dole, so to speak - I refer to those who depend on this bill for financial assistance - will only get £127,000 or one twentieth of the amount paid to the more fortunate farmers in that State who harvested their crops. To indicate the position of the wheat-growers in my State, I need only mention that a recent census has shown that of the 10,000 farmers who have remained on their properties, 9,200 have mortgages or liens over their farms or stock, or are knocking at the door of the Bankruptcy Court, so that there are only 800 men who are independent of outside aid, and of those I do not know one that exists in the particular district where this drought and rust has occurred. However, this distribution will be in the hands of the different States, and I am glad to say that, in Western Australia, at any rate, the Minister for Lands understands his job. He has brought forward, with regard to the Agricultural Bank, legislation which not only meets the position so far as the Crown, the outside storekeeper, and the farmer are concerned, but provides that, when a composition is made, the mortgagee must bear his share of any loss. That is as it should be, because there should be an all-round sacrifice in the deflation that has taken place of our great primary industry of wheat-growing. I hope the bill will have a speedy passage. No one can know, until it has actually been tried, whether it will meet the desperate needs of the distressed wheatfarmers of Australia.
.- This is a bill on which there are likely to be quite a number of differences of opinion, and justifiably so. The first is in regard to the manner in which the money is to be distributed in the various States - and in that regard the more elastic the legislation is made by the Commonwealth, the better it will be for everybody concerned. It should be the responsibility of the States to distribute the money according to their knowledge of their own internal conditions. Before we reach that point, however, we must consider the manner in which the £500,000 odd is allocated amongst the different States. I may say, as a South
Australian representative, that my State is extremely dissatisfied with thebasis of distribution. We should be given some idea of the method on which the commission worked in arriving at the respective amounts for the different States. For instance, Victoria is to receive £192,000, as against only £100,000 for New South Wales, £127,000 for South Australia, and £137,000 for Western Australia. There is also £12,000 for Queensland; but, in. view of the fact that that State operated on a particularly advantageous method of marketing for a few years, it. is extremely doubtful whether it is entitled to any amount at all in a distribution of this kind. The chief discrepancy to which I wish to draw attention, however, is that between the amount allotted to South Australia and the amount allotted to the adjoining State of Victoria. The sum of £127,000 for South Australia is very small in comparison with the sum of £192,000 for Victoria. The area under wheat in the two States is practically equal; but Victoria certainly has a better average crop this year than South Australia has. I shall quote figures, officially supplied by the South Australian Minister for Agriculture, regarding the State’s wheat returns. Victoria must produce a set of figures as bad as these in order to justify a. grant even equal to the amount that South Australia is allotted. The figures from the South Australian Minister for Agriculture are as follows: -
I submit that the State of Victoria cannot put up any case of damage from drought, pests or diseases to compare with that. I happen to live only five miles away from the worst of the Victorian country, which is the county of Millewa. I go through there fairly often and was through it as late as October last. The offcial figures of the Victorian Statist for the crop sown the year before last - it was smaller last year - show that in Millewa 188,000 acres, and in Weeah, 207,000 acres were sown. Last year the yield for those counties was small, comparable with the 2.85 bushels an acre I have quoted for 1,006,500 acres in South Australia. It is in that corner of Victoria that the damage from drought and most of the grasshopper damage occurs. If Victoria brings in the adjoining counties of Karkarooe, with 732,000 acres, and Tatchera, with 420,000 acres, where the yield also was small, then on my side of the border we can include the counties of Chandos and Buccleuch, which have a lower average yield over a period of years, and had a much lower absolute yield during the past year than the counties of Karkarooe and Tatchera in Victoria.
– If South Australia’s present yield is not substantially below the average yield, it has no case.
– Our crop is practically a total failure in the counties which I have quoted. I am speaking as a resident of part of a district which had a total failure this year, although it usually has yields of from 10½ to 12 bushels an acre.
– Then that is your case.
– That is the case I am putting up. I admit that in the counties of Millewa and Weeah, in Victoria, they have also had a failure this year. [Quorum formed.] I was discussing the relative yields of Victoria and South Australia. The official returns for South Australia show that 3,180,000 acres were sown last year, out of which 1,006,500 acres, or practically one-third, returned a yield of only 2.85 bushels tothe acre, and another 900,000 acres had a yield of from 5 to 8 bushels to the acre,, or an average of something over 6. In 1934, South Australia experienced oneof the worst wheat crops for many years. Victoria has a better average yield, and a better absolute yield this year -than has South Australia. It would be exceedingly interesting to know on what basis South
Australia is to receive only £127,000, as compared -with Victoria’s £192,000, in the division of the sum of £573,250 to be provided to meet cases of special adversity.
– Victoria has more members in the Cabinet.
– I think that the distribution is being made apart altogether from Cabinet considerations. I understand that it is in conformity with a recommendation made to the Government by the Royal Commission on the Wheat Industry. My electorate adjoins the Victorian border. Farmers in the electorates of Wimmera and Wannon may be receiving assistance equivalent to 3s. or 4s. an acre, whilst on the South Australian side of the fence it is extremely doubtful if this legislation will enable them to get1s. an acre. If we attempt to distribute the £127,000 over the 1,900,000 acres affected, there will be barely1s. 3d. an acre. Seeing that the area in Victoria that is affected by drought and seasonal conditions is only about half that affected in South Australia, the Victorian farmers will be on a much better wicket.
– On what basis has the allocation been made?
– That is a point on which we should have information. A special recommendation was made to the Cabinet by the Wheat Commission after it had presented its report, and I understand that this has been acted upon by the Government. The grounds on which this special assistance is to be granted are limited to particularly adverse seasonal conditions and extensive damage to crops arising from the prevalence of pests and disease. A loss of three bushels an acre in the counties of Weeah and Millewa, in Victoria, or, say, Albert, in South Australia, is much more serious than, perhaps, a loss of 12 bushels an acre in the more favoured counties of either of those States.
This grant was not intended to be used to bolster up the position of farmers in difficulty through investment in land at too high a price. I think that Victoria has a little more than its fair share of farmers of that type, who have been inclined to pay too high a price for wheat land. Farmers in my own State are by no means free from blame in this regard. One farmer in the electorate of the honorable member for Grey (Mr. McBride) paid the astonishing price of £29 17s. 6d. for wheat land, and, in the end, he became insolvent. There is no shortage of such cases.
– How many wealthy farmers will get a “ pot “ out of this grant ?
– The wealthy farmer is but a figment of the imagination of the honorable member for Barton (Mr. Lane). I heard all the evidence given before the . Wheat “Commission in South Australia, and, knowing that State from end to end perhaps better than anybody else in this House, I am aware how few farmers in my State paid federal income tax last year. According to information obtained by me from the Premier of South Australia, fewer than 50 farmers in the whole of the State paid the tax. The point must not be overlooked that their tax was not assessed solely on their wheat production. Wool also was considered, and a man who has sheep to-day is in possession of a liability rather than an asset. Any member of this Parliament who imagines that the wool industry is in a position to-day to meet its expenses is sadly lacking in knowledge of Australia’s chief primary industry.
– Is the honorable member speaking of South Australia only?
– No. I claim that wool-growing in Australia today is not a payable proposition. Men cannot produce wool profitably at the world price now operating. If we could go back to the price received twelve months ago the position would be different. Seven years ago, 17.8 per cent, of the State income taxpayers of South Australia were farmers and producers, but three years ago their proportion had dwindled to 3 per cent., and since then it has dropped to just over 2 per cent. In no State of the Commonwealth is the income tax exemption figure so low as it is in South Australia, the amount being only £100. The tax is levied on a graduated scale, commencing at1s. 6d. in the £1. Furthermore, the exemptions for children are smaller than those allowed in any other State in the Commonwealth. I am attempting to point out especially for the benefit of honorable members from other States that the wheat industry in South Australia has dropped to a lower economic level than it has reached in any other part of the Commonwealth. I am not exaggerating the position. As a State, South Australia is certainly responsible for some of the difficulties which now face its wheat industry. Settlement there has pushed out to areas on which it is economically impossible to grow wheat.
– South Australia did not have technical advisers; it is time it got them.
– The technique of farming is entirely different from that of mining.
– No technique is needed for farming when the money is to be got from the Government.
– It is natural that mistakes should be made when people have no idea of the difficulties that will confront them in the opening up of new land. I repeat that the difficulties confronting the wheat industry in South Australia to-day are due mainly to the fact that the wheat belt in that State has been pushed further than in any other State of the Commonwealth and that attempts are being made to grow wheat in areas in South Australia which it would be wise for the industry to abandon.
Another point I stress is in relation to clause 2 of the bill.We should not attempt to make too rigid returns governing the bounty. The condition in the bill in this respect is so severe that it might create a wrong impression in the. minds of the State authorities who will be charged with the distribution of this bounty. I am not reflecting upon the goodwill or the ability of the gentlemen who will be charged in South Australia with the administration of the provisions of this bill ; but I contend that too often such men are inclined to be guided by the experience of a lifetime in courts rather than by the actual conditions existing in an industry. I, therefore, intend to support an amendment which will be moved in committee to make this legislation a little more elastic. Unless the Government is able to produce evidence from the Wheat Commission or from any other authoritative source to justify what I consider will be a very unfair distribution of this bounty, I feel that I myself or some other honorable member representing a South Australian constituency will be charged with the unpleasant duty of moving to amend the amounts payable to the different States.
– Why deal in that way with New South Wales?
– I want to be fair to New South Wales; my present grievance is against Victoria. However, I assure the honorable member for Barton that the day will come when more attention will be paid to him than he expects.
– What estimates has the honorable member in view?
– The estimate made by the South Australian authorities amounted to £40,000 or £50,000 above the amount of the bounty which that State is to receive under this bill. Another amendment which will be moved in committee, and which I shall support, will be designed to guarantee that any money made available to growers shall be paid directly to the growers and be used for their own benefit or that of their families. I am not attempting to put up a case against the claims of creditors in this regard; but I understand that this money is being voted for a specific purpose, namely, to enable the farmer to repair some of the damage he has suffered as a wheat-grower, and, therefore, I contend that it should not be treated as part of his ordinary income payable to his ordinary creditors. The purpose of this grant is to enable growers to remain on the land and thus increase the production of a commodity on which the prosperity of Australia so much depends.
– The distribution of the money would be in the hands of the -State government.
– It would be for the State government in each case to decide the method of distribution. I do not think the honorable member for Martin would agree that this money should be voted without the provision of safeguards as to whom and for what purposes it should be distributed. It should not be claimable in satisfaction of State income tax or other debts owing to a State.
– Under the present provisions of the bill that could not be avoided.
– Then in committee an amendment will be moved to obviate that possibility. Subject to the qualifications I have stated I support the bill.
– There are three points that have crossed my mind during the discussion of this bill, and I shall raise them now so that the Minister, when replying to the debate, may be able to throw some light upon them. The first touches upon the method of distribution of the money itself. I should like to be advised as to whether after the circumstances under which farmers are to receive this money have been determined the distribution of it will be left to the State authorities, or whether machinery will be provided by means of which the Commonwealth will make the payments direct to the growers ? My reason for raising this point is that certain legislation, of which we do not approve, has been passed in some States, under which stay orders, and what arc known in New South Wales as supervisors in charge of holdings and farming businesses, can be satisfied from such grants.
– Similar provision with regard to supervisors applies in South Australia.
– Apparently the practice is general. I want to know definitely whether these supervisors or anybody acting under a State law of this nature will have any authority to interfere in any way with any grant that might be made to a farmer under this measure?
– This money will become part of the ordinary income of the grower and subject to the ordinary law affecting his position.
– Then this money is to be used to buttress the financial position of those who hold mortgages or liens upon a farming property. This Parliament should not approve of that.
– That is not a fact.
– I find it hard to agree with the honorable member that it is not a fact. The honorable member for Fremantle (Mr. Curtin), by his interjection, has raised a very important point, because all distributions made by the Commonwealth seem to be subject to similar processes instituted by State law. We have had such an experience in connexion with allocations made by this Parliament for Christmas relief to the unemployed. . This money was regarded as income, and as such it came within the scope of various State regulations governing relief systems, unemployment, and so on. I ask the Minister whether these grants to farmers will be subject to similar action by the State authorities? Unless provision is made specifically to meet this possibility there is a danger that this money will be treated as income and will come under State regulations in regard to supervisors. This will mean further concessions to the mortgagee.
– An amendment to meet that contingency will be moved in committee.
– Members on this side of the House will be pleased to support such an amendment. We have argued that concessions made by the Commonwealth were over and above concessions made by the States, that they should go direct to the parties interested, and that the States should not be permitted to divert this money into other channels.
A second point which has been raised in the debate concerns the methods by which the Cabinet decided upon these allocations. I ask the Minister if the Wheat Commission set down any basis to guide the Government.
– The commission stated the amount, that is all.
– I am surprised that it did not go further than that, and that the Cabinet did not have more information at its disposal to guide it in considering this aspect of the matter. The Minister might elaborate his remarks upon that aspect of the matter so that we may be in a position to understand why, for instance, £192,000 is to be allocated to Victoria and £100,000 to
New South “Wales, and so on. Honorable members should be better informed as to the reasons which actuated the Government in arriving at this allocation. “We recall that before the coalition government was formed, members of the United Australia party laid it down in a similar bill last year that payment of bounty would not be made to other than farmers in necessitous circumstances. The point made by the honorable member for Barton (Mr. Lane) cannot be brushed aside lightly. There may be anumber of farmers whose interests, are not confined to one commodity.
– They could not be assisted under this bill.
– They may be interested in other forms of primary production. The general taxpayers should not be called upon to make contributions to farmers who are not in necessitous circumstances.
When the last bill was brought down an amendment, designed to ensure that the bounty would be payable only to farmers who derived no taxable income, was moved, but was not accepted by Parliament. While listening to the honorable member for Barker it struck me that a similar amendment would suit the case which he was making, because he said that there were few farmers in South Australia who paid income tax last year. If honorable members can obtain information from the Minister on the points I have raised, the passage of this bill will be facilitated.
– In rising to support this measure I desire to take advantage of this opportunity to congratulate the Government on its promptness in honouring the promise made in August of last year to assist the wheat industry to the extent of £4,000,000. It will be remembered that at the end of July last the Royal Commission on the Wheat Industry, in its second report, recommended that, in respect of the previous season’s operations, the wheat industry should be assisted by the provision of that sum. The Prime Minister (Mr. Lyons), within a few days of the receipt of the report, made, on behalf of the Government, a promise that the industry would be assisted to that amount, and the bill now before the. House is designed to give effect to that promise. To those of us who during the last two or three years have experienced a good deal of difficulty in impressing upon the Government the seriousness of the position of the wheat industry, this altered attitude on the part of the Government has been indeed very pleasing. In recent months the royal commission has presented its final report. All honorable members will agree that it contains a fund of information in regard to the whole of the ramifications of this great industry. It contains recommendations in regard to the rehabilitation of the industry, and if they cannot be successfully carried out it will be a serious position not only for the wheat-growers, but also for Australia generally. The bill now before the House, in my opinion, is the best of its kind that has been presented to Parliament for dealing with wheat-growers. Its provisions make for a better and more equitable distribution of the assistance to be given than ever previously proposed. It is pleasing to notice that the obnoxious clauses which appeared in the bill before the House twelve months ago are not repeated in this measure. The only fault I can find with this bill is that the Government is not in a position to state definitely at the present time what it proposes to do in connexion with the recommendations contained in the final report of the Royal Commission on the Wheat Industry. I gather from interjections which have been made in this debate that some honorable members still seem to think that there are some wealthy growers engaged in the wheat industry.
– The honorable member studies only the pockets of the growers.
– If the honorable member will peruse the report of the royal commission he will improve his knowledge of the state of this industry. Unless it can be put on a cost basis it will bring about a very serious position affecting not only the growers, but also the whole of the people of this country. I appreciate the fact that there may be constitutional as well as other difficulties arising in connexion with the recommendations of the Wheat Commission, but I urge the
Minister for Commerce (Dr. Earle Page) to take steps to impress upon the States the urgent necessity for collaborating with the Federal Government in order to secure the rehabilitation of this industry. According to the report of the royal commission the total debt of the wheat industry amounts to the staggering sum of £150,000,000. Computed at 5 per cent, the interest bill on this amount is £7,500,000. The crop for 1934 is estimated at 120,000,000 bushels which, if sold at an average price of 2s. 6d. a bushel at railway sidings, will yield £15,000,000. It will thus be seen, that it will take one-half of the 1934 crop to meet the interest bill on the indebtedness of the industry. It surely must be obvious to all honorable members that no industry can continue to produce at anything approaching its maximum capacity under such conditions. The honorable member for Barker has referred to the crops in certain States, mentioning especially Victoria. As a matter of fact the wheat crop for Victoria for 1934 has been, with one exception, the smallest crop for1 the last ten years. The average crop of wheat in Victoria is about 40,000,000 bushels. According to the latest information at our disposal, the crop for last year will total from 25,000,000 to 26,000,000 bushels, which is materially below the average. I intend to support the bill; but I urge the Minister in charge of it to take steps to see that the States are brought into line in order that effect may be given to the other recommendations of the royal commission.
.- I support the bill. I wish, however, to emphasize the disparity that is noticeable in the allocation of the grant among the different States. Wheat-growers throughout Australia followed closely the investigations of the royal commission, gave evidence before it, and, subsequently, took a keen interest in its report. It will be remembered that the commission in one of its earlier reports stated that an amount of £4,000,000 was considered necessary to enable the wheat industry to be carried on, but that it could not at that time recommend the method of its allocation. It was thought that it might be distributed on a bushel basis, but, that, in. view of the varying seasonal conditions in the different States, such a method might not meet the needs of the industry. Consequently, the recommendation relating to the distribution of this amount was delayed until recently. What the commission then did met with general approval in the industry; it recommended distribution under three head’s, namely, a subsidy on a bushel basis of 3d. a bushel, a subsidy on an acreage basis of 3s. an acre, and the distribution of >a certain amount among farmers who are in necessitous circumstances due to adverse seasonal conditions or extensive damage to their crops arising from the prevalence of pests or disease. Having in mind the large area of wheat land sown in South Australia this year, and possessing more than a passing knowledge of those areas, I feel that a large number of farmers who definitely come within the category of those who have suffered serious loss and hardship will receive very little under the proposed allocation. It has been pointed out that the area in South Australia, which produces from 5 to 8 bushels to the acre, comprises nearly 2,000,000 acres. Even if the distribution were made over the area represented by the lower production mentioned in the first instance - 1,060,000 acres - it would be infinitesimal, and would not meet either the intentions of the commission or the necessities of the case. Before we reach the committee stage of the bill, at which amendments with respect to the proposed allocations will be moved, I ask the Acting Prime Minister (Dr. Earle Page) to give information concerning the basis upon which those allocations have been made. I submit that upon almost any basis which complies with the provisions of the bill, the farmers of South Australia will, be definitely worse- served than those of any other State. Surely in the distribution of a grant of this description the assistance to farmers should not vary in Victoria, South Australia, Western Australia, or any other State. Under the proposed alterations. I cannot imagine any basis of calculation upon which an equitable distribution may be arrived at. The mere consideration of the drop that has taken. place in the yield of the different States will not result in the adoption of a fair method of distribution, because, in such an event, a farmer who last year obtained 30 bushels to the acre and this year only 10 bushels might come within the scope of the measure. Such a farmer could urge hardship or necessity only by reason of the high capital cost of his land, due materially to the price paid for its purchase. I do not think that it is the intention either of the Government or of the House to distribute this relief on that basis, and thus bolster up the high capital values which obtained in prosperous times when the price of wheat was very much higher than it is to-day. This is definitely designed to meet the case of persons who have obtained a very small return from their land, and, consequently, arc unable to meet their commitments. I again ask the Acting Prime Minister to give some indication of the basis upon which the allocations have been made, so that we may determine whether they in fact meet the wishes, not only of the commission, but also of the Parliament.
Debate (on motion by Mr. Lane) adjourned.
Bill returned from the Senate with an amendment.
Bill returned from the Senate without amendment.
Bill received from the Senate, and (on motion by Dr. Earle Page) read a first time.
The following paper was presented: -
Northern Territory - Report by Dr. W. G. Woolnough (Commonwealth Government Geologist) on certain Gold Mining Leases.
AIR Port at Fremantle - Federal Capital: Eviction at the Causeway - War Pensions - British Import Duty on Scoured Wool.
Motion (by Dr. Earle Page) proposed -
That the House do now adjourn.
.- For some considerable time, representations have been made to the Defence Department to assist in the establishment of an airport at Fremantle. Influential interests in the city of Fremantle, having regard to the importance of the port and also taking cognizance of what they believe to be the considerable activity which the Defence Department is displaying at. Fremantle in the matter of improving the defences, not only of Fremantle itself, but also of Rottnest Island, feel that the time has arrived when serious consideration should be given by the Government to the representations made to it to expedite the initial proceedings in respect of the establishment of an airport at Fremantle. I intended to speak at greater length on this subject, but at this late hour I shall merely bring the matter definitely before the notice of the Minister for Defence. I sincerely trust that, before the House rises, he will be able to make some considered statement as to whether it is intended to facilitate the commencement of this very important work.
.- I desire to bring under the notice of the House, and particularly of the Minister for the Interior (Mr. Paterson) a case of eviction at the Causeway, Canberra. A tenant of a government cottage, who has been out of work for nearly five years and who has a wife and three children, are to be evicted-
– Another house has been found for that person.
– Yes ; but although he has a wife in ill health and three children, it is proposed to provide them with, accommodation in a slum area, where the accommodation is quite unsuitable.
– A doctor has ordered the woman away from that quarter.
– The Minister should give further consideration to the matter, especially in view of the fact that his wife is in indifferent health and there are three children to maintain. I trust that the Government will- not act in the manner proposed. It appears that this man went to the agent who is in charge of these properties, and handed him, I think, lis. 3d. as one week’s rent, but the agent, without the knowledge of the tenant, gave a receipt as a payment of arrears. I regard that as a trick on the part of the agent. This man has lived in the Federal Capital Territory for about ten years, and has been occupying the home from which he is to be evicted for five or six years. It is now proposed to find him accommodation in the slum area at Molonglo. I trust that the Minister will reconsider the matter, and delay the action which the Government proposes to take.
Last week I directed a question to the Minister for Repatriation (Mr. Hughes) in connexion with the position of certain returned soldiers, who arc unable to obtain a war pension. I believe that my experience of the Repatriation Department is similar to that of other honorable members. Quite a number of returned soldiers, who are suffering from tuberculosis, on appearing before the Commissioner, are refused a war pension simply because the authorities contend that the complaint from which they are suffering is not due to war service. In the question which I directed to the Minister, I pointed out that returned soldiers suffering from such complaints should be entitled to the pension. The men who enlisted for service abroad were not afflicted with this complaint, but many of them returned slightly gassed, or otherwise affected. After a lapse of years, lung complaints developed, which, in all cases, were due to war service. The Government should make some representation to the Commission to ensure that those who are suffering to-day receive a pension. I honestly believe - and I know other honorable members do - that their present disabilities are due to war service. I have had several such cases brought under my notice, but I wish to refer particularly to that of a nian who returned from the war slightly gassed. He returned to his usual employment without attempting to obtain any financial assistance from the department, but after a lapse of years, his condition became gradually worse. To-day that man is a complete invalid. He applied for a pension; but, although he was discharged from the military forces as suffering from the effects of gas, he was informed that his application could not be granted, as his present condition was not due to war service. I submit that greater consideration should be given to cases of this kind by the medical board. I know of very few men in my district who have received what I would call reasonable treatment from the board, and I have knowledge of very few cases that have received sympathetic consideration from it. I hope that the Government will be able to afford some relief to the class of ex-service men to whom I have referred.
– There appeared in the Australian press recently a statement to the effect that the British Government intended to impose a duty of 10 per cent, on imports of scoured wool. Several persons in Victoria who are anxious about the repercussions that such action would have on the Australian woolscouring industry have asked me to obtain some information on the subject. Is the Acting Prime Minister (Dr. Earle Page) able to inform me whether he has received any intimation from the High Commissioner that such action is proposed by the British Government; or are the reports based on mere rumours?
– Inquiries have been made from the High Commissioner on the subject mentioned by the honorable member for Melbourne Ports (Mr. Holloway), and it has been ascertained that the reports have arisen following upon a request from certain British fellmongers that such a duty should be imposed. The proposal, at the moment, is quite indefinite.
I shall bring under the notice of the Minister for the Interior (Mr. Paterson) the remarks of the honorable member for Lang (Mr. Mulcahy).
A day or two ago I promised to obtain copies of the farmers’ debt adjustment measures passed by the various State parliaments. I have obtained them from New South Wales and South Australia, and will lay them on the table of the Library for the convenience of honorable members. The legislation of Western
Australia on the subject will be found in the volumes containing the statutes of that State.
Question resolved in the affirmative.
House adjourned at 11.53 p.m.
The following answers to questions were circulated: -
en asked the Minister representing the Postmaster-General, upon notice -
– The answers to the honorable member’s questions are as follows : -
Wheat Industry : Returns, Estimates, and Quotas.
e. - The information is being obtained, and will be furnished as soon as possible in answer to a series of questions asked by the honorable member for West Sydney (Mr. Beasley) regarding returns, estimates, and quotas in connexion with the wheat industry.
– The information is being obtained, and will be furnished as soon as possible, in answer to a series of questions asked by the honorable member for Riverina (Mr. Nock), regarding returns, estimates and quotas in connexion with the wheat industry.
y asked the Minister for Health, upon notice -
Will he make representations to the Government of the State of Victoria with a view to having all meat from the Werribee sewage farm branded in such a way that consumers can avoid it when desiring to purchase meat not affected by beef measles?
– This is a matter entirely of domestic administration by the State Government of Victoria; the Commonwealth has no authority to intervene, and has no official knowledge of the circumstances.
en asked the Vice-President of the Executive Council, upon notice -
– The answers to the honorable member’s questions are as follows : - 1 and 3. Papua and New Guinea are both “ territories “ under the authority of the Commonwealth within the meaning of section 7 of the Navigation Act. 2 and 4. Permits to carry passengers or cargo between Australia and those territories, are not necessary, as, following on the report and recommendations of the 1925 Royal Commission on the Navigation Act, trade between the Commonwealth and those territories was, by orders in council made in August of that year under the second proviso to section 7, exempted from the coasting clauses of the act.
Federal Capital: Eviction at The Causeway.
y asked the Minister for the Interior, upon notice -
– The answers to the honorable member’s questions are as follows : -
e.- On the 28th March the honorable memberfor Boothby (Mr. Price) asked the following questions, upon notice: -
I am now in a position to supply the following answers: -
Whilst there is a demand overseas for citrus juices the markets there are highly competitive because a number of foreign citrus-producing countries are able to produce and export citrus juices at relatively low costs. Development of Australian export on a larger scale depends on the ability of manufacturers in the Commonwealth to compete with foreign suppliers on overseas markets.
Cite as: Australia, House of Representatives, Debates, 3 April 1935, viewed 22 October 2017, <http://historichansard.net/hofreps/1935/19350403_reps_14_146/>.