Carol Brown (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

On behalf of the Joint Standing Committee on Electoral Matters, I present an advisory report of the committee on schedule 1 of the Tax Laws Amendment (2008 Measures No. 1) Bill 2008. I seek leave to move a motion in relation to the report.

Leave granted.

I move:

That the Senate take note of the report.

I seek leave to incorporate a tabling statement in Hansard.

Leave granted.

The statement read as follows—

On behalf of the Joint Standing Committee on Electoral Matters, I have pleasure in presenting the Committee’s report entitled Advisory report on Schedule 1 of the Tax Laws Amendment (2008 Measures No. 1) Bill 2008.

The Senate asked the committee to review the bill, which proposes to discontinue the tax deductibility of political donations.

The committee supports the discontinuation of tax deductibility for political donations and recommends that Schedule 1 of the Tax Laws Amendment (2008 Measures No. 1) Bill 2008 be passed by the Senate without amendment.

Discontinuing tax deductibility for political contributions and gifts is estimated to save $31.4 million over the four years to 2011-12, with savings commencing in 2009-10.

The policy of discontinuing tax deductibility for political donations was taken to the 2007 federal election by the Australian Labor Party. The bill will give effect to this pre-election commitment and deliver ongoing savings of over $10 million per year. Delaying the passage of this legislation will lead to these savings disappearing from the budget bottomline.

The savings estimates prepared by Treasury represent the best available estimate given the lack of information from tax returns, donations to political parties and political party membership.

While some inquiry participants argue that tax deductibility should be considered as part of a broader inquiry, it is doubtful that the future political financing landscape will retain such an unbalanced and inequitable scheme.

Tax deductibility for political donations was introduced in an ad hoc way in 1991 following amendments to electoral legislation in the Senate by the Coalition parties and the Australian Democrats. While initially only applying to donations by individuals and their party membership fees to a cap of $100 per year, in 2006 the government extended tax deductibility to businesses and lifted the threshold to $1,500 per year.

At the time, opposition members of the Electoral Matters Committee expressed their concern that these changes would encourage individuals and other entities to make extensive political contributions, in secret, and at taxpayer expense.

Discontinuing tax deductibility for these payments will remove the inherent inequity of the tax system which provides higher income earners a larger subsidy for contributions to political parties. Abolishing tax deductibility for business taxpayers will remove a loophole under which payments by businesses to political parties are subsidised by the taxpayer to the tune of 30 per cent.

There is no evidence to suggest that removing tax deductibility will necessarily lead to reduced participation in political activities. Members of the community can still join political parties and individuals and businesses will still be able to donate to political parties and candidates for public office. However, the inequity created by the tax system will be removed and provide a fairer basis for political participation.

I would like to take this opportunity to thank my fellow committee members for their contribution to the inquiry and those that participated by making submissions or appearing at the public hearing. I would also like to thank the committee secretariat for their assistance.

I commend the report to the Senate.

I seek leave to continue my remarks later.

Leave granted; debate adjourned.