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EMBARGO: 5: 00 pm
PRIME MINISTER
FOR MEDIASUNDAY, 31 MAY, 1981
ELECTORATE TALK
Last week, John Howard introduced new legislation into the
Parliament to stamp out the gross tax avoidance schemes that
have been growing up in our community. Since 1977, the Government
has introduced 12 bills incorporating some 28 measures against
such schemes. But what has been happening up to now is that
as-soon as one scheme is stopped a new one is thought up. The
new legislation is designed to prevent this from happening.
Its aim is to make impossible, all versions of anti-social
tax avoidance.
Anyone who pays less than their fair share of tax does so at the
exppnse of every other taxpayer, at the expense of every decent:
member of Australian society. We believe that any person who
. claims the privileges of being an Australian resident, who benefits
from the services provided'by the Government and the protection
of the law, mustC contribute his or her fair share by way of
tax contributions.
We believe that there is no real difference between the person who
finds an artificial loophole to slip out of tax and the person who
falsely declares his income. An anti-avoidance provision was
already part of the law. However, over the years the courts had
cast doubt on its meaning and its interpretation had become so
narrow as to be largely ineffective against avoidance.
When reasonable men can come to very different views as to what:
tax avoidance is, it becomes difficult to cast-the law in terms
which will strike down blatant or contrived schemes, but which will
not hinder reasonable commercial or family dealings. The new
legislation is expressed in terms which would eliminate schemes
w~ hich-when-their circumstances and results. are objectively examnined-,
have no practical ' effect other than * a reduction of tax liability.
In order to ensure that people who still think they can get away
with avoidance are not taking a " one way bet" in doing so, the
legislation provides for penalty tax equal to twice the amount of
tax sought to be avoided.
This approach, and the Bill itself, is the result of long and
careful study, not only by Departmental officers and by Parliamentary
counsel, but also by private legal counsel and the Taxation
Advisory Committee. We sought and welcomed constructive comments
on the provisions of the Bill. / 2
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At the same time, we have introduced legislation which requires the
courts to have regard to the intention of the law rather than
solely to the fine points of language. It is our hope that the
decisions of courts will accept the spirit of this taxation
legislation rather than just relying on the letter. It is a matter
of great regret that it is necessary for legislation to be used
to stamp out tax cheating. For if all taxpayers accepted their
responsibility to the whole community, if they accepted that they
should pay what is justly required of them to provide public
services, we would not need to devote part of the community's
resources to seeking out the tax cheats, to the time consuming
process of framing laws.
Because some people get away with paying less than their fair share!
of tax, but are still consuming public services paid for by the
rest of us, the tax burden on the decent, responsible taxpayer is
higher than it otherwise would be. The cost to the community of
tax avoidance is not measured. simply by how much more tax the
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