EMBARGOED UNTIL MAJOR EVi) NI1
NEWS BULLETINS
1j AU1S ALJA
PRIME MINISTER
FOR MEDIA TUESDAY SEPTEMBER 28 1982
ADDRESS TO THE NATION
Nobody likes paying their taxes, but we all know that
governments have to provide services of a gi'-at many
kinds for education, health, roads z~ nd commnunications,
for the-general. well-being of the commnxr~ ity and it is
important that all people contribute !_ airly, in accordance
with their incomes, -to the goveranent revenues, needed to
provide them.
I am talking to you tonight because there are some people
who have not been contributing fairly. They have been
seeking to avoid or -evade paying taxes and by doing so,
they put a heavier burden on other Australians.
Two important principles are involved in fighting tax
avoidance and tax evasion principles that have come
in-to conflict recently. The first is that in general,
legislation should not be retrospective, and the second
is the overriding need for governments to be fair to all
Australians. over the last several years, the Government has maintained
an unrelenting fight against tax evasion and tax avoidance
and a significant number of . artificial schemes have been
outlawed by legislation. In recent times, this has become
a contentious political matter in relation to what are
known as bottom-of-the-harbour schemes..
These schemes were particularly unpleasant. Whatever the
variations, they always involved three elements: first,
a company was sold with an unpaid tax liabilityl second,
the price paid for the company reflected the fact that
one way or another the tax liability outstanding at
the time of the sale simply would not be paid; third,
those who bought the company stripped it of its assets
so that it had nothing left to pay its taxes.
It was both as simple and as blatant as that It was not
a complicated tax avoidance arrangement, but a straight
out case of a company being emptied of assets with intent
to deny payment of tax which remained legally due.
Two groups of people. gained from these transacti~ ons. These
were, first, the original owners of the company, the vendor
shareholders who received a much better price for their-*
shares than would have been the case if the tax had been paid.
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Second, there were the promoters, the people who arranged
the deals who received their promotion fees out of the
evaded tax. A very large sum of money was involved. In many
cases, the current year profits of a company involved in
these schemes would be half a million dollars, and in a
few cases, three or four million dollars or even more.
So, we are not talking about small sums. In total, we
are talking about hundreds of millions of dollars..
The Government introduced legislation in November 1980 to
outlaw these schemes and to impose criminal penalties for
the first time against them, carrying sentences of up to
five years in gaol. We have now passed legislation to
establish a special prosecutor who will prosecute those
who acted illegally. The special prosecutor will have
particular responsibility for action against promoters
of the illegal bottom-of-the-harbour schemes.
Last wee k, we int~ roduced lagislationdes igned to recoup
the tax that shoulId have been paid from those who benefited
from the schemes. This legislation is tax legislation.
it is not crimiri.~ l legislation. it does not carry criminal
penalties. It simply will be saeking to collect the
tax that should have been paid much earlier.
There is an element of retrospectivity in this legislation,
and 1I particularly want to say something about that ' and
about the principle of fairness to all Australians.
None of us like retrospective legislation and there is an
important principle involved in that. Normally the
Government would not consider it, but in these circumstances
we believe that retrospectivity is justified. Retrospective
tax legislation is, after all, by no means, unprecedented.
There are a-t least two occasions in 1936 and in 1978
when the British Parliament passed retrospective legislation
against tax avoidance, . and appeals against the 1936 legislation
were rejected by England's highest courts of appeal.
I and my colleagues in government and I am sure the
overall majority of Australians are absolutely fed up
with the few people who are being unfair to their fellow
Australians. It is clear the Government had to make a
difficult choice between supporting absolutely the
principle of no retrospective legislation or maintaining
its support for the principle of governing fairly for all
Australians. in this instance, in relation to the bottomof-
the-harbour schemes, we made the decision that we must
place the principle of fairness above the principle. of.
retrospectivi ty.
The Government represents all Australians. Its duty is to
govern fairly for all Australians. At elections, people
divide up their votes between political parties, but once
elected to office, it is the duty of governments and of
Members of Parliament to represent all people. That deeply
held conviction is the very foundation of my party, and to
represent all people you have above all to be fair.
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I hope that the legislation will be given a thoughtful
but nevertheless speedy passage through the Parliament
so that we can get on with the business of collecting
taxes that should have been paid long ago. There is no
doubt that the legislation will be passed. We wiJll not
allow a situation to exist in which some Australians
need to pay more because a very few are seeking by
improper means to pay less, or none..