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19221006_reps_8_101.xml
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19221006_reps_8_101.xml
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<?xml version="1.0" encoding="utf-8"?>
<hansard xsi:noNamespaceSchemaLocation="../../hansard.xsd" version="2.1" xmlns:xsi="http://www.w3.org/2001/XMLSchema-instance">
<session.header>
<date>1922-10-06</date>
<parliament.no>8</parliament.no>
<session.no>2</session.no>
<period.no>0</period.no>
<chamber>REPS</chamber>
<page.no>3305</page.no>
<proof>0</proof>
</session.header>
<chamber.xscript>
<para class="block">House of Representatives. </para>
<business.start>
<day.start>1922-10-06</day.start>
<para>
<inline font-weight="bold">Mr. Speaker (Hon. Sir Elliot Johnson)</inline>took the chair at 11 a.m., and read prayers. </para>
</business.start>
<debate>
<debateinfo>
<title>PUBLICWORKS COMMITTEE</title>
<page.no>3305</page.no>
<type>miscellaneous</type>
</debateinfo>
<subdebate.1>
<subdebateinfo>
<title>Automatic Telephone Exchange</title>
<page.no>3305</page.no>
</subdebateinfo>
<speech>
<talk.start>
<talker>
<page.no>3305</page.no>
<time.stamp />
<name.id>KNH</name.id>
<electorate>MELBOURNE PORTS, VICTORIA</electorate>
<party />
<role />
<in.gov>0</in.gov>
<first.speech>0</first.speech>
<name role="metadata">MATHEWS, James</name>
<name role="display">Mr MATHEWS</name>
</talker>
<para>- On behalf of the Chairman of the Joint Parliamentary Standing Committee on Public Works, I present the report and minutes of evidence relating to the proposed establishment of an automatic telephone exchange at Box Hill, Victoria. </para>
</talk.start>
<para>Ordered to be printed. </para>
</speech>
</subdebate.1>
</debate>
<debate>
<debateinfo>
<title>QUESTION</title>
<page.no>3305</page.no>
<type>Questions</type>
</debateinfo>
<subdebate.1>
<subdebateinfo>
<title>AMENDMENT OF CONSTITUTION</title>
<page.no>3305</page.no>
</subdebateinfo>
<para>Notice of Motion</para>
<speech>
<talk.start>
<talker>
<page.no>3305</page.no>
<time.stamp />
<name.id>KHE</name.id>
<electorate>CAPRICORNIA, QUEENSLAND</electorate>
<party />
<role />
<in.gov>0</in.gov>
<first.speech>0</first.speech>
<name role="metadata">HIGGS, William</name>
<name role="display">Mr HIGGS</name>
</talker>
<para>- My notice of motion for leave to introduce a Bill for a proposed law to amend the Constitution is at the bottom of the business-paper, and I ask the acting Leader of the House if I may hope that it will occupy a more prominent position before the session closes? </para>
</talk.start>
</speech>
<speech>
<talk.start>
<talker>
<page.no>3305</page.no>
<time.stamp />
<name.id>KNF</name.id>
<electorate>RICHMOND, NEW SOUTH WALES</electorate>
<party>LP; NAT from 1917</party>
<role />
<in.gov>0</in.gov>
<first.speech>0</first.speech>
<name role="metadata">MASSY-GREENE, Walter</name>
<name role="display">Mr GREENE</name>
</talker>
<para>- It is well to hope in a matter of this kind. The position of the notice on the business-paper is not a thing for which I am responsible. Probably the notice is where it is because it was the last handed in. However, I hope that Government business 'may be concluded in sufficient time to enable the honorable member to move his motion. </para>
</talk.start>
</speech>
</subdebate.1>
</debate>
<debate>
<debateinfo>
<title>QUESTION</title>
<page.no>3305</page.no>
<type>Questions</type>
</debateinfo>
<subdebate.1>
<subdebateinfo>
<title>SITUATION IN THE NEAR EAST</title>
<page.no>3305</page.no>
</subdebateinfo>
<speech>
<talk.start>
<talker>
<page.no>3305</page.no>
<time.stamp />
<name.id>KYV</name.id>
<electorate>SOUTH SYDNEY, NEW SOUTH WALES</electorate>
<party />
<role />
<in.gov>0</in.gov>
<first.speech>0</first.speech>
<name role="metadata">RILEY, Edward</name>
<name role="display">Mr RILEY</name>
</talker>
<para>- Can the acting Leader of the House give us any assurance regarding the prospects of peace in the Near East? Has he any information to give concerning the conference that is taking place? </para>
</talk.start>
</speech>
<speech>
<talk.start>
<talker>
<page.no>3305</page.no>
<time.stamp />
<name.id>KNF</name.id>
<electorate>RICHMOND, NEW SOUTH WALES</electorate>
<party>LP; NAT from 1917</party>
<role />
<in.gov>0</in.gov>
<first.speech>0</first.speech>
<name role="metadata">MASSY-GREENE, Walter</name>
<name role="display">Mr GREENE</name>
</talker>
<para>- I cannot say more than I have already said, namely, that the news we have received is of a distinctly hopeful character. </para>
</talk.start>
</speech>
</subdebate.1>
</debate>
<debate>
<debateinfo>
<title>QUESTION</title>
<page.no>3305</page.no>
<type>Questions</type>
</debateinfo>
<subdebate.1>
<subdebateinfo>
<title>ABSENCE OF PRIME MINISTER</title>
<page.no>3305</page.no>
</subdebateinfo>
<speech>
<talk.start>
<talker>
<page.no>3305</page.no>
<time.stamp />
<name.id>KNH</name.id>
<electorate />
<party />
<role />
<in.gov>0</in.gov>
<first.speech>0</first.speech>
<name role="metadata">MATHEWS, James</name>
<name role="display">Mr MATHEWS</name>
</talker>
<para>- The Prime Minister has not been seen for some time, and the rumour is current that he has been spirited away byhis enemies. Is there any truth in that rumour? </para>
</talk.start>
</speech>
<speech>
<talk.start>
<talker>
<page.no>3305</page.no>
<time.stamp />
<name.id>KNF</name.id>
<electorate>RICHMOND, NEW SOUTH WALES</electorate>
<party>LP; NAT from 1917</party>
<role />
<in.gov>0</in.gov>
<first.speech>0</first.speech>
<name role="metadata">MASSY-GREENE, Walter</name>
<name role="display">Mr GREENE</name>
</talker>
<para>- I explained a day or two ago that the right honorable gentleman is very unwell, and is endeavouring to get a little rest. </para>
</talk.start>
</speech>
</subdebate.1>
</debate>
<debate>
<debateinfo>
<title>QUESTION</title>
<page.no>3305</page.no>
<type>Questions</type>
</debateinfo>
<subdebate.1>
<subdebateinfo>
<title>COMMONWEALTH OIL REFINERIES LIMITED</title>
<page.no>3305</page.no>
</subdebateinfo>
<speech>
<talk.start>
<talker>
<page.no>3305</page.no>
<time.stamp />
<name.id>KLG</name.id>
<electorate>for Mr. Blakeley</electorate>
<party />
<role />
<in.gov>0</in.gov>
<first.speech>0</first.speech>
<name role="metadata">MAHONY, William</name>
<name role="display">Mr MAHONY</name>
</talker>
<para>asked the Prime Minister, <inline font-style="italic">upon notice -</inline></para>
</talk.start>
<quote>
<para>What amount has been paid by the Commonwealth Government in the purchase of shares in the Commonwealth Oil Refineries Limited? </para>
</quote>
<para>
<inline font-weight="bold">Mr. GREENE</inline>(for <inline font-weight="bold">Mr. Hughes).The</inline> Commonwealth Government has paid to date on its 250,001 shares in the Commonwealth Oil Refinery Limited the sum of £112,500 9s. </para>
</speech>
</subdebate.1>
</debate>
<debate>
<debateinfo>
<title>QUESTION</title>
<page.no>3305</page.no>
<type>Questions</type>
</debateinfo>
<subdebate.1>
<subdebateinfo>
<title>COMMONWEALTH GOVERNMENT LINE OF STEAMERS</title>
<page.no>3305</page.no>
</subdebateinfo>
<speech>
<talk.start>
<talker>
<page.no>3305</page.no>
<time.stamp />
<name.id>KAY</name.id>
<electorate>for Mr. Jowett</electorate>
<party />
<role />
<in.gov>0</in.gov>
<first.speech>0</first.speech>
<name role="metadata">GIBSON, William</name>
<name role="display">Mr GIBSON</name>
</talker>
<para>asked the Prime Minister, upon <inline font-style="italic">notice - :</inline></para>
</talk.start>
<list type="decimal-dotted">
<item label="1.">
<para>Is it correct as reported that - " Following recent revelations, it is understood on good authority that the Commonwealth Shipping Line is breaking away from the Conference Lines, and is extensively cutting passage and freight rates from Colombo to Australia, and that the reductions are to take place immediately"? </para>
</item>
<item label="2.">
<para>Ifso,can be inform the House if the Commonwealth Line is arranging also to break away from the Conference Lines regarding all freight and passenger rates between Australia and Great Britain? </para>
</item>
</list>
<para>
<inline font-weight="bold">Mr. GREENE</inline>(for <inline font-weight="bold">Mr. Hughes).The</inline> answers to the honorable member's questions are as follow: - </para>
<list type="decimal-dotted">
<item label="1.">
<para>The Commonwealth Line is and has always been free to quote its own rates of freight and passage money. The reference to breaking away from the Conference Lines is not understood. </para>
</item>
<item label="2.">
<para>See No. 1. </para>
</item>
</list>
</speech>
</subdebate.1>
</debate>
<debate>
<debateinfo>
<title>QUESTION</title>
<page.no>3306</page.no>
<type>Questions</type>
</debateinfo>
<subdebate.1>
<subdebateinfo>
<title>ROWAN COLLECTION</title>
<page.no>3306</page.no>
</subdebateinfo>
<speech>
<talk.start>
<talker>
<page.no>3306</page.no>
<time.stamp />
<name.id>KYV</name.id>
<electorate />
<party />
<role />
<in.gov>0</in.gov>
<first.speech>0</first.speech>
<name role="metadata">RILEY, Edward</name>
<name role="display">Mr RILEY</name>
</talker>
<para>asked the Prime Minister, upon <inline font-style="italic">notice -</inline></para>
</talk.start>
<quote>
<para>Whether it is the intention of the Government to purchase theRowancollection? </para>
</quote>
<para>
<inline font-weight="bold">Mr. GREENE</inline>(for <inline font-weight="bold">Mr. Hughes).I</inline> would refer the honorable member to the remarks of the Prime Minister on the 27th July last, -when he said he was personally in favour of acquiring the collection and asked the House to find some means of expressing an opinion. </para>
</speech>
</subdebate.1>
</debate>
<debate>
<debateinfo>
<title>QUESTION</title>
<page.no>3306</page.no>
<type>Questions</type>
</debateinfo>
<subdebate.1>
<subdebateinfo>
<title>UNEMPLOYMENT RELIEF</title>
<page.no>3306</page.no>
</subdebateinfo>
<speech>
<talk.start>
<talker>
<page.no>3306</page.no>
<time.stamp />
<name.id>C7E</name.id>
<electorate>COWPER, NEW SOUTH WALES</electorate>
<party>FSU; CP from 1920</party>
<role />
<in.gov>0</in.gov>
<first.speech>0</first.speech>
<name role="metadata">PAGE, Earle</name>
<name role="display">Dr EARLE PAGE</name>
</talker>
<para>asked the Prime </para>
</talk.start>
<para>Minister,upon <inline font-style="italic">notice -</inline></para>
<list type="decimal-dotted">
<item label="1.">
<para>Have many country councils in New South Wales refused to entertain or accept the Federal grant for unemployment owing to the hampering conditions imposed by the State Government and their insistence that the city unemployed shall be utilized, while many practical skilled local roadsmen are workless? </para>
</item>
<item label="2.">
<para>If so, will he take steps to obtain the remission of those conditions? </para>
</item>
</list>
</speech>
<speech>
<talk.start>
<talker>
<page.no>3306</page.no>
<time.stamp />
<name.id>KFP</name.id>
<electorate>WAKEFIELD, SOUTH AUSTRALIA</electorate>
<party>ANTI-SOC; LP from 1910; NAT from 1917; LP from 1922; NAT from 1925</party>
<role />
<in.gov>0</in.gov>
<first.speech>0</first.speech>
<name role="metadata">FOSTER, Richard</name>
<name role="display">Mr RICHARD FOSTER</name>
</talker>
<para>- This is a matter which concerns the Government of New South Wales. They have agreed to conform to the conditions laid down by the Commonwealth Government when making the grant. </para>
</talk.start>
</speech>
</subdebate.1>
</debate>
<debate>
<debateinfo>
<title>ADDITIONAL SITTING DAY</title>
<page.no>3306</page.no>
<type>miscellaneous</type>
</debateinfo>
<para>Motion (by <inline font-weight="bold">Mr. Greene)</inline> agreed to - </para>
<quote>
<para>That the House at its rising adjourn until 3 o'clock p.m. on Monday next. </para>
</quote>
</debate>
<debate>
<debateinfo>
<title>PAPERS</title>
<page.no>3306</page.no>
<type>papers</type>
</debateinfo>
<para>The following papers were presented: - </para>
<quote>
<para>Northern Territory Acceptance Act and Nor thern Territory (Administration) Act - Ordinance of 1922. No. 11. - Maintenance Orders (Facilities for enforcement). </para>
<para>War Service Homes Act - Land acquired under, in New South Wales, at West Kempsey. </para>
</quote>
</debate>
<debate>
<debateinfo>
<title>INCOME TAX ASSESSMENT BILL</title>
<page.no>3306</page.no>
<type>bill</type>
</debateinfo>
<subdebate.1>
<subdebateinfo>
<title>Second Reading</title>
<page.no>3306</page.no>
</subdebateinfo>
<para>Debate resumed from 2nd October <inline font-style="italic">(vide</inline> page 2973), on motion by <inline font-weight="bold">Mr. Bruce</inline> - </para>
<para>That this Bill be now read a second time. </para>
<speech>
<talk.start>
<talker>
<page.no>3306</page.no>
<time.stamp />
<name.id>JXA</name.id>
<electorate>Hunter</electorate>
<party />
<role />
<in.gov>0</in.gov>
<first.speech>0</first.speech>
<name role="metadata">CHARLTON, Matthew</name>
<name role="display">Mr CHARLTON</name>
</talker>
<para>.- The Bill is a measure to be discussed chiefly in Committee, but at least three of the important alterations that it is designed to effect are worthy of consideration at this stage. They are the averaging of incomes for taxation assessment, the treatment of bonus shares, and the exemptions. We should, I think, endeavour to make our income tax law as simple as possible, but it is, in fact, complicated and intricate, so that the ordinary person finds it difficult to decide exactly how it applies to his particular income. I do not know that the averaging system will tend to simplicity, and I gravely doubt whether, if adopted, it will prove as satisfactory as many seem to think. My opinion is that it will increase complication in many cases, and, instead of lessening the difficulties of the man on the land, will accentuate them. The Taxation Commissioners appear to have been divided in opinion as to the advisability of assessing on average incomes, and the primary producers seem equally divided as to how the system would work. Many think that it would be better merely to carry forward losses from time to time. They would prefer to have their losses in a bad year deducted, paying income tax on the net amount; and that seems to be preferable to the 'averaging system. </para>
</talk.start>
<interjection>
<talk.start>
<talker>
<page.no>3306</page.no>
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<name role="metadata">BRUCE, Stanley</name>
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<para>- The averaging system is not now being proposed for the first time. It was agreed to in an Act dealt with last December. </para>
</talk.start>
</interjection>
<para>Mr.CHARLTON.- Yes, but it was then applied only to certain interests, and it is now proposed to extend it so that it shall, embrace, with certain exceptions, all sections of the community. The Treasurer told us the other day that an income which did not reach two-thirds of the average amount for five years would not be taken into consideration for averaging, but would be taxed as it stood. </para>
<interjection>
<talk.start>
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<page.no>3306</page.no>
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<para>- It would start a new averaging period. </para>
</talk.start>
</interjection>
<continue>
<talk.start>
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<page.no>3306</page.no>
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<para>- That meets, to some extent, my objection to the system. Let me direct attention to paragraphs 11 and 12, pages 51 and 52, of the first report of the Taxation Commissioners: - </para>
</talk.start>
</continue>
<list type="decimal-dotted">
<item label="11.">
<para>The following table shows how, in the zone where " Suspense Credits " do not occur, the system may operate: - </para>
</item>
</list>
<para class="block">
<graphic href="101331192210065_2_0.jpg" />
</para>
<para>Note. -For the first year the income of the year is taken as the average on which to determine Che rate, for the second year the average of the first and second and so on to the fourth. For the fifth and subsequent years the average Is that of the tax-year and the four preceding years. </para>
<para>The figures used in the table are hypothetical ; but hypothetical figures, bo long as they fairly represent a probable experience, ore Just as reliable for purposes of illustration as actual figures, which, as they are never likely to recur exactly, can only be regarded as typical. </para>
<list type="decimal-dotted">
<item label="12.">
<para>The total income for ten years is £88,808, or a yearly average of £8,881. The tax payable in ten years on a yearly income of that amount is £22,484, but as the above figures show, the owner of the fluctuating income pays only £20,098, or £2,384 <inline font-style="italic">less</inline> than the taxpayer with steady income of the same aggregate amount. </para>
</item>
</list>
<para class="block">However, it seems to me that averaging will not be as satisfactory as might be desired, and that the taxpayers will have as much difficulty in making up their returns as they have at the present time. Taxpayers, especially amongst the business community, have always been troubled to know exactly how the present tax operates. </para>
<para>In regard to bonus shares, I am totally opposed to relieving them from taxation. </para>
<interjection>
<talk.start>
<talker>
<page.no>3307</page.no>
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<name role="metadata">WATT, William</name>
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<para>- In every case? </para>
</talk.start>
</interjection>
<continue>
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<para>- Yes; I am open to conviction, but I cannot see why they should be free from taxation. Companies make profits, a portion of which they distribute in the form of dividends. In time the undistributed profit accumulates to a large amountand is then distributed amongst shareholders in the form of bonus shares. From the interjection of the honorable member for Balaclava <inline font-weight="bold">(Mr. Watt),</inline> I infer that in his opinion there are circumstances in which it would be equitable to exempt such shares from taxation, and </para>
</talk.start>
</continue>
<para class="block">I shall be glad to hear what the honorable member has to say on that point. But at the present time I see no justification for exemption. Since the war, many companies have accumulated large profits over and above the dividends they have paid. By converting these profits into bonus shares, increasing the capital of the company, and giving the shareholders a larger holding free of taxation- </para>
<interjection>
<talk.start>
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<para>- Taxation has been paid on all these shares at the source in the hands of the company. </para>
</talk.start>
</interjection>
<interjection>
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<para>- If that were not so, I do not thinkanybody would agree to exempt them. </para>
</talk.start>
</interjection>
<continue>
<talk.start>
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<para>- That puts a different complexion upon the matter. Unfortunately, I did not have the opportunity of hearing the Treasurer move the second reading of the Bill, and I was not aware that taxation is paid on the shares at the source. Messrs. Farleigh and Duffy, of the Taxation Commission, in a minority report upon the subject of bonus shares, say - </para>
</talk.start>
</continue>
<list type="decimal-dotted">
<item label="6.">
<para>We are forced to the conclusion that if bonus shares, issued as the result of current or accumulated profits are not taxed in the hands of the shareholder in the year of receipt, a fair amount of profit will find outlet in this way, and. thus, to this extent nullify the aggregation and graduation principles of the Act. </para>
</item>
<item label="7.">
<para>The fact that the profits have already been taxed in the hands of the company does not affect the position, as the same applies to a cash distribution from accumulated profits, and there is no suggestion that a cash distribution should not be followed to the shareholder. </para>
</item>
<item label="8.">
<para>Since the shareholders, by their own votes at the company meeting, say that the distribution shall be made to them' in the form of shares instead of cash, it cannot be said that the shareholders have no voice in the form in which the distribution is made. </para>
</item>
<item label="9.">
<para>We, therefore, recommend that bonus shares issued out of the current or accumulated profits should , be taxed in the hands of the shareholder in the year of receipt, but that an adjustment should be made by allowing the shareholder the amount of tax already paid on those profits by the company. </para>
</item>
</list>
<para class="block">I understand that the Treasurer is not adopting that recommendation. </para>
<interjection>
<talk.start>
<talker>
<page.no>3307</page.no>
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<para>- No. </para>
</talk.start>
</interjection>
<continue>
<talk.start>
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<para>- Evidently, the object is to place this taxation on an equitable basis. There are many people with small incomes who receive dividends from companies, and the taxation of bonus shares in their hands would raise their incomes above the exemption. </para>
</talk.start>
</continue>
<interjection>
<talk.start>
<talker>
<page.no>3308</page.no>
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<para>- Bonus shares that are issued out of profits will be taxed at the source, and not in the hands of the shareholders. </para>
</talk.start>
</interjection>
<continue>
<talk.start>
<talker>
<page.no>3308</page.no>
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<para>- The Treasurer's explanation removes a misapprehension under which I was labouring. </para>
</talk.start>
</continue>
<para>I am pleased that the exemption is being increased to £200, but I would like the Treasurer to agree to further extend it. </para>
<interjection>
<talk.start>
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<name role="metadata">MCWILLIAMS, William</name>
<name role="display">Mr McWilliams</name>
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<para>- Should there not be greater discrimination between single men and married men with large families ? </para>
</talk.start>
</interjection>
<continue>
<talk.start>
<talker>
<page.no>3308</page.no>
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<para>- That is what I am about to urge. An exemption of £200 is very small, having regard to the high cost of living. When the Income Tax Act was first introduced by a Labour Government, the exemption was fixed at £156, although I urged that it should be not less than £250. Since that time the cost of living has increased tremendously, and I think the exemption to-day should be at least £300, at any rate in respect of married men. I agree with the honorable member for Franklin <inline font-weight="bold">(Mr. McWilliams)</inline> that there should be discrimination between married and single men. If single men are to be granted an exemption of £200, a married man should be allowed a further exemption of £100 in respect of his wife, and there should be a greater allowance for each child. The increase from £26 to £30 for each child is not sufficient. In Great Britain, where, generally speaking, taxation is much heavier than in Australia, the income tax exemption is much more liberal. The exemption is £156 in respect of earned income, and £135 in respect of unearned income, whilst the allowances are : - Married men, £100 earned, £90 unearned; eldest child under sixteen years, £40 earned, £36 unearned; each younger child, £30 earned, £27 unearned. A man with a wife and three children thus gets an exemption of £352, as against the proposed exemption of £290 in this Bill. Great Britain is supposed to be more heavily taxed than the Commonwealth, and surely the allowances made by the Commonwealth should be at least as liberal. The Treasurer would be taking a reasonable view if he would agree to increase the exemptions, at any rate, so far as the poorer classes are concerned. When the Bill is in Commit tee we shall test the feeling of honorable members on that point. </para>
</talk.start>
</continue>
<para>The proposal in regard to the taxation of co-operative companies is very unsatisfactory, although the present law is an improvement on that which obtained prior to the last amending Act. Clause 4 of this Bill, in the definition of "income," excludes - </para>
<para>Any rebate received by amember of a cooperative company based on his purchases from that company, where the company is one which usually sells goods only to its own members. </para>
<para class="block">We all profess to be desirous of encouraging co-operation, but the insertion of the word " usually " in the paragraph I have quoted will press harshly on co-operative societies. These bodies work on the same basis as in Great Britain, where, however, I understand, they are free from taxation. Nearly every co-operative society, although selling goods chiefly to its own members, does sell to a limited number of outsiders. The co-operative society with which I am associated sells only to its members; but there are societies with a membership of 2,000 or 3,000 who sell goods to perhaps fifty or sixty persons who are not shareholders. The latter get some rebate, although not as much as is received by the members. The proposal in this Bill will have the effect of rendering liable to taxation all rebates received by cooperators. I do not think Parliament intended that when it passed the existing Act, and the amendment introduced some time ago was intended to exempt members of these societies. I submit that the definition would be more fair if it referred to " any rebate received by a member of a cooperative company based on his purchases from that company." That would exempt only the rebates received by members, leaving non-members who received rebates to pay taxation upon them if they have a taxable income. The definition in its present form deprives of exemption the whole of the members of any society which does not sell exclusively to its own members. The co-operative societies are not doing any harm to other people; but this amendment will press very heavily upon old people. The secretary of the society to which I belong has put the position to me in this way: "Many old-age pensioners deal with us because they get a slight rebate, which, at the end of the quarter is helpful to them. They have not the money with which to take up shares. Under this definition, we must either refuse to deal with them, or render the whole of our members liable to taxation upon the rebates received from the society." I think the Treasurer would meet the wishes of the House if he amended the Bill as I suggest, so that shareholders who are receiving a taxable income shall not be liable in respect of rebates. These co-operative societies, whether formed amongst farmers for the more economical marketing of primary produce, or amongst the workers for the supply of every-day necessities, promote thrift, and should be encouraged by Parliament. Outside these four matters I have mentioned, no great principle is involved in the Bill. The measure contains quite a number of clauses, but as they are mostly for the purpose of consolidating previous income tax assessment legislation, they will provide work for the Committee stage. </para>
</speech>
<speech>
<talk.start>
<talker>
<page.no>3309</page.no>
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<name.id>KYI</name.id>
<electorate>Swan</electorate>
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<name role="metadata">PROWSE, John</name>
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<para>.- On the 22nd April, 1920, thi3 House unanimously agreed to the following motion: - </para>
</talk.start>
<quote>
<para>This House is of opinion that the fairest method of calculation for purposes of the Federal income tax ns applied to primary producers would bo upon a basis of five years' operations. and iia December, 1921, the Royal Commission on Taxation, which had been appointed by the' Government, having in the meantime recommended the system approved by the House, the ex-Treasurer <inline font-weight="bold">(Sir Joseph Cook)</inline> introduced an amending Income Tax Assessment Bill for the purpose of bringing it into effect. I would like honorable members to realize that the Country party have never contended that the averaging system upon income over a number of years should be confined to primary producers only. In my remarks on the Bill before us in 1921 I said - </para>
<para>I repeat that the measure is altogether an incomplete instrument for the purposes desired and which it was hoped it would accomplish. All that the .primary producer expects is mere justice. I would follow the honorable member for Balaclava <inline font-weight="bold">(Mr. Watt)</inline> when he says that this law of average should apply to every taxpayer. In justice, I concede that that is only reasonable. </para>
</quote>
<para class="block">Although I voted for the amending Bill <inline font-style="italic"><m</inline> the ground that the principle of five years' average we sought to have estab lished was admitted, in concluding my remarks I said - </para>
<quote>
<para>I know of no injustice in connexion with our legislation that is greater or does more to retard the progress of the country. This Bill is an admission of the necessity for some remedy, and as such I accept it. It is clumsy and inadequate, but it is a step in the right direction, and I hope that the Government will offer an early opportunity to honorable members to consider a revised instrument for the assessment of taxation which will be equitable all round, and not continue the heartburning that is now caused to citizens by the unjust and cruel incidence of taxation. </para>
</quote>
<para class="block">I am very sorry to say that while I am able to compliment the Treasurer <inline font-weight="bold">(Mr. Bruce)</inline> on the manner in which he has presented this consolidating Bill, I cannot congratulate him upon the method of averaging he has embodied in it. It is clumsy, and does not meet what the House desired; that is to say, it does not apply the averaging system to incomes, but applies it to rates. People do not live upon rates. They live upon their incomes. If the system is to be equitable, it must be based on the average income a citizen has received over the period fixed upon. A Royal Commission which submitted a report to the British Government in 1919 recommended - </para>
<quote>
<para>No tax can be successfully administered that is contrary to the general sense of justice in the community. </para>
</quote>
<para class="block">Our Treasurer, when addressing a meeting in Melbourne recently on the subject of taxation, upheld the maxims of A.dam Smith, and one of those he dwelt upon was - </para>
<quote>
<para>The subjects ' of every State ought to contribute towards the support of the Government as nearly as possible in proportion to their respective ability, that is, in proportion to the revenue which they respectively enjoy under the protection of the State. </para>
</quote>
<para class="block">If the Treasurer and the House agree with that maxim, they must adopt the amendment I propose to submit in Committee, because it will secure practical equity, and will not vary on varying incomes. The Royal Commission appointed by our Government to inquire into taxation matters has said - </para>
<quote>
<para>If the principle of graduation were dropped out of the Act and a flat rate for all taxpayers substituted - a step which we do not recommend- , , and which I do not recommend - the necessity for a system of averaging would simultaneously cease to exist. </para>
<para class="block">That is so. Honorable members will readily see that when taxes are levied -on a flat rate of, say, la. or 2s. in the <inline font-style="italic">£1,</inline> it does not matter what the income may be in any one year, it will have no effect on the amount received in another year, and the aggregate of tax over a number of years will amount to the same as it would upon a steady income earned over the same period. Honorable members can . also see that under a gradu-° a ted tax the amount levied on the taxpayer, with an income fluctuating from year to year, may vary to a crushing extent. </para>
<para>If I understood the Treasurer properly when he waa moving the second reading of this Bill, he pointed out that differences are inherent to all averaging systems when incomes rise and fall. -I dispute that. In a table which I have had circulated I have endeavoured to prove that it is not the case. The Treasurer also described the Bill as being the refinement of equity. I dispute that also. I contend that the true average when taken on income, and not on rate, will be nearer the refinement of equity than is the Minister's proposal. The Treasurer also pointed out that his Bill waa the consolidation of eight previous Acts, but I venture to think that if it is passed in its present form it will soon ha,ve some pups; that is to say, it will require further amendment because of the injustice that will be done to certain taxpayers. The Royal Commission on Taxation in its report says - </para>
<para>In support of the general evidence that impoverished years recur with frequency, there were placed before the Commission, 'by primary producers and their representatives, actual cases which clearly exhibit the added hardship imposed by the present system of taxation, in which each year is treated as a watertight compartment cut off from its neighbours on either side, and subjected to taxation up to the full limit of its earning, irrespective of what has occurred in the earlier years. The Commission also obtained particulars of a large number of actual cases from pastoral and agricultural finance institutions and other sources, and had under examination also fifty cases prepared by the federal taxation authorities from taxpayers' original returns, so that they had in all under scrutiny from 130 to 150 actual cases founded on dependable records, in addition to a number of hypothetical cases which were submitted by various witnesses. Only a few of these can be cited here as examples in order to compare their treatment with that which would be meted out in the case of a person of steady income who throughout a corresponding period had received the same aggregate income. These examples may be introduced with an extract from the evidence of a witness representing the Federated Graziers Association of Australia, who said - </para>
</quote>
<quote>
<para>An example is, however, given illustrating the actual experience of a grazier in at large way, which will show what the actual result has been in seven years' operations - </para>
</quote>
<para class="block">
<graphic href="101331192210065_5_1.jpg" />
</para>
<para>The net result of the seven years' operations is a profit of £56,447 18s. 6d., or an average of £8,063 19s. 9d. per annum. The assets at stake in the business varied in value from £300,000 to £450,000 . . In the example I have just quoted to you, it has been shown that the net result of seven years' operations was a profit -of £56,447. </para>
<para>Taking the result of the sixth and seventh years, which showed profits of £55,531 4s. §d. and £45,835 respectively, the unfortunate earner of this income finds that in those two years alone his Federal income tax on those profits amounts to £38,246 16s. 2d. and the State (New South Wales) income tax to £6.961 15s. 2d., that is £45,208 lis. 4d. in all. </para>
<para class="block">The Royal Commission says that hardship only can come to the taxpayer when one year is taken and separated from all other years, without taking into consideration the result of the previous year or the prospects of the year ahead; but in my proposal one year is changed to a term of five years and annually adjusted or assessed. Nature has her laws of average, and my proposal simply falls into line with the laws of nature. In the past we have assessed all the revenue obtained by a taxpayer during a period of twelve months, instead of twelve years. I propose that the assessment be made on the basis of his earnings for sixty months, a period which contains five springs, five summers, five autumns, and five winters. By the adoption of this system we shall overcome 80 per cent, at least of the complaints that now arise. For one thing, difficulty in regard to the calculation of the natural increase in live stock will be overcome, because the increase which, comes into existence during' the five years will either have died, been sold, or become a merchantable commodity during that period. In that way the natural increase would be brought into the actual possession and enjoyment of the taxpayers. Under the old system of assessment a taxpayer might be assessed on his natural increase of stock and before the next year's return be came due the whole of that stock might have died as the result of the drought conditions which unfortunately occur so frequently in Australia. In their report the Commission gave a number of comparative tables showing what tax would be payable under the several methods.These they epitomize in the following way : - </para>
<para class="block">
<graphic href="101331192210065_6_0.jpg" />
</para>
<para>The summary shows that in the twelve representative examples epitomized, having an average of thirteen years, the amounts by which the other totals are in excess of the total tax (£46,612 8s. l0d.) payable by taxpayers having unfluctuating steady incomes of equal aggregate amounts are - </para>
<para class="block">
<graphic href="101331192210065_6_1.jpg" />
</para>
<para>The divergencies are 48.22 per cent., 35.09 per cent., 6.70 per cent., and 2.07 per cent. respectively as compared with the tax payable (S.I.) by the recipients of steady incomes of similar volume. The close approximation of the A. M.S. method to the standard of the tax on steady incomes bears striking testimony to its accuracy : it is closely followed by the method(R.A.M.) which for reasons already stated your Commissioners recommend. </para>
<para>This Commission, . which was appointed to propound a scheme that would be equitable in its application to all citizens of the Common wealth, has deliberately recommended a scheme under which a citizen with a fluctuating income would nay 6.70 per cent. more than a citizen who wasfortunate enough to be in receipt of a regular annual income. If that difference were limited to 6.70 per cent., the position would not be so bad, but the amounts which go to make up that average vary tremendously. Some of those variations hit some of our citizens very severely; but undoubtedly in many cases the system recommended is an improvement on that which has hitherto obtained. It is well that we should examine some of the tables which appear in the report. In the summary of examples set out on page 18 of the report, it is shown that, taking the tax payable by a man with a steady income at £20 0s. 10d., a taxpayer with a fluctuating income under the system recommended by them would pay £19 19s. 4d. That would appear to be an advantage in favour of the system recommended by the Commission; but when logically considered it is not, because it is just as serious for, say, a banking institution to have an excess of 10s. in its accounts a3 it is for it to have a shortage of 10s. If necessary, it would spend £100 on the work of finding out where the mistake occurred. Here we have a system where, in certain cases, the amount payable by the taxpayer is less than the mean average ought to be. Taking the next example, it is shown that under the system recommended by the Commission - the "E.A.M." method - a taxpayer with a fluctuating income would pay £83 13s. 9d. ; while the man with a steady income would pay only £53 15s. 3d. There we have a variation of £30 between the tax payable by two men enjoying the same income. In yet another case, the amount payable by a man with a steady income would be £75 19s. 2d., as against £105 39. Id. payable by a taxpayer with a fluctuating income under the recommended average method. There we have a difference of 25 per cent. That should not be possible. In yet another case, the amount payable under the recommended average method is £124 10s. 2d., as against £127 19s. 2d. payable in respect of steady income. That, I am afraid, is equally wrong. The Commission states - </para>
<quote>
<para>Our inquiry has led us to the conclusion that harsh and inequitable 'incidence in the case of widely fluctuating incomes, when each year is strictly segregated from its neighbours, is inseparable from any system of income tax in which steep graduation is a feature, and that escape from the inequity of such a tax can best be secured by a breaking down of the wall of partition between the years - </para>
</quote>
<para class="block">The only way is to break down the wall of partition between the years and to allow the income to be based on the fire years' average - </para>
<quote>
<para class="block">By some method of merging or averaging which substantially mitigates - if it does not wholly remove - the cause, viz. : - the unsound assumption that each year's income or loss standing alone must determine taxable capacity, whereas the circumstances require that the longest period practically possible be brought into account. When as many years and as many vicissitudes as is practically possible are brought into line through merging or averaging the annual incomes, the true taxability of the subject - that is, his taxable capacity - can be fairly determined. . . . The outcry against, the system of averaging, which has found free, though not universal, expression in Britain, arises largely from this confusion. In our opinion the definite and only necessary function of an averaging system is to determine the taxable capacity of the subject. . . . </para>
</quote>
<para class="block">What is the taxable capacity of the subject? We are agreed that the segregation of each year from its neighbours is wrong. We have agreed that the five years' average should be taken, but we are now asked to adopt a method that is not based on an average of five years' income. I would draw the attention of the House to a . couple of tables which I have had printed, and ase now in the hands of honorable members, and which I think will illustrate my contention as to the way in which it would be possible to arrive at a true system of' averaging incomes and assessing taxpayers. The Treasurer may say, or his advisers may tell him, that considerable cost would be involved in inaugurating the system which I propose. </para>
<interjection>
<talk.start>
<talker>
<page.no>3312</page.no>
<time.stamp />
<name.id>JPC</name.id>
<electorate />
<party />
<role />
<in.gov>0</in.gov>
<first.speech>0</first.speech>
<name role="metadata">BEST, Robert</name>
<name role="display">Sir Robert Best</name>
</talker>
<para>- That would be a very natural objection. </para>
</talk.start>
</interjection>
<continue>
<talk.start>
<talker>
<page.no>3312</page.no>
<time.stamp />
<name.id>KYI</name.id>
<electorate />
<party />
<role />
<in.gov>0</in.gov>
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<name role="metadata">PROWSE, John</name>
<name role="display">Mr PROWSE</name>
</talker>
<para>- If the Treasurer says that the system recommended by me, and illustrated in a memorandum which I ha.ve circulated amongst 'honorable members, would involve more cost than that now proposed by the Government, I should like to know from whom (he has obtained that advice. If he has been informed by the Federal Taxation Commissioner that the working of my system would involve greater expenditure, then I draw his attention to a paragraph in the report of the Commission criticising the opinions expressed by that officer - </para>
</talk.start>
</continue>
<quote>
<para>In view of the statement made by the .Federal Commissioner of Taxation in his Seventh Annual Report that " The average of income for purposes of an income tax assessment would greatly increase the administrative difficulties and costs by introducing complexities from which the administration is now .free, and it would considerably add to the difficulties of taxpayers in understanding their assessments," your Commissioners endeavoured to obtain an authoritative estimate of the cost of change, but the information received was bo vague and unsubstantial that we have been unable .to make any use of it. In his evidence before the Commission, the Federal Commissioner of Taxation declared - " When . I tell you that the averaging of incomes will involve the doubling of our assessing staff, I am not exaggerating the position," but when specific ' requests were put to him to ascertain how his estimates of costs had been arrived at, he was forced to admit " it is all a guess, I am sorry to say, because we have not the figures." </para>
</quote>
<para class="block">He had no figures te support his statement. </para>
<para>The Deputy Federal Commissioner in Sydney estimated the increase at possibly 35 per cent, of the present cost of assessing, 'but he too was unable to submit any figures in substantiation of his estimate. A witness who had had fifteen years' experience in responsible positions as a taxation officer gave it as his opinion that " under an average system there will be a little extra work, but this can be provided for .by strict supervision and reorganization. If the present system of arriving at average cost values of stock is done away with, there will be a great saving, which can be offset against any increases in administration costs consequent upon the introduction of an averaging system." </para>
<para class="block">In the memorandum I have circulated amongst honorable members explaining the amendments that I propose to move, I 'have taken from the Treasurer's memorandum figures setting out certain fluctuations during a period of years, and have tested' them by his system, as well as by that which I am recommending to the House. In my memorandum I state that- </para>
<para>The method of averaging incomes provided for in the amendment proposed by <inline font-weight="bold">Mr. Prowse</inline> results in making the total taxes paid .by a taxpayer over a period of five years exactly the same, whether his income be received in five equal annual sums, or whether it be received in irregular amounts (whether rising or falling). </para>
<para>The method' of arriving at the tax payable in each year is very simple, and should take less time in assessing than the method proposed in the. Bill. </para>
<para class="block">In order to carry out the reforms which I suggest, the ready reckoner as at present used by the Taxation Department would suffice. If this Bill is passed, however, there will be required, in order to cope with the fluctuations of rates and amounts, a ready reckoner the like of which is not in existence. </para>
<para>The following tables of comparison show - clearly the' difference between the results which may be achieved by the adoption of the -methods I propose and of those proposed by the Treasurer. On page 8 of the memorandum to the Bill, which gives examples in connexion with the Bill, honorable members will note that, over a period of five years, a sum of £6,500 has been earned, and in the manner set down in the tables supplied. In respect of the first, the income for each of five successive years is £800, £1,000, £1,500, £1,200, and £2,000. I have applied true average to the incomes shown under that table, and the tax works out at £363 18s. 4d. A steady income over five years, received in equal instalments of £1,300 per annum, also totals £6,500; and the citizen pays £363 18s. 4d., which is the same amount of taxation as under the true average system. That demonstrates the refinement of equity. According to the proposals of the Bill, dealing with exactly the same figures, the tax works out at £328 16s. 6d. upon the total income of £6,500, or £35 below the true average. I present table <inline font-style="italic">"A"</inline> so that honorable members may perceive the exact comparison. The foregoing is more clearly shown by these tables: - </para>
<para class="block">
<graphic href="101331192210065_8_4.jpg" />
</para>
<para>Steady Income for five years, received in equal payments of £1,300 per annum, equals £6,500, and pays in tax £363 18s. 4<f. </para>
<para class="block">A system which returns to the Treasury less than the proper amount of income tas is just as improper and erroneous as one which forces a citizen to pay more by way of tax than he is entitled to pay. This country requires a system of taxation which shall be absolutely just and equal, in its incidence, upon every taxpayer. On the same page of the memorandum to the Bill another set of figures is submitted by the Treasurer, indicating the income earned by a citizen for six successive years as follows:- £2,000, £1,500, £1,000, £500, £800, and £600-a total of £6,400. </para>
<para>Under" the true average system, honorable members will note in the table of comparisons which I append that the total amount of income tax paid for the six years amounts to £318 4s. . Under steady income, the same amount would be paid by the taxpayer; but, under the credit column appearing in my table, it will be seen that a small refund is made, although in . but one year out of the six, and amounting to only £2 13s. 5d. The refund is made in order to give justice to the citizen concerned. Why the Government should not pay what it owes to the citizens of the Commonwealth - if the Treasurer contends that they should not - I fail to understand or appreciate. According to the Bill, the taxpayer earning the same amount of income in each of the six years mentioned would be required to pay 'a total tax of £360 7s. 10d., or £42 above the true average. This will be. apparent in the following comparison-. - </para>
<para class="block">
<graphic href="101331192210065_9_0.jpg" />
</para>
<para class="block">Honorable members will perceive at a glance that the proposals in the Bill are wrong,. Why should one citizen be re- quired to pay £42 more than another who has been in precisely the same position from year to year during the six years in question? </para>
<para>I now submit another table, showing the effect of both methods in dealing with rising and' falling incomes; and I draw special attention to the violent fluctuation in tax under the Government proposals, and to the perf ect agreement with steady income under my true average system. The figures set down, by the way, are not such as appear in the printed memorandum to the Bill : but they are so startling as to form a striking comparison - </para>
<para class="block">
<graphic href="101331192210065_9_1.jpg" />
</para>
<para class="block">It will be seen that the income is taken in each table in respect of aperson earning £10,000 in all, over five years. First, there is the declining income by £1,000 a year, beginning at £4,000 and ending in the fif th year, with nothing ; and, secondly, there is the rising income, beginning with nil in the first of the five years, and increasing by £1,000 each year to £4,000 in the fifth ; making, again, £10,000 in all. Under the method proposed in the Bill the total tax paid on the falling income is £1,0131s: 8d., and, on the rising income, £613. Under my true average system the income paid for thefive years on a declining income amounts to £746 9s. 7d., and, on a rising income, to precisely the same. How manifestly unjust and inequitable it is that a taxpayer suffering from a declining income should be required to pay practically £400 more, over the sameperiod, than another taxpayer whose income is steadily rising - making, for the five years; the same gross total ! This is not a party question. The aim of Parliament should be to devise some instrument which, will mete out equal justice to those two typical citizens, and, in fact, to every taxpayer. </para>
<interjection>
<talk.start>
<talker>
<page.no>3314</page.no>
<time.stamp />
<name.id>JX7</name.id>
<electorate />
<party />
<role />
<in.gov>0</in.gov>
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<name role="metadata">CHAPMAN, Austin</name>
<name role="display">Mr Austin Chapman</name>
</talker>
<para>- If the honorable member's figures are correct, the proposals of the Government- are: grossly unfair. </para>
</talk.start>
</interjection>
<continue>
<talk.start>
<talker>
<page.no>3314</page.no>
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<name.id>KYI</name.id>
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<in.gov>0</in.gov>
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<name role="metadata">PROWSE, John</name>
<name role="display">Mr PROWSE</name>
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<para>- Under the true average system honorable members will see that, both in respect of rising and falling incomes, taxpayers are. assessed at precisely the same gross amount as in the case of a third individual who also receives £10,000 income over five years, but steadily, at the rate of £2,000 per annum. When it can be demonstrated that it- is easily possible to assess taxpayers upon an equitable basis. I claim that such a system should be adopted. </para>
</talk.start>
</continue>
<interjection>
<talk.start>
<talker>
<page.no>3314</page.no>
<time.stamp />
<name.id>F4B</name.id>
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<in.gov>0</in.gov>
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<name role="metadata">BRUCE, Stanley</name>
<name role="display">Mr Bruce</name>
</talker>
<para>- The honorable member is putting- his case as though his " true average " were a basis of fact. I entirely dispute that, however; and- I intend to demonstrate that the honorable member is not entitled, toattach the phrase " true average ". to his system. </para>
</talk.start>
</interjection>
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<talk.start>
<talker>
<page.no>3315</page.no>
<time.stamp />
<name.id>KYI</name.id>
<electorate />
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<in.gov>0</in.gov>
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<name role="metadata">PROWSE, John</name>
<name role="display">Mr PROWSE</name>
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<para>- Then I shall be prepared to call my system a just average. I have further tables of > figures which honorable members may care to examine. I have taken the case of a citizen who is earning £5,000 netover a period of five years, and I have treated that total of income in five different ways, as follows: </para>
</talk.start>
</continue>
<para class="block">
<graphic href="101331192210065_10_0.jpg" />
</para>
<para class="block">The first treatment is according to the true and just average; and the total amount of tax, namely, £239 18s. 9d. is precisely the same as in the case of a regular average income. Honorable members will note that the just average works out exactly 'as though the taxpayer had made the total amount of his income for the five years at the rate of £1,000 per annum. My true and just average table shows, in fact, however, that in the third year he made a loss of £1,000. The table shows how my 'system deals with such loss; and I may add that that is precisely -how the Treasurer's system should deal with losses. In the year in which the loss is made, £105 16s. 5d. is refunded to the taxpayer. The Government would act far more equitably if, instead of first relieving the taxpayer of money which they had no right to take -afterwards trying to level up generally by paying out doles for seed wheat and subsidies to cattle owners - they were to impose a -true and just system of levying taxes. In the first year the citizen is taxed on his income for that 'period, namely, £2,000. In the next year,his income amounts to £1,000. That is to say, for those two years hehas averaged £1,500. The taxableamount due upon £1,500 per annum forthe twoyears is deducted from what the citizen has already paid in hisfirst year, and hepays the difference, so bringing out matters squarely. So far, so good! In the third year, however, the taxpayer sustains a loss of £1,000. That reduces the average of his income, over the three years, to £666 per annum ; and that amount, for the three years, provides a certain taxablesum.Itis deducted from what he has already paid, and , it is found that he has previously paid more than he should have been required to contribute. Therefore, he is refunded - as my just average table demonstrates - £105 16s. 5d. It will be noticed how refunds deducted from the amounts of taxation already paid are necessary to place the citizen on precisely the same basis as a fellow citizen who has earned exactly thesame total of income from year to year. I draw attention now to example " C." This demonstrates the position under the old system, 'before the Act was amended. For the five years - showingfluctuating annual incomes precisely as in example "A" - the taxpayer is required to pay £501 4s. 2d., which is more than double the amount of tax paid by a citizen earning a steady income of £1,000 a year. I cannot conceive of any grosser formof injustice. Such a difference as is revealed bet ween examples " C " and " A " is not inconf ormity with the findings of theBritish Royal Commissionor ofthe Commonwealth Taxation Commission. Yet, under the Statuteof 1921, and theBill before the House, the same inequitable system is carried on, slightly mitigated in some cases, however and aggravated in others. </para>
<para>My example " D " demonstrates what amounts of tax are demanded by the Department under the 1921 Act. It will be noted that the total net tax is £374 9s. 5d. in respect of precisely the same series of fluctuating incomes over the five-year period. Again, I ask honorable members to compare that total with the amount drawn from a regular average income, and on the basis of my average system. My last example, " E " shows that, according to this amending Rill, the net amount of tax will be actually higher that under last year's Act, and will total £381 3s. 2d. </para>
<para>The Treasurer may object that if my average methods are introduced, they will do violence to his. income tax receipts. A burglar who reforms will doubtless do violence to his income. </para>
<interjection>
<talk.start>
<talker>
<page.no>3316</page.no>
<time.stamp />
<name.id>KNP</name.id>
<electorate />
<party />
<role />
<in.gov>0</in.gov>
<first.speech>0</first.speech>
<name role="metadata">MAXWELL, George</name>
<name role="display">Mr Maxwell</name>
</talker>
<para>- Now we have the searchlight being turned on by the police ! </para>
</talk.start>
</interjection>
<continue>
<talk.start>
<talker>
<page.no>3316</page.no>
<time.stamp />
<name.id>KYI</name.id>
<electorate />
<party />
<role />
<in.gov>0</in.gov>
<first.speech>0</first.speech>
<name role="metadata">PROWSE, John</name>
<name role="display">Mr PROWSE</name>
</talker>
<para>- But will honorable members say that the burglar is not doing the right thing in reforming? Of all the projects advanced by thinking men for the taxing of the people, that embraced in the amending Bill is the most unsatisfactory and unfair. It does not provide the modicum of justice which can be and should be given, while the former systems imposed by the Taxation Department have been nothing short of burglary. I should add that, in speaking in this manner, I am merely employing metaphor. </para>
</talk.start>
</continue>
<interjection>
<talk.start>
<talker>
<page.no>3316</page.no>
<time.stamp />
<name.id>JPC</name.id>
<electorate />
<party />
<role />
<in.gov>0</in.gov>
<first.speech>0</first.speech>
<name role="metadata">BEST, Robert</name>
<name role="display">Sir Robert Best</name>
</talker>
<para>- Well, it is a metaphor I never met afore! </para>
</talk.start>
</interjection>
<continue>
<talk.start>
<talker>
<page.no>3316</page.no>
<time.stamp />
<name.id>KYI</name.id>
<electorate />
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<role />
<in.gov>0</in.gov>
<first.speech>0</first.speech>
<name role="metadata">PROWSE, John</name>
<name role="display">Mr PROWSE</name>
</talker>
<para>- The honorable member for Batman <inline font-weight="bold">(Mr. Brennan),</inline> when the Superannuation Bill was under consideration, expressed the desire that the Government should make it retrospective to prior to 1920, and he made a statement which completely applies to what I am now endeavouring to show to the House. The honorable member said that finance should not be used as ah argument to support palpable injustice. If the Treasurer, having done justice to the citizens of the Commonwealth in giving them the benefit of a five years' average, finds that the result does not meet his requirements, there is only one obvious and honorable course open to him. That course is to ascertain, first of all, what amount he will be short in revenue, and then to increase the rate of tax to make up that amount. As honorable members will see, the tax will then be levied equally on the people. To-day the burden is unequally distributed, and, first of all, justice must be done; then, if the whole of the people are found to be not contributing sufficient, the proper course is to increase the rate of taxation in Order to secure the amount of revenue required by the Commonwealth. I cannot for the life of me conceive any reasonable objections to the proposals now put forward. When the Bill is in Committee I propose to move that sub-clauses 2 to 8 of clause 13 be left out, and the following new subclauses substituted: - (2.) In assessments of tax for the financial year beginning on the first day of July, 1922, and for each subsequent year: - </para>
</talk.start>
</continue>
<list type="loweralpha">
<item label="(a)">
<para>the taxable income of the taxpayer shall be deemed to be the total taxable income of the taxpayer in the years (in this section called "average years") beginning with the first average year, and ending with the year next preceding the financial year for which the tax is payable; </para>
</item>
<item label="(b)">
<para>the rate to be applied to such total taxable income shall be calculated under the Act by which the rates of income tax are declared as if the taxable income were such total taxable income divided by the number of average years comprised in the period from the first average year to the financial year next preceding the financial year for which the tax is payable, both inclusive; </para>
</item>
<item label="(c)">
<para>from the amount of tax thus calculated there shall be deducted the total amount of tax levied against the taxpayer in the total of the average years comprised in the period from the financial year immediately succeeding the first average year to the financial year next preceding the financial year for which the tax is payable, both inclusive. (3.) In assessments of tax for each of the financial years beginning on the first day of July, 1922, the first day of July, 1923, the first day of July, 1924, and the first day of July, 1925, the first average year shall be not earlier than the financial year beginning on the first day of July, 1920. (4.) Whenever the taxable income of a taxpayer has been assessed for ft period of five average years the rate of income tax to be applied in the next financial year shall be the rate applicable in that year, under the Act by which the rates of income tax are declared, to a taxable income of that amount, and that year shall be the first average year in assessments of his tax for each financial year sub- sequent to the last mentioned financial year for a further period of five financial years. (5.) Any year in which the taxpayer was not carrying on business and was not in receipt of a taxable income shall not be counted as an average year. (6.) Any year in which the deductions allowed in his assessment to a taxpayer en gaged in business left' no taxable income or produced a loss, or in which the taxpayer incurred a loss shall be an average year, and shall be taken into account in ascertaining the assessment of tax for any financial year. (7.) Where the amount of tax calculated under sub-sections (2) (a) and (b) of this section is less than the amount of tax levied against the taxpayer in the total of the average years comprised in the period from the financial year immediately succeeding the first average year' to the financial year next preceding the financial year for which the tax is payable, he shall be entitled to a refund of the difference between the amount of the last mentioned tax and the amount of the tax so calculated. (8.) Where there are not at least two average years for the purpose of calculating the rate under the foregoing provisions of this section the rate of income tax to be applied in a year to the taxable income of a taxpayer shall be the rate applicable in that year, under the </para>
</item>
</list>
<para>Act by which the rates of income tax are declared, to a taxable income of that amount. </para>
<para>The application of a true average will dispense with 90 per cent. of the complaints that come to the Taxation Department, and prevent the heartburns that are now experienced. One of these complaints has reference to the taxation on the natural increase of stock. My proposal will also remove the difficulty in the way of those who go out prospecting, as we desire people to go, in order to enrich this country. Such people will be able to average their incomes, whereas under the present arrangement they are seized on when they find a little bit of gold, without any regard to the amount of money sunk in obtaining that gold. Such injustices are not likely to attract those immigrants whom we all desire to see come to this country. When a man goes on the land the bulk of his time is occupied in developmental work; he is sowing for a reaping, and the Taxation Department taxes him on his reaping day. The position then is not a fair representation of a man's taxable capacity, which, as the Royal Commissions, both in England and' here, have found, is the amount he receives over a certain period. It has been clearly shown that where the graduated scale is in vogue, some form of averaging of income is necessary in order to be just to the citizen, and the averaging should as nearly as possible represent the true position. My proposal is just in regard to rising and falling incomes, so that a man is taxed least when his income is least, and when he makes a loss in his work of developing the country he gets a refund. These are some of the advantages to be. gained, and honorable members will notice throughout the whole of the report of the Royal Commission that there are very few occasions on which a refund is necessary. They are called for only in crushing years like 1914; and is it not better to return a man his own money than to give him a dole, and, in a way, pauperize him ? The system, therefore, commends itself to me, and I think it will give every satisfaction if applied. No honorable citizen can object to be treated on an equal basis with his fellowcitizens who have equal taxable capacity. The computation, I reiterate, is simple, and, so far from causing increased expenditure by the Department, ought to tend to economy. If the principle which I commend is adopted, I am quite confident that there will be very few amendments required in the taxation laws of the Commonwealth for many years to come. </para>
</speech>
<speech>
<talk.start>
<talker>
<page.no>3317</page.no>
<time.stamp />
<name.id>JPC</name.id>
<electorate>Kooyong</electorate>
<party />
<role />
<in.gov>0</in.gov>
<first.speech>0</first.speech>
<name role="metadata">BEST, Robert</name>
<name role="display">Sir ROBERT BEST</name>
</talker>
<para>. - First, I congratulate the Treasurer <inline font-weight="bold">(Mr. Bruce)</inline> on his excellent exposition of the Bill on the occasion of its introduction. As the honorable gentleman very properly said, the Bill contains but few really fundamental alterations, and of these he favoured us with a clear explanation. I have never yet been able to see any substantial advantage in the averaging system as it obtains under the present law. But the system was considered fully by the Royal Commission, and has been recommended to this House. We must all admit that the honorable member for Swan <inline font-weight="bold">(Mr. Prowse)</inline> has devoted considerable industry to the formulation of the scheme, which with a great degree of earnestness he has submitted. But if my recollection serves me aright that very system of averaging which he has denominated as . true and just has already been investigated by the Taxation Commission, which came to the conclusion that it was not desirable to adopt it - in other words, the Commission rejected it. The system may havemany merits which have been assigned to it by the honorable member, but the fact remains that the Commission was not able to see them. The Commissioner of Taxation, who is an able and experienced expert, says that the complexities and difficulties involved in the proposals of the honorable member, would result in much additional administrative expense. While, as I say, the honorable member has been earnest and zealous in the promotion of his scheme, we dare not ignore the fact that the Taxation Commission, whose special duty it was to investigate and recommend, has seen fit to reject it. </para>
</talk.start>
<interjection>
<talk.start>
<talker>
<page.no>3318</page.no>
<time.stamp />
<name.id>KYI</name.id>
<electorate />
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<in.gov>0</in.gov>