AUSTRALIAN TAXATION

Otago Daily Times, Issue 22830, 14 March 1936, Page 16

AUSTRALIAN TAXATION

UTILE- HOPE OF REDUCTION DEFENCE COMMITMENTS (From Our Own Correspondent! SYDNEY, March 7. The Federal Government is going to become very unpopular. Despite bumper surpluses in the last two years, and an even larger one in prospect this year (ending on June 30), the Prinie Minister (Mr J. A. Lyons) has officially stated that there is no hope of immediate reduction of Federal taxation. The truth is that the Government is so working in the dark concerning what Australia may need to spend on defence that the Government cannot risk loosening any of the screws it at present has on taxpayers. Apart from the general demand for a decrease of the present heavy rate,; two taxes at present, particularly, are the subject of agitations for reductions. These are the petrol tax, raised from 2d to 71 a gallon when Australia's financial crisis came five years ago, and the sales tax on the vast majority of goods sold. Both have been prolific money-raisers. The two taxes between them helped greatly to support the framework of the national economy in the time of crisis.' Since the economic position improved, they have given greatly increased returns. The sales tax has been reduced from 6 per cent, to 5 per cent., and a big list of articles, especially agricultural implements and the like have been removed from the tax. But the petrol tax remains unchanged. A portion of its proceeds returns to States for road maintenance, but the greatest part of it goes into Federal consolidated revenue. Motorists' organisations are conducting an intensive campaign for its reduction, despite a rebuff from the Treasurer (Mr Casey) a few months ago. They point out that the sales tax has already been lightened; the petrol tax remains the same old""emergency burden." A representative deputation from trading, industrial, business, and manufacturing interests recently waited on Mr Lyons and Mr Casey and asked for: A reduction of sales tax by 1 per cent, a year over five years, the first reduction to take place immediately; a reduction of 20 per cent, in the income tax and the abolition of super-property tax; abolition of the Federal land tax and a gradual reduction in primage in accordance with arrangements made at Ottawa. It is pointed out that in the last four years the sales tax has yielded £34,000,000. The tax .was intended to make up for the loss of Customs duties, but these had increased by £0,885,038. Mr Lyons said the Government had to face increased expenditure on defence and the increased 6ocial services had added to the expenditure. Old age and invalid pensions had increased £2,000,000 since 1930. Who was going to suggest that they could be reduced? Defence was taking this year £2,250,000 more than in 1930, and they would have to face a greater increase. A sum of £3,000,000 had been found for the States. They were finding £1,250,000 more to assist primary industry, and, roughly, there was about £8,500,0011 in these four items. If they reduced taxation as suggested it would amount to about £5,250,000. Such a reduction would not permit the Government to meet its commitments. Until the Government knew what would be necessary for defence it was not in the position to: give relief.