AUSTRALIAN TAXATION.

Evening Star, Issue 25700, 25 January 1946, Page 4

AUSTRALIAN TAXATION.

Only a few months after the end of the war, the Commonwealth and State Governm'ents /of Australia are in conflict on an important constitutional issue. For the last three years taxpayers across the Tasman, who have not fared any better than their friends in New Zealand in the extent of government demands, have been spared the nightmare of contributing to a multitude of coffers by the introduction of a system of uniform taxation whereby"all levies were made by the Commonwealth, and the States' requirements paid out of. the pool. This system was first introduced in 1942, when the present Prime Minister, Mr Chifley, who was then Treasurer, piloted legislation through the Federal Parliament. His argument was that the Commonwealth's tremendous needs from taxation for war purposes made it essential that it should "have available to it the maximum taxable capacity of the nation. The whole of the ■taxable field was not available to the Commonwealth while State taxes were levied upon incomes at various levels. The enormous war expenditures had greatly increased the aggregate national income, with the result that State revenues had swollen to a marked extent. The Commonwealth felt that the, States should not profit in this way, and that it was dangerous that the States should have the wherewithal for types of spending it was desired to discourage in war time. The legislation, which was enacted in the face of strong resistance from the States, was quickly tested by a section of the States unsuccessfully attempting to upset it in the High Court. The court decided that the scheme was well within the powers which give the Commonwealth priority in taxation. The system of uniform taxation has proved reasonably popular, and is now administered on a basis of pay-as-you-earn. The original Act provided that the system should operate for the duration of the war and one year after it, but the Commonwealth has decided to retain uniform taxation. At a conference of State Premiers in Canberra this week, Mr Chifley announced that it was futile to hope for a return to pre-war taxation levels for some time, and it was desirable that the war-time taxation system should be retained. The State Governments unanimously oppose the proposal on the grounds that their sovereign rights are jeopardised. The principal objection appears to be that instead of being in & position to levy taxes, the State Governments will continue to be dependent 'on -grants made by the Commonwealth. The States see in the latest move an attempt to circumvent the people's "pronounced opposition to more power for the Commonwealth Government as expressed in their firm rejection of the referendum of 1944. Mr Chifley is, no doubt, highly conscious of the High Court judgment in favour of the on this matter, but he is apparently prepared to be conciliatory to the States. While expressing scorn for a return of the pre-war system of dual taxation, he has promised increased grants to the States as Commonwealth expenditure recedes from its high war-time level. ' For the States the outlook is not bright, as they will depend for their revenues on the grants of the Central Government, but the . taxpayers will probably conclude that some such curb on State expenditures is not unjustified.