Jj ASTRLIAEMBARGO: 7.00 p. m.
PRIME MINISTER
FOR PRESS OCTOBER 1978
ELE CTORATE TALK
The Government's campaign against abuse of the tax laws is
continuing with the announcement by the Treasurer, John Howard,
in the last few days of further measures.
The new legislation is highly technical, as would be expected
from the very nature of tax avoidance finding loop-holbs
in legislation in order to avoid the spirit and intention of the
law. In the last year there have been about 15 Government measures
designed to stop-up chinks in the taxation legislation.
Their value to the revenues amounts to some hundreds of millions
of dollars.
The Government believes there is widespread support in the
community for the action which is being taken to curb tax avoidance.
In some taxpayers escape paying their tax, then the burden falls
more heavily on the rest. The average wage earner has little
capacity to take part in such schemes while very many high income
earners have chosen not to.
Governments do not spend their own money they spend taxpayers'
money and they thus have a duty to ensure that no-one cheats
the system at the expense of others. The Government has an
obligation to protect the person who plays the game by the rules,
and it has a duty to weed out the cheats. When the tax burden
is equitably shared according to the intention of the law,
the great majority of honest taxpayers are the beneficiaries.
The Government will keep up the pressure on tax avoiders.
The law will stay under constant scrutiny and the loop-holes
will be closed as they are found. This is an approacht to a
problem which no government, including the last Labor government,
has previously tackled in the same systematic way.
Labor instead, when in office, concentrated its attention on the
punitive taxation, which kills incentive for wage earners and
stifles enterprise in businessmen. Repressive and unfair taxation
is the breeding ground for tax evasion. Punitive taxes forced
many small businessmen and farmers into a situation * where they
were obliged to make arrangements to ensure the continuity of
their enterprises. The Government rejects this policy of
socialism, repression and dishonesty. Australians expect a fair
reward for honest effort. They expect to benefit from their
enterpri'se. and their achievements.
2..
That is why -as well as legislation designed to prevent
manipulation of the tax laws, there has been a major programme
of tax reform in which Australia leads the world.
Many of the complex arrangements which people entered
over the years were simply designed to keep family farms an~ d
businesses together. The Government's programme of taxation
reform is making these increasingly unnecessary.*
The Comonwealth Government gave the lead in the progressive
abolition of death duties and the State Governments are
now following suit. A system of investment allowance,
and Stock Valuation Adjustment has provided a major incentive
for businesses. Private companies have been enabled to retain
more of their profits for use in their business activities.
Above all, there has been enormous progress in the reform of
taxation as it applies to individuals. In less than three years,
the Coalition Government has brought in automatic taxation
indexation, as well as carryin * g out a reform of the tax scales,
reducing them to three steps, and placing the great majority
of taxpayers on the lowest rate of tax.
In the last Budget, it was necessary to bring in a special.
and temporary surcharge of 1 percent which will ILast until
June This year taxpayers will be paying $ 3000 million less in personal
income tax than they would have paid if the 1975 Hayden tax
scales still applied. The total revenue foregonte over the
past three years is more than $ 6000 million.
Boththis year and last year the increase in tax collections has
been smaller than the increase in personal incomes. The taxpayer
on average weekly earnings, with a dependent spouse, and two
children, is paying $ 6 a week less in tax this year than he would
if the old Hayden tax scales were still in force,' as well as
receiving $ 7 a week because of the family allowances. He is thus
$ 13 a week better off in terms of disposable income.
Our taxation system is designed for honest tAxpayers, honest
governments, and for incentive, enterprise and prosperity.
This policy will continue.