― xvii ―
PREFACE
On 11 April 1972 the then Treasurer (the Right Honourable B. M. Snedden, Q.C.) announced that the Government had decided to institute a full-scale public inquiry by a Committee to be appointed into the operation of the taxation system which would put the Government in a position to have an overall look at tax policy.
On 18 May 1972 the then Treasurer announced that the Government had drawn up the following terms of reference for the inquiry:
- ‘1. The functions of the Committee of Inquiry are—
- (a) to examine and inquire into the structure and operation of the present Commonwealth taxation system;
- (b) to formulate proposals for improving the Commonwealth taxation system, either by way of making changes in the present system, abolishing any existing form of taxation or introducing new forms of taxation; and
- (c) to report to the Treasurer of the Commonwealth accordingly.
- 2. The Committee of Inquiry shall, in carrying out its functions, do so in the light of the need to ensure a flow of
revenue sufficient to meet the revenue requirements of the Commonwealth and have regard to—
- (a) the effects of the present Commonwealth taxation system, and of any proposals formulated by the Committee, upon the social, economic and business organisation of the community and upon the economic and efficient use of the resources of Australia; and
- (b) the desirability of the Commonwealth taxation system being such that, so far as is practicable, there is a fair distribution of the burden of taxation, and revenue is raised by means that are not unduly complex and do not involve the public or the administration in undue difficulty, inconvenience or expense.
- 3. For the purposes of these terms of reference, the present Commonwealth taxation system shall be taken to be the system under which the Commonwealth raises revenue by means of the following forms of taxation:—
Income Tax
Sales Tax
Estate Duty
Gift Duty
Duties of Excise imposed for the purpose of raising general revenue, and duties of Customs that correspond with duties of Excise so imposed.’
On 14 August 1972 the Honourable Mr Justice K. W. Asprey, a Judge of Appeal of the Supreme Court of New South Wales, was appointed as Chairman of the Committee and subsequently on 10 September 1972 the following persons were appointed as members of the Committee:
Mr D. M. Bensusan-Butt, M.A.
Sir Peter Lloyd, M.A.
Professor R. W. Parsons, B.A., LL.B.
Mr Kenneth Wood, F.C.A.
and Mr M. C. Kahl, A.A.S.A., was appointed as Secretary of the Committee.
The first meeting of the Committee was held on 14 September 1972. Possession of the premises of the Committee at 107 Pitt Sreet, Sydney, was taken on 23 October 1972.
Because of the pressure of other commitments Mr Bensusan-Butt resigned from the Committee shortly after the completion of the
preliminary report on 1 June 1974. Mr Bensusan-Butt made a reservation to the then Chapter 9 of the preliminary report dealing
with capital gains. In view of the change in the form of that chapter (now
― xviii ―
Chapter 23), this reservation has not
been repeated in this report. The Committee desires to acknowledge its indebtedness to Mr Bensusan-Butt for the part played by
him in the preparation of the preliminary report.
The Committee advertised widely throughout Australia calling for written submissions to be made to it. The form of the advertisement appears on page 533.
Advertisements were inserted in the press and journals with an extensive coverage in October and November 1972 and in February 1973. The Committee also wrote to a great many individuals, companies and representative bodies and organisations specifically inviting them to make submissions to the Committee.
Originally the Committee asked for submissions to be forwarded by 31 March 1973 but this date was subsequently extended and during the period for forwarding submissions the Committee on several occasions obtained press coverage publicising the closing date for submissions.
The Committee, in answer to inquiries, made known that it was prepared to confer with any person or body desirous of making a submission with a view to rendering assistance as to the format of a submission and a number of persons and bodies were interviewed by the Committee for this purpose.
The Committee received in all 605 written submissions and had the opportunity of conference and discussion with certain authors of submissions. Many of these are very substantial documents showing that much time and expense were devoted to their preparation. A list of those persons, organisations and companies who made submissions to the Committee appears on p.535. The Committee also received a number of submissions on a confidential basis.
The Committee desires to thank all those who have made submissions to it and those who have also given of their time to confer with the Committee in person.
In addition to seeking written submissions, the Committee has commissioned studies by experts in special fields where it was considered that their views would be of great assistance to the Committee. Other studies have been prepared for the use of the Committee in its deliberations and reference to these is made in various places in the report. The Committee desires to thank all those who have assisted it in this fashion. A list of studies which their authors agree may be publishednote appears at p.547 of this report. It must be clearly understood that these studies are not a part of the Committee's report and the Committee takes no responsibility for their contents which represent the personal views of their authors.
The Committee has received from the Treasury and the Taxation Office a series of well-balanced and informative background studies prepared by senior officers on a wide variety of subjects. Though these studies did not, of course, make recommendations to the Committee, they have been of considerable assistance in its deliberations. Thirteen of these studies have been published by the Government for public information and a list of these appears on p.549 of this report.
The Committee desires to record its thanks and appreciation to the Secretary of the Treasury (Sir Frederick Wheeler, C.B.E.), the Commissioner of Taxation (Sir Edward Cain, C.B.E.) and their officers for their ready assistance at all times in supplying information to the Committee concerning the administration and operation of the taxation legislation. The Committee also wishes to express its appreciation of the continuous help and co-operation afforded to it by the Second Commissioner (Mr W. J. O'Reilly, O.B.E.) who acted throughout as a liaison between the Committee and the Treasury and the Taxation Office.
― xix ―
Apart from its investigation of the relevant taxation statutes of the Australian Parliament and the Parliaments of the several States, the Committee has also given consideration to the appropriate taxation systems of the United Kingdom, Canada, New Zealand, South Africa, the United States, and a number of the countries of Europe and South America. It has obtained information as to operation of these systems by various means and desires to thank all those who have supplied this material. Lastly the Committee has had the benefit of reports, articles and commentaries on practically every aspect of taxation from other commissions of inquiry, taxation experts in Australia, and in the other countries mentioned above.
The professional staff of the Committee has included lawyers, accountants and economists. Throughout the life of the Committee its numbers have fluctuated but a complete list of the persons who have served as members of the professional staff is appended at p.551 The Committee is keenly appreciative of the work performed for it by its professional staff and desires to thank them for the indispensable services and assistance given by its members to the Committee.
The Committee also desires to thank those professional firms, universities and other organisations which at inconvenience to themselves so readily made available to the Committee the persons who constituted its professional staff. A list of the professional firms, universities and organisations which greatly aided the Committee in this connection appears on p.551.
The Committee also acknowledges the assistance which it has received from its general services staff who at all times worked so well in the duties undertaken by its members. A list of these appears on p.551.
The Chairman also wishes to thank his Associate (Mrs Jean Johnson) and his Tipstaff (Mr D. R. Parker) for their cheerful and constant help to him during holiday periods in addition to the usual working weeks.
The Committee wishes to acknowledge a special debt of gratitude to its Secretary, Mr M. C. Kahl, A.A.S.A., upon whom a great burden of the work of this Committee has fallen from the commencement to its conclusion. Without the whole-hearted devotion and efficiency at all times of Mr Kahl, the Committee would not have been able to complete its work by this date.
A similar acknowledgement of the indebtedness of the Committee must be made in respect of the invaluable work performed by its Chief Economist, Mr A. H. Boxer, B.A., B.Phil., upon whom a great burden of the work has also fallen. At all times Mr Boxer carried out his work for the Committee without regard to hours or to his own personal convenience.
Following upon the change of Government resulting from the Federal election on 2 December 1972, the present Government in office confirmed the continuation of the Committee's work. The Committee agreed in February 1974 after some earlier discussion to a request by the then Treasurer (the Honourable Frank Crean) to make a preliminary report so as to place before the Government by 1 June 1974 the Committee's views as at that date of some of the broad alternatives in relation to tax reform, having regard to the presentation of the Budget for 1974-75. Accordingly, the preliminary report was submitted on the understanding that it would be treated on the same confidential basis as any other document prepared in conjunction with the framing of the Budget.
The committee then emphasised that this was a preliminary report only and that many of the opinions in it were at that stage necessarily either provisional or expressed only in a broad-brush way to be filled out in greater detail in the full report. This was also apparent from the manner in which a number of the Committee's views were expressed.
― xx ―
The Committee had concluded its deliberations more particularly upon Chapter 23 of this report (Capital Gains Tax) and had arrived at its decision to recommend deferral of this tax prior to the announcement made on 29 January 1975 that the Government's plans for the introduction of a capital gains tax had been postponed. No attempt has been made in the discussions and recommendations of this report to take account of this change in the Government's policy.
Where there is not unanimous agreement upon the recommendations contained in any chapter of this report, a reservation by a member or members appears at the end of that chapter.
It must be clearly understood that this report supersedes the preliminary report, although it contains a large proportion of the material which appeared in the preliminary report.
In conclusion, the Committee would like to make it clear that, in undertaking a task of such magnitude, set by its terms of reference, it has always had a full realisation that it was entering upon a field in which controversy will never cease and that, upon the issues of taxation and economic policies which are inextricably interwoven in all questions of the reform of a taxation structure in any country, opinions as to the true and best path to follow will invariably differ. The history of every committee of inquiry into a taxation system is proof enough of that fact. Accordingly, this Committee expresses the hope that, out of the discussions which appear and the recommendations which are contained in this report and from the disputation which will inevitably follow upon its publication, a fairer, simpler and more efficient taxation system will eventually emerge than the one which presently produces the revenue for the Australian Government.
K. W. Asprey
Chairman
J. P. D. Lloyd
Ross W. Parsons Members
K. Wood
31 January 1975