6th Parliament · 1st Session
The President took the chair at 3 p.m., and read prayers.
Assent to the following Bills re ported: -
War Pensions Bill (No. 3).
Supply Bill (No. 2) 1915-16.
Supply (Works and Buildings) Bill (No. 2) 1016-16.
Sugar Purchase Bill.
War Census (Postal Matter) Bill.
Wireless Telegraphy Bill.
– I ask the Minister of Defence if he has confirmed the appointment of Dr. Carty Salmon as medical officer in command of the Base Hospital, St. Kilda-road?
– Upon inquiring into this matter I found that the appointment is one which does not come before the Minister for confirmation. Under the powers vested in the Commandants to call upon officers for service, the Victorian Commandant is vested with authority to make this appointment, and it was made in that way.
– Has the Minister of Defence power to review appointments by the State Commandant, such as that of Dr. Carty Salmon to command the Base Hospital, Melbourne?
– -Every appointment is subject to review by the Minister, and by the Military Board. I understand that some objection has been taken to Dr. Salmon’s appointment on the ground that he has not practised as a doctor for a considerable time. I find on inquiry that the position is not medical, but administrative, and I therefore see no need to interfere with the’ Commandant’s action.
– Is Dr. Carty Salmon identical with the high, great, glorious, and most worshipful grand’ master of the. Masonic Lodge of Victoria ?’ If the Minister has not that information now, can he supply it later.?
– I do not think that that is a question upon which the Defence Department can supply information.
– I think your Selection Committee could.
– I have an explanation to make and an apology to offer to honorable senators for my absence when the call of the Senate took place on Thursday last. It will doubtless be recollected that I was in my place in this Chamber, and, as a matter of fact, spoke, during the early portion of Thursday’s sitting. A friend of mine, however, in terviewed me here, and. solicited my presence on a matter of some public importance at a place down the city. I therefore accompanied him thither, andupon attempting to returnfrom the bottom end of Collins-street I found myself impeded by the large concourse of people which had gathered to witness the funeral of the late Major-General Bridges. The result was that I reached the parliamentary buildings only to find that the Senate had just risen. I can assure honorable senators that. I was absent in no contumelious spirit, and I hope, therefore, that they will accept my apology.
Motion (by Senator Pearce) agreed to-
That Senator Bakhap, having made a satisfactory explanation of his failure to answer the call of the Senate; and having apologized for his absence, be excused for failing to answer the. call.
Officials’ Employed: Cooks and Waiters
-I ask the Assistant Minister if he has yet obtained a reply to the questions which I put to him. some time ago in regard to the. number of officials engaged at the different railway offices in connexion with the transcontinental railway - at the Melbourne office, the Kalgoorlie office, and. the Port Augusta office?
– I have not the informationyet, but I will endeavour to obtain it right away.
– Has the Minister representing the Minister of Home Affairs received information regarding, the conditions and hours of cooks and. waiters at the western end of the transcontinental line?
– I have received the following, information: -
– On Tuesday last, in reply to a question which I put to the Minister of Defence, I was assured that men recruited at Sydney were not compulsorily sent away after they had been enlisted. In these circumstances, I ask the Minister whether he is aware of the fact that I have received a letter from the Department informing me that men enlisted have been turned adrift, and that instructions were now being given to discontinue the practice?
– I am not aware that the honorable senator has received a letter from the Department. Has he received it from theDistrict Head-quarters?
– I have received it from the Melbourne Head-quarters. It is signed by Mr. Trumble.
– That letterhas been sent without my knowledge, and I would like “the honorable senator to let me have a copy of it. The information which Isupplied to the Senatewas that which hadbeenfurnished to me.
Treatment of Sick and Wounded soldiers.
SenatorNEEDHAM.- I ask the Ministerof Defence whetherhe has received any further information in connexion with the charges made regardingthe supply of food to sickand wounded soldiersat the Harefield Hospital, England’?
– On the 26th ultimo the honorable senator asked -
The replies given to those questions were as follow: -
A cablegram in the following terms was accordingly despatched to the High Commissioner’s office: -
Articles appearing Melbourne Herald, 23rd inst., severely criticising arrangements Harefield, quoting Rita Fiske. Appears she furnishedmaterial articles; also Katherine Prichard,British Australasian. General nature complaint that insufficient food, indifferent ‘quality. Only goodmealthat provided A.N.A. picnic. No attention special cases, when men unable eat ordinary food. Minister would appreciate brief report week-end cable. anda reply as under has now been received -
Your week-end received here 31st. When complaints were made, High Commissioner personally investigated them. The Australian auxiliary hospitals are under Imperial authority, and British dietary scale was in force. He, out of RedCrossfunds from Australian branch, ‘authorized extras, since which complaints have ceased. Agent-General South Australia lives near the hospital; often visits it,andspeaks in highest terms of management, and contentment of men.
– I ask the Ministerof Defence whether he has any ‘further information to impart in regard to the recall ofLieutenant-Colonel Ramsay Smithand Matron Bell, also in regard to the position of Lieutenant- Colonel Barrett, either in relation to theDefence Department or to his activities in connexion with the Australian Red Cross ?
– As I have already informed the Senate., the Department has asked tobe supplied with a report in regardtothe threeofficers whom the honorablesenator has mentioned. That report has not yet arrived. Wehave, however, informed the RedCross Society that we have noobjection to Lieutenant-Colonel Barrett remaining in Egypt, if he wishes to do so in connexion with ‘Red ‘Cross work, but that he must be dissociated entirely from military work.
– -Is he still an officer of the DefenceDepartment ?
– All three are officers of the DefenceDepartment,but are subject to recall. All three have been relieved of any work so far as the military authorities are concerned.
– I ask the Minister of Defence whether the Department has any control over thefundscollected in Australia by the Red Cross Society, or whether it acts in any way in conjunction ‘ with that society in the distribution of those funds?
– The Defence Department has no control over any of the funds, including the Red Cross Society’s funds, which have been raised in Australia ; but those who have been intrusted with the distribution of the funds in question, and with the purchase of goods for our soldiers, work in co-operation with the Department in tlie distribution of those goods. The Department affords the trustees of those funds every facility in that connexion. At the same time it accepts no responsibility in the matter.
– I suppose that no camp has been the subject of more conflicting reports than has the Liverpool Camp. I have had reports which have condemned it, and others which have upheld it. In view of all the circumstances, I certainly will go carefully into the whole matter as soon as I have sufficient time to do so; and with this end in view I shall probably make a personal inspection of it. Up to the present time, 1 have not arrived at any decision in respect of removing the Camp from its present site, although another camp is being established at another site on the training area, namely, at Holdsworthy. But we have had complaints in regard to Holdsworthy, and one of the complaints made by the men is that it is too far from the railway station, and that if a camp were located there it would be awkward for them whenever they wished to visit Sydney.
– Is it not a fact that a considerable sum of money is being expended in the erection of additional huts at the present Liverpool Camp, and if so, would it not be better to . suspend operations in that connexion until a decision in respect of the suggested removal of the Camp has been arrived at?
– It is a fact that a considerable sum of money is being ex pended on huts at all our military camps; and we cannot suspend those operations, because if we did so there would be more complaints.
– Is Colonel Kirkland still Commanding Officer at Liverpool Camp? I believe he was suspended for a time, or that something else was done in regard to him. Has he been reinstated in the position, or is it intended to continue him there ?
– Colonel Kirkland is the Camp Commandant at Liverpool. He has not, to my knowledge, been suspended. The question of his retention there is under consideration.
– I ask the Minister of Defence whether it is the policy of the Department to select officers in each military district to command the portions of our Expeditionary Forces which are raised in those districts, or whether officers are chosen in one district to command the men raised in another district?
– To what commands does the honorable senator refer t
– To the appointment of officers in any given district. Do you select the men in that particular district for the Expeditionary Force commands?
– So far as the Expeditionary Forces are concerned, in the selection of officers for the higher commands we treat the Commonwealth as a whole. For the command of a brigade we select the officer that in the opinion of the military authorities is best fitted to command, no matter from what State he may come. In regard to subsidiary commands, we endeavour, as far as possible, to select the officers from the State in which the unit is being raised, because of their familiarity with the men of whom they will have the immediate command; but cases sometimes arise in which there is no officer deemed suitable in that particular district. Battalion commanders are sometimes brought from another district, but as a rule they are selected from the district from which the battalion is raised. So far as regards district administration in connexion with the camps, although not necessarily in connexion with the Expeditionary Forces, we treat the military list of the Commonwealth as a whole, calling up any officer we think fit from any district, and sending him to any part of the Commonwealth where we think his services can be made good use of.
– There are complaints that men have been brought from other districts.
– That has been done where it has been deemed advisable.
– Has the Minister of Defence received further information regarding the question asked by Senator Story about the control by Cook and Sons of the transportation of the effects of deceased soldiers?
– The arrangement entered into with Cook and Sons is as follows : -
The effects of deceased soldiers of the Australian Imperial Force are dealt with as follows: -
The officer in charge of the AdjutantGeneral’s Office at the Base is responsible that the pay-book, and all available documents and effects, are searched for a copy of the will left by deceased; that the pay-book after the withdrawal of the will is sent to the paymaster, and that the will, and all documents of value, are transmitted, together with any other effects, to the Australian section of the Intermediate Base Depot, Alexandria.
The kit of the soldier, and any personal property which it is not desirable to send away, are sold or otherwise disposed of, and the amount realized by the sale is sent to the District Paymaster, and credited to. the deceased soldier’s account.
The personal effects of a sentimental value are not sold, but are disposed of in accordance with the directions in the will, or, if there is no will, they are transmitted direct to the next-of-kin shown in the soldier’s records.
Following on the procedure adopted by the Imperial authorities, who have arranged for effects of deceased members of the British Army to be forwarded to Messrs. Cox and Company, London, similar arrangements have been made by the Officer Commanding, Australian Intermediate Base Depot, Egypt, with the approval of the Minister for Defence, for Messrs. Cook and Son, in respect to deceased members of the Australian Imperial Force. Parcels containing these personal effects are handed over to Messrs. Cook and Son for despatch to relatives, th is firm acting merely as forwarding agents.
No information has yet been received regarding the rates to be paid for the service, put it is presumed that the cost will be based on the rates approved by the Imperial authorities for similar service for the British Forces. Particulars in this connexion are being obtained from the Officer Commanding, Australian Intermediate Base, Egypt.
The Minister of Defence has also approved of such effects being insured.
I would suggest to honorable senators that, as they will be repeatedly asked questions concerning this information, it would be well for them to cut it out of Hansard.
– Has the Minister of Defence received any report from Tasmania as to the necessity or desirability of establishing a second military camp in the northern part of the island?
– No report has yet been received.
– Is the Minister representing the Minister of Home Affairs aware that there is a very limited knowledge in the community as to the responsibility of every person over eighteen for making one of the returns under the war census, and that the limited character of that knowledge is most apparent amongst the female portion of the population? Will the Government take steps to have it brought home to the public that every person over the age of eighteen is bound to make one of the returns?
– I shall bring the honorable senator’s representations under the notice of the Minister, to see what can be done to give greater prominence to the matter.
-Colonel Sir Albert Gould. - Is it intended to require domestic servants to send in returns?
– The Act says “ all persons.”
The following papers were presented : -
Commonwealth Electoral Act 1902-1011 and Referendum (Constitution Alteration) Act 1000-1912. - Regulations. - Statutory Rules 1915, No. 154.
European War - Further Correspondence with the United States Ambassador respecting the treatment of British Prisoners of War and Interned Civilians in Germany - Paper presented to British Parliament.
Lands Acquisition Act 1906 - Land acquired under, at -
Kalgoorlie, Western Australia - For Defence purposes.
Lytton, Queensland - For Quarantine purposes.
Public Service Act 1902-1913-
Appointments, on probation, without examination, of the following Engineer
Operators, Wireless Telegraph Stations : -
A.Bagot,Class F, Adelaide.
G.G. Phillips, Class E, Townsville.
Promotion ofR. W. Hamilton, as Clerk, 3rd Class, Accounts Branch(Expenditure), New . South Wales.
Return of Temporary Employees for the financial year 1914-15.
Supply of Intoxicants
asked the Minister for ‘the Navy, upon notice -
Is it a fact thatintoxicating liquors were dispensed at the launching of the destroyer Torrens last Saturday at Cockatoo Island ? If so, and , in view of the example set by His Majesty the King in abolishingintoxicants fromhis household during the war period, does theMinister not consider that similar example should be shown at public functions such as the launching ofwar vessels? Will the Minister takesteps to preclude intoxicants being served at future launching ceremonies?
– The answer is -
The practice followed at the launching of the Torrens will be followed at the launching of theBrisbane,that is, drinks of various kinds will be available, and those present may please themselves as to what they drink.
SenatorBLAKEY asked the Minister of Defence, upon notice -
Has an officerofthe Department visited Hamilton (Victoria.) for the purpose of reporting on itssuitability as a military encampment site?
If so, has his report been presented?
Will the Minister state the nature of the recommendations contained therein and will he give effectto same?
– Theanswers are -
asked the Minister of Defence, upon notice -
In view of the urgent need for medical menat the seat of war, and of the serious depletion of the medical staffs in the public hospitals of Australia to supply adequate medical attendance to our troops, will the Minister take steps to insure that the many duly qualified, law-abiding, reputable medical men long established in Melbourne, with other medical men, including the homoeopathic practitioners over the Commonwealth, shall receive the official circular issued to Australian medical men under the direction of the Medical Department inviting their services in a professionalcapacity to serve their country at homo or abroad?
– With reference to the honorable senator’s questions, I am informed by the Deputy Director-General of Medical Services as follows: -
Bill received fromthe House of Representatives.
Standing and Sessional Orderssuspended,and(on motion by Senator Russell) Bill read a firsttime.
Billreceived firom the House of Representatives.
Standing and Sessional Orders suspended, and (on motion by Senator Gardiner) Bill read a first time.
Debate resumed from 1st September (vide page 6527), on motion by Senator Russell -
That this Bill be now read a second time.
– At this late stage of the debate it is not my intention; to occupy very much time- in the consideration of this measure, because nearly everything that can. be said on the subject has already been said by the different speakers. When we adjourned the discussion on the Bill, I was pointing out that an income tax for war purposes is somewhat similar to a premium for insurance, and, consequently,, the greater amount of property or income enjoyed by a person the greater will be the premium he will be called upon to pay for his insurance. Every one, therefore, will admit that this tax is fair in its incidence, because we know that the greater portion of revenue derived from Customs and Excise duties is paid by the poorer classes of the community.. In no State has this burden been heavier than in Western Australia, where the revenue collected in the first few years of Federation from this source was about £6 per head of the population. I have prepared some figures bearing on this subject, in order that we may know whether, in levying this tax, we shall be going to the extreme, or shall merely get a fair amount of revenue. Under Mr. Fisher’s War Budget, if I may be permitted to apply that term to it, the Treasurer estimates that the income tax will bring in something like £4,000,000. In the Commonwealth the total of Customs and Excise revenue is about £1’5,000,000 sterling, collected from about 5,000,000 people, so the income tax will represent rather less than one-third of the Customs duties, whereas in the United Kingdom, instead of the Customs and1 Excise- dutiesbeing’ two-thirds greater than the income tax, the income tax will really produce’ the larger amount, thus showing that direct taxation, in the Old Country is. greater than, the indirect taxation through the Customs.
– In the total, or per head ?
– In the total. According to Mr. Lloyd George’s War Budget, it is estimated that the incometax will produce- £103,000,000, as against £92,0.00.000 anticipated to be received from- Customs and Excise. It will be seen, therefore, that the wealthy classes in Australia are being let off lightly in connexion with the income tax.
– The income tax in Great Britain will produce considerably more per head of the population than is anticipated here. *
– Yes, and it will be a great deal more per payer, notwithstanding the fact that Australia canbe regarded as one of the richest countries in the world.
Senator- Blakey. - It is reported in the press that the South London Council have levied a municipal tax of 10s. in the £1.
– I would point out to Senator Blakey that a municipal tax is more in the nature of a rate for services rendered than of a tax.
– Yes; I am aware of that, and I merely mentioned the fact to uphold your argument that taxation in the- Old Country is higher than here.
– I think I have shown that income taxation here will be lighter than it is in the Old Country. Taxation is not a cheerful subject to contemplate,, but we can accept the principle without any abuse of one politicalparty by the other, because if there- is one subject upon which the two- parties seem to agree, it is the equity of the present war. Both’ parties are- pledged to do everything possible to bring it to a successful issue, and, that being so, it is the duty of all sections- of. the community to make an effort to. pay the bill, which is part and parcel- of the horrors of war. We ought to be- able to devise a means of. meeting- that payment without any particular abuse being hurled at either- party or at any individual member of a party.. L am- pleased to- acknowledge that Australia has- some citizens who do pay up in a. very cheerful way. Take, for instance,, the, patriotic attitude of Sir- Samuel McCaughey, of New South Wales. When the- Commonwealth, inflicted upon< him; a> big land tax amounting- to between £17,000 and £18,000 he is reported to. have written«, when he forwarded his. cheque, that he rejoiced in the fact that: he was in a position to pay such an enormous, tax.. The- cheerful way in which, he paid the tax was undoubtedly an- excellent example to wealthy men, and ona which L hope was not singular. Amongst the politicians in Australia there is. a man: who has occupied the position of Treasurer of the Commonwealth on morethan one occasion, and who ought to. know its revenue requirements. I findthat he takes up a very antagonistic attitude to this income tax. He said, of the> Ministry as, a whole, and. of the Treasurer- in particular, that they were taking up a rather discreditable course in imposing an income tax. I happened to be sitting in the gallery of another place very recently while the Income Tax Bill was being discussed, and I heard the Labour party referred to in anything but pleasing terms. I heard words which, if uttered iu the hearing of a stranger who did not know the men constituting the party, would lead him to form the opinion that Labour members were a lot of drones in society, men who have never followed an industrious or thrifty life, men who were more of the loafer and robber type than honest men. Iu fact, to quote the exact words which were used then in reference to the Labour party I find that he said -
It is all very well for people who have very little, and who have made no attempt to acquire anything by their industry, to talk lightly of taxation: but there arc people in the community who have been industrious, careful, and self-denying all their lives, and it is not fair that they should be despoiled industrially now.
– You did not give the gentleman’s name, but merely mentioned the office he had filled.
– I think that the gentleman is very well known. He happens to come from the same State as I do. For the last twenty years I have listened to that kind of criticism from the same source, and therefore it did not come as a surprise to me. If it contained any element of surprise to me ft was that as he grows older he does not seem to grow wiser, and he certainly does not become politer or fairer to his political opponents, because it is statements of that kind which he has been making during the whole of his political life. I say without fear of contradiction that the gentleman I am referring to - Sir John Forrest - has never tried to treat his political opponents with any approach to politeness. As a Labour man who has been in politics for fourteen or fifteen years, I think that I can claim that, until I entered the political arena, I followed quite as industrious a career as Sir John Forrest has done. The Labour party here, and .in another place, includes a considerable number of miners, artisans, and men who have worked at manual labour of one kind or another. If there is any ease to be found at such callings I can assure you, sir, that I did not have that experience. I suppose that it has been the experience of every Labour senator that he has had very laborious work to do at his usual avocation. Certainly a gentleman such as the one I have in my mind has followed for about fifty years the arduous calling of a Government servant, performing the Government stroke, and whose jubilee is about to be celebrated in Western Australia. Any one who ever saw the half-starved figure of the gentleman, and the indications of self-denial which are so apparent in his exterior, must admit that he has lived a very hard life indeed, that he has been practising self-denial, and that his political opponents have had all the ease and the pleasures of life. Those who know the gentleman best are, of course, in a position to know how much selfdenial he has practised. I think that the less he talks about industry the better, because ever since he was able to do anything he has avoided the ordinary industries of life, and kept at the Government stroke. It is of no use for us to lecture and talk about being patriotic and ask the country to do great things to help the Mother Land if when, the bill is presented we refuse to meet the responsibility. It is idle to talk about protecting the pockets of the rich and to put the responsibility on to posterity by borrowing the money, remembering the amount which we have already endeavoured to borrow - indeed, the biggest loan ever known in Australian history - has been raised in connexion with this war.
– The honorable senator knows that practically all the money to carry on this war will have to be borrowed.
– I do not think so; indeed. I should be sorry to think’ that ail the money will have to be borrowed. I should like to see a very fair share of the amount provided out of revenue. I believe that the income tax,if it comes up to our expectations, will yield a very fair quota of the expense of the war.
– If we immediately tax ourselves sufficiently to pay the interest on our borrowing we shall do very well.
-Surely that is part and parcel of the burden, whetherit is to meet the interest or to pay the principal.
– To pay the principal while you are borrowing more. It is unwise in a time of war to attempt any payment of principal.
– I am not talking about paying the principal. It matters nothing to the taxpayer whether the money raised by the income tax is used to pay the principal or the interest. Undoubtedly we are allowing the rich section of the community to get off much more cheaply and lightly than is permitted in the United Kingdom, and I dare say in other countries. I do not pretend to know what is the rate of taxation adopted by the other parties to this war, or how they are raising revenue, but we do know that the United Kingdom is raising a much larger amount by direct taxation than is Australia. Consequently it ill becomes a man of the type to which I have referred to raise the great objection he has done, and to do so in such an insulting and abusive way. That reminds me that while he was Treasurer of the Commonwealth something like £6 a head was collected in Western Australia by means of Customs duties. I cannot remember a single occasion when he raised the slightest objection to the collection of that money and more if it had been possible to do so. That heavy taxation had to be borne principally by the working people of the State, and never on a single occasion, so far as I am aware, did Sir John Forrest ever express the slighest word of sympathy for the taxpayers. But now during a war, when the rich are called upon to do their share, nothing but abuse is poured on .the heads of those who are responsible for the introduction of this measure. I hope that the estimate of the yield from the income tax will be more reliable than the estimate of the yield from the probate duty and the- land tax, which, I may say, during the last year has been rather a disappointment. It was estimated that something like £3,700,000 would be collected from those two taxes, but instead less than £2,000,000 was collected. I think that the percentage which we are attempting to raise now by an income tax is not anything too much; but should the estimate exceed the actual collection, then the Sir John Forrest type of politician will have every occasion, I hope, to growl, because it is our duty to raise as much direct taxation as we possibly can. If, after a year’s experience, it is found not to be yielding as much as was estimated. 1 hope that an addition will be made to the rate. The argument has come from ellis side that much of this kind of taxation may be passed on. I recognise that almost any kind of tax can be passed on more or less. It is difficult indeed to find a tax which may not be passed on to some extent but, in my opinion, less of an in,come tax will be passed on than is possible in the case of Customs and Excise taxation. We know that it will be very difficult for quite a number of persons in the community to pass on the income tax. I refer to men who are receiving a very considerable income, and who, therefore, are quite able to pay their due share of the war expenditure. Senators Grant and Stewart used the argument that this taxation could be passed on. I should like to ask them how they intend to pass on the income tax. If they can show me how it can be done I may be tempted to do it myself. I do not think that Ministers or members of Parliament will be able to pass this income tax on to any one. I do not see how Judges, lawyers, bankers, sharebrokers, mine managers, and mine-owners, or the different officials in our public Departments can pass this tax on.
– The mine-owners of South Wales passed the income tax on by putting the price of coal up from 17s. to 35s. per ton.
– South Wales is rather far away for me. I find it quite difficult enough to follow what is being done in Australia. I have already shown, however, that the people of the Old Country pay a higher rate of income taxation than the people of Australia are to be asked to pay under this Bill. It would be more to the purpose if Senator Grant would tell me how I am to pass on the income tax to some one else. Another argument that has been used is that this kind of taxation has the effect of keeping capital out of production. That might be said of almost any kind of tax. and I do not think that there is much in that objection. Under an income tax those who are best able to bear taxation are required to contribute the largest amount. It is a just and equitable tax. A business man who may have experienced a bad year is not, under this form of taxation, asked to contribute as much as he would have to contribute in a year of prosperity,, when he would he in a -better position to pay taxation. The incidence of the proposed tax will be fair, and will injure no one. Those who have no income will have nothing to pay, and those who have large incomes will have to .pay taxation in proportion to their incomes. This is about the best form of taxation that could be adopted for the purpose for which it is to be imposed, and I give the proposal my hearty support.
Senator Lt.-Colonel Sir ALBERT GOULD .(New South Wales) [4.4].- I have not many words to say upon this Hill, but .1 can assure Senator De Largie that I .take no exception to the imposition of an income tax for the purpose of providing the money necessary to enable us to -carry on the war. It is unfortunate that .the necessity for the imposition of a .’Commonwealth income tax should arise at a ‘time when the people of Australia have already to pay heavy .income taxation, to the different State Governments, but we ‘.have to realize that the war must be effectively financed. I .cannot .forbear pointing out how necessary it is that we should not levy this taxation -to .a greater extent than is .absolutely necessary for war purposes. Attention should also be called .to the duty .imposed upon the Government, in the existing circumstances, to administer the finances in the .most careful manner, and to avoid any unnecessary increase o’f ordinary expenditure. It is ‘their duty, if possible, to reduce ordinary expenditure where that can be done without injustice to those employed m connexion with Government undertakings. When so many men are going to the “war, and are finding other’ avocations, a great opportunity is presented to ‘the Government to refrain from filling vacancies so created. If they take advantage of that opportunity the people will have some confidence that a real effort is being made at retrenchment. .
– Their .positions should be kept open for our soldiers when they come back.
– I quite agree ‘with the honorable senator that where men have left public or private employment to give their services to the country by assisting in its defence, when they return from the front, as we hope they will, their positions should be again open to them. It is a very cruel thing indeed that a man who has risked his life in the war should, when he returns to this country, find himself in need of employment. It is truethat the Government propose to give such men certain allowances, but they would* not represent anything like the equivalent, of the wages they earned in their previous employment. Statements have appeared in the press to the effect that men* who have returned from the front haveapplied in vain for re-employment, and in some instances have also vainly sought assistance from the great funds whichhave been contributed by the people. If these statements be true, they are greatly to the discredit of those who are responsible for such a condition of affairs. I do not believe that the people of thiscountry, who have opened their ‘heartsand their pockets, and contributed soliberally to these funds, had any idea that the moneys would be invested, and’ only the interest upon them used for the assistance of returned soldiers. I believe that these funds were contributed for the purpose of giving the fullest possible assistance to men who -have returned from the war.
– The Government have no responsibility for those funds.
.- - I quite -recognise that. They have been raised voluntarily.
– I cannot allow the honorable senator ‘to discuss the funds on this Bill.
– I intended only to allude tot’hem in passing. I recognise that they are under the control of private individuals,, and not under the control of the ‘Government. I feel sure that if men who have gone to the front held office under the Commonwealth or ‘State Governments, they will be liberally treated on their return. Tt is reasonable under present circumstances to look to the Government for the exercise of economy in the ordinary administration o’f the public Departments. It should not be possible, for men to complain that the -Government have increased the ‘expenditure for this year by something like £2,000,000 or £3,000,000 in excess of the expenditure for last year. It should not be possible for us to take up a report on the Post and Telegraph Department, and .find that .an enormous number o’f the men are employed in that Department in excess of ‘the number previously employed. With .increased business we .must -expect an increase in “the number of. employees, but we have it. asserted by the gentleman appointed, to inquire into- the Post and Telegraph Departs ment, that officials, temporary and permanent,, are practically tumbling: over- one another, in that Department in such numbers as to hamper each other in the performance of their duties. When our- .public Departments are seen to grow in that way people naturally feel, that an income tax or any other tax proposed should, be examined caref ully to see. Whether the Government, under the pretence of. raising money to carry on the war,., are not raising money which will be used to further overman an already swollen. Public Service.
– The. present Government appointed the gentleman who made the. inquiry.
.- That is so*; but we require to know whether the Government- intend to take the> necessary steps to reduce, the expenditure upon the- Post, and TelegraphDepartment.
– We took one step more than did the last. Government; We made the inquiry.
– If. the Government, do. not take action, as the result of the inquiry, their position, will, be- worse than that of. the: previous. Government, because: they- will be. continuing am- unsatisfactory state- ofaffairs, with their eyes open.
– Why say that we are going to- do. nothing, when, we- have already said what we intend. to-do ?
– I could show theGovernment how to save £70,000 a year: in the. Post, and Telegraph Department.
.- I think, that, the honorable senator might, very readily, show it. would be possible to save a few thousand pounds, in the administration of. that Department.. We can- look, back to. the time when the Post and Telegraph business was controlled, by the. different. State Governments, and while the. Department, under the Commonwealth, is not giving tha publics greater facilities than- the- separate Departments, under the State Governments, the cost of administration has. enormously increased .,
– Can. it be honestly contended’ that the Post and Telegraph Department under the Commonwealth is not giving; greater facilities than did the separate Departments under the State Go vernments? The honorable senator has only to look at. Ms telephone- book to- find £hat. that is not so..
r- ALBERT GOULD. - I can look back to the time when receiving- offices were not closed as early as- they are closed now,, and when greater facilities were given to people for tile Pate postage of letters’.
– We now. have cheaper telegrams, telephones, and mail carriage.
-Colonel. Sir ALBERT GOULD. - We have, a Telegraph. Branch and- a Telephone- Branch, and we know that, a man- may get a. telegram! through in decent time if. he pays double rates. I have, known of cases where men sending telegrams from. Sydney to Melbourne have arrived here before their telegrams, unless they have paid double rates.. In spite of the payment, of double rates, the operations of the Department each year still leave us seriously in debt. If we consider the telephone system,, it will be admitted’ that it is a continual source of worry to the people. I do not suppose that there is- a business firm or a private individual1 who has to- make much- use of our telephone system who. is not constantly finding some cause of complaint. At the present time people are paying, double or, treble the telephone rates- that they paid under State administration, and yet the Department finds, it- impossible to- make both ends meet. That does not reflect credit upon the Government. I do. hope- that Ministers-will- address, themselves- earnestly to the task of reforming this Department, and that- without, inflicting any- injustice upon its> employees. Personally, I would much prefer to see the- Department con> ducted, by. a. smaller number of.’ men in* receipt of. better salaries tha-n by the large number who. are engaged in. con.ducting its. affairs to-day. We know that tha’ proposed income tax will, prove a very heavy bur dam. . It, has- been: stated that, the. rate payable under: it will be . least than is. the-, rate operative in; England).. In this connexion, the case has been: cited; of a, man in the Old Country in receipt o£ £10.,.000 per year who: is deriving: an income from Australia, and’ it has been’ shown that- he will be taxable to the extent of 8s. lOd. in the £L That represents an enormous- impost, but if it be necessary to raise the: money, we have- no* option-but to.raise it. Consequently,. I take no exception to the rates proposed. I regard an income tax as a very fair impost, because it takes from those who can best afford to pay for the cost of government. The exemption under the Bill has been fixed at £156 a year. That is quite right. But there are a few clauses in the measure which will call for some attention in Committee. The exemptions also extend to the income of a trade union and of an employers union. That is all right. But I wish to direct attention to the many societies which are carried on for purposes other than pecuniary profit. Under the Bill the exemption will extend only to societies which are registered under our Friendly Societies Act, and which are not carried on for pecuniary _ profit. I desire to point out that there are many organizations in the Commonwealth which are not conducted for the purposes of profit. Take the case of a cricket club or a yacht club, or that of a society for the promotion of fine art.
– I am afraid that in cricket there is a little profit now and again.
– If a cricket club experiences a very good season and manages to save a little money during the year, that money is invariably expended for the benefit of the club and the promotion of the sport.
– We are not getting enough revenue from sport and amusement.
– If the honorable senator desires to impose a tax on theatre tickets, he is entering upon a different field altogether. To my mind a football club, a cricket club, or a society for the promotion of fine art ought to be exempt from taxation so long as they are not established for purposes of pecuniary profit. The individual who contributes to the funds of these organizations is not to be allowed to deduct the amount of his contribution from his taxable income. In these circumstances, why should the organizations themselves be taxed? Then it is proposed to exempt contributions to our war funds in excess of £5, and I understand that it is also intended to allow deductions to be made in respect of donations exceeding £20 to charitable institutions in Australia. I wish to know why any arbitrary line should be drawn in this regard. If I can afford to contribute £20 to a charitable institution, why should I be at liberty to deduct that amount . from my taxable income, while the individual who is in a position to give only £5 or £10 is denied a similar right ?
– The difficulty is that in the case of small donations the trouble of verifying them would not make the task worth while.
– The individual who claims the right to deduct such donations ought to be able to verify them if necessary.
– We could not accept everybody’s claim without verification.
.- If I contribute £5 to the Red Cross Fund, I ought to be able to deduct it from my taxable income.
– What about the individual who contributes £5 per year by means of donations of shillings and sixpences? We must have a limit.
– But why not make the contribution £5 all round ? I fail to see why a man in receipt of £200 or £300 per year, who gives a guinea to a hospital, should not be as much entitled to deduct that amount from his taxable income as is the individual in receipt of £20,000 a year who contributes £5 to a similar institution. The Assistant Minister might fairly consider whether it is not possible to reduce the amount mentioned in this connexion so as to bring more people within its purview.
– The trouble is that, if we did as the honorable senator suggests, we should have to accept every statement contained in a taxpayer’s” schedule, because it would not pay us to verify the statements.
– Why not say to the claimant, “ You must produce the receipt for your contribution?” I am of opinion that the limit should be made as low as possible.
– What about the man on the Stock Exchange who gives £5 for a kiss?
.- He has his reward. The Government ought to encourage the public to open their purse-strings and to contribute to our charitable institutions. There is still another matter which, to my mind, warrants some consideration. Under the Bill it is provided that where a company borrows money on debentures it shall be deemed to be the agent for each debenture-holder. Now, it is almost impossible for a company to know who holds bearer debentures. If we affirmed that a company must pay certain money on debentures, I would have no objection to urge. But the Bill proposes to make a company the agent for each debenture-holder .
– The honorable senator is referring to a company in respect of whose debentures there are no coupons attached.
– I have in my mind a case in which a large capital has been raised by a company, and in which’ coupons have been attached to the debentures, which are payable every six months. Anybody may hold these debentures, but how we are going to make the company an agent for each debenture-holder is something that I cannot understand. Then there is the provision relating to partners. I believe it is contemplated that if A and B are in partnership they shall be assessed as one individual. Under the State income tax they are not charged in that way. They have to furnish a return showing the total income derived from the partnership, and how it has been apportioned. Each partner then has to pay upon the amount apportioned to him. The clause in this Bill, however, provides that partners shall be assessed on the income derived by them as partners as if it had been derived by a single person and without regard to their respective interests. Thus we are departing from the principle which has been laid down in our State Income Tax Acts. I come now to the case of trustees. Let me deal with the case of a trustee company, or even of the individual trustees of an estate. Let me assume that an income derivable from an estate is £5,000 annually, and that it has to be distributed amongst twenty beneficiaries. Under this Bill the estate will be assessed at the rate that is payable in respect to the income of £5,000 a year, although no beneficiary will be getting more than £200, £300, or £400 a year out of it. I believe that the Leader of the Opposition has pointed out this difficulty, and that the Minister intends to rectify it.
– I am happy to say that I think we have come to terms.
– Is it arranged that taxation will be only on the amount payable to the individual ?
– I was only expressing a hope; I am not yet in a position to make a progress report.
– If one beneficiary was getting £500 a year under the terms of a will, earning another £500, and receiving still another £500 from another source, it would be fair that he should be taxed on his £1,500 a year income.
– I think we can meet the honorable senator in Committee on that point.
– In other words, the trustee company, instead of being made liable to pay the tax in the first instance, would pass it on to the beneficiaries, who would be liable to pay it to the Government in the ordinary way. I do not know whether that is the way the honorable senator contemplates, but it occurs to me that it would be a fair way, and would not allow anybody to escape the fair amount of taxation to which he was liable. I have not had an opportunity to study the Bill closely, but I assume that its provisions are generally of the character to be found in Income Tax Bills, protecting the Government and the individual equally from the possibility of unfair or inequitable treatment.
– The only trouble is that the tax is far too light.
– I do not know that it is’, when I cite the case of a man who will be called on to pay 8s. lOd. in the £1 on his income. People who have been living up to their incomes will, I think, find it necessary to retrench, and will probably take the line of least resistance by discontinuing a great deal of employment, and refraining from making improvements. That sort of thing will interfere materially with the poorer classes, who must necessarily feel the loss of employment. Builders in Sydney tell me that the amount of new work now going on, or being provided for, has been very materially lessened. I believe not half as much building will be undertaken there during the next year as hitherto, and the same will probably apply throughout the Commonwealth. That point must be borne in mind. If we can do with a tax of1s in the £1, there is no virtue in charging, 2s. If we tax only to the extent required, and on a proper basis, every man will pay a fair and adequate amount towards the cost of financing the war. I quite agree with an interjection made when Senator de Largie was speaking, that the war will practically have to be financed by means of loan money. Our aim in imposing, taxation should be to obtain ample means to pay interest, and whatever sinking fund is thought desirable, although I very much. fear that the sinking fund will be used to meet other expenditure ; but once we have made that, provision, we shall have done our fair share towards meeting the cost of the war, which is being waged, not alone for those now living, but for those yet unborn. Unless we can keep our end up, the war will be a serious matter for the people to-day andto-morrow. If the tide of civilization and freedom is turned back, the cost in blood and treasure will be enormous. Those who come after us will be affected for good or ill by the result, and it is only fair that they should find their proper proportion of the cost. To attempt to meet the cost of the war, or any substantial portion of it, out of ordinary income would be to put an undue burden on the people of the present day. It would be going the right way to kill the goose that lays the golden eggs. You may easily destroy your people by excessive taxation, and the result would affect the poorer man , although he may not pay the tax directly, quite as much as the wealthier man.
– Is £1 in. £10 excessive taxation, when they paid £1 in £3 in the Peninsular War?
– We are going to pay a great deal more than that in connexion with this war, and must make up our minds to it .
– The figures are all against you.
– Can the honorable senator fairly compare the expenditure on the Peninsular War, a century ago, with the expenditure of to-day ?; Does’ it. approximate on the basis of population to the necessary cost of this struggle? The greater the amount the more we have to. pass on. Do honorable senators opposite: want to see the rates, of this tax raised to suck an extent as practically to mop up half the income? There are other countries not involved in the war where the taxation is not nearly as high, and we do not want to give any people here an excuse for picking up their- traps and establishing themselves under a foreign flag.
– Australia is the lightest taxed of any of the Allies.
– Before the war, Australia was more heavily taxed by Government and municipal bodies than was Great Britain. I have this on the authority of the Statistician of this State.
– The direct taxation in Australia is much lighter than in the United Kingdom.
– At one time Australia was. very lightly taxed. To-day it is much more heavily taxed, and the taxation is. growing still heavier. We must bear it. in order to carry on the war, and no vote of mine will be cast for any departure from that principle, but. I would urge upon honorable senators’ the importance of economy in the administration of our ordinary affairs so as to satisfy the people that we are not raising money simply, to squander it.
Question resolved in the affirmative.
Bill read a second time.
In Committee :
Clauses1 and 2 agreed to.
Clause 3 (Definitions).
Senator Lt.-Colonel Sir ALBERT GOULD. (‘New South. Wales), [4..44].-
The wording of the. definition of” absentee “ is peculiar. If a man whose, business, interests are all in Australia goes away for twelve or eighteen months, will he be. classed as an absentee?
– No; he simply has to satisfy the Commissioner that he resides in Australia.
Clause agreed to..
Clauses 4 to 10 agreed to.
The following incomes, revenues, and funds shall he exempt from income tax:. -
Senator Lt.-Colonel Sir ALBERT GOULD (New South Wales) [4.48].- I should like to see the exemption go further, as indicated in my second-reading speech, and include other organizations or societies not carried on for pecuniary profit. I therefore move -
Thatthe words “ or any society or organization not carried on for pecuniary profit “ be added to paragraph b.
The organizations I have in mind are cricket clubs, football clubs, or any bodies of that kind, established to promote sport, and not forthe pecuniary benefit of any particular member.
– Would you exempt such clubs as the Australian Jockey Club, and the Victorian Racing Club, and the Melbourne Cricket Club ?
– We might make some exception with regard to them.
– It must not be forgotten that the racing clubs have been most generous in their donations to war funds. Theyhave given far more than would be extracted ‘from them by way of taxation.
– This will not deal with the gross income; it touches only the net income.
– I submit it would be unfair to tax the funds of a cricket club or a football club in connexion with which there is no pecuniary profit to any individual.
– I trust the honorable senator will not press his amendment, because if it is carried it will exempt only those institutions he does not desire to see exempted, such as the Australian Jockey Club and the Victorian Racing Club. I do not know whether the honorable senator has had a large experience of sporting clubs, but I have, and I have never yet belonged to one that had a profit at the end of the season.
– Are not the winnings of the owners of horses taxed as income ?
– When the -amount is paid over to the owner it represents income, but he has to deduct from that the cost of training, stabling, and other expenses. Take the case of a racing club that receives £2,000 in one day, and offers £1,500 in prizes, the gross profit of that day would be only £500. All sporting clubs established for genuine sport usually collect just sufficient funds to carry on. the club from year to year, and, therefore, they will not be affected in the slightest degree by this amendment. The only clubs that will be exempted will be, as I have shown, the Melbourne Cricket Club, the Australian Jockey Club, and the Victorian Racing Club, and similar institutions and I am quite satisfied that those connected with such clubs are sports enough not to ask for exemption at a time like this.
Senator Lt.-Colonel Sir ALBERT GOULD (New South Wales) [4.53].- A good deal of the income derived by the largerclubs is ‘set apart for special purposes. The racing clubs, for instance, havea fund to assist jockeys who maybe injured. Will an exception be made in such cases?
SenatorRussell. - Paragraphf makes provision for those cases.
SenatorLt.-Colonel Sir ALBERT GOULD.- That is so, but I still thinkthere are a great many cases in which exemption ought to be granted. We might just as well ask, why should a society registered under a Friendly Societies Act of the Commonwealth or a State not paytaxation, when the smaller sporting societies to which I have referred are required to pay? If the principle of exemption is good with regard to societies registered under the Friendly Societies Act, why should it not hold good in respect of societies not so registered ?
– There is a good deal in what the honorable senator has said. If any income is not for the benefit of any individual person it does not seemto be a fit subject for taxation. The Minister will probably have read in this morning’s papers a statement to the effect that the Victoria Racing Club have decreased the amount of prize money at the forthcoming spring meeting with the object of not only inflicting hardship upon horse-owners, but of making certain that there will be a substantial profit, which, I am given to understand, will be handed over to one of the patriotic funds for the benefit of our soldiers.
– In other words, to provide against decreased gate money.
– I gather that the profits made will be handed over to some patriotic organization. Is not that so?
– The whole of the Flemington receipts during the currency of the war will be exempt, because they are all being given to patriotic funds. Look at paragraph h of clause 18 -
– Yes ; I find that it is there provided that a deduction will be made of - contributions exceeding £5 in the aggregate, in respect of each object, oE contribution made during the continuance of the present war to any public fund established in any part of the King’s Dominions, or in any country in alliance with Great Britain for any purpose connected with the present war.
That will exempt profits derived from the spring meeting, but it will not touch those organizations, mentioned by Senator Gould, which have not been established for the pecuniary profit of any individual.
– You will see 50,000 people at the football match next Saturday. Should they be exempt ?
– But is the money expended in such a way as to bring pecuniary profit to the members of the organization? It seems to me that in all probability we shall have to tap other sources of revenue before we are finished. I am not insensible of the fact that the various State Governments have thought that the large attendances at sports gatherings are a suitable subject for taxation. Although such a means of taxation has not yet been resorted to, it has been discussed in State legislative circles. But T think it is unwise to tax the prospective profits of organizations, such as those alluded to by Senator Gould, which come forward so loyally and patriotically and intend to do more in the future in connexion with the subsidizing of funds, especially for the benefit of our soldiers.
– Can you give a concrete case of any body you want to exempt that is not already exempted ?
– If the Assistant Minister assures me that in effect these organizations will have their profits exempted from tho tax, it is of no use to contend against a shadow.
– If they are run for profit they will pay the tax, but not otherwise.
– For the profit of whom t
– For their own personal profit, or for the profit of a club. If the football clubs do the same as the racing clubs I mentioned, they will not be taxed, but if they will not take that course they ought to be taxed.
– We are told that the activities of the country must be carried on notwithstanding the fact that we are engaged in a war. Surely the Assistant Minister will not contend that the profits derivable from the entertainments given on the grounds should not legitimately be devoted by the clubs for the purpose of increasing the opportunities of earning further profits in the future.
– As a rule the clubs have no profits. What they do is to increase the revenue account.
– If all profits devoted to war funds are to be exempt from the tax, it is useless to prolong this discussion.
Senator Lt.-Colonel Sir ALBERT GOULD (New South Wales) [5.3].- While the Assistant Minister says that the organizations will be exempt, it must be borne in mind that their exemption is only to be arrived at in the event of their giving whatever profit they make either to a charitable institution or to a war fund. It must not be forgotten, too, that every man who belongs to an organization of that kind will pay the tax in respect to his subscription. For instance, a man who pays a subscription of £20 a year to a club will be taxable on that amount, but the Bill provides that the people to whom he subscribes the money shall also pay the tax, and so it might go on ad infinitum. If the Assistant Minister gives a subscription to the Victoria Racing Club, he gets tickets for the races and obtains certain privileges, but he does not receive a single sixpence from the club, no matter how successful it may be. Why should its funds be taxed in a particular way?
– I think that we are very largely beating the wind. I have asked for a concrete case of any body which ought to be exempt that is not exempted. How will the provision work out?’ Take, for instance, a tennis club, which, of course, is not organized. My honorable friend is evidently afraid that it may be taxed. It will be treated as a company. If it makes a profit it will undoubtedly be taxed; but when does a tennis club have a profit? And when, too, does an ordinary cricket club have a profit? It is only when the Victorian Football Association begins to run semifinals and finals that a large profit is made. As much as £1,100 may be taken on the Melbourne Cricket ground next Saturday. If the footballers wish to get out of the payment of this tax, let them follow the worthy example of the racing men and give the whole of the profits of that match to the patriotic funds.
– What becomes of the money which these clubs raise ?
– In some of their balance-sheets I have seen such items as lemons, £400; and boots, £250. Who ate all the lemons has always been a puzzle to most members of the club, but they have winked at the item.
– What is done with the money?
– The players undoubtedly get some of it. The taxable amount will be nearly always nil, for, as a rule, the hat has to be passed round.
– Will an exemption be allowed without any inquiry being made?
– Certainly not. I ask the honorable senator not to press his amendment, as there is really nothing in it.
– I prefer that the amendment should be submitted to the Committee.
– I move -
That paragraphc be amended by the addition of the following words: - “or of an association of employers or employees registered under any Act of the Commonwealth or a State, relating to the settlement of industrial disputes.”
The object of the amendment is simply to prevent the measure from being lopsided. As exemptions are granted to trade unions, it is also desired to exempt employers’ unions.
Amendment agreed to.
Clause, as amended, agreed to.
Clauses 12 and 13 agreed to.
Clause 14 -
The income of any person shall include -
profits derived from any trade or business and converted into stockintrade, or added to the capital of, or in any way invested in the trade or business.
Senator Lt.-Colonel Sir ALBERT GOULD (New South Wales) [5.10].- I am not quite clear as to how far this clause will affect persons who are engaged in business. A certain amount of stock has to be disposed of before a man can have any profits to convert into stockintrade. Suppose that he re-invests the money in the purchase of fresh stock, will that be taxable?
– The object of the clause is really to prevent persons from converting part of their income into capital and dodging the tax.
– A man in trade expects to turn his stock over twice or thrice in a year. Suppose that in the second portion of the year he replenishes his stock out of a good deal of the profits which he made in the first portion of the year, will that money be taxable ?
– He will be taxable on any profits which he has made on the deal.
– Suppose that a man started with £10,000 worth of stock, and that out of his profits he got another £5,000 worth of stock, will he have to pay the tax on the £5,000 ?
– Suppose that a man starts at the beginning of a year for whichthe assessment is made with £10,000 worth of stock. He may turn that stock” over, but he will have the exemption of the £10,000 in stock. Men do not as a rule sell or buy stock for the fun of the thing. If they buy £10,000 worth of stock they generally endeavour to sell it for at least £12,000 or £14,000. In the event of a man turning over his stock, and re-stocking, he will still be allowed ‘the .exemption of the £10,000 he had in capital. If he makes a profit of £3,000 or £4,000 in turning the stock over, that amount will be taxable, because it will be income as differentiated from capital.
Senator Lt.-Colonel Sir ALBERT GOULD (New South. Wales) [5.13].- It must “be remembered that in earning a profit of £2,000 6r £3,000 a man will have to meet’ the ordinary expenses of living and carrying on the business. A. provision of this character will, I think, have a tendency to deter a .man from increasing the value of his stock-in-trade. If a man starts to trade with £10,000 worth of stock, practically what the clause does is to limit him to that amount, and he will not be able to increase the value of his stock without having in the first instance to pay toll to the Government. In other words, if he wants to put £2,000 of his profits into new stock he will have to pay toll to .the Government in respect to that amount, and then the value of his stock will .run up to something like £10,000. We ought to ,do all in our power to encourage a man to increase and enlarge his business. If a trader has the misfortune to ‘lose a couple of thousand pounds he will get no consideration, practically, in respect to the loss. Why should he not be dealt with in the same way when he has the good fortune to make a profit to that extent ?
– A man who loses in business will not have to pay the tax on the amount of his loss.
– The Business man will have to take all the risk, and -the Government will stand to win all the way through. If a man makes a loss he will have to ‘put up with the loss, but if he makes a little profit the Government will come along and take their toll out of it.
– May I point out that the business of ‘a man in buying and selling stock is treated as an ordinary trading account, and the income tax is levied only on the profits of the business. A man has a right to debit his losses against his profits, and it is the net profit that is the basis of taxation. If he makes no profit, he will not be taxed.
Clause agreed to.
Clause 15 (Agent selling goods for foreign principal).
– It is not very often that in considering a taxation measure an honorable senator rises to suggest that the scale of taxation proposed may be somewhat too low. Without committing myself to that view straightway, I should like to ask the Minister why it is deemed that the profit derived from the sale of foreign goods is only £5 per cent, upon the price at which the goods were sold. We have to consider that the agent is an agent for a trade absentee. I understand that the settled fiscal policy of the Commonwealth is one of Protection, and it occurs to me that in this connexion we might do something to encourage Australian trade. I am of opinion that people who export goods to Australia on a very large scale are not satisfied with a .profit of 5 per cent. No doubt the Government have consulted their experts in fixing the profit at this rate, but perhaps the Minister will be able to inform the Committee as to the manner in which the 5 per cent, has been arrived at. Many of these trade absenteesare foreigners, and many of them were inhabitants of countries that are now hostile to us. I feel sure that they make a great -deal more “than “5 per cent, profit on -their -exports to Australia. Without committing myself to the ‘view that ‘5 per -cent, -is too low to adopt as a standard, I ask the Minister -to explain how it has been arrived at.
Senator .RUSSELL (Victoria - Assistant Minister^ :[5.1<8]. - I can only say that after all it is necessary to adopt an approximate and average Tate.
– By whom is it fixed ?
– This rate has been fixed by the State authorities. A similar clause is to be found in the different State Income Tax Acts. We have been guided by experience in the matter, and it is thought that it is reasonable to estimate the average profit at 5 per cent.
.- In perusing the Bill some time ago, I was struck by what has attracted the attention of Senator Bakhap. It appeared to me that to fix -5 per cent, as the average profit made by absentee traders was to fix a rate very much below the mark. I could refer to some who are not making 5, 10, or 15, but up to 25, per cent, profit and more. I think that 5 per cent, is a very low estimate. If the clause passes in its present form I think that our experience will indicate the necessity for increasing the rate. I should be pre- pared to support an amendment fixing; the rate of profit at 10 per cent.
Senator Lt.-Colonel Sir ALBERT GOULD (New South Wales) [5.21].- Honorable senators have to bear in mind that in considering the< profit made on goods sent into this country the absentee traders have to take into account the cost of the administration of their business. Considerable expense is often necessarily involved in canvassing the country, in advertising, and in the upkeep’ of agencies. While I am not prepared to say that no more than 5 per cent, profit is. made in many instances, we> must. have, regard to the average profit made.. Many goods sent out do- not catch on with the public. They are found to be unsuitable, and a loss is made upon them. On another class, of goods a. profit of 10 or 15 per cent., may be made after paying all expenses. This has to go* to meet the loss on unsaleable lines, and so the- average profit is reduced. I suggest, that the Government might require the. agents of absentee traders to submit returns of their businesses, showing what expenses hav® been properly incurred’ in connexion therewith, and what profit has’ really been made,, and let that be the basis of taxation.. By that means, the difficulty which has been suggested could be overcome.
– I believe such a provision would lead to a, great, accession, of revenue.
– I am aware; that a clause, similar to clause 15 is. to be.ound in theState Income Tax Acts.
– This rate is fixed, in accordance with the actual experience of years.
-Colonel. Sir ALBERT’ GOULD. - If the- Committee’ bo desired, they might adopt some- such provision, as I have suggested- in order to, make sure> that no one could, avoid the. taxation- he should rightly pay. I am disposed, to. think that over, the business* of the year, it, would be found that, the, averagerofit would not amount- to- more- than 5- per cent.
Clause agreed to..
Clause 16 agreed to.
Clause 17 -
Tin connexion, with income derived from, mining operations (other than, coal-mining) carried on in Australia, the following provisions, ,-, apply: - (a), the ……… required1 by this Act- to be made’ by the person deriving the- in come in the first place shall show the total income so derived- during the calendar year in respect of which the return is compiled;
the capital expended by the person carrying on the mining- operationsin, necessary plant and development of a. mining property from which income has been received (less the distributed” and undistributed income derived prior to the year 19M by that person ) shall be- divided by theestimated number- of years during which payable mining operationsmay be expected to. continue under normal conditions’, and’ the- quotient thus obtained shall, in addition toany other deductions allowed by this Act, be deducted from the income; to) where separate and distinct mining; operations, are carried on by the same person, either alone’ or in- association with any other- person, and) a profit is made on some, and a. loss, is made- on others, that person shall be entitled to deduct the sum of the losses from- the sum of the profits; and the balance of profits: (if any), shall-, be: included in the income of, that person..
Amendments; (by Senator Russell). agreed: to. -
That the word’ “ calendar,” line. 9, be- left out, with a view- to insert, in. lieu thereof- the word “ financial.”
That the word” “year,” line 1.7; be left out,, with a view to insert in lieu thereof theword’s “‘financial year beginning- the- first, day o* July.’.’*
l- Sir ALBERT G’OULD (New South Wales) [5.-.261].. - This clause refers- to the estimated number of years during which payable mining operations’ may be expected to continue under normal1 conditions. It- is- at very hard matter to foretell how long a mine will’ last. Is it not possible in anyway te- limit the term of years ? If wetake the case of the- Mount Morgan mine, honorable- senators may remember that ittook a new lease’ of life when it was discovered1 that it was a great copper- mine.
Senator- Russell. - Is- not the clausein accordance with actual practice ? Themining company will give its estimate, and the- Commissioner’ will’ give his. There may be arbitration’ to fix the lifeof a mine.
– I still say that it is a very difficult matter- to estimate the life of a mine.
– I should be only too, glad to accept the assistance of the honorable senator to make the clause more definite. For the information of honorable senators I may give a simple illustration. I take the case of a mining company with an income of £1,000 per year, capital expended on plant, £5,500, less profits distributed or otherwise, £500, leaving a total of £5,000. Years during which mine is estimated to be payable, say, ten years. Dividing the £5,000 by ten we get £500, the amount on which income tax is assessable.
– The only trustworthy means of determining the life of a mine is afforded by the extent of its ore reserves. The life of a mine can only be guessed if we attempt to estimate it beyond the life it may be expected to have judging by its ore reserves actually disclosed and tested. The language of the clause is rather vague. Unless the Department administering the Act is willing to accept the computations of responsible officers of mining companies, the vagueness of the language of this clause may give rise to a good deal of friction between the taxing department and mining companies.
– We must leave this to administration. We could not undertake to value mines here.
– It is a very difficult matter to decide, and I would not lightly attempt to interfere with the language of the clause. Naturally the administration will wish to see the amount of capital which may be deducted within a given year reduced by the extension of the period for which it may be deducted. As one who has had some connexion with mining operations, a word of wisdom to the administration may be of some account. I believe that if the responsible officials of mining companies are confided in, and if their estimates of ore reserves and of the length of time during which their companies are likely to continue operations, be accepted, the clause will operate satisfactorily. But if, on the other hand, the Department raises unnecessary obstacles, a good deal of unpleasantness will be occasioned. I hope that the Bill, when it becomes an Act, will he sensibly administered, and that no unnecessary irritation will be caused to mining companies.
Clause, as amended, agreed to.
Clause 18 -
In calculating the taxable income of a taxpayer, the total income derived by the tax payer from all sources in Australia shall betaken as a basis, and from it there shall be deducted -
Provided that the deduction shall not be allowed unless the Commissioner is satisfied that the fund has been established, or the payment made in such a manner that the rights of the employees to receive the benefits, pensions, or retiring allowances have been fully secured.
Amendment (by Senator Russell) agreed to -
That the word “of,” line 3, of paragraph e, be left out, with a view to insert the word “by” in lieu thereof.
Amendment (by Senator Russell) proposed -
That before the word “ Contributions “ in paragraph h, the words Gifts exceeding twenty pounds each to public charitable institutions in Australia and “ be inserted.
Senator Lt.-Colonel Sir ALBERT GOULD (New South Wales) [5.33].- This paragraph relates to a matter to which I alluded a little time ago, and I ask the Assistant Minister to agree to the retention of the provision in its present form. As a matter of fact, I would like to see an even lower amount fixed as the exemption in this connexion, but I recognise the difficulty to which the honorable gentleman has referred.
– Twenty pounds is the amount adopted in the State Income Tax Acts.
– I recognise the difficulty that may be experienced in getting returns which will satisfy the Commissioner that the deductions are being honestly made. But I would suggest that the amount of £5 should be adhered bo, and that by regulation it should be declared that no such deduction will be allowed in the absence of receipts for the contributions which taxpayers claim to have made. That would overcome the difficulty which the Assistant Minister has stressed. I need scarcely point out that gifts of £5 in the aggregate may be made up of contributions of 10s. each, and that in such circumstances the task of verifying the claims will be just as difficult as it would be in the case of larger amounts.
– We all recognise that our charitable institutions must be supported. It is not the usual practice in connexion with contributions to these organizations to ask a taxpayer for receipts. People recognise that if they do not give up to a certain standard they will inevitably be taxed, because our charitable institutions must be maintained. The Government do not think that a man who is receiving more than £156 a year is particularly generous if he contributes £5 annually to these organizations, but when an individual gives something in excess of £20 - it may be a donation of £20,000, or even of £100,000 - it is only right that he should be allowed to deduct that amount from his taxable income. To my mind, the suggestion of Senator Gould is a little too small to bother about. If every taxpayer who claims the right to deduct from his taxable income the amount of his contributions to charitable institutions is obliged to produce receipts for those contributions, we shall require to employ a staff of clerks for the purpose of checking the receipts. In such circumstances we should collect a larger revenue by discarding the receipts and accepting all the statements contained in the schedules of taxpayers.
Senator Lt.-Colonel Sir ALBERT GOULD (New South Wales) [5.40].- According to the Assistant Minister, if I choose to say that I have contributed during the year £5 in the aggregate to our war funds, I am to be permitted to deduct that amount from my taxable income. But there must surely be some check upon the statements of taxpayers.
– Read the proviso.
.- It reads-
Provided that payments shall not be allowable as deductions under this paragraph unless verified to the satisfaction of the Commissioner.
But the Assistant Minister has himself pointed out that it will be difficult to obtain receipts. I contend that it will not. If, for example, a man contributes annually to the Prince Alfred Hospital, Sydney, he obtains a receipt for his donation. In addition, there is usually an acknowledgment made in the public press. This is a necessary check on the collector. I think it would be a fair thing to reduce the amount in respect of which a deduction is allowable to £5.
Amendment agreed to.
Amendment (by Senator Russell) agreed to -
That the word “ and “ in paragraph i be left out.
Amendment (by Senator Russell) proposed -
That after paragraph i the following proviso be inserted : - “ Provided that the total amount of calls paid in the year in which the income, is derived shall be deducted in the case of calls on shares in a mining company; and”
– Whilst I heartily approve of the amendment, may I ask the Assistant Minister why this privilege is not to be extended to calls made by all companies ?
– Suppose that a bank desired to strengthen its finances by making a call upon the unpaid capital ?
– Would not that capital be available for the purpose of creating income which would be taxed under the provisions of this measure?
– It is generally assumed that mining calls are made either because the mine is not prospering or because a great deal of developmental work has to be done. If the latter, of course, a lucky find may be made. On the other hand, most banks have only half their capital called up.
– In the majority of them all the capital is called up.
– It is putting it at a low figure to assume that the banks have at least 10 per cent of capital to call up, and at a time like the present they might think it desirable to call it up, not because they are not doing well, but because world conditions generally are not satisfactory. In a case of that kind! the. individual would be putting something into capital, and it would be fair to allow him to deduct only 5 per cent. Calls in a mining company are, generally speaking, a different proposition.
Amendment agreed to
– I move -
That the following new proviso be added to paragraphj: - “ Provided also that if the Commissioner is satisfied that a sum has been so set aside or paid by any person to provide individual personal benefits, pensions, or retiring allowances to employees in any business, the person setting aside or paying the sum shall be entitled to deduct it.”
There are companies in Australia like the British and’ Australian Tobacco Company, which in respect of funds of that kind are practically “holding” companies. The proceeds of the funds are generously given: to the employees, and we think it desirable to exempt payments of that kind.
– That is, the amounts the firms pay in?
Amendment agreed, to.
– I desire to move the addition of a new proviso to the effect that such payments shall not be regarded, as a set off against any claims that may be made under any Employers’ Liability Act, Commonwealth or State. There are in the various States Employers.” Liability Acts under which employees may recover compensation for injuries received in working hours through the carelessness of the employer or of fellowemployees, and in order to circumvent the provisions of those Acts the employers have established funds to which they themselves contribute, and to which the employees are also invited to contribute, but the money is only recoverable by the employee conditionally on his agreeing not to proceed against the employer under the terms of the Employers’ Liability Act. The effect is to completely destroy the provisions of such Acts, contrary to the intention of Parliament.
Senator RUSSELL (Victoria - Assistant Minister) [5.55). - The honorable senator is attempting to do what may be a good thing at the wrong time, and in the wrong place. What he wants is really an amendment of the Employers’ Liability
Act. Payments to insurance funds for compensation purposes are included in; the general trading account, and it would be ridiculous not to allow as an exemption what is after all an ordinary trading expense. It is only fair to regard the annual contribution paid to various insurance societies to insure employees as an ordinary business charge.
SenatorLt. -Colonel Sir ALBERT GOULD. - If an employer does not see fit to insure his employees, and’ an accident happens, and he has to pay compensation’’ out of his own pocket, is he allowed to make any reduction in respect of it ?
– That would be a question for the Commissioner. It is immaterial to him whether the money is paid by yearly instalments or in a lump sum. Without pledging the Commissioner in any way, I certainly think he would make full allowance for any sum paid in compensation as a genuine charge made. on the business.
– The various Employers’ Liability Acts, have not been secured by the workers of the Commonwealth without prolonged effort, and no attempt by employers to circumvent, them should be countenanced. I think the payments made by employers and employees to insure them against accident represent an effort made by the employers, to circumvent the provisions of. the Employers’ Liability Acts.
– How do you construe) them as, an attempt to circumvent the Employers’ Liability Acts?
– I am opposed to the amount paid by the employer in that way being deducted from his taxable income. I regard it as an effort to circumvent the provisions of an Act of Parliament.
– Suppose he pays it to a State insurance office? Surely a, man will not. be circumventing an Act if he insures an employee under a State insurance office guaranteed by a State?
– Perhaps the objection would not be so telling in that case. An employee is entitled to recover compensation for injuries received, and any effort made to contract an employer out of that liability is not desirable:
– He does not contract himself out of the liability.
– But he does, because in the event of an accident occurring the employer will leave the insur- ance company to fight the employee, and it will be doing so with the employee’s own money.
– Would you prefer an employer not to insure, then?
– It is a wise provision to compel every employer to insure his employees.
– But the employee as well as the employer is obliged to contribute to the fund.
– He .cannot do that under this Bill.
– I want to prevent him from contracting .out :of .his liabilities.
– And discourage him from insuring his employees.
– I know that Senator Bakhap is always anxious to assist the employers, but I am not desirous of doing anything o’f the kind, and I therefore move -
That the following words be added to paragraph j : - o “’ .’But :any .payments made out o’f such funds under the preceding section to an employee shall not invalidate any -claim that an employee may have under the provisions of .any Employers’ Liability Act:”
. - -The amendment does not seem to be very “much in accord with the views which ‘Senator Grant has put before the Committee. On Hie contrary, his arguments seem to be entirely irrelevant to the proposal which has been now submitted.
– How could you invalidate anything -under the Employers’ Liability Act by this Bill.?
– I cannot see how that could be done. Senator Grant’s main -objection appears to be that an employer shall not ‘be allowed to deduct from his income payments made by him to insure ‘his employees. We will assume, for instance, that an ‘employer pays £150 per annum premium in respect of liabilities which ‘he might incur under the Employers’’ Liability Act. In that case would Senator Grant not allow that employer to deduct ‘such an amount from his income :as a legitimate and regular expenditure?
– But the employees also pay another £150.
– Let us deal with one question at a time. : Senator Grant - It is an important point.
– But let us deal with one question at a time.
– You are only -dealing with half the -question ; you are not putting it fairly.
– Does Senator Grant object to that -employer being allowed £150 from his year’s income ? The whole of his argument has been in that direction. Then does Senator Grant propose to again tax that £150 as part of the income of .the society?
– On a point of order, I submit that the amendment covers the whole field in connexion with the employer’s liability, and therefore it is not in order.
– Looking at the .new proviso proposed to be inserted by Senator Grant, and comparing it with the Bill, in my opinion it is not relevant, and therefore T rule that it is not in order.
Clause, as amended, agreed to.
Clause 19 -
In the case of a person (other than a company -or an absentee) there shall be deducted, in .addition to the sums set forth in the last preceding section, the followingsums : -
– I draw the Minister’s attention to the totally insufficient ‘sum to be deducted in respect of each child under the age of sixteen years. The settled policy of the Government is to encourage the .growth of population, and I understand that was the object of the £5 maternity bonus. I notice in this morning’s newspaper that a learned professor has stated that the maternity bonus probably has had someeffect in the desired direction; but I submit that a deduction of £13 is altogether insufficient. That deduction is made by some of the States, which, until recently, wore very much more in need of revenue than the Commonwealth, and if the Commonwealth has been in the habit of doing; things on a very much larger scale, because of its greater revenue, and because^ the destinies of the nation have been committed to its care, it would not be out of place to allow a much larger deduction than £13.
– Do you not think that, ‘before we ‘do so, wo ought !to increase the pensions in respect of a child under the War Pensions Act? This is the amount we allow under that Act.
– But we have to pay money out under the War Pensions Act, and in this case we are merely making a deduction. I might say that only the national financial limitations will constrain me from increasing the payment under the War Pensions Act when an opportunity arises ; but I ask the Minister, if he were a justice of the peace sitting on the Bench in connexion with a maternity case, would he not allow an unfortunate girl mother a larger sum than 5s. a week for a child ? It must not be forgotten that single men with incomes of £3 a week are exempt from taxation. Probably some of them are supporting aged parents; but, generally speaking, a single man with an income of £3 per week, and nobody depending upon him, is by no means in an unenviable position.
– There are not many in that .position in any part of Australia. They nearly all have some dependants.
– A large number have no obligations in this respect, and they are infinitely better off than a married man, with two or three children, in receipt of an income of £230 or £240 a year, because the latter will have to pay income tax; and I maintain that a deduction of £13 for each child under the age of sixteen years is altogether insufficient. Does anybody think that a child can be brought up on 5s. a week?
– Make it £25, and you may succeed in carrying it.
– I do not feel disposed to go to that extent, but I move -
That the word “ Thirteen “ be left ont, with a view to insert in lieu thereof the word “Twenty.”
– I will not attempt to controvert what Senator Bakhap has said in regard to the cost of maintaining a child. I know what it is, and I know that £13 is not sufficient; but I ask the honorable senator not to put the Senate in an illogical position. When we were asked, under the War Pensions Act, to make provision for the maintenance of a child of a deceased soldier who was killed in the service of his country, we were generous enough to allow a widow £13 per year in respect of each child under the age of sixteen years. In common with other members of this Parliament, I deliberately said that, after considering the question in all its aspects, £13 was a fair amount. It would be illogical, therefore, if I now sanctioned a proposal to increase the amount in this Bill. As one who will claim exemption in respect of three children under this Bill, it would be illogical for me to say that it would cost £20 or £25 to keep the child of an ordinary citizen, but that £13 was sufficient to keep the child of a soldier who had lost his life. I ask the honorable senator not to press the amendment. Possibly, on some future date, I shall be prepared to consider the question of increasing the amount, and to permit the ordinary citizen receiving a pension to claim payment at the same rate, whether it be 20s. or 25s. But do not let us treat this proposal differently and so put the Senate in an illogical position. I ask Senator Bakhap not to press his amendment to a division, because that would be unfair to the feelings of most members of the Committee, who, I believe, are willing to accept £13 as a very fair compromise.
– I do not think that the Assistant Minister has argued logically. In the first place, there is no parallel between the pensions to war orphans and the exemptions in this clause. I have already said that if it were possible I should be prepared to vote for an increase in the pensions to widows and children under the War Pensions Act. It is only because of the wrong policy adopted and the problematical number of the widows and the orphans that we are unable at present to make a much more generous provision. But the Assistant Minister must not forget that while we are allowing a pension for a child under the War Pensions Act, we are also allowing something to the mother, and it is not inconceivable that in. a country like Australia she will be capable of earning a little money. I admit that the payment to the war widows and children is, so far as I am concerned, only an interim payment. If after the war is ended we can provide them with more money, I shall be prepared to vote accordingly ; but at present we are considering an Income Tax Assessment Bill, not only as an instrument for raising revenue, but for certain other considerations, which, indirectly obtrude themselves upon us.
– Why do you call it a widow’s pension if you admit that she has to spend something to feed her children ?
– Surely the Assistant Minister is too sensible to set up such a contention as that the widow will not have to do that. I submit that in a country like our own, where every instrument of taxation should be availed of, if it has an indirect influence in promoting the interets of the country, where it is so necessary that we should have a large population, and where it is admitted a family averages three or four children, we might quite reasonably raise the exemption in this clause so as to place the married man in the position of not being called upon to pay the tax until he has an income of £216 or £217, when we exempt a single man with an income of £156. I have said that I would not pledge myself to exempt any income from taxation, but there should be a certain equity observed when we are discussing the matter of exemptions. We ought to do something in the way of justice and common sense. I am sure that if the Assistant Minister were a justice of the peace adjudicating on a claim for provision for the children of a family he would hold himself in contempt if he did not order the payment of more than 5s. a week for a child. Therefore, not with any desire to embarrass the” Administration or to obstruct the passage of the Bill, I must seek for an increase of the exemption from £13 to £20, and I think that in doing that I am most parsimonious.
Senator Lt.-Colonel Sir ALBERT GOULD (New South Wales) [6.20].- I hope that the Assistant Minister will assent to the amendment, as the increase would assist the poorer people, whose cradles, generally speaking, are more in use than those of wealthy people.
– Do you admit that?
– I believe that it is the case. A man with an income of £200 will be exempt from taxation, but he will have to maintain four or five persons. Surely it would not be a serious concession to agree to the proposed increase. I know that the sympathies of the Minister are with the poorer classes, and no doubt they deserve more consideration at our hands than do other classes. I ‘think that the suggestion of Senator Bakhap is a reasonable one, for I do not believe that any person can maintain a child on 8s. a week.
– The argument of the Assistant Minister seems to me to be fraught with great possibilities and great danger. He says that, because we fixed on £13 as the pension payable in respect to a child under the War Pensions Act, we ought to adhere to that amount as the exemption under this Bill. In other words, if we made an error in regard to the war pension, we should repeat it here. That is, I think, a very dangerous doctrine.
– I think it was an error, taking all the circumstances into consideration.
– The honorable senator said, I think, that he voted for a pension of £13, feeling at the time that it was not adequate, and that now he wishes to adhere to that sum. But, as Senator Bakhap pointed out, the cases are entirely different. In one case we made provision for the widow and the children of a deceased soldier - not necessarily for their whole and sole maintenance. We do not expect that the widow and the children are to sit still, do nothing, and live on what the Commonwealth gives them. We did not profess for a moment that that amount was to defray the whole cost of their maintenance. What this amendment seeks to do is to make a reasonable reduction from a taxpayer’s income of the actual cost of maintaining his children. The cases are entirely different. Senator Bakhap has suggested that if the Assistant Minister were on a Bench to decide a maternity case, in all probability he would allow more than 5s. a week for the child. I also think that he would. But what would be the position in the case of a person who is bound by an order of the Court to pay a certain sum for the maintenance of an illegitimate child? If an order of 7s. 6d. per week is made against him, will he not be able to show that there is an actual payment out of his income in respect to which he is entitled to the deduction of that sum per week? The parent of a child born in wedlock will be entitled only to a deduction of £13. It seems: to me that the. father of an illegitimate child can put up a very good claim that he is entitled to deduct from his income more than that sum. Is that a desirable state of things to set up ? Is it not penalizing, so to speak legitimacy? I hope that the Minister will see the desirableness of having an exemption more in keeping with the situation, such as the £20 suggested by Senator Bakhap.
– The suggestion to increase the amount of the exemption allowed in respect to children has come from a very strange political quarter., Nowadays I am prepared to hear of almost anything occurring; but; when we find the party which, in the past, did so much to saddle the burden of taxation on the. shoulders of those least able to bear it, striving to outrival the Labour party, we are justified in assuming that there is something more than a genuine desire behind this proposal. It has been suggested from time to time that this f orm of taxation is of a class character, and, therefore, must necessarily exempt some sections of society. In this measure we endeavoured to hold the scale evenly between those who can pay the tax and those who cannot. But now it is urged that we have not done the fair thing.
– Who said that?
– It has been implied very clearly in the suggestions which have been made during the last three or four minutes. In the circumstances, we are justified, I think, in believing that there is nothing genuine behind this attempt to force the Government to change their attitude, because we know from an experience extending over a. number of years that whenever an attempt was made to equalize the burden of taxation, it came rather from the Labour party than from its opponents. It is much too late in the day for our friends on the other side to talk as, they are now doing, because the conduct of their party is ample proof that, on the present occasion, they are not squaring the precepts of the present with the actions of the past. Before I am put: in a false light, sir, I repudiate the suggestions from honorable senators on your left, that I am less a sympathiser with those who cannot bear the burden of taxation than they are.
Sitting suspended from 6.30 to 8 p.m.
– I have been saying that such a proposal as is represented by the amendment, coming from representatives of the Liberal party in. this Chamber, may be regarded as a gift from the Greeks; and we are justified in being suspicious of this unusual solicitude on the part of honorable senators of the type of Senator Gould for the poorer taxpayers having families to support. The Bill now before us is the result of careful study extending over a long period. Its object is to impose the burden of taxation as equitably as possible. This is the first taxation measure in which the children of taxpayers have been taken into account. This was to be expected from a Government who may be trusted to hold the scales evenly between the different sections of the community. I cannot understand the strange zeal for the poorer sections of the community which has been exhibited to-night by members of a party that in the past has resisted every attempt made to adjust the burden, of taxation equitably.
– That is not correct.
– The whole career of the party to which the honorable senator belongs bears witness to the truth of my statement. The members of the Liberal’ party have always been liberal enough to themselves, but when they have been called upon to impose the burden of taxation upon the shoulders of those best able to bear it, they have never been found equal to the task. In the circumstances I refuse point-blank to be placed in a false position by the amendment submitted by the other side. In this Bill the position of the less well-to-do taxpayers has been taken into account, and it is proposed to permit of a certain exemption in the case of children. A taxpayer with a large family will under this measure escape a share of taxation, one with a moderate family will escape a lesser share of taxation, and taxpayers who have no family will receive no special exemption. Honorable members opposite, who are trying by the amendment to paint the lily, and to add another hue to the rainbow, may rest assured that their device will be seen through clearly by the electors who are watching this matter-.
– I ask the honorable senator to connect his arguments with the amendment.
– I connect them in this way : The arguments used by honorable senators opposite in support of the amendment .may make good electioneering ammunition by-and-by.
– Who is thinking of electioneering ammunition ?
– I think that the election which is only about two years distant has had much to do with inspiring the .action .of certain .honorable senators in connexion with this Bill. I repeat that I refuse to ‘be placed in a false position toy this amendment. This is the most , equi table income tax measure in the feature under discussion : ever introduced in ‘a .British Parliament, and yet honorable senators opposite want to go one better, because they desire to placard themselves before ‘.the electors as the genuine friends of the poorer sections of the community. That «an be easily contradicted, because we shall ‘be able, as we have done in the past, to .put our side of the .case before the ^electors from the public platforms, and to show our honorable .friends opposite in their true light. I believe that the clause is a reasonable one, and I refuse, by supporting the amendment, to be dragged at the tail end <ot the Liberal remnant in this chamber, who .are attempting on the present occasion to place the -party -to which I belong in .a false light.
– I would .not .have risen to speak ;again ion =the amendment were .it not for ‘.the
Concluding remarks of Senator Lynch. 11 any one has been addressing the electors this evening it iB Senator Lynch. He has been addressing them in ‘anticipation <of something which I can-not exactly understand. I take this opportunity of correcting the honorable senator. He has said that in respect <of ‘the proposed exemption for ‘children .this is the first income tax ‘of so liberal -a character introduced in any British Parliament. Before the honorable senator becomes so denunciatory lie would be well advised if he equipped himself with a knowledge of the facts. As *a .matter of fact :a provision of this ‘nature has found a place for -some years in the Income Tax Act of Tasmania.
– - -K was to .some degree ‘responsible for it.
– Senator Bakhap, w-ho has .moved the amendment we are now discussing, was one of those who were responsible for the introduction of a similar provision in a Bill passed .by the Tasmanian .Parliament when the Liberals were in power, and carried the measure, thus setting an example to the world. If Senator Bakhap, who assisted to give -effect on the statute-book of Tasmania to .a certain policy, now, in pursuance of the same policy, endeavours to improve this Bill, shall Senator Lynch say him nay-? .And shall he say that the honorable .senator and Senator Keating, from the same State., who knew ;of this fact (of which Senator Lynch was not aware, .are .supporting this proposal for the ulterior purposes which .Senator ‘Lynch .has (attributed to them ? I entirely resent this preaching to Senator Bakhap, or to any other -member of .the Committee suggesting that >we are exceeding our duty in supporting a proposal of this character. If Senator Lynch was not acquainted with -the facts, why should fee pronounce judgment upon others who have been doing things which he has .not even been .dreaming of?
– I -do not propose to again address myself to the merits of the amendment, and I should not -have ‘risen again -were it -not for what ‘Senator Lynch has said. As Senator Keating has pointed ‘out, it “was my unpleasant duty, ‘because of “the ‘unsatisfactory ‘state -of ‘the finances -oT Tasmania, ‘to support an Administration that immediately upon ‘my advent *to the parliamentary arena had to impose taxation c-T -a very drastic character.
– -What is the exemption under the Tasmanian Act?
– :Tt goes down as low as £80, and even in those days : before ‘the war we pu-t a “tax of ls. -4d. in the £il, am the -higher register, on wealthy people.
– Senator Bakhap supported an exemption as low as £80.
– I did indeed, rand when I went before my constituents they did not reject me for having had the moral courage to carry an exemption as low as £80. I think that I doubled the vote recorded for me by -having done so.
– What exemption is made in respect to children under the State Act?
– About £10 for each child.
– No, the exemption is quite as high as that proposed under this Bill.
– If the honorable senator does not know what it was, how can Senator Keating blame me for not knowing ?
– Senator Bakhap knew of the principle and Senator Lynch did not.
– The condition of the finances of Tasmania at the time was very bad.
– Order ! I may have allowed Senator Lynch a little too much latitude, but I now ask honorable senators addressing the Chair, and particularly Senator Bakhap, who has moved the amendment, to confine themselves strictly to it. I cannot allow a rambling discussion to take place on the amendment.
– In any case, the fact remains that I have been responsible to a certain extent for putting upon the statute-book of Tasmania a taxation measure very much more liberal than the Bill now before us, and, in the circumstances, that I should be accused of an attempt to gain kudos in the eyes of the electors by suggesting something more liberal in the way of exemptions for married people with large families than is proposed by this Bill is somewhat singular. I may inform Senator Lynch that there -are special sections in the Tasmanian Income Tax Act which give widows with children more liberal treatment than is given to the ordinary taxpayer. There are many provisions in the Tasmanian Act of a more liberal character, considering the circumstances in which it was passed, than those which are to be found in this Bill. That, in the circumstances, Senator Lynch should hold this Bill up to us as a quite symmetrical measure which ought not to be interfered with is a little over the odds.
– The exemption under the Tasmanian Act is only £80, whilst under this Bill it is £156.
– I should like to deal with the claim openly expressed by Senator Lynch, that members of the Liberal party are devoid of humanitarian in stincts, and have done nothing to advance the interests of the poorer classes. The TEMPORARY CHAIRMAN.Order! I must ask the honorable senator to address himself to the amendment. * Senator BAKHAP. - I must say that it is hard that Senator Lynch should attack the Liberal party in general terms, and should endeavour to impute improper motives to members of that party for submitting this amendment, and that we should be unable to reply to his unjust, strictures. If the honorable senator will peruse publications a century old he will find that proposals were long ago placed upon the statute-book which he would lead us to believe have been due to the Labour party, and he might evolve a new school of philosophy, and would probably learn something of which at the present time he has very little knowledge.
– We have never claimed that we have evolved these proposals. What we have said is that we have done something. We have taken action to give effect to them.
– My honorable friends opposite have fallen lamentably short in the efforts they have made on behalf of the poorer class. The real difference between honorable senators on this side and members of the party opposite is that, while we both desire to make the position .U. the poorer class better, honorable senators opposite propose at the same time to reduce the rich to a condition of indigence. We recognise that whilst we have the responsibility of bettering the conditions of certain classes of the community, it is not incumbent upon us to act as the Greek tyrant did who went through a corn-field and whisked off all the heads of the taller ears of corn. We do not believe in making the rich poor, but in making the poor rich. Throughout the whole of the utterances of Senator Lynch ran a thread of vindictiveness against the wealthy merely because they are wealthy. I have submitted the amendment because I believe that a deduction of £13 for every child under sixteen years of age is lamentably insufficient. I am honestly of opinion that £20 would be a fairer thing. When I submitted my proposal, an honorable senator interjected that I should have moved to make the deduction £26. But as the Assistant Minister - if he were a justice of the peace - would -probably adjudge that 7s. 6d. per week fairly represents the cost of supporting a child, I think that we may very well include in this Bill an exemption on that basis. Consequently I have been content to submit a proposal in favour of an exemption of £20 in the case of each child under sixteen years of age. That will afford relief to the best class of the community - that class which takes on family responsibilities, and has to depend upon a weekly stipend to discharge those responsibilities.
Senator Lt.-Colonel Sir ALBERT GO OLD (New South Wales) [8.18].- Like Senator Bakhap I resent the charges which have been made by Senator Lynch against the party to which I belong. If Senator Findley had proposed an exemption of £26 in the case of each child, and honorable senators upon this side of the chamber had opposed it, no man would have been louder in his denunciation of them than would Senator Lynch. The honorable senator gave his position entirely away when he said that he feared the Greeks: when they brought gifts, because that was an admission that he is prepared to judge this proposal, not upon its merits, but upon its source of origin. I would remind him that this is not the first occasion - apart from the example of Tasmania - upon which a similar provision has been inserted in an Income Tax Bill. In New South Wales a deduction of £50 is allowed in the case of each child.
– That State followed the lead of Western Australia.
– Yes. A smaller deduction is made in Western Australia. Yet the honorable senator has declared that this is the most liberal taxation measure that has ever been submitted to a British Parliament. In Western Australia the exemption allowed for every child is £10, and in New South Wales it is £50. Yet the honorable senator, because we think that a deduction of £13 for every child is utterly inadequate, and suggest that it should be increased to £20, holds up his hands in pious horror. I say that we should deal with this matter on its merits. I am content to stand by the amendment of Senator Bakhap. It is a much fairer proposal than is that of the Government, which will afford very little relief to the more wealthy classes of the community. On the other hand, we have to remember that to men with limited incomes the amount of the exemption is very important.
– Since Senator Keating spoke upon this question I have taken the trouble to make myself familiar with the position which obtains in certain of the States. I have learned that the honorable senator is either quite unacquainted with the facts, or that he has made statements which cannot bear scrutiny. The position in Tasmania is that a certain deduction is allowed for every child, but that deduction is rigidly limited to incomes of less than £150 of taxable value. In other words, any person with a taxable income in excess of that amount receives no allowance whatever for the children which he has to maintain. This clause, which proposes to authorize a deduction of £13 for every child under sixteen years of age, is the most liberal provision - with the exception of that operative in New South Wales - that has ever been brought before any Parliament. Evidently Senator Keating does not know the income tax law of his own State, otherwise he would scarcely have affirmed that it is a more liberal form of taxation-
– I said that the principle as introduced there was more liberal.
– I stand by my former statement that, excluding New South Wales, this Bill represents the most liberal form of income tax that has ever been brought before a British Parliament. The Tasmanian law is not nearly so liberal, for the reason that it makes no allowance for the children of taxpayers who have a taxable income in excess of £150 per annum.
– And that legislation was enacted in peace time, whereas we are living in a time of war.
– Exactly. This is a war measure. Although I am here to liberalize taxation as much as possible, I cannot be induced to support the amendment, seeing the questionable quarter from which it emanates. I cannot forget that all our struggles in respect of income tax, land tax, and old-age pensions legislation have been due to the stupidity of the party opposite.
The TEMPORARY CHAIRMAN.I must ask the honorable senator not to pursue that line of argument.
– All I wish to say is -that I do not intend to accept this particular present. We have always attempted to secure equality of sacrifice, whilst the efforts .of the ‘Opposition - of the remnant who now pose as the -friends of the working classes - ha-ve always been exerted in -the other ‘direction . I intend to support the Bill in its present form.
– I would not have risen ‘but for .the remarks -of Senator Keating, who ‘Stated that it was not the intention of this Parliament to wholly provide for .the widows and children of the men who sacrifice their lives in fighting the battles of the Empire. I admit that the ‘pensions allocated under our War Pensions Act are very small considering the high ‘cost of living. But I would not like at to igo forth to the -world that we deliberately send men to (Gallipoli to fight out battles, whilst we stay at home, .and then tell their widows that we do not intend to provide for them, but -merely propose to give them a few shillings to keep body -and soul together, whilst expecting them to tod] .in order to maintain their families. I say urn hesitatingly that it would .be mean on our part to sanction a deduction from our taxable incomes of more than £13 for every child under sixteen years of age whilst affirming that that is a sufficient sum .to provide for the -needs of the children of our .heroes who perish on Gallipoli.
– Does the honorable senator say that it is ^sufficient?
– I have never said that
– Then, why -not make it more’?
– Because we have not the wherewithal. If we had brought forward a heavier income tax, we might have been -accused of extravagance. The fact that New South Wales grants an exemption of £50 :for -every child under sixteen years of -age ‘ought not -to influence us i-n this matter. Personally, -I -do not think that that amount is a -penny too much. ‘But we ‘have to recollect that when New South Wales enacted that legislation we were not called upon to provide hundreds of millions of pounds to take our share in fighting the battles in which the Empire is now engaged. What is the position -as it has been put by honorable senators opposite? They have pleaded the case of the “poor” children. Sena/tor Gould has had the “poor “ mouth all day. He wanted the “poor “ Austraiian Jockey -Club and the “ poor “ crocket clubs .exempted. I would like to make an exemption of £50 in the case lOt- -every child under sixteen years of age.
– - Nobody -is -asking ‘for that.
– I admit that. The Government are called upon ‘to obtain revenue, and we cannot obtain it if we are to grant an exemption «very time that we feel sentimental. If the amendment had been bought forward at any other time, I would have been -glad to support it. I ‘believe that Senator Bakhap is actuated in this matter by genuine sentiment. It is true ‘that an increase df a few pounds in the deduction might not make -a -great deal of difference, but honorable senators opposite have wanted nothing but exemptions since they came here to-day. If the Government yielded to all these requests, which, individually, might amount only to small sums, T doubt whether in the aggregate “we should get enough money’ to carry on the “war.
– The honorable senator estimates that this income tax will provide £1,000,000 more than will be required for .the war.
– I wish the lion orable senator’s words were true. I am only afraid that we shall yet have ‘to raise .not only this tax, but from £3,000,000 to £4,(000,000 more to pay interest on the .money we borrrow. .1 hope I am wrong, but that is what “I fear.. Even .if the tax .did provide £1,000,000 more, we are not .yet out oT one of .the driest years w.e ever had, and we cannot .stop -our public works. “We have never said that this was purely a war .measure. We have to keep .this country going, and we .are passing through a very bad period. With the responsibilities facing them, ,the Government ,are -not likely to lose their .heads and become extravagant on account -of .the receipt of .another £1,00.0,000 of -revenue. The condition of Europe must convince any thinking man -that it is a question not of one but ‘of many millions .before we are through the job, .and I urge honorable senators to stand ‘by the £-13 exemption in the Bill.
– If there is any justification for the amendment, it has been amply given -by the Minister. He argues that because we provided £13 per child in the Wax
Pensions Act we should allow the same amount in this Bill. He admitted that £13 was not adequate to pay for the sustenance of a child for a year, but, forsooth, because we have made a mistake in one measure we are to repeat it in another ! The two Bills are not so interrelated as to make that necessary. As Senator Bakhap pointed out, the putative father of an illegitimate child would probably be ordered by the Bench to pay, not 5s., but 7s. 6d. per week. In such a case he would be able to claim afterwards a greater deduction from his income than £13 per annum, whereas another man would get a reduction of only £13 for a legitimate- child.
– I never heard one Opposition voice- ask for more than £13: for the soldier’s child.
– We all agree that that amount is. not adequate, but in passing the War Pensions Act Parliament did not purport to give to- the widow and children of a deceased soldier such a* sum as would enable them to do nothing for the rest of their lives. In this case we are purporting to tax the man s income, and in order to ascertain his net income we must ascertain what he has left after discharging certain obligations, one of which is the maintenance of Irischildren. We all agree that £13 is not enough to maintain a child for a year. Why, then, cannot we allow more, seeing that we want to arrive at the income which a man receives, less the deductableexpenses ? I should not have, spoken tonight but for Senator’s Lynch ‘s outburst. He said he would shed light on the situation, but a reference to Mr. Knibbs’ book goes to show that he was wrong in saying that this was the. first instance- of the introduction of a liberal measure comtaining a provision of this kind. His, own State has had a similar provision, and so have New South Wales and Tasmania, and I still think that Tasmania was the first to. give legislative recognition to the principle. Senator Bakhap; was interested in doing this. Then what is more natural than that he should seek to give effect to it in this atmosphere in the best possible way, if he could not induce the Tasmanian Parliament to do better than it did ? Why he in doing it, and I in supporting it, should be animadverted on as we have been by Senator Lynch, I am. at a loss- to know, if thisChamber is to retain its character as a deliberative assembly., One, would infer from what Senator Lynch said, that if anything is proposed_ from this side,. its merits will be absolutely ignored and only its origin taken into consideration. Apparently, men, and not measures or the merits of those measures, will determine the honorable senator’s attitude towards them.
– Not more than a week ago I said I would take my full share of responsibility for placing this Government measure on the statute-book, because I did not indulge in any lip-service when I’ said I. wanted to give the Government a full measure of loyal support. They have had it, but perhaps it has not been greatly valued because the numerical strength on this side is not great. They have had as much support as we have been able to accord them, but surely that support did not involve the abrogation of our right, to improve the details of any taxation measure and make it more equitable and suitable to the hard and hardening conditions of the people, particularly the married people of the community? In order to completely free myself from Senator Lynch’s imputation that I, or anybody associated with me, was seeking a superior electoral standing in the eyes of the citizens, I am prepared, if the Government will agree to increase this deduction.,, to vote to reduce the exemption for single persons from £156 to £125 per annum. In Tasmania there is a discrimination between married and unmarried persons. Incomes under £80 are exempt in the case of unmarried persons, or- of £100 in the case of married persons, widows-, and widowers maintaining at least one child’ under the age- of sixteen-. If the Government are afraid that this amendment will substantially reduce the amount returned! by the tax- to- thenational exchequer, I am prepared, inorder to show that I am not seeking votes, to vote- to reduce the- exemption for unmarried persons to- £125. Single persons receiving £126 and over are more fittedto pay some taxation at this juncturethan are married people- receiving incomes of £156 and over. If the Minister will not accept that challenge, let us hear no more of this charge of endeavouring to improve our standing with the electors, because we address ourselves, as is our duty, to the consideration, of the details of a measure which has already been adopted without division on its first and second readings.
Question - that the word proposed to be left out be left out - put. The Committee divided.
Majority … … 20
Question so resolved in the negative.
Clause agreed to.
Clause 20 agreed to.
Clause 21 -
Where a taxpayer, either alone or with other persons carries on or is interested as a partner in more than one business the income (if any) from which would be taxable, and makes a profit in one or more of such businesses, and a loss in another or others, the taxpayer shall he entitled to deduct the sum of the losses from the sum of the profits.
Senator Lt.-Colonel Sir ALBERT GOULD (New South Wales) [8.50].- I would like to have some explanation from the Minister with regard to this clause. Suppose a taxpayer is in a partnership with two or three different people in different concerns, what will be the position ? For instance, “ A “ and “ B “ might be in one business, “ A “ and “ C “ in another, and “A” and “D” in another. If “ A “ made a loss in one partnership, would he be entitled to deduct that loss from the gains in the other two?
Clause agreed to.
Clauses 22 and 23 agreed to.
Clause 24 -
A company which has at any time before or after the commencement of this Act borrowed money on debentures, shall be deemed to be the agent for each debenture-holder, so far as may be necessary for the purposes of this Act.
Senator Lt.-Colonel Sir ALBERT GOULD (New South Wales) [8.52].- When speaking on the second reading, I put a case that will be touched by this clause. Suppose a company has issued bearer debentures with coupons attached for the payment of interest - how will that work under a clause of this character? The company will not know who are the holders of these debentures, and will not know how to deduct any money they may have been paid. Again, it might so happen that a debenture-holder will have made a return, and paid his income tax in respect of the interest he had derived from the debentures, and the company that issued the debentures would have no way of ascertaining whether that had been done or not. Is it not possible to make some alteration in the clause to get over the difficulty ?
– I am sorry that I cannot hold out very much hope to the honorable senator. We cannot accept the responsibility of telling private business people how they are to run their ownbusinesses.
– We are not asking that. We are asking you how you are to run your own ?
– We say that the income derived from debentures shall be taxed like income derived from any other source, and we hold the company responsible as the agent of the debenture-holder. We shall probably collect it from the company, which, in turn, will have to make whatever business arrangements may be necessary in relation to the debentureholders.
Senator Lt.-Colonel Sir ALBERT GOULD (New South Wales) [8.54].- I would suggest that a simple course would be to allow the company in every case to be responsible for income tax in respect of a debenture, and then to deduct what they had paid by way of income tax from the holder when the debenture became payable, if it could not be done earlier. It is almost impossible to deal with the clause on any equitable basis as it stands at present. There is another difficulty. Suppose the company has issued bearer debentures, and there is £5 payable on each debenture, how much will be deducted in respect of income tax on them ? At present the clause presents all sorts of difficulties.
.- The honorable senator must know that there are thousands of difficulties in connexion with an Income Tax Bill, but I have no doubt that the Commissioner will do all that is possible to facilitate its successful working, and overcome the difficulties that may arise from time to time.
Clause agreed to.
Senator Lt.-Colonel Sir ALBERT GOULD (New South Wales) [8.57].- In regard to this clause, which deals with the assessment of partners, some explanation is necessary. Take the case of a firm in which there are four partners, and assume that their earnings total £2,000 a year, so that each partner will be entitled to draw £500. Is it fair that each should be taxed as if he had received an income of £2,000 ? If we are going to say that the partnership firm is to be taxed as if there were just one income, we shall be outraging the ordinary principle of justice. I can conceive that when the clause was put into the Bill, in the first instance, attention had not been drawn to this aspect of the case; and 1 would point out now that it is not fair to place partners in that position. Something ought to be done to relieve them. I am quite sure that a clause could readily be obtained from one of the State Acts to get over the difficulty if it is desired to have a specific provision dealing with partners.
.- The honorable senator is quite mistaken as to the power of the clause dealing with partners. Partners will be taxed as individuals, in so far as the profits of the partnership are distributed, but they will be taxed collectively on the undistributed profit. That is to say, if a partnership business made £10,000 profits, and after dividing £5,000 amongst the partners, put the other £5,000 into the firm, they would pay collectively on the latter amount on the higher scale.
Clause agreed to.
Clause 26 agreed to.
Clause 27 -
Amendment (by Senator Russell) agreed to -
That after the word “ company,” line 2, the words “ or a trustee “ be inserted.
– I move -
That the following new sub-clause be inserted: - “ (1a) In the assessment of a trustee, there shall be deducted from the tax assessable to him so much of the total tax as bears to the total tax the proportion which that part (if any) of the whole income, which is distributed to the beneficiaries, bears to the whole income.”
The object of this amendment is to meet a difficulty which Senator Millen has pointed out. It will enable an estate, instead of paying on a flat or high rate, to be taxed on the proportion of income received .
Amendment agreed to.
Clause, as amended, agreed to.
Clauses 28 to 32 agreed to.
Clause 33 (Alterations of assessment).
– Does this clause provide that the Commissioner may require a further payment of the tax after a payment has already been made?
– Yes, a reassessment.
– And there is no limitation whatever as to the time within which a re-assessment may be required ?
– No; it may bo required at any time.
– I point out to the Minister that it may be considerably afterwards when a man may have his income re-assessed, and that then he may have altered his whole position. On the first occasion he may have been carrying on a business solely, but on the second occasion he may be in partnership. Or on the first occasion he may have been in partnership, and some years after it was determined the Commissioner may require a re-assessment of his income for a particular year, and it may be impracticable, or perhaps impossible, for him to obtain tha books by which the re-assessment can be verified or otherwise. Again, a man may have been carrying on business in one State, and paying the income tax, but three or four years afterwards, when he is in another State and has rid himself entirely of everything belonging to the previous business, his income may be reassessed, and he will have no means of checking the re-assessment. I think that there should be some limitation instead of using the words “ at any time.”
– The suggestion of Senator Keating sounds all right at first, but, unfortunately, in some of the States the authorities are going back now ten or twelve years. The statute of limitations has been practically set aside in this matter. I understand that the State legislation goes so far that, in the event of a man avoiding or dodging the income tax during his life, there is power for the Commissioner to deduct the amount from his estate after his decease. We do not desire to leave any loopholes, or to encourage any person to dodge the income tax. There may be, of course, individual difficulties, but there is also the possibility that in a crisis the Commonwealth might lose income tax to which it was legitimately entitled. . If a big firm is involved, a set of well-kept books will be available to refer to, and no difficulty can arise; but if the amount involved is small, it will not be worth bothering about very much. There are not likely to be big cases arising out of this provision, but it is possible that a number of persons in a small way may be continually trying to dodge the tax, and our object is to deal with such persons harshly and severely.
– I point out to the Minister that the very persons who will be dealt with severely will, according to his own statement, be those who will not have the evidence to rebut the charge. For instance, a farmer, as a rule, keeps only his bank book, and it may be exceedingly difficult for him to check a re-assessment covering a period of nine or ten years. There will be dozens of cases in which a gardener will not have a set of books to enable him to prove his case ; but, because of that fact, guilt is to be assumed.
– When the Commissioner desires to re-assess over a period of time it will be because he has definite proof of omission, and he will supply the facts to the taxpayer.
– The Commissioner may furnish an explanation from his own side, but it is not likely to be more’ than an ex parte statement. The taxpayer will not be in a position to rebut the reassessment.
– It looks as if the Commissioner’s ex parte statement will be conclusive evidence.
– That is so. I think that in this matter, as in others, a limitation should be provided. There are to-day men who pay more than double the amount of the tax for the mere filling up of the returns, and to make them liable to have their returns reviewed for a period of eight to ten years is, I think, going too far.
– Surely Senator Senior’s experience of a taxation department is that it does not send out a notice of re-assessment without giving definite information. It may be true that an odd individual receives an additional assessment note, who is not able to test the facts, but under this provision the Commissioner will not move unless he has definite proof of omission, and he will be able to supply the facts. It may be difficult, of course, for a man to prove a negative unless he knows the facts; but when he receives a notice in regard to the facts, and is allowed a reasonable time in which to send in an answer, surely it can be left to the judgment of the Commissioner to say whether the assessment in his case was correct or not. Honorable senators know that, of all the men who are easy-going as a rule it is a Government tax collector. I understand that the Commissioner, under the Land Tax Assessment Act, is likely to act under this measure, and, I have not known him to go round looking for the scalps of any persons. This provision will insure the collection of the income tax. We look upon a dodger of taxation in this country ‘ as rather a despicable individual. Honorable senators need not fear the occurrence of any tyranny under the provision. It should be remembered, too, that the income tax will be the first charge on a man’s income, and not the last.
Clause agreed to.
The validity of any assessment shall not be affected by reason that any of the provisions of this Act have not been complied with.
– Perhaps the Minister will say whether this clause is put in for the protection or encouragement of the Commissioner or for the protection of the taxpayer.
SenatorRUSSELL (Victoria - Assistant Minister) [9.16]. - I should say that the object of the clause is to avoid disputes about technical matters of little consequence. If a big mistake is made the Commissioner will probably go over the whole ground again, hut it would never do to have appeals made to the Courts continually because of trumpery errors of little consequence.
Clause agreed to.
Clauses 35 to 46 agreed to.
Clause 47 -
No statute of limitations at any time in force shall bar or affect any action or remedy for the recovery of income tax.
– Here this Bill goes so far as to deprive the taxpayer of even the protection of the statute of limitations. The Commissioner has full power to declare what the assessment is to be. The tax must he paid within thirty days, and if the taxpayer dies in the meantime it may be collected from those whom he leaves behind, and now, under this provision even the protection of the statute of limitations is taken from the taxpayer or his representative. The Minister does not shelter himself behind the just provisions of this Bill, hut behind its administration. We are told that, although the Bill will invest the Commissioner with the powers of a tyrant, its administration is going to be merciful.
– The presumption underlying the Bill is that the Commissionerwill be always just and accurate, and that the members of the community liable to taxation will always be unjust and dishonest.
– That is the principle of the Bill. I think that credit should be given to the taxpayer for intentions as honest as those of the Commissi oner. We are told that the Com missioner will always be merciful, but we want justice, not mercy.
– Is there not always an appeal?
– The consequences of an appeal may be escaped by the Commissioner in many ways, and after having swept away the statute of limitations by this clause, all that is now necessary to complete the measure is a provision that, after everything else has been done to him, the taxpayer shall be hanged, drawn, and quartered.
– The provisions to which the honorable senator takes exception will only apply to those who have not paid the tax in time.
– I understand that the statute of limitations does not apply to a debt due to the. King. This clause has been inserted for simplicity’s sake.
– It wasnot necessary to insert it.
– Then leave it out.
– After the Minister has confessed that there is no necessity for the clause, I hope that no member of the Committee will support it.
Clause agreed to.
Clauses 48 to 52 agreed to.
Clause 53 -
Every contract, agreement, or arrangement made or entered into, in writing or verbal, whether before or after the commencement of this Act, shall, so far as it has or purports to have the purpose or effect of in any way, directly or indirectly -
altering the incidence of any income tax; or
relieving any person from liability to pay any income tax or make any return ; or
defeating, evading, or avoiding any duty or liability imposed on any per- son by this Act; or
preventing the operation of this Act in any respect; be absolutely void, but without prejudice to its validity in any other respect or for any other purpose.
– This is a very drastic provision.
– If the honorable senator will read the last two lines of the clause he will find that it applies to income tax only.
– If a contract or arrangement made between two persons is held by the Commissioner to alter the incidence ofthe income tax, the contract will be voided.
– If two men conspire by a contract to escape payment of the income tax, surely the honorable senator would not permit them to do so.
– A person may have an agreement with an absentee. It may depend entirely on the party to the agreement who is resident in the Commonwealth what the absentee shall get. The agreement might be voided in order that a larger amount might be collected from the absentee, and in order to void it the Commissioner might claim that the contract altered the incidence of the tax.
[9.281. - If the honorable senator will read the clause carefully he will find that a contract would not be voided except in so far as it affected the payment of income tax.
– It would be what is called voided pro tanto.
– The object of the clause is to catch any one who desires to escape the payment of income tax, and a contract would, under this clause, continue in force for every other purpose.
– In all other respects its validity would rest upon its own merits.
– Just so. The contract is not wholly voided, but only so far as it affects the payment of income tax.
Clause agreed to.
Clauses 54 to 65 agreed to.
Title agreed to.
Bill reported with amendments; report adopted.
Bill read a third time.
Bill received from the House of Representatives.
Standing and Sessional Orders suspended, and (on motion by Senator Gardiner) Bill read a first time.
– In moving -
That this Bill be now read a second time.
I need scarcely remind honorable senators that it has already been debated in conjunction with the Income Tax Assessment Bill. In submitting this motion I shall, therefore, content myself with reading the measure in order that its provisions and its schedules may be placed on record in Hansard. The measure is as follows: -
A Bill for
To impose a Progressive Tax upon Incomes.
Majesty, the Senate, and the House of Representatives of the Commonwealth of Australia, as follows: -
Income tax is imposed at the rates declared in this Act. 4. - (1) The rate of the income tax in respect of income derived from personal exertion snail be as set out in the First Schedule to this Act.
Rate of Tax upon Income derived from Personal Exertion. for so much of the taxable income as does not exceed £7,600 the rate of tax per pound sterling shall be
Cite as: Australia, Senate, Debates, 9 September 1915, viewed 22 October 2017, <http://historichansard.net/senate/1915/19150909_senate_6_78/>.