THE HOUSE

Dominion, Volume 10, Issue 3178, 31 August 1917, Page 7

THE HOUSE

, AMENDMENTS TO FINANCE Bill > SECOND READING DEBATE. The House of Representatives met at 2.30 p.m. . Amendments.'-to the Finance Bill were introduced by Vice-Regal Message. _Sr.R ; JOSEPH \VABD (Minister of ■I'inaiice) said that ' the amendment enabled the "directors of a' company, • notwithstanding, anything .to ■ the contrary in (ho articles of assoeiai°i n ' c '° a " lvas necessary to' enable tho company to . invest money.. in the "War. l".oan v There was no element of cor pulsion in- the-proposal, but'the directors, - :were given power to . invest money u they desired to do so without any person being able to proceed against them on account of their action. A similar provision was made with rer gard to publio bodies, which wero given power to put money into the U";u' Loan. Local.bodies were to.be permitted, lo borrow money for this, purpose. Sir Joseph Ward moved the second reading of tho ■ Finance Bill. He said that, he had already explained . the. BiH, and would reserve further remarks till tho closo of 'the debate. T'ib Cigarette Tax. Mr.' T. M.- WILPOBD (Hutt) said a great deal of authority was being left in the hands of tho Commissioner for Taxes, who would be required to interpret many . poiiits. . Mr. AVilford, proceeded to tell the Houses the purport of certain, of tho clauses of-the Bill. Ho expressed the keenest approval of . the new clause providing for. the elimination of_ the .£3OO exemption to persons re--ceiving large .incomes. The £300 exemption would- be reduced by * ,£1 for every .£1 by. which a man's, income exceeded .£6OO, which meant that (the exemption vanished.at ,£9OO. He thought the provision for compulsory investment m the Avar Loan was one.of the most ipgeniDiis he had over known, and he cordially congratulated the Government and the Minister upon tho work. ' He strongly approved of the schemes in the . Kill for- the encouragement of steal! investors to put money'into the War Loan. Ho was sorry the' Qovernment did not adopt his idea about cigarette and tobacco duties. Of the present tar nine twenty-fifths of the tax went to the Government, and , sixteen twenty-fifths went to the merchant and'shopkeeiper. People would not object to pay the ■higher price for. the cigarettes 'if tho .extra cost was going to the Government, bnt they did object to the present system by which most of the added cost tirent to the shopkeeper. His idea was 'that a penny stamp or some other penny ■duty stamp should bo affixed to every packet of cigarettes. The shopkeeper' was not . entitled to any profit on tho duty. If this scheme were adopted the shopkeepers would got the profit they got .before the tax was imposed; the public would get cigarettes at the present rate, 'and the Government would pet Bs. 4d. a thousand. , This, he believed, would be . worth. .£IOO,OOO ; to.-the--Government. He ■wished- that the Government could have imposed a duty on - films. Ho l ook no notice of what the film companies said about it: he had been lobbied on the subject, but) he still believed .tile Government could get revenue this way; Compulsory Loan Investment. The Hon. D. BUD3)O (Kaiapoi) said "that the taxation was to be -so heavy that most people would feel that tho country was at war.. Men would pay the. taxes out of a sense'of duty, but they would take little' "pleasure 111 the duty. - He thought it was matter for congratulation that the Government had | been able to retain the high exemption limit of .£3OO. He admitted candidly that the tax was not 60 heavy as he had expected, especially in the lower registers. He did not see good reason for ' stopping the gradations . at .£64(10. He thought the rates Could have gone on . increasing even to the" point of complete confiscation. Ho approved to the full of the proposals for compelling the people to invest in the loan: It would not be 'fair to allow people to hold liquid asBPts for better investment at the end of the war. He, thought, .however, that men and firms and. companies without liquid assets .might, be. under a. hardship if they lad to,borrow from a" bank'to invest. ' A

difference in regard to this compulsory investment, should be made betwoen companies consisting of a small number of rich shareholders and a company of a largo number of small holders. Mutual Life Associations. SIR JOHN PINDLAY (Ilawke's Bay) eaid ho would ask the Minister to modify bis proposals for the taxation of mutual life associations. He did not approve wholly of the proposals to compol peoplo to invest in the "War Loan. Thero would be cases in which peoplo with gonerous incomes but heavy responsibilities would. Buffer hardship. A. man who had a modest income and a large family whom lie was educating and starting in Ufa might not have saved any money. Ho would have to find a large smn for investment or suffer a heavy penalty. Ho thought also that the constitution of the. Appeal Board, and the final, determination of all appeals by the Commissioner, wero points that might be considered; Referring to his first point, lie said that e\orybody must bo interested in the stability of tho five mutual life offices established in New Zealand, and he feared that the taxation upon them would have serious results. Tho taxation was levied 011 their income from investments, and no deductions Were allowed on ac. count of losses which might at any time be very heavy—so heavy as to cut deeply into the reserve funds. Tho basis of taxation of the Government Life was different from that for the other mutual associations, and under the new scale ot taxes imp.Tsed by the present Bill the tax would bo burdensome rn the mutual associations., For instance, if this year the Government- demanded income tax at the rote of 7s. fid. in the pound from the Australian Mutual Provident Society it would mean that the society would have' to trench to the extent of .-Kjt.OOft on its' reserve fund—tho fund established to ensure payment of death claims. Ho suggested'that such taxation was _ inherently unsound. These associations wero not profit-making concerns. There were in the Australian Mutual Provident Society 78,71(S insurers, and tho average size of policy .was .£233, so that the effect of the tax "would bo to penalise heavily all these small people. Unimproved Value, Mr. E. M'CALLIJM (Wairau) supported; tho appeal of Sir John Kndlay that the Finance Minister should givo such relief to' mutual insurance associationsas would ensure the safety of their funds. He admitted that the Bill contained so fully tho proposals in tho Budget that 110. had. nothing much to say, but lie would like, to mention ono point. . It was in regard to valuation of land and un« improved value. -The exemptions or remissions on account of mortgage were so low that the poor man. desiring to buy a. large block of land would be heavily penalised. It "was a fact that men .with too small' capital took up too largo holdings, and this Bill would deal a stealthy blow at this very "undesirable form of speculation. His fear was for the man who had already put his money into such & venture. His chief complaint, however, was as to tho tendency of the Valuation Department to on raising the unimproved value of lands. The improvements wero becoming exhausted and were no longer obvious, and they were being reduced in valuation, and so the unimproved value was being allowed lo rise. He knew of , one farm, for instance, which had cost «£7 1 10s. per acre, on which over XiO an acre had been spent in improvements; He hoped that there would not bo too much severity about the compelling of men with embarrassed finances to invest in the loan. He hoped the Government would get rid of the wretched worts tax, and make the tax Gd. a gallon all round. There was an idea that the worts tax was imposed to encourage the drinking Of light beers, the kind of ales brewed in Auckland, 111 preference to heavier ales brewed in the South,lsland. He was glad the Government had increased the old-age pensions. The Taxing of Mortgage Interests. Mr. J. ANSTEY (Waitaki) said he was 'glad tho Government had at last introduced a Bill which represented thq first real attempt to call upon wealth to hear its share of the war. He did not think taxes, although formidable, were too heavy. He would have liked to see the beer duty raised a little higher, but the increase made would satisfy most members of the House. He would have preferred a higher increase in the tax on spirits in preference to the tax on tea. He approved of the cigarotto tax and the amusement tax. He was strongly opposed to the taxation of mortgages, which he regarded as entirely vicious in principle. It was a tax 011 industry and enterprise, -and in not a few cases would crush small producers out altogether. He would advise tho Minister to reimpose'the lßnd tax and mortgage tax. It should be a flat tax on land and mortgage, ' and occupier and mortgagee would each pav the tax according to his interest ill the land. In such a tax there could be no gradations. He was definitely of opinion that the imposition of the graduated tax on mortgaged interests in laud would have serious results. He confessed that he could see no reason for the two income taxes, nor for the break at ,£6OO. and the extinction of the exemption at £900. The only effect "of it was to>make the increases more ranid between XGOO and .£9OO, and this could have been avoided by making the 'rate of increase more rapid. He would have liked to see the exemption reduced to, say, £200, for unmarried men, and large exemptions given to married men pneorfling to the size of their families. He did not approve the proposal to allow the banks to charge 5J per cent, for advances of money to go into the loan. Virtually this would mean that the banks would be allowed to impose

a 1 per cent, tax on investors in the loan. 1 His last word was in advocacy of the scheme, which ho enumerated in the Budget debate, for tho. imposition of a price tax on exports now bringing enhanced vaulos. ,The Land Tax. Mr. G. V. PEAHC.E (I'ateaj said he did not believe in a bachelor lax, but h() would favour a reduction of the exemption to .£'2oo for bachelors, and an increase of tho exemption to JMOO for married men. Ho was glad that the Government had consented at last to raise tho beer duty, and so place a fair tax 011 one of the richest monopolies in- the country. Tho concession allowed for depreciation of buildings was important, though it was not large enough.- The Government had shown statesmanship ty retaining the tea tax, which was opposed only by politicians who put votes bel'oro national economy. The land tax imposed by the Bill would operate unfairly owing to tho non-exemption of mortgages. Ho could quoto a case where* the tax would amount to 30s. per acre on the land actually owned by the laxpayer, since most of the farm was owned by tho mortgagee. Men who had largo mortgages would be unable to borrow money to make compulsory contributions to tho War Loan, since they had no margin of security. The combination ot' laud tax and income tax was entirely unfair. A farmer was required to pay iaxation on his income, aud then to pay taxation on his capital, that was, the land used in the production of tho income. The injustice was emphasised by the fact "that the farmer paid laud tax 011 his debts as well as his capital. The amount of the land tax should be deducted from tho farmer's incomo before income tax was levied. He would like to see the taxes so framed that each farmer would know exactly what ho would have to.pay. , Conscription of Wealth. Sir. E. P. Lliß (Oamaru) said lie approved heartily of the scheme for compulsory contributions to the War Loan. The Dominion had laid dowu the principle of compulsion in connection with the maintenance of the armies in the neld. and it was only fair that the same principle should be applied in the obtaining of tho money required for war purposes; He thought that the period allowed for the repayment of money advanced T>y banks for investment in the War Loan 6hould be extended to lour years. The period of two years proposed in the Bill was not long "enough, and an extension would have the eliect of increasing substantially the investments in the War Loan. The. present laliT allowed an old-age pensioner to own and occupy a house, to the value .of £-100 withont aiiy deduction being made from tho pension. This concession should be extended to cover .£4OO in a bank or a house that had been let. It was not fair that an aged person should be icfused a pension because 1 a life-time of thrift had produced a small investment in the savings bank. Ho suggested that the tax on beer shbuld be fixed at a level sixpence all round. "Old Finance.' Dr. ' A. K.' XEAVMAS? (Wellington 5a si) said lie had_ understood that the Bill was going to bo tlie last word in high finance. But he found that it was "very old finance. Ho had been reading a. book called '.'Kings." Probably members did not know it. They would find it in the Bible. The taxgatherers of Pharoah's day lißd made levies upon -the gold and the silver of the people. One of them had been named Josiah and the other Joseph. People had to mortgage their properties in order to pay the taxes demanded by that early Joseph, and On Monday lie would be mortgaging some property himself in order -to pay taxation. Unnecessary Taxation. "I disagree entirely with tlm attitudo taken up "by. the Minister of Finance," said Dr. Newman. "My idea of the proper course at a time Jiko this is to put as feu; taxes 011 the people as possible, and raise as little .money by loan as possible. People have trials enough in their own homes, and if we burden them with unnecessary taxation it is to tho disadvantage of tho 'country. The Treasurer lias stacked up in London ,£7,000,000, and by March 31 next - he will linve. J3.000.000 more, with at least .£1,000,000 out of t'ne Havings Bank. That will mean JCli.ooo,ooo ati least stafcked up in London. I think he should take of that money and raise £17,000,000 instead ot .£22,000,1)00 on loan in Jfew Zealand. I am quite sure that the policy of wringing the last shilling out of the people is entirely vicious. AVc are going to load the people of this country with an amount of taxation they can hardly conceive. A great deal of this taxation. is unnecessary. The Treasurer had a surplus of ,£4,000,000 last year, and he is likely to havo a further surplus of £4,000,000 this year. A surplus of .£8,000,000 in two years is more than this country can afford. I may bo asked where the money required by the Government is to come from. Economy is revenue, and it is a form of revenue this Government has never tried. We havo had a census of tho people at a.cost of £35,000 in order to make some changes in electoral boundaries. ,AVe have enormously bloated -Estimates. It would be quite possible to gain £200,000 by a little economy management!" The Tea Tax. The tea tax was one of the most in. iquitous taxes ever invented. If tho House voted for a tea tax of 3d; a pound this year, tho Treasurer might next year 6ay that, he had tho people of .the country behind him, and • the tax would bo bumped up to Is. Regarding the amuse, meat tax, he-'was glad to see that tho Treasurer was going to reduce the tax on the.tickets from sixpence downwards. The amusement tax was very popular with the peoplo who did not go to tha picture; shows at all. His own opinion was that the. picture show had been a boon, to a large section of the people, and in war time it kept them from fretting. Reverting to the tea tax, he said that it was all very well for some wealthy members of ! the Hoaseto advocate tho tea tax. Rich people drank very little tea, but old-age pensioners and others drank . a good deal. Another in. iquitous feature of the tax was that under it a married man with a family had lo pay four or live times as much as a single man. Cheap tea at a shilling-a pound would have to bear the tax , of 3d. a pound equally with tho more expensive tea. This was surely an unfair method of imposing taxation. Beer Duty. He was delighted that the National Government had increased the beer duty. But he would have liked to seo the licence fee paid by brewers Por the right to carry on this very profitable monopolistic business a man was required to pay one pound a year—one whole quid! (Laughter.) This was not nearly enough. Every country in tho world at the beginning of the war had put a heavy duty 011 beer, and here, after throe years of hard fighting, the House had squeezed' an extra 3d. on to it. He would like to point out that last year the Government had put twopence a bottle on whisky and brandy and Geneva, aiul now they had put another twopence a bottle on to whisky and brandy and Geneva.. Wasn't it a cruel tax! While they put twopence a bottle 011 spirits they proposed to put threepence a pound 011 lea. This wns done by the Government under pretence of equality of sacrifice. There were many other luxuries that might be taxed: pianos, motor-cars, champagnes, clarets, Moselles, jewellery— and these should be taxed before -such grinding taxation as this was put upon the people. Company Taxation. "One thing more 1 want to ask the Minister to take notice of is this," Dr. Newman continued. "I have gone down tho town during the last few days, and I have talked to a number of people, and I call assure the "Minister that this taxation of companies is going to work very great havoc. II: is going to disorganise trade and have a very great eliect in raising tlia price of commodities. If this House passes the legislation the companies cannot go 011 paying taxation. We have to make some rearrangement of if. Therefore 1 iisli the Treiuiiire.r to take some of his large surplus and use it for reducing the amount, of the loan. Only in this way will it be possible lo cairy 011. In England they have one settled opinion about their heavy taxation, and about their huge debt, and that opinion, is tWt thero is miiy 0110 way of reducing their debt. They aro unanimous on

this point—that tho nation can do something by saving, but iliat mere saving of (coppers hero arid there and economy of the people will not pull England through, and it will not pull New Zealand through. Tho only way New Zealand can pull through will bo by increasing all her industries and decreasing the national debt. Economy alone will not allow us to pull through. If you cripple, companies and private people with this largo amount of taxation and debt you will finil that recovery aiter tho war will bo slow. Pace Too Hot. "I would finally urge tho Prime Minister and the finance Minister to look at tiiis fact. We began tlife war thinking it wns going to be a {short war. Now wo realise that it is'a long war. This country can raise the twenty-four -unl.lions'of loan, and it can raiso tho taxation .with a squeeze, but isn't the pace too hot? If we liavo to raise this amount of money next year we shall be in serious difficulties. But if we tan limit expenditure and limit taxation, our -chances of recovery will be tho brighter. Early last month a member of the House of Commons carried a resolution in the teeth of a Ministry iliat. the whole of tho finances of the House of Commons should be referred to a select committee. That committee was set up. There is not one member of this' House who does not realise that expenditure is running away from .the Government not only in military matters, but in other matters. . I would urge the House if the Ministers don't show more economy to insist.that there shall be more economy, and ' less money token fron; the pockets of the people."' Distributing Sacrifice. Mr. L. M. ISITT. (Christchurch North) said he was delighted that the Government had at last begun to . conscriptwealth-. The Government had behind it the approval of the vast majority of the members of tho House in the steps it was. taking to impose a share, of sacrifice upon tho wealth of tho country. He did not approve, of the ftx on tea. The suggestion that ho.wanted lo protect tea because it was the drink of tho .temperance man did not dismay liim. Everybody knew that the consumers of alcohol consumed a great <leal of tea in. their efforts to slake the thirst created bv .the beer and spirits. The tax, on tea would fall most heavily upon ihe workers. It would linyo been a patriotic thing to have put an. extra duty on. spirits, because every bottle of whisky imported from tho United Kingdom meant the destruction of essential foodstuffs in the British distilleries. He would like to lmve seen the amusement tax mado more severe, with the object of forcing thrift upon the extravagant people. Young persons who went: to the picturo theatres four or five times a week were suffering mental nnd moral injury, and would be benefited by a tax. Tea or Whisky? Mr. J. V. BKOWN (Napier) said ho believed the tax should be taken off tea and placed pn whisky. The tax on tea was a special tax on women, and should noC be imposed in war time. The amusement tax should not be applied so as to interfere with attendance at pic•ture shows, which provided wholesome recreation for a great, many people. The proposals for securing compulsory subscriptions to the War Loan were sound. Taxation'should bo forced upon wealthy people. The brewers did not object to paying their full share of taxation, but it should be,recognised that their business was prccarioui. The goodwills of hotels werp no "more profitable than the goodwills of farms, and they wero considerably less secure. About Beer. Sir. C. PAIvATA (Southern Maori) protested against the inconsistency of members who objected to beer, but wanted tho beer duty raised and tho -.-onsumption increased in order that the public revenue .might bo increased. If tea was taxed on the same basis ."is beer, the'tax would bo 2s. Gd. per pound. Three out of four of the people of Ncw Zealand enjoyed alcohol, and lie did not think the water-drinkers should bo Allowed to interfere. "The cold water people are shirkers," said Mr. Parata. "They offer nothing' to tho country, and they won't let the people (who like a glass of ale) drink it, and pay nobly." Unfair Proposals. Mr. W. H. HELD (Otaki) said lie wished to protest against some of Ihe unfair taxing proposals in the Bill, chiefly the taxing of mortgages. Ho strongly advocated tho exemption, of mortgage interests from land tax, ' saying, that the alana as to ihe creation of bogus mortgages to escape taxation was a bogey, lie thought the Government, could have got out of its difficulty about possible loss of revenue through exemption of mortgages by allowing the'graduation of income tax to go on 1 above ,£6IOO, and by increasing the rate of levy on small incomes. Ho would have liked to see a graduated tax on receipts, and a higher tax than that now levied. His own 1 opinion, was that tho investments in London might bo reduced; but he admitted that the Pinanco Minister understood a great deal more about this than he did. By these means the Government would have been able to refrain from tlv; taxation of , mortgaged interests. More allowance should be made to companies with wasting n&;ets. He entirely applauded the policy of compelling financial shirkers to invest in the-loan, but ho would ask tho "Minister to remember that there were people who would not be able to- find any money to invest in the loan. " Mr. C. H. POOLE (Auckland West) said that tho Bill-.was one of the. best drafted measures lie had seon in tho ITcAisc. The men who found inost. fault with .the Bill-we're those men who were in the happy position of having enough wealth to be affected by the taxation. Economy in Expenditure. Mr. G. J. ANDERSON (Mataura) said lie would be glad to see mortgages exempted for taxation purposes, but he realised that any, arrangement of this kind would open the door to fraud in the form of bogus taxation. Income tax payers should be given a special exemption for each child. He felt that tliero was room for economy in public expenditure, particularly in connection'.with tho Defence Department. A committee of Parliament would bo able to give a great deal of assistance to Ministers and to protect public interests. He would have liked to have had the Finance Bill referred to a Public Accounts Committee. Sir Joseph Wnrd: Such a thing lias never been done in any country. The Government must take responsibility. Mr. Anderson said a committee could have given added assurance to the House. He realised that the money required by the Government had to be raised. . The adjournment of tlie debate was moved by Mr. J. M'Combs (Lyttelton) and the House rose at 11.20 p.m.