Thursday, 9 June 2022

Bills

State Taxation and Treasury Legislation Amendment Bill 2022

Second reading

Debate resumed on motion of Ms SYMES:

That the bill be now read a second time.

Motion agreed to.

Read second time.

Committed.

Committee

Clause 1 (10:37)

Mr DAVIS: I will just ask the minister some contextual questions. Clearly this state taxation bill comes in the context of the state budget and the challenges that the state faces with respect to the budget position. I ask: does the government propose any new taxes or increased taxes beyond what is in this bill?

Ms TIERNEY: The bill before the house today is very clear in terms of what it is attempting to do. I understand the question that the member has put, but we are dealing with the bill that is before the house today and to err otherwise is to just wander into speculation, and I am not prepared to do that.

Mr DAVIS: If interest rates rise—they certainly have risen significantly since the bill was introduced and there may well be further rises, as markets seem to expect—will the government take any further taxation measures beyond what is in this bill?

Ms TIERNEY: Again, and I will continue to provide this answer to the questions that I suspect you will continue to put to me this morning as hypotheticals, I am here to deal with the bill that is before the house. In terms of other matters, the government will deal with them as it sees fit when they arise.

Mr DAVIS: It is clear that line of questioning will not be productive, but I will just place on record our concern that the government may bring forward further taxes. We know the Premier promised there would be no new taxes in 2014, as did the Treasurer, and there have been more than 40 new taxes since this government came to power. But with respect to the exact provisions in the bill, with the committee’s leave I might just ask a couple of questions and then make a statement on what we intend to do with clause 34.

With respect to the windfall gains tax changes that are in this bill, I ask: in effect what is going on here is the state government got the original windfall gains tax bill wrong and it has now had to come back and modify the legislation, recognising that an unintended effect would be that universities undertaking various projects would be clobbered by the state government’s tax, which—giving them some generous latitude—we presume they did not intend to do. Why is it that the government did not consult with universities in the first instance, allowing confusion and concern to build, and has now had to come back to fix its errors?

Ms TIERNEY: Firstly, I reject a number of things that the member raised prior to asking his question. We will not be using this opportunity in committee to continue to have the opposition use this as a party-political free advertising space. We reject what the member has put in relation to allegations of taxation, and I can easily refute what he has said. In respect to the windfall gains tax—

Mr Davis interjected.

Ms TIERNEY: Excuse me, I am speaking. In respect to the windfall gains tax, there have been a lot of discussions between the Treasurer and the universities, and we are very pleased to be able to now bring this forward. It does mean that there is clarity around the purpose and use of the windfall gains tax, and of course it upholds the principle of the continuation of the use of and investment in educational facilities and other educational activities.

Mr DAVIS: If the minister wants to refute points that I have made, she is welcome to do so, but I note she did not do so. She said she would refute them or could refute them but chose not to actually do so. Beyond that, on the windfall gains tax, we are not opposing that provision; we think it is a correction of an error and a mistake by the government. My question is why the government did not consult in the first instance.

Ms TIERNEY: The Treasurer consulted with a whole range of organisations and sectors in respect to that. We have been able to have substantive and detailed discussions with the vice-chancellors in particular, and we are pleased to bring this clarification before the house today.

Can I say that, in terms of dealing with what you continue to assert, the Andrews Labor government has cut or abolished taxes and fees 57 times since coming to government. This includes increasing the payroll tax threshold twice since coming to government so that fewer small to medium-sized businesses pay payroll tax, and last July we cut the regional payroll tax rate to 1.2125 per cent, just one-quarter of the metropolitan rate and the lowest in the nation. It is interventions like these that have seen the regional unemployment rate fall to 3.2 per cent, the lowest in the nation and less than half of what it was when those opposite—your government—were in power last and were voted out. We supported businesses through the worst of the pandemic with payroll tax cuts that have saved Victorian businesses about $1.7 billion up to 2021–22 and will save about $4 billion over the forward estimates. I could go on, but I think that is enough to provide for those that might be listening that you are providing the chamber with information that is not correct.

Mr DAVIS: I would make the simple point that since 2013–14 taxes have gone up 80 per cent—state tax take is up 80 per cent. The economy has grown by nothing like that size or that increase. The tax take per head is up and the debt has gone up too.

But my purpose here today is fundamentally in this committee to focus on clause 34, and I might ask the minister about this clause, referenced in the purposes section, given that it has purview across all objections that are lodged for whatever matter across the operation of state taxation in this way. The government is removing latitude for the State Revenue Office to allow objections out of time. We understand there has to be a time period. We understand also that harsh or unusual circumstances can occur and allowing the State Revenue Office the latitude to allow an objection out of time does not seem to us to be unreasonable. I am thankful to the minister’s office for providing details about the numbers of objections—about 55 over the last five years, so it is actually a very modest number of people that we are talking about. These are where objections have been provided, in effect, by grace of the SRO—not known for its generosity and human kindness. But leaving that aside, that is the circumstance, and the fact is that removing that latitude for the SRO to do so, to allow an out-of-time objection and then obviously for that to be assessed on its merits, seems to us to be unreasonable, and it does seem harsh for taxpayers. When they apply, the SRO would—prior to this clause being passed—previously have had the capacity to provide an out-of-time objection. Now, I know that the minister will say that the Treasurer will retain that capacity, but that means an escalation, it means a political involvement and it means that a more seamless mechanism is unable to operate. So I just put on record that I think it is harsh. We do think that that latitude should be there, and consequently we will oppose that particular clause. There is not a lot of revenue involved here, but it does matter where harsh circumstances apply to individuals.

Ms TIERNEY: I will begin by refuting some of the comments that the member made prior to actually asking the question. Those opposite talk about their list of 42 new or increased taxes. The fact is that they do count the point-of-consumption wagering and betting tax, which they not only voted for but supported vocally, so I think they are being quite hypocritical. They also include the mental health levy which they now apparently support, but that seems to change on a day-to-day basis. The list also counts the absentee landowner surcharge for foreign purchasers six times. Obviously that is not a tax on Victorians; that is a tax on foreign purchasers. A little bit of clarity and a bit of transparency on those points I think should be on the record.

In respect to clause 34, which the opposition has signalled they will be opposing, the fact is that most stakeholders right across the state, no matter where they come from or who they represent, have applauded the Treasurer in respect of this budget and indeed the wider government. The amendment before us today is really an amendment when you have not got much else to say, because it is a matter of just streamlining procedures. It is about not hurting Victorians because, as I understand it, in terms of the category that is potentially affected, in the last financial year there were only seven Victorians in the whole state that were picked up by it.

Mr Davis interjected.

Ms TIERNEY: And I know that you have said it was a small number, but let us get the actual quantum on the record. For the sake of clarity again, currently a taxpayer must lodge an objection within 60 days after the date of service of a notice of assessment or a payroll tax decision. The commissioner may, however, permit the late lodgement of an objection after 60 days. There is currently no time limit on the commissioner’s discretion to extend the ordinary 60-day period for lodgement of an objection. The SRO commissioner requested that the government legislate a maximum five-year time limit on the commissioner’s discretion to permit late lodgement of an out-of-time objection. Such a limit will support the policy imperative of finality and certainty in the resolution of tax disputes for the benefit of both the state and the taxpayer. Delays of longer than five years make it difficult for the SRO to fully consider the facts of the grounds of the objection, key staff members may have moved on, relevant files may have been destroyed. Taxpayers must retain records pertaining to their tax matters for only five years under the Taxation Administration Act 1997.

The same record-keeping requirements apply to the State Revenue Office, and under government retention and destruction protocols the SRO may destroy documents related to revenue management and assessment and determination of liabilities five years after they are received. A five-year limit—and that is a five-year limit after the 60 days—will ensure consistency with the broader tax administration framework, including a five-year period of retrospectivity for assessments, a five-year limit on the withdrawal of assessments and issuing of reassessments, a five-year limit on application for refund and a five-year record-keeping obligation. Objections to tax assessments issued more than five years previously are rare; as I have just stated, there were seven such instances in 2021–22. If a historical tax matter is brought to light beyond the five-year limit and justice in a particular case is required, the state still retains the ability to compensate the affected taxpayer via an ex gratia relief payment on a case-by-case basis, Mr Davis.

Mr DAVIS: I understand the minister’s point, but nonetheless it is a more cumbersome system, and the current system would work better, in our view. It is a very small number of taxpayers, we concede that, and we thank the minister for the list of numbers over the last five years, but still it is a question of fairness and we think the current arrangements are fairer.

Ms TIERNEY: We will just agree to disagree on that one, Mr Davis.

Clause agreed to.

Clause 2—no question put pursuant to standing order 14.15(2).

Clauses 3 to 7 agreed to.

Clauses 8 to 13—no question put pursuant to standing order 14.15(2).

Clause 14 agreed to.

Clause 15—no question put pursuant to standing order 14.15(2).

Clause 16 agreed to.

Clauses 17 to 30—no question put pursuant to standing order 14.15(2).

Clauses 31 to 33 agreed to.

Clause 34 (10:56)

Mr DAVIS: I have made my point. We think this new change is unnecessarily harsh and means that in certain circumstances a very small number of individual taxpayers may be disadvantaged, so we will oppose it.

Committee divided on clause:

Clause agreed to.

Clause 35 agreed to.

Clause 36—no question put pursuant to standing order 14.15(2).

Clause 37 agreed to.

Reported to house without amendment.

Ms TIERNEY (Western Victoria—Minister for Training and Skills, Minister for Higher Education) (11:03): I move:

That the report be now adopted.

Motion agreed to.

Report adopted.

Third reading

Ms TIERNEY (Western Victoria—Minister for Training and Skills, Minister for Higher Education) (11:04): I move:

That the bill be now read a third time.

Motion agreed to.

Read third time.

The PRESIDENT: Pursuant to standing order 14.27, the bill will be returned to the Assembly with a message informing them that the Council have agreed to the bill without amendment.