REGRADED TAX.

Auckland Star, Volume LVIII, Issue 211, 7 September 1927, Page 17

REGRADED TAX.

"PATIENCE" SAYS MINISTER.

MAT BE CUSTOMS REDUCTIONS

AND CONCESSIONS NEXT YEAR.

A SCEPTICAL HOUSE. (By Telegrapn. — Parliamentary Reporter.) WELLINGTON, Tuesday. The Minister of Finance, the Hon. W. D. Stewart, in moving the second reading of the Land and Income Tax Amendment Bill, -which changes the method of graduation in the middle ranges of the income tax, stated in the House to-night that, although the proposals had been severely, criticised, he found that no individual affected by them, who had had the matter explained, had failed to admit their justice, especially when they discovered that they were bearing no share of the increased burden due to the war debt, and pensions. As for the suggestion that the alterations were made to secure more revenue, the answer was that, in order to obtain ap equitable system, the proper course was to fix the maximum and minimum, and to grade each class according to the proper amount which each taxpayer should pay. This was the instruction given to the taxing officers, who applied their lifelong knowledge, and patiently made calculations to secure the most equitable grading. That it produced more revenue was beside the point. The higher the income the greater, it was presumed, could be the burden of taxation it could bear. The actual increase was estimated at between £150.000 and £200,000, but he was doubtful if this would be obtained unless incomes maintained themselves at anything like last year's position. He asked members to suspend judgment until the revision of Customs taxation took place. In considering remissions under thie head it must be mentioned that it was customary to allow some period for stocks to be cleared before reductions came into force. Therefore reductions would not operate until next year. Farmers «Teed Relief. Mr. J. W. Forbes: Any additional duties will be imposed immediately? " Mr. Stewart: Yes, that is necessary. If we can get an adjustment of the tariff we will be in a position to review various classes of taxpayers, and see if any remissions are possible to those who bear the most burden. I feel. disposed to believe that those most urgently needing relief are farmers, but one of the difficulties of trying to afford any relief through the land tax is that already exemptions through mortgages exclude so many that it leave's a very narrow field.

The Minister suggested that the area of taxation of farmers was further restricted owing to local taxation, for the Government and local bodies could not continue to reap in the same field. He believed that farmers, except those in the higher range of income, preferred to pay income tax. Finally, the Minister suggested that if his critics had patience to wait until the Government had worked to a point at which it was aiming, they would realise that the result would be satisfactory to the community.

Unfulfilled Promises. Leader of the Opposition; Mr. H E. Holland, said that in spite of the speech of the Minister, he could not see the necessity for introducing such a bill. In 1925 the Government had promised to reduce taxation, and even in the hist Budget there was no suggestion of increasing taxation, though the Government must have been aware of the increase in the national debt and the consequent necessity for more revenue to meet the naturally increased expenditure. In the face of this the Minister pretended that the only need for this change was to put taxation on a more equitable basis. He had at the same time suggested that next year there might be a reduction in taxation, but next year would be election year, and the whole thing looked like election tactics.

Taxpayers with small taxable'balances were being more heavily taxed than those with large balances. The Minister bad admitted he was going to get more revenue out of his proposals, but he would not admit that this was his purpose, nor would he say definitely that he was going to remit customs duties to the extent of £150,000. If the Minister wanted this extra revenue, Mr, Holland said he would suggest it could be obtained from a source which at present was untaxed. He reviewed previous remissions of taxation, which he claimed .went to the large landowners, who should now be asked to pay. He suggested* to' the Minister he should leave taxation as it was at present. Further, he suggested that any increase in taxation at the present time was a distinct breach of faith by the Reform party, since at the last election it promised to reduce taxation. No Specific Promise. The Minister of Lands, Hon. A. D. McLeod, denied the Reform party had made any specific promise at. the last election to reduce taxation. What it had promised to do was to look carefully into the incidence of taxation. That was, what it was doing now, and it etUl had another year to complete it.. He proceeded fo argue that the Opposition, both Labour and Liberal, had in previous sessions endeavoured to penalise small farmers with assessable incomes of £700. He then proceeded to discuss company taxation, contending the present basis was preferable to an individual basis. If company taxation was abolished, then it was evident taxation on smaller incomes must be greatly increased; otherwise the country would lose- an enormous amount of revenue. Cause for Resentment. The Leader of the Nationalist party, Mr. -GL W. Forbes, said there was no doubt public resentment against these increases in taxation in the country arose from the fact that people were led to believe there was to be a reduction in taxation. The Minister had quoted from his party manifesto, and he (Mr. Forbes) admitted it was difficult to pin the Government down to anything definite, but the general impression was created that there was to be a reduction in taxation. Instead there'was an increase. At present an increase in taxation was most inadvisable, because every encouragement should be given to those who were having a hard struggle. The opposition to these proposals in the 'country had been a surprise to the Government, which was always saying we were getting round the corner. We would never get round the corner while Ministers were busy extending the corner by increasing taxation. We should shorten the corner by reducing taxation. x .

Moving the Wrong Way. Mr. M. J. Savage (Auckland West) said he never could understand why an income earned in a town should pay tax and incomes derived from the direct use of land should not pay tax. Many people were now paying both land and income tax, and in view of this it was difficult to understand the point of view of the Minister in charge of the bill. The farmer paid, as all other citizens paid, through the Customs, but he paid very little directly on his land, and no doubt wished he had an income sufficiently large to warrant him paying income tax. The bill was moving in the wrong direction; gradations were moving in the wrong way, and there was no guarantee that the legal exemption of £300 existing to-day would not be £250 to-morrow. This was a case in which if the taxpayers did not hang together they would hang separately. Mr. T. K. Sidey (Dunedin South) said the two taxation bills had fallen upon the country like a bombshelL The Minister had shown a-handsome surplus and under the circumstances an increase in taxation was the last thing the country expected. Reduction Next Tear. Sir Joseph Ward (Invercargill) said there was no valid ground for postponing a reduction of taxation until next year. High taxation was only justified by war, and there were many people in this country who could not go on paying the maximum of taxation indefinitely. Replying at 12.45 a.m. the Minister of Finance said any attempt to reduce, taxation would only mean greater anomalies than at present existed. Even as amended the provisions for exemption were still more liberal than those accorded in the Australian States. The second reading of the bill was carried on the voices. The Minister suggested that the Committee stage should be taken forthwith. Mr. Savage objected to the bill going any further at that stage. It was not a matter which should be rushed through in five minutes, he said. In view of this objection the Prime Minister had no option but to move the adjournment of the House, the Commit- . tee stage being set down for next sitting day.