CUSTOMS BILL.

Press, Volume LXIX, Issue 20790, 25 February 1933, Page 16

CUSTOMS BILL.

MOTOR SPIRITS TAX. EXEMPTIONS PROPOSED. PISHING LAUNCHES AND AIRCRAFT. [From Ock ParlmJuentart Reporter.] WELLINGTON, February 24. The only modifications of the recent Customs resolutions contained in the Customs Amendment Bill introduced into the House of Representatives tonight, were provisions exempting from the additional tax petrol used in the fishing industry and in aviation. In moving the second reading of the Bill, the Rt. Hon. J. G. Coates said it would give effect to the resolutions agreed to on February 8, imposing additional taxation on sugar, tobacco, motor spirits, and gold. It wa3 anticipated that the proposals would produce about £1,040,000 additional revenue in a full year. The extra taxation on motor spirits had only been imposed because of the necessity for revenue. An excise duty would be imposed on sugar manufactured in New Zealand. Provision was made saving the agreement with Australia, and the Government was empowered to apply the duties to the Cook Island if this course were deemed necessary.

Cigarettes and Tobacco. Mr Coates said he could not agree to impose an additional duty of 8d per lb on imported cigarette tobacco leaf sought by a deputation of Nelson tobacco growers last week. He did not favour the imposition of new Customs and excise duties on cut and plug pipe tobacco, but extra revenue was essential, and it was not thought that the position would be made any better by raising the duties on imported cigarette leaf. Customs figures showed that the consumption of cigarettes had declined with each increase in duty during recent years, and it was felt that any additional impost would only have the effect of further cutting down revenue. In 1930 the duty on imported cigarettes was fixed at approximately 13s 6d per lb, while that on cut tobacco was increased in the following year from 4s 2d to 6s 2d per lb. This meant that the duty on imported cigarettes was more than double that on imported tobacco. The position was similar in regard to the excise duties on the • two classes of: goods, and the effect had been to reduce the "consumption of cigarettes as compared with that of pipe tobacco. In 1920 manufactured tobacco entered for duty amounted to 3,162,0001b, and the volume of cigarettes during the same period was 1,832,0001b, making a total of 4,994,0001b. In 1932 manufactured tobacco entered for duty totalled 3,445,0001b and cigarettes 1,015,0001b, or a total of 4,460,0001b. This meant that while in 1029 cigarettes repfrfe-. sented about 36 per cent, of the tasai quantity of tobacco and cigarettes cleared' in Now Zealand, in 1932 this percentage had dropped to 23. It was therefore obvious that if it were desired to obtain extra revenue an endeavour had to be made to decrease the disparity between the duties on cigarettes and tobacco. Mr Coates said he felt that if the new duty .were likely to destroy the tobacco growing industry it would not bo worth while imposing it in spite of the urgent need for revenue. Several members, and notably Mr K. J. Holyoake (C., Motueka) had urged that an extra 8d per lb should be placed on imported cigarette leaf, but he could not see his way clear to grant this request, as it was clear from the figures quoted that any increase, no matter how small, in the cigarette duty would result in a loss of revenue. The relative position of the Customs and excise duties on tobacco were .not altered by the new proposals, and the existing protection for the grower was maintained.: He doubted very much whether the alteration in the tariff proposed would have the effect some growers seemed to fear. It had been said that there should be no need to import any cigarette tobacco, and ho could not understand why the manufacturers did not use more local leaf.

Motot Spirit Tax. Mr Coates went on to say that motor spirit used by commercial fishing vessels and aircraft would be exempted, from the additional petrol tax of 3d a gallon. Representations had been made asking that petrol used for certain purposes should bo exempt from the in-, crease 1 in duty. After going into the matter carefully and considering the effect of the increased duty on the incomes of fishermen, it had been decided to make provision for a refund: of the duty to those engaged-in this industry in respect of the petrol used iu their vessels. It was not the desire of the Government to retard the development of aviation in the Dominion, and bearing in mind the special nature of the petr.ol used for flying machines, it 1 had also been decided to provide for a refund of the additional dr*~ on such petrol. Mr Coates added that the Highways Fund would receive the same amount from the petrol tax this year as it did last year. The Government again intended to take £500,000 from the petrol tax to assist the Consolidated Fund, and it would also apply the proceeds of the latest increase in duty to the Consolidated Fund. Provision for Befuiid. In making provision for refunds tho Bill prescribes \hat persons engaged exclusively in the fishing industry or using fuel for aircraft should apply for a rebate in respect of any spirit purchased. after February 8. The application shall be supported by such, declarations . or other . documentary evidence as may be required. Any person is liable to a fine on summary conviction of £SO or three months' imprisonment who makes any claim which is false in any material particular. Applications for refunds shall be made i" respect of the periods ending respectively on the last day of March, June, September, and December in any year. Refunds must be applied for within one month after the end of any period, although in special cases applications may be made and accepted before the end of the period. . Export Duty on Gold. In deciding to impose an export duty of 128 6d an ounce on all gold of 20 carats, said Mr,Coates, tile Government came to the conclusion that in view of the fact that this commodity was worth comparatively so much more than other goods at the present time, it should in the circumstances contribute

a greater amount than in the past to the revenue of the State. Since the resolutions had been passed on February 8 it had been decided to exempt heirlooms and similar plate from the increased duty. Were it not for the present circumstances the Government would not have had recourse to this form of taxation. • ■■■ _ Mr A. M. Samuels (C., Thames): Suppose the price of gold falls? Mr Coates said provision was made in the Bill to meet this contingency. If sterling varied "in value so as to bring about a change in the price of export able gold, there was power for an aaiustment to be made in the duty. ■ Gold is defined in the Bill for the purposes of taxation as gold m its natural state. Any substance containing gold, gold dust, and all other gold, whether wrought of unwrought, except coined gold issued .from the mint at London or from any brancn thereof, coined gold of any foreign %tate, and articles of jewellery or ornament worn without intent to defraud the revenue by any person leaving New Zealand. The Bill stipulates that old gold, jewellery, and plate made outside the Dominion, whether in -that form or melted down, shall pay the full export duty whether exported from the North Island or the South Island. Dealing with, the export duty of 6d an ounce or part of an ounce on uncoined gold, the Bill provides for the levy of proportional- duty on gold of a less degree of fineness than 20 carats. In the event of a reduction in the value of gold in New Zealand, the Governor-General may, by Order-in-Council, reduce the rate of duty payable. Power is also given to exempt from duty by Order-in-Council any articles of plate, jewellery, or ornament exported from New Zealand if they would be exempt from Customs duty on importation into the' Dominion.

Measure Criticised. Mr M. J. Savage (Lab., Auckland West) said the Government's policy was adding to the burdens of the people and to those with smaller incomes in particular. There had been talk of British preference for years, but the Government's policy did not lean m that direction. Increased taxation was decreasing imports from Great Britain, with a result that Great Britain could not afford to buy New Zealand produce. Revenue was falling, but that could only be expected when the Government was following a policy of breaking down the incomes of the people. If they continued long enough they would come to the time when there would be nothing, left. No matter how. revenue was raised it had to come from the incomes of the people, and tho fact that the Government was getting most of its income by means of indirect .taxation blinded tlie taxpayer to the actual amount he was paying. The Minister for Financo had said that cigarette tobacco could not bear another 8d per lb duty, but lie had imposed another 8d per lb upon New Zealand grown tobacco. Did he think that local people were the easiest to get at?.. The increased petrol tax would be an additional burden that could, not be justified. It had been imposed in the. first place for the purpose of building highways, and then the Government had used part of it for ordinary Tevenuo purposes. Now the increase was frankly meant for raising ordinary revenue, and it did not appear likely that any member there would live to see it brought back to its proper function again. What was the Government going to do about making the oil companies bear some of the burden? lie asked. They could stiroly shoulder some of it, and if they wero compelled to do so those who were trying to make a living out of motor transport would have a better chance tj> carry on. It was useless talking t& the Government, he amid the only thing, Labour members could. do was to record the most emphatic protest they could make. The only clause in the Bill that, they would not say no to was one exempting fishermen from payment of tho tax. ;

Mr Ansell's Belief. Mr A. E. Ansoll (C., Chalmers) said' that ho realised the Government must have revenue but in Ms opinion it had gone the wrong way about getting it when it imposed extra taxation on petrol. He was certain that the Minister's estimate would not bo realised because' the consumption of petrol had already dropped to a considerable extent .and the additional taxation would accelerate the decrease. Ho believed that jt was possible that the decrease in consumption would be so great that the Government would not obtain any extra revenue from the tax and, in addition, there would bo a loss in the tyre tax through cars going out of commission. The decrease in Customs duty through fewer cars being imported, and the decrease in the tax on sales would have; a. serious effect on the • unemployment situation. • Mr H. Atmore (Ind., Nelson): Will it be serious enough to affect the party, vote? Mr Ansell: The hon. gentleman will get his answer when thg bells ring. Large parts of the country were totally dependent .on motor transport, Mr Ansell added, and in taxing petrol the Government had taxed the life blood of the ■ country. He suggested that the Government should reconsider its decision, and urged a tion in regard to the profits made by the oil companies. Mr J. McCombs (Lab., Lyttelton) said that the whole of the extra taxation proposed in the Bill had been made necessary by the gap in the country's finances caused by the increase in the. exchange rate. Mr Ansell was objecting to the tax on behalf of his motorist friends, but he had previously, voted for the increased exchange and sales tax, both of which had increased the price of petrol. Mr Samuel said that the taxation from petrol should be definitely ear? marked for derating purposes, but instead of that lieing done the farmer was still required to pay the same rates while he was being asked to bear extra taxation on his transport. If the tax had to be imposed it should be borne by the big oil companies, who were making millions in profits, because they continued to hand all taxation on to motorists. Mr F. Langstone (Lab., W.aimarino) said the increased taxation, which would mean an extra cost of-from £.lO to £ls a year to every relief worker, had been made necessary by the Government's action in increasing the exchange rate. If the exchange had been left alone the deficit according to the Government's own figures, would have been kept down to £1,310,000. (Left sitting.) DECISION WELCOMED. AEKO CLUBS AND FISHING INDUSTRY. The Government's decision to exempt from the tax of 3d a gallon-all petrol used in aviation and by the fishing, industry is welcomed and appreciated by both the interests affected. : Mr P. R. Climie, secretary of the " Canterbury Aero Club, said last evening that one or two aero clubs had made representations to the New Zealand Aero Club in respect of the new petrol tax, and he took it that representations had also" been made to the Government.

None of the clubs, however, had thought there was much chance of a rebate. "It is going to help the aero clubs very greatly, for every club in Zealand is just struggling along at the present time," said Mr Chmie. As their work is largely of a, national character, I think the " reb&te is. only fair. The clubs win be jubilant, for they use a'very large quantity of petrol, • ana this'means a lot-to-them. Mr J. C. Mercer, instructor, to tnc Canterbury Aero Club, said it was tainly a big thing for the club, which used from 1200 to 1400 gallons of petrol a quarter. Giving the view of the fishing, industry, Mr E. J. Newman, of . Messrs , P. Feron and Son, said the Governments decision meant a great deal to fishermen, deputations of whom from-various parts of the Dominion had gone to-Wel-lington to ask for exemption from the petrol tax. , "A good many small launches are petrol-driven,'' said 'Mr * Newman. '' They have to go a long way to the grounds, and they use a lot of petrol. The tax, combined with the present low pri'ces, would »have pushed some of the fishermen out of the industry altogether, and the exemption, from the tax represents just the difference between life and death to them." Mr Newman said that in some ports practically all the fishing boats were petrol-driven, while in others the boats were becoming equipped with crude-oil engines. At Lyttelton the boats were all petrol driven, with the exception of three or four.

THE PETROL TAX. OIL COMPANIES ASKED TO BEAR SHARE. GOVERNMENT CONDUCTING ' negotiations. [From Our Parliamentary Reforteb.] WELLINGTON, February 24. During the last few days the Government has been conducting negotiationrf with the oil companies operating in New Zealand in a hope of inducing them to bear Id of the additional tax of 3d, which has been imposed on motor spirit. If the negotiations are successful the retail price of petrol will be increased by: only® 2d on account of the tax. There is reason to believe that if the companies are not prepared to carry a full penny of the tax the Government may meet them by remitting a small portion itself. It was stated in the lobbies to-night that art announcement to this effect may be made during the Committee stages of the Customs Acts Amendment Bill which was introduced into the House to-night. : n „ m Representations made since toms resolutions wero introduced nave, it ip understood, impressed upon members of the Cabinet that the additional taxation may'so diminish the returns that it will not nearly realise the estimate of £500,000 made by the Minister for Finance. During their speeches m the second reading debate on the Bill tonight several members urged the. Government to see if part of the tax could not be carried by the oil companies. Mr A. E. Ansell >{C., Chalmers) asked what the Minister for Finance intended to do rtyjarding tho operations of these companies in New Zealand. Two O® three; years ago, he Baid, a report hau been madoby a Select Committee, but after it had been tabled no further action - . "The Government should negotiate with the petrol companies and induce them to carry at . least a proportion ot the tax," saidMr Ansell. "During recent years the companies have absorbed a portion of the taxation and are cat titled to that credit, but ,1 consider there is still room for negotiation, and that they may be induced to accept a portion of the new liability." _ The Hon. A. 35* McLeod (Xnu., Waita* rapa) also argued that the benzine monopoly coiild bo made. to carry & great deal of the tax. He admitted, however, that .it was most difficult to exercise any control over < such a vast monopoly.