INCOME TAX

Press, Volume LXXXI, Issue 24740, 4 December 1945, Page 4

INCOME TAX

AMENDING BILL * PASSED

FUTURE TAXATION IN LATER MEASURE

(P.A.) WELLINGTON. December 3. Provisions concerning lut'ure taxa-i tion were not in the Land and Income Tax Amendment Bill, so the House must wait lor a later bill, said the Minister of Finance (the Hon. W. Nash), replying to the second reading debate on tne Dill in the House of Representatives this evening. The Opposition took advantage of discussion , on- the bill, which was -passed, to urge a reduction of taxation. Although with the introduction of the universal family benefit income tax exemptions for children would generally cease, the exemption of £SO could still be claimed for any child for whom the family benefit was not payable, said Mr. Nash, speaking to the second reading of the bill. The Leader of the Opposition (Mr S. G. Holland) asked whether in such cases the exemption could be claimed as of right. Mr Nash replied that it would have to be established that the child was dependent. There were some children tl7 to 18 years old to-day earning £6 or £7 a week. However, the commissioner had power to treat any child for whom a benefit was not being paid as a. dependent child. That was actually an extension of the existing law, which allowed exemption only for children up to 18 years. The amendment would mean that a child even of 21 or 22 could be classified as dependent if he or she was not earning an income, and that provision was better than anything hitherto. * Mr Nash said the commissioner would have similar power concerning relatives for whom a taxpayer claimed exemption. The commissioner would determine whether the relative was in any way dependent. If the relative had sufficient income of his or her own, no deduction would be made from the taxpayer’s income for that relative. “Fantastic” Taxation Rates Mr W. J. Poison (Opposition, Stratford) said the Minister had referred earlier to the bill as one that would provide relief for those, entitled to it within the national interest. Actually, apart from patching over one or two sores, and making small adjustments which were just and reasonable, and long overdue, the bill did not deal with any of the important matters affecting the battered, long suffering ; taxpayers of New Zealand who were paying the most fantastic rates of taxation of any country in the world. We were now entailing an era of peace, in which it was incumbent upon us to get down to a basis enabling us to compete with the rest of the world, instead of remaining in a fool’s paradise on the artificial basis to which we had become accustomed in the last few years. Yet the Minister of Finance offered no hope of relief. He took up the self-satisfied attitude of a wizard of finance who knew more about how to spend other people’s money than they themselves. He believed he was right, and was depriving the people of the opportunity to carry on their businesses as they might do in the country’s interests. It was an absurd idea that the Minister of Finance knew better than the taxpayers how their businesses should be run. The bill offered taxpayers no relief. Mr Poison said one would imagine, after listening to the Minister of Finance, that peace would be more costly than war. “It looks to me as if it is going to be, as a result of the increase in taxation which appears to be coming,” said Mr Poison, The tax bill had been increased by £9,000,000 this session, and the taxpayer would never get his head above water if the present tax system continued. Mr Poison said a complete tax revision would be in the interests of the country, so that people could obtain relief from war-time taxation. A taxpayer with dependent children paid twice the amount of tax to-day that he did befo're the war. He said it was clear that exploitation end oppression were the principles of the Government’s taxation policy, and- that it was intended to exploit private enterprise until it was exterminated. He considered that if this policy was continued there would be serious repercussions. Reductions in Britain Mr W. Sullivan (Opposition, Bay of Plenty) ssid the United Kingdom had greater problems to deal with than New Zealand, yet had reduced taxation. The reductions in the bill were just "chicken feed” in comparison with the total yield of taxation. Taxation on industry was so heavy that businessmen were saying “it’s just not worth while” to expand a business or industry, in view of the Government’s policy. Mr Sullivan said the Minister of Finance was giving no consideration to industrial expansion, or implementing the policy of full employment. Mr J. Thorn (Government, Thames) said liabilities arising from the war would have to be met, and therefore taxation would have to remain. Although company taxation had progressively increased since 1935, so had the residue left to companies. He said that in 1935 income remaining to companies after taxation had been paid was £9,113,000, and in 1944 the figure was £14,800,000. Those figures could not be said to indicate a policy,ruinous or calamitous to industry. The Government had been twitted about not reducing taxation because the United Kingdom Government was doing so. The fact-was that the United Kingdom was “going slow” in making any reductions because of the inflationary effect sudden widespread reductions would have. Mr G. H. Mackley (Opposition, Masterton) considered that the Government’s policy of trying to maintain expenditure during the peace period on the same basis as during the war was out of touch with realities, but hsd been forced on the Government by its policy of onward and upward with the brakes off. Spending had far outrun New Zealand’s normal income, and it was essential therefore that the Government should carry on its war-time spending policy, which no prudent person could justify. If expenditure were to be maintained as during the war, then the public would have to accept the same conditions. That meant the community must pay, individually and collectively, on a war-time basis. Fublic’s Great Concern Mr Mackley said the public’s greatest concern to-day was for a reduction in taxation, and there was nothing in the bill to indicate that was coming. He hoped the Minister would clarify the position. The Minister owed it to the taxpayers to tell them what he proposed >to do to effect a reduction in taxation. The Hon. A. Hamilton (Opposition, Wallace) said it was to be regretted that such an important bill came down so late in the’ session. Was there no thought of reducing the sales tax? Mr Hamilton likened the bill to “crumbs from the taxgatherer’s table,” and hoped it would' indicate that there might be more taxation relief to come. Referring to the statement by Mr Thorn that the income of companies had increased in spite of laxation, he asked if that increased income had kept pace with the depreciated value of money. If it had not. then ha doubted if there was any advantage at all. Mr W. S. Goosman (Opposition, Waikato) considered the Government was wanting in experience and knowledge, and would not recognise disaster until it came upon the country. He criticised the recent decision to repay’ overseas loans, and said it would have the effect of denying this country gobds it would require later on. The Government had done its best to grind down industry which,’ however, had gone ahead in spite of the taxation handicap. Money had to go back into industry, he said, and if it did not there would be a serious production decline. There was no other country in a better position than New Zealand to reduce taxation. Mr Nash, replying to the debate, said the special depreciation allowance of 10 per cent, on buildings and plant was not for a calendar year, but from the time in the first year- when the farm came into use. Mr Nash gave details of excess profits tax derived for the year ended March 31, 1942, £374,000, and subse-