THE FINANCE BILL

Auckland Star, Volume XLIX, Issue 87, 12 April 1918, Page 4

THE FINANCE BILL

WAR LOAN OF £20,000,000. GENERAL ELECTION POSTPONED. NO CHANGE IN TAXATION. CBy Telegrapn.— Special to "Star.") WELLINGTON, Thursday. The Finance Bill was introduced by Governor's message to-night, and explained by. Sir Joseph Ward, who stated the bill contained the whole requirements to enable the financial side of government to be carried on- Appropriations would be extended to December 31 next, enabling expenditure to be continued on the basis of the past session's votes until Parliament could pass the current Estimates, which would come down next session. The amount of unauthorised expenditure would be increased to £262,500 from the usual limit of £150,000. The bill provided that tbe land tax be imposed exactly on the basis of last year's Act, with the same exemptions. The income tax was also levied in the same manner and with tbe same rates as last year. The question of tbe incidence of taxation would not come before tbe present session. He announced that there would be no increased taxation required until next session. THE AMUSEMENT TAX. Referring to the amusement tax, the Minister said that, as the result of careful examination, the bill proposed to exempt from the tax payments made for admission to agricultural and pastoral societies' shows, but the tax was retained on side shows at these places of assemblage where payments exceeded sixpence. The amount collected from agricultural ; shows was, in round figures, about £2000, and, as the difficulty of collection was considerable, it had been decided to exempt agricultural shows. It was also proposed [ to exempt payment for admission to entertainments promoted for patriotic purposes and entertainments promoted by societies established for literary, horticultural and kindred purposes, when not held for private profit. Provision was being made for the purchase of war loan certificates from the post office on the timepayment system. FRESH WAR LOAN. Authority to raise twenty millions was sought. The clause in the previous Finance Act dealing with compulsory sub- ( sci-jptions provided that such should I equal 4i times an individual's or comI land and income tax, but the I present measure substituted for this a system of imposing a penalty equal to double land and income tax. In the last bill the minimum, which was the maximum, was in operation, but this could not be so satisfactory as what was proposed in the present bill, compelling people to subscribe to the loan in proI portion to their means. Mr. Pearce: Who will decide that? Sir Joseph Ward: In the first instance, I the Commissioner of Taxes, who is in a I position to know the financial condition 1 of everyone with an income of over £300 or land valued £500. The Com-missioner,-upon ascertaining default' by any individual or company, will advise I the Minister of Finance, who is empowI ered to authorise operation of the comj uplsory provisions. A Board comprising the Auditor-General, Commissioner of Taxes, Secretary to the Treasury, and Government Life Insurance. ComroisI sioner will be set up, and any person receiving a compulsory notification will have the right to appeal within 14 days. j This Board's decision will he final. The bill proposes a penalty of double the ; amount of land and income tax upon I those who fail to do their duty. The j penalty would not absolve a taxpayer from giving full contribution to the j war loan as decided by the Board. The amount of interest will be 3 per cent free of income tax. Mr. Wilford: Why free of income tax? Sir Joseph Ward: I'll explain that separately. SPECULATION PENALISED. Continuing, the Finance Minister said if anyone in New Zealand had been operating in war bonds in the way of speculation—he had heard bonds *had i been purchased slightly below par—that : person would not be contriI butor. Neither the seller nor the purchaser of war bonds so dealt with would [ be allowed to count them as contributions. Provision would again be made for the purchase of a certain amount of stock to bo available for payment. j The Minister, coming to loan money, I stated that the bill proposed authority j to raise £20,000,000. He added that the ! total amount the country would have j borrowed when this £2*0,000.000 loan I was raised, would be the very large sum (of £83,393.830. Of that amount war '.purposes accounted for £76,000,000; while since August, 1914, total authorities for purposes other than war amounted to £7,393,830. Mr. Harris: What percentage has been raised in New Zealand? Sir Joseph Ward: All of the money borrowed in the open market during the last two or three years has been raised in New Zealand. The total raised in the Old Country is £19,500,000, but that stock has not gone on the market. As a matter of fact, a large portion of that stock is held in London for payments by the War Office in connection with expenditure on our behalf. The total amount borrowed in New Zealand since the beginning of the war amounted to £32,500,000. That did not, of course, include the new loan of £20,000,000. The Minister went on to explain that Clause 17 of the bill was intended to legalise the memorandum of agreement with the Old Country. The New Zealand Government raised money from the Imperial Government in 1914 by way of , Treasury bills, and these were' replaced by what was known as a memorandum I of agreement. Another clause provided j for the retention of money over subI scribed in one loan for the next, so that no person haying; subscribed would have his money returned. The bill also asked the House to put public bodies in the position of having protection of moratorium. INCOME TAX CONCESSION. Referring to the 4. per cent interest free of income tax for loan money Sir Joseph Ward declared it was the only safe way to get the money required unless the people of the country made I up their minds to have dear money in | New Zealand. Other countries had paid j interest free of income tax. This was I not going to relieve the taxpayer in the future from payment of one penny less of taxation. If high taxation were put on people from whom the country was borrowing money, they would de"stroy the very people from whom they 1 had to look for a large share of taxation revenue in future. It was necessary to , ensure the obtaining of loan money for some time ahead, if required, and some incentive must be held out to persuade people and companies to increase their overdrafts to lend to the Government Conscription of wealth would take away *ne very class of investment which the

country was largely ro.ylng upon for war money. The wealth people talked Of conscripting consisted in very many cases of bricks and mortar, and that was very often well mortgaged. Under Gov. ernment's proposals they were conscript, ing a man's income, which was a very different thing in many cases. Fully one-third of the income was conscripted, and often a good deal more. The 4J per cent free of income tax had not been instituted for the purpose of giving any taxpayer relief. Mr. Forbes expressed the opinion that the time had come to throw the whole of our resources into the scale to avoid the possibility of disaster. Little as he liked the freedom from income tax proposal, the Finance Minister was of opinion thatsuch terms were necessary, and, under the circumstances, he believed the Government should be trusted. He applauded the setting up of a Defence Expenditure Commission, as'people should know that the money they were putting into the war loan was-being wisely expended- Many people believed the time had arrived when the whole incidence of taxation should be reviewed and altered, but the time to do so was not a short session. He hoped certain amendments would be introiJuced by the Finance Minister next session. Mr. Pearce complained of re-imposition of what he described as the excessive land and income tax of last year, and contended that the amusement tax should be heavier. He believed in compulsory subscription to the war loan, but objected to tbe method of assessment. It gave too much power to the Commissioner of Taxes, and in his opinion was unsound in principle. Mr. Forbes expressed himself as being entirely in favour of the life of Parliament being extended till the war wag over. In times like the present the attention and energies of the people should not be disturbed by an election campaign. The only choice at the present time would be a National Government or chaos, so what would an election profit the people? Mr. Witty vehemently protested against enormous waste by the Defence Department. He demanded details of expendi. j ture before voting millions more. There was not a single detail about how eighty, two millions had been spent. Was it fair that two Ministers should go Home to represent New Zealand when one would do i. asked Mr. Witty, who declared Parliament was sheltering itself from criticism in the deepest dugout. The cost of living was going up by leaps and bounds, and the session was going to be adjourned till October, simply to bar an election-For Parliament to be shut up till October, neglecting domestic affairs, neglecting inquiry into expenditure, neglecting re« turned, soldiers, was scandalous. He would sooner go into private life to-mor. row than keep in office Ministers who were afraid to face their constituents. The debate was adjourned at 11.25 p.m. "IMPROPER AND UNFAIR." (By Telegraph Reporter.) WELLINGTON, this day. When the House resumed at 11.30 thil morning, Mr. Brown -asked a question which provoked an indignant reply from the Premier. The member for Napier inquired if it was a fact that-last Jmbnth a member of Cabinet had expressed the opinion to Mr. Massey that the health of the Defence "Minister was such that he thought the Minister "was "unfit t» control the wounded soldiers' department. Mr. Massey declared that no sneli statement had been made to him, ailing the opinion that such innuendo* were most improper and unfair, ani should not be allowed to. go on the r> cords of tbe House. -