Wilson Tuckey (O'Connor, Liberal Party) Share this | Hansard source

Yes, I know. Anyhow, we should not get too far into that. I am talking about the AWB later today. The member for Hunter is well aware of my views on the scams that have operated within that system for the last five or six years, many of which were identified by Mr Cole. A large number were not because it was not in his brief, and those are all ones that have caused substantial financial damage to my constituents, many of whom are prepared to return to the chopping block at the next opportunity, and complain bitterly about the government maybe trying to protect its interest.

Coming back to this tax bill, it is interesting that there are many aspects of tax deductibility for welfare or charitable organisations that I believe should be under constant review in this place. I do not know if it would be the public accounts committee, but one of those standing committees of the parliament, attended of course by members from both sides of the House, was not looking at the practicality and the value to the Australian taxpayer of some of the aspects of tax deductibility.

Granted: I know that at one stage the government had a look at people who might better be described as lobbyists but, because their lobbying activities were involved, say, with the environment, they were considered some sort of charitable organisation. It is not unusual for them to pay their chief executive a very large salary, and of course with the advent of the fringe benefits tax we had to change the law—it might have been the previous government. These people were taking their entire salary as a fringe benefit, because the organisation by whom they were employed did not pay tax. The argument of FBT deductions is that the employee relies upon the employer to pay all their bills—in other words a salary sacrifice—and then turns around and the employer is obliged to pay tax on those benefits. Of course, the trade-off as we all know is that company tax is a flat rate; if the employer is a company there is a tax benefit that accrues from that activity. But if the agency that participated in this arrangement with fringe benefits tax was not taxed then the employee became virtually tax free. State governments were pulling the same trick, and as a result of that there was no opportunity to recover the tax as the legislation intended.

So there are a range of issues about charitable and other similar organisations and groups that achieve this deductible gift recipient status. In my mind, while I support its basic existence, there should be a constant review of those who receive it, and I endorse the fact that the government has seen fit to have a restricted period under which the entitlements of a number of the institutions listed exists. So that is the first thing to do there.

The member for Hunter in his closing remarks said a few things about tax on small business. After a long career in small business, I have to say that income tax as such was seldom a serious problem. When you are struggling in small business and utilising the deductions available, income tax is seldom a huge burden. It is the taxes you pay even when you are going broke that hurt small business—payroll tax, a variety of stamp duties, land taxes and rates and taxes that take no account whatsoever of the income of the business. They are purely and simply arbitrary and they become a cost to business. Some of those are in fact tax deductible at the Commonwealth level, and I guess that is some advantage. I invite the member for Hunter to look, in pursuing quite creditably the issue of how small business is taxed, at the taxes they pay even if they are going broke. Those taxes make life very hard for small business, and it is something that we might all want to turn our attention to one day, notwithstanding that very few of those taxes apply from the Commonwealth regime.

GST was a great invention because that, at least, removed the burden small business so frequently had hidden in the purchase price of the goods—sales tax. Many of those goods included the very equipment that they used to run their business. We even had the most outrageous situation whereby you could buy a refrigerator for domestic purposes at a relatively low rate of sales tax but if you bought one for the conduct of your business the tax was frequently about 30 per cent on the same item. One wonders how we could have had for so many years a tax system that applied in that fashion.

The other issues that have already been mentioned relate to a variety of corrections within the bill. That is appropriate. It is easy to say that the draftees will get everything right or that as we get layers of tax law we do not have some unnecessary duplication. The bill deals with a lot of those matters. It is interesting that this House must correct where the asterisks are. I think it quite appropriate, by the way, that we are correcting some duplication where the Prime Minister has to appoint senior officers in the tax office and if he is unavailable to do so he delegates that responsibility to the Treasurer. Whosoever is in government does it anyway. It has not been a job that the Prime Minister typically takes upon himself. In other words, it has been the responsibility of the person designated as Treasurer in the government of the day and this bill recognises that fact and repeals subsection 6B(11) of the Taxation Administration Act 1953. The Prime Minister will no longer need to delegate the power to the Treasurer to make such acting appointments. It is eminently sensible and good policy. There are a number of things of that nature in the bill, and I am sure everybody agrees with those.

There is not much more I can say. There is an extensive list of deductible gift recipients—thousands that the government recognises. I trust the Assistant Treasurer, who is sitting at the table, will find the time to get his department to review their performance, and while he is looking at that I trust he will ensure that if those so-called charitable organisations out there doing public good are running businesses of significance they will be treated as businesses and not charities. That is fair to other competitors as much as it is fair to the taxpayer. With those few remarks I announce that I am more than happy to support this legislation.

See this speech in context