Senators have quoted the findings of the Income Tax Commission. A White Paper issued by the Government in 1961 deals with this matter at pages 8 and 9. The arguments for and against are very fairly set out there. They point out that the Commission arrived at their recommendation for two reasons. First of all, there is the point that real income does not arise from owner occupation and that it is not fair to subject notional income to taxation. The second point is that if there is a charge on notional income it should not be confined to real property but should extend to chattel property also.
With regard to the first point, it may be classed as notional income but certain limitations are recommended by the Commission that it should apply only to houses up to the first £30 valuation and, again, in assessing the income tax due, ground rent is taken into account, and the ground rent being deducted from the valuation leaves the residue subject to tax.
I believe that on this basis the average amount on which income tax is assessed is only about £15. Therefore, it is a small matter as far as the payer is concerned. I think there is a matter of principle both ways. The Government have argued in this White Paper that the principle is still as sound for taxation as it is against it.
The point made by Senator O'Brien, which is also more or less supported by Senator Ross, is very important. For instance, if a person has £2,000 invested in national loan he has to pay income tax on the dividends from that loan. Before he buys the house, he is paying a rent. It is not recommended that he should get any benefit on that rent. Now he buys a house and puts the £2,900 into it and, as a result, he would escape income tax. There does not seem to be any very good reason for that: it is, of course, a form of saving, I know, but we do not exempt all forms of savings. For instance, we do not exempt a man who has £2,000 invested in national loan.
The person who buys the house gets a good many advantages. If he has not the £2,000 but borrows the money he pays interest to the bank and, to the extent to which he pays interest, he is free from income tax. If he goes to an insurance company to borrow his money he gets relief also on the premium he pays to the insurance company. Therefore, many reliefs are given to a person to encourage him to buy his house. If the argument of the Income Tax Commission were logical, there is no reason why they should stop at £30 valuation. The arguments all apply just as well to the higher valuations as to the lower ones.
This form of taxation is not peculiar to this country. They have it in most European countries. Evidently, they think it is a just tax in all those countries. I am not sure if it is mentioned there but it has often been mentioned that the amount collected in this way is comparatively small. The amount that would be collected on the £30 valuations of owner-occupied houses is not a very big amount—about £250,000—but the amount of Schedule A tax collected is about £1.3 million. Therefore, I cannot argue very well against it, on that basis, that it would be impossible for the Exchequer to meet the point. I think, therefore, I can only argue against it on the principle of the matter that I do not see any good reason why these particular people should be exempt from tax.
Let me read the final paragraph from the White Paper issued by the Government.
In the present circumstances, therefore, the Government are not convinced that owner-occupiers should be relieved of income tax where there is a liability under existing law.
That would go to prove that the Government of the time were not so very positive that they thought the matter should never be taken up again. Since 1962, I have not seen any good reason why we should consider this matter. I do not think it is likely that the Government will consider this in the very near future.