THE NEW TAXES

Dominion, Volume 10, Issue 3164, 16 August 1917, Page 5

THE NEW TAXES

» EXPLAINED BY FINANCE MINISTER EXAMPLES OF THEIR OPERATION REVENUE THE FIRST CONSIDERATION

Ihe Miuistor of Financo (Right Hon. Sir Joseph Ward) said in the House of .Representatives yesterday that ho hail promised to place boi'oro members information with regard to the operation of tho new land and income taxes. Ito had prepared eomo tables showing tho actual working of tho taxes in specific cases, and would place the papers on tho table for the information of tho House. A taxpayer who had an income of J.'5G,'Jt!S had paid .£25,590 in taxation in 191(j-17 (ordinary income tax .£7823, war tax .£2BIB, excess profits tax This year tho same taxpayer would pay X 20,992 (ordinary incomo tax JE323S), war tax .£12,682). In another case there had been no excess profits taxation, and tho figures were as follow:—lncome, ,£51,315; last year payment, ,69613 (ordinary income tax iEGS9G, special war tax .22717); this year, ,£19,985 (ordinary incomo tax ,£7758. war tax .812,227). Another taxpayer w r ith an incomo of i27,5il had paid .£9172 last year, including excess profits, and would,pay JEM 33 this year. A man who had. paid .ClBCt last year on an incomo of .£37,785 (without any excess profits tax), would pay i 11,838 this year. Tho figures wero useful, said tho Minister, as showing the tremondous inequalities that had arisen under last year's echomo of taxation with the excess profits tax. It was necessary to remove tho uncertainties that had arisen in connection with the system of last year. The new ■proposals would not create uncertainty. Tliey operated in a clear and definite fashion.

The Income Tax. Another tablo ho had prepared for the information of tho House compared the ordinary income tax,' Jilus tho special war 'tax of last year, with the income tax, plus tho war' tax proposed this year on various incomes. Tho tablo was as follows:— Present Proposed rates: rales: Assessable ■ Tax Tax income. payable. payable. .£ £ s. d. .£ s. d. SOO It 13 4 T- 30 (I $00 31 5 0 42 3 !) ] 000 40 11 8 70 (! 3 21!) 11 S 21!) 9 7 3,000 3SG 5 « Mi IK :l 4.000 SSO 13 10 920 fi 3 7 000 1,228 8 8 2,557 10 0 10 000 1,778 G 8 3.682 10 0 on 000 3,61113 4, 7,132 10 0 50000 9,111 13 * 18,682 10 0 100)000 18,278 6 8 37,432 10 0 A comparison between the taxation for the two years was not easily made. Under tho old system tho jumps were largo and tho gaps were wide. J hero wore 110 gaps in the new scheme, niid (lie collection of revenue, therefore, would bo closer.

Assessments Compared. A further table presented by the Minister compared actual assessment for laiul tax anil income tax at tho present rates and tho proposed rates'. In the case of a property of .£102,259 unimproved value, producing an income of .£66,392, the total W?6'c at tho present rates would bo ,£13,??!, and at tho proposed rates <£"d'.!ISO. There were substantial increases in other cases included in tho table, but small decreases in tho cases of certain small properties that had borno excess profits tax during the. cuv- • tent year. A property of <£58,9-16 unimproved value, with <£16,406 inwmio (including excess profits), and with mortgages amounting to .£50,074, paid J24598 this year, and would pay <£6051 under the proposed system. The taxation 011 a property of '.£2500 unimproved value, with .£1039 income (including excess profits) and a mortgage of ,£BOO, w» .£134 tlfis year, and would be .£79 under the new scheme.

Revenue Essential. "7ho purpose of the scheme of taxation Is to provide money for war purposes," said the Minister. _ "E"orybofly in this country ought to give something towards the cost of the war. Members of the House should remember, in discussing tho Government's proposals, that this is war taxation designed to produce revenue for war purposes. There are not manv people escaping under tho proposals. * tast year somo peoiflo did escape, and I Tegret very much that this was so. Cases occurred that had net been foreseen by anybody. In some instances whole groups of taxpayers escaped under tho excess profits tax. The avenues of escape are being closed by these proposals, "We all want to protect tfio small farmers, but, as I have said alreadv, this is war taxation, and everybody has eot to pay. Tho largo taxpayers, on whom the Government depends always for the larger* part of tho revenue, nro being charged very heavily already. I can say of my own knowledge that somo large taxpayers in this country aro going to pay over 15s. in the pound, in combined land and income tax. I know of cases ■of that kind. "We have not got in this country the. multi-millionaires that are found in some other countries, and we do not want them. Our financial requirements are, in proportion to our population, .lighter than those of the United Kingdom. But our obligations are mounting over the ,£2,005,000.000 limit, in proportion to our population, and tho Government has to face that fact. We must raise tho money required for war purposes.

The Farmers' Burdens. "Wo are being told that wo;ought to relievo the small farmers and the small taxpayers generally. If we did that, then the people who are now paying ss. ill the pound an their incomes would Jiavo to pay 10s., and tho people who ure paying 15s. iu tho pound would have to hand over their whole income. Tho effect of ..a policy. of 'that kind would be to close tho ordiuary channels of revenue against us, since the peoplo ivho paid the taxation now would not have the means to pay taxation and so help to keep tho country going after tho war. We cannot deal in any sentimental fashion with particular classes of the community. We requiro huge sums of money, and we must get them in order to carry on our share of t'ho war. That is tho essential l'act to be kept iu view all the time. Parties and Politics. "I know that some members are anxious that tho Ooverument should give consideration to what I may call party views and party politics at tho prcent time, especially in connection with the laud. That, ill my opinion, is entirely wrong. VVo have got to get through this -war, and provide tho necessary financo for it. When, the war is over wo can turn to questions of policy and party difference. But our present duty is to make perfectly 6uro that wo can get the revenue wo want to provide for ojiy eventuality tha* may arise through a snortage of shipping or through circums'Ninces in this country beyond our control. We must havo strong" finance for present needs and iu order to give us a secure position when tho war is over."

Mr. Pftyno (Grey Lynn)'. Is that tbo reason for the reserves in .London?' Sir Joseph Ward: That is partly the reason. Wo are going through a new experience in this country. I indicated the other day that w'o would lmvo over .£10,000,000 from tho Savings Bank used for war payments boforo tho end of tho prasent financial year. Probably thi-ru will bo moi'o than that. We must be strong enough hero and in London to meet tho applications ol' all who want their nionoy after tho war for industrial .or other purposes. Many of tho depositors will wish to withdraw their money after the war, and that is why a strong reserve is necessary in London. It in our dutv (o maintain it. Mr. T. ,M. Wilford (Hull)-. Tins illicit on war loans must lie paid mil. i>r 1 a.in lion. Sir Joseph Ward: The iiilurcal uu

war loans is being: paid out of taxation, and it must be so paid. It' tho war ends within a reasonable period this country will bo as well oil' as any country in tho world. Wo have a highly productivo country behind lis. But wo cannot afford to handle party issues at tho present time, I believo that tho small farmers are just as anxious as tho large farmers io do their share, liven if they wero not, it would be incumbent on them to do their part, and it is tho duty c f every niombcr who represents a farming district to explain to hi« constituents the .necessities of tho situation. It would be necessary to keep heavy taxation, on tho big men for many years to coine." Mr. W. Nosworthv (Ashburton): They did not pay as much as tliey should last year or tlio year before. Sir Joseph Ward: Tliey are being called upon in nomo cases to pay five or six times as much this year as they paid last year. High luxation is inevitable/'

Taxes Discussed. Mr. J. T. M. Hornsby (Wairarapr) said lie believed that tho existence of a National Cabinet at tho head of an almost undivided House provided an opportunity for dealing with great national questions. Ho deprecated l'ho suggestion of the i'iuanco Minister that members should not raiso these questions merely becauso sonio of them had been given party aspects. Unless the House could deal freely with, tho proposals of r.Uo Government then members might as well go home. Ho intended to insist upon tho rights of tlio peoplo as against the land monopolists. Sir John Findlay (Hawke's Bay) saicl that a certain financial institution proposed to mako advances to its officers in order that they might purchase War Loan debentures, repayment to bo mado bv deductions from their wages. But it had found that this arrangement would bo illegal under the Truck Act. Sir Joseph AVard said the Bill would provide for a system of this kind _ for State employees, and would givo the rig lit to private firms to make advances. Mr. C. A. Wilkinson (Egmont) urged the Government to allow the payer of land tax to deduct tho tax as expenditure before assessing tho income tax. He believed tho Government could 51} o increased protection to email men without damaging the finances of the country. Ho was aware that private members had very little power in the House, and that tliey conld not do more than mako suggestions to the Government.

Time for Consideration. Mr. 'I'. M. Wilford (Ilutt) said that the important Bills of the session. so tar had all been put through as emergency measures in very short time, 'this process had limited discussion. t He hoped the' Government was not going to continuo this process. Tho members. ought to have full opportunity of considering and discussing tho taxation proposals. Mr. J. l'ayne (Grey Lynn) said that the Labour members had been blamed for delaying tho House for two hours by discussing tho .£21,000,000 Loan Bill. Tlio Government seemed to think that members should not want to discuss a little matter of that kind. Mortgage Exemption. Tho Hon. D. Buildo (Kaiapoi) asked for tho exemption of tho morlgago in tho case of tho small landholder. Ho did not see qui to how the diflerentiation between.small men and big men could bo made. ~ .. Sil- Joseph Ward: When tho 'taxation Bill comes down, tliero will bo found a proposal to meet that suggestion in a. reasonable way.

Minister's Reply. Sir Joseph Ward said he had not suggested that any member of tho House should refrain from criticism. What ho had said was that the Government, created purely for war purposes, could not luvndlo great party issues. He believed those issues must wait until the war had ended. There had never been in New Zealand taxation calling upon the large landowner to pay as much as was asked this year. The largo landowners were going to pay more than ever before under the combined land and income tax. Members must not imagine that in normal times it would be possible to keep such a burden of taxation 011 tho people, ihe Dominion would havo to go back to normal taxation in normal times, and tho House would bo ablo then to consider the imposition of graduated taxation. But to add graduated taxation to war taxation was out of the question. The House had had two davs for the consideration of the Loan Bill. The surplus in hand would bo invested as a reserve unless it was required for war purposes. But tlio Government must have a safe finance. The Allies were goiug to win, and they would gain a complete win. But nobody could say just when the war would end, and in the meantime tlio Government must maintain a sound position. He bad taken authority to borrow .£2-1,000,000. It was proposed to raise ,£22,000,000 in two loans, and if that amount did not provo sufficient for the year's requirements it might bo advisable to use t C2,000,000 of the surplus.

A Strong Position. "We may require to have somo millions of money in hand," added tho Minister of Finance. "We havo estimated our revemio to produco a surplus, but somo factors may arise to disturb tho estimate. If there is a shrinkage of shipping of 25 per cent, during this year, tho estimated surplus may not bo realised. If wo aro not able to have it through any oausd, then we will still be justified in Laving arranged for it. Last year's surplus was based upon safety. This year's surplus is also based upon safety. If wo go through the year successfully we will havo a very large surplus. Our business at the present moment is to go for complete safety. If wo have a large surplus at the end" of the year, all the better for the wliolo community."

Vol.. Tin' l.ix ill I In' "bovo i' s im",tii i'll l-v ii" additional M I"' 1 ' mil ' SUK'X-lnX.

1 LAND TAX THE TABLE 01? RATES. Taxable amount. IJ ;ile. Tax. X (I. £ s. <1. 1,000 1 -1 3 4 2,000 1 1-32 S 11 10 . 3,000 1 2-32 13 5 7 -1,000 13-32 IS •! 7 0,000 1 4-32 23 8 9 0,000 1 5-32 23 18 1 7,000 10-32 34 12 8 8,000 1 7-32 40 12 (i 'J.OOO 1 8-32 40 17 0 10,000 1 0-32 53 7 8 11,000 1 10-32 CO 3 1 12,000 1 11-32 07 3 9 13,000 1 12-32 74 9 7 14,000 1 13-32 82 0 7 13,000 1 14-32 89 10 10 10,000 110-32 97 18 4 17,000 1 10-32 108 5 0 IS,000 117-32 114 10 10 19,000 1 1S-32 123 13 11 "0 000 1 10-20 132 10 3 21,000 1 20-32 142 3 9 22,000 1 21-32 151 IB 5 23 000 • 122-32 161 14 4 24,000 1 23-32 171 17 (i 25,000 1 24-32 182 5 10 20,000 1 25-32 192 19 4 27,000 1 2C-32 203 IS 1 28,000 1 27-32 215 2 1 29,000 1 28-32 220 11 3 :! 0 000 1 29-32 238 5 7 111 000 1 30-32 250 1 2 32 000 1 31-32 202 10 0 •jj'floo 2 275 0 0 31.000 2 1-32 2S7 15 2 15 1100 2 2-32 3«0 15 7 ,16 W 2 3-32 314 I 3 37,000 24-32 327 12 I 38 000 2 5-32 311 S 1 39 000 2 0-32 355 9 I 40 000 2 7-32 369 15 10 50 000 2 17-32 527 0 10 GO'OOO 2 27-32. IS 9 70 000 3 5-32 920 11 5 80 000 315-32 1150 5 0 Qfl <100 it 25-32 1417 4 loolooo 1 3-32 1705 14 7 110,000 413-32 -01; 10 120,000 4 23-32 &loJ / ij HO 000 5J-.J2 2/2o •» - 110*000 5 11-32 3117 3 9 Ki 5 21-32 3535 3 1 100 000 5 31-32 3079 3 4 6 0-32 4449 4 4 ISO,000 01 - - <> '< 100,000 fi'iOvli p 1 193,000 7 •' 1