PARLIAMENT

Dominion, Volume 10, Issue 3179, 1 September 1917, Page 8

PARLIAMENT

THE FIANCE BILL -,' "MOST HAVE-REVENUE FROM ALL SOURCES" FINANCE MINISTER'S REPLY TO CRITICS , 80ME AMENDMENTS FORESHADOWED, The Legislative Council met at 2.30 / p.m., and adjourned without .transacting ' business until 2.30 p.m. on Wedensday next; THE HOUSE The House o£ Representatives met at 2.30 p.m. The Hutt Road Amendment Bill (Mr. R. A. Wright) was introduced and read a, first time. SHOPS AND.OFFICES AMENDMENT. The Labour Bills Committee reported the Shops and Offices Amendment Bill (Sir. Hindmarsh) with amendments, and recommended that it should bo allowed to proceed. Mr. 'A. H. HINDMARSH (Wellington .South) said that the Bill proposed to limit the hours worked by girl attendants' in tearooms and "marble bars." These girls were employed in many instances until 11.30 p.m., and had to mako their'way home after the trams . had'ceased running. It was not desirable that such conditions should be . imposed iipon them merely in order that : a section of. the public might .have entertainment. Ho proposed that the tearooms should close at 10.30 r;.m., unless, they "provided proper sleeping aceoni- ■ modation for the girls. He hoped the Government would accept this proposal. . The PRIME MINISTER said he would examine the Bill and the evidence, and ' see if the Government could give .facilities for the measure.

FINANCIAL BjLL SECOND READING DEBATE. . . Mr. J. M'COMBS (Lyttclton) resumed the debate on. the motion of the second reading of the Finance Bill. He said ■..■■ that the' Government's taxation nroposals were going to fall very lightly indeod on the man who was making big- war pio- ■■■ . fits. . There was no conscription of wealth under the Bill. The" Government .'.., had i'ailei to make a proper levy on war . profits last year, and was proposing now to leave war profits alone altogether. Yet the war profits made in New Zealand included .£16,000,000 received from the British people.and ,£6,000,000 exacted from the local consumers. The war profit on wool alone had amounted to over : .£6,500,000. He protested against the issue of the War Loan stock free of in- . ■ ■■. come tax. The financial interests of the : Dominion were being invited to "dig themselves in," and Iho soldiers when they Jreturned would find that they .'had to provide money to pay interest on '■''■. invested war profits.

The Picture Theatres. Mr! J. PAYNE (Grey Lynn) said that many small business men were being threatened with ruin by the compulsory .provision of the loan. Their assets were small and they would find it exceedingly difficult to raise money for investment without wrecking their business. ■He thought the progressive income tax should reach 2fls. in tho pound on individual inoomes in excess of The Government was giving away far too much, to big investors in the War Loan. It was a shameful thing that while some men .were being conscripted for service in the Forces other men had to bB offered financial inducements to provide the money required foe war purposes. The mass of tho people were behind the Labour members in the protest against the "free of income tax" provision of the War Loan. Mr. Payne protested against the amusement tax. He Baid that very many of the picture theatres were being run at a.-loss in. the present keenly competitive conditions, and they ought to be encouraged, because they provided the ' entertainment that was needed by very many people in war time. If a tax of one penny was to bo placed on a picture theatre ticket there snoald be a corresponding tax on drinks sold over hotel ba-re.

Freezing Companies. ; Mr. G. B. SYKES(Masterton) said he realised that many people would have to endure inconvenience at a timo when the Government was compelled by the necessities of the war to raise huge sums of money.. The incidence of the taxation would be Adjusted when jiormal conditions had been restored '. Ho thought that there should'be some discrimination in favour of men -with! family responsibilities. Some exemption should bo made in favour of the soldier at the front. Mr. Sykes read a telegram from the Wellington Farmers' Meat Company referring to the position of freozing companies under the proposals for compulsory contributions to the War Loan. Tho companies, owing to. the shortage of shipping, had great-difficulty in financing their purchases.. Some > of the products Vwere entirely a.i the 'mercy of the market fluctuations, and prices might Tecedo before realisation became possible. The Government should not enforce compulsory contributions against companies engaged in- the primary industries, since the system would have a serious'effect on industry and would embarrass the companies in their efforts to providojncreased. storage accommodation. Since the outbreak of war one company had spent over .£150,000 on providing increased storage. This provision was made out of .borrowed; money, : -and tho company, ,'like' other freezing i-ompajiies, had a big'.overdraft. The,companies were doing -work that ..otherwise, the Government would have required to undertake, 'and they were entitled to consideration. The Wellington Farmers' Meat Company -was holding at present >CIOO,OOO worth of tallow and preserved meat,: and he thought that the freezing . companies should not be compelled to contribute to the! War Loan if they showed that they were using their money for national purposes. A great deal of the storage space now being provided-would not be required- when the war was over. He hoped the. Minister would give the companies some relief. Levy on Wealth, '"'Dr. THACKER (Christchurch East) Baid that he regarded the Bill as a good one. He believed that the time might come when Mr. Craigie's scheme for tho conscription of wealth would bo required. The member for Timaru had elaborated a reasonable schemo for levies on property. Dr. Thacker advocated incheased taxation on cigarettes, cigars, and wines. Mr. J. CRAIGIE (Timaru) said that ho felt the Government ought to be setting an example of economy to the people of New Zealand. The' war was costing the Dominion i! 63,000 iter day, or Mi per minute, at the present time, and current reports suggested that economies could be effeoted. It would be a good thing to set up a committee of tho House to study Departmental finances. Some speakers had blamed the Minister of Finance for raising too much money. He felt, that the ■ right course for the Minister was to gather as much money as possible while it could Ire obtained, and so establish reserves against tho days of difficulty that might come later. Hard times might be experienced after the war, end the creation of a substantial reserve fund might prove a very valuable measure. He would havo liked to have seen a graduated land tax in addition to the fiat tax in-order to promote subdivision. It would be a. good thing to give notice row that at the end of a certain period, possibly two years, there- would bo an increase in the land tax. The Dominion did hot want large estates. He approved of the. proposals for compulsory contri--1 buttons to the War Loan. They were a step-in the direction of the conscription of wealth. He had made suggestions on other occasions for a levy on wealth, as the corollary to the conscription of men. It would be the right thing to conscript enough wealth to provide for •the soldiers and their dependants. Ho sihad- been told that -hi? scheme .would'

bring ruin on the country, but the Minister of Finance was proposing now that wealthy people should ba required to pledge their property or their securities in order to raiso money for investment in the War Loan. The scheme for a levy on wealth had the support of very eminent political economists in tho United Kingdom. Mr. P. C. WEBB (Grey) characterised as absurd the claim that under tho Bill wealth was being conscripted. He was not in favour of the tax on tea, or tho tax on pictures, and he was not too sure about the tax on beer. In fact, he ■disapproved of all indirect taxation, even oh motor-cars and motor tyres. "No Courage." Mr. A. H. HINDJIAUSH (Wellington South) said that it was perhaps unfortunate that a man had to bo taxed on his mortgage—taxed on his debts, as somo honourable members had said, but the result of experience in this country and ill States of Australia was that if exemption was allowed on mortgages all land taxation- was evaded. He was therefore opposed to ihe exemption of mortgages. He.thought that the Government ought to be more heroic in dealing with tho taxation of land. There should be some automatic method devised and adopted for promoting the settlement of land. His suggestion was that there should bo an increment tax on land, especially on town land. He did not endorse all that had been said about tho courage of the Finance Minister. In his opinion the Minister had rather shown lack of courage in preferring to follow conventional Mr H G. ELL (Christchurch South) said that the taxation proposed, with the exception of the tea tax, would fall on the shoulders of those best able to bear it. ]n preference to the tax on tea he would have liked to see imposed a greater increase in tax on spirits. He approved of the tax on all amusements, tor that tax was a voluntary tax purely. He was glad that allowances were to bo given to old-age and other pensioners, but he thought the Government might mako. provision for those retired public servants who had gone out of the Service with very small pensions. Air. R. A. WRIGHT (Wellington Suburbs) said that the compulsory provisions in the principle, bwt there would be War Loan were -causing consternation throughout the Dominion. Ho believed in the principle, ibt there would be many eccentric results of compulsion and much injustice. Small shareholders in public companies would, because of this taxation and the compulsory loan scheme, stand to lose the whole of their dividends. Ho had in mind specially the men drawing from to £150 in income from investments in public companies. He was glad to note that the pensions were to bo increased, and he joined with Air. Ell in urging the claims of superannuated Civil Servants retired on superannuation. .,

MINISTER IN REPLY. THE MORTGAGE TAX. SIB JOSEPH WAED, replying, said that tho debate had demonstrated one thing .clearly—that all taxation was objectionable. Every section of the community to be.affected by the tax had been agitated in consequence, and their agitation was passed on to Parliament. Referring to the taxation of mortgage interests, he said that those who asked for a reversion to the old system of a tax on mortgages did not-realise what this would mean. That old system could not be applied to the present system of progressive land and income tax as provided for in the Bill. He did not for a moment say that no other, system ot taxation could be devised to bnnff m the same amount of revenue, but he did claim that no fairer system could be devised for the equitable distribution ot the burden. He would like to do away with the taxing of mortgage interests in land, but ho could find no way of remitting this tax without giving up the taxing of land on a graduated scale It mortgages were to be exempted no land tax revenue would be collectable in thto country. He was sure that no people with responsibility in this country wouUi ask for this at this time. But there^ was no getting over it. The cry of taxing upon debts".had been raised, but ho did not admit {hat this was a fair waj-of statin* the case. Generous exemptions wet allowed, and if were given we bers In the House who toW %5 o &°\r„dfihat m^ Tml amount of revenue would have to be provided in some way or other by from this taxation, nothing more than transference was possible.

Perhaps More Taxes. As a matter of fact, the peoplei of to country would be very lucky rf.toW Zt have to pay higher taxation yet. Mi Pearee: Sot if it isn't necessary Sir' Joseph Ward: But at the present 1 don't need to pilo it That is a matter of opinion. I believe we do need it, and T believe we are stronger and safer and better because of our reserve in You say in the Budget that von will reduce taxation next year. Now you say you-are going to increase lU Sir Joseph Ward: "1 saicl we would reduce taxation if possible." He took the member for Wellington East to task for his pessimism', saying that Dr. Newman had'been driven to the Bible for comfort. Following up the idea, of he liking of the Government to *ho Josiah and Joseph in the Book of Kings, Sir Joseph Ward Dr. Hoffman to Jeremiah, who, he said, was famed for "wailing and gnashing of teeth! (Laughter,)

Exemption For Children. He believed that a bachelor tax would be a mistake. Tho country wanted young men. Many men had to remain single for various reasons, and they need not be penalised. He proposed, m committee, to give an exemption of .£25 additional for every child of a married taxpayer. That would give an advantage to the family men. He was prepared, also, to give a right of final appeal by taxpayers to the board mentioned in the Bill. He would add to the 1 board the Commissioner of Taxes and the Commissioner of the Government Insurance 'Departmeent. There was no intention to penaliso people who were interested in companies. Four men owning a company would not, as had been suggested, lie taxed both singly and in combination. A great deal had been sail about the cigarette and tea .taxes. Members should understand that the proposals were to a largo extent contingent upon one another, and that it was hot a fair thing for them io opposo some particular tax because it was unpopular, and say nothing about other and larger taxes that did- not affect so many people. "I hope that there is not going to be any combination of members from the two sides of the House, with an idea that it is.a National Government, and they can do anything they like with it," said Sir Joseph Ward. "That is not a fair way to carry out the truce, but it has been attempted. I am speaking for myself, and I am certain that every other member of the Government feels similarly. I have heard a member say to-day that some tax must bo knocked out. I say quite politely that it must not be knocked ou ! \ The taxes proposed in this Bill are intended to produce a certain amount of revenue, and we must .iave that revenue. I am willing to change the taxes proposed if the effect of the cliango is to give the Government more revenue, hut I am not going to change anything if tho result would be to give us less revenue."

The Little Taxes. Sir Joseph Ward said that _ he was considering a change in the cigarette tax on lines that had been suggested. If tho Government could secure .£120,000, instead of ,£40,000 from cigarettes without giving the wholesalers and retailers opportunities to charge upon increased excise, he thought the change would be a good one. He had discussed the • matter with the Controller of Customs, and hoped to have final information on the subject within a day or so. He believed that the official report would be quite favourable. With regard to the beer tax, tho House should remomber that the Government had' doubled the amount of tie

beer tax during its term of office. The system .-was similar to that in operation in the "United Kingdom. If the House wished, to abandon a system that hud been introduced in order to encourage the brewing of lighter beers, ho would be ouito willing. There was no ground j at all tor a suggestion that tho Government was protecting liquor interests. He had not acted blindly in connection with the taxation proposals. He had studied in his official capacity the balanco-sheets of all kinds of business firms in this country. He had been surprised to find that the audited balance-sheet of one of the largest breweries m this cou.ntry sliowed that the company had not merely failed to make'a profit, but had actually made losses in recent years, after paying income tax. Mr. Pearce (Patea): They must have watered their share-list, like they water their beer. Sir Joseph Ward: "The balance-sheet was one of several covering a sequence of years." .Ho had seen the balancesheet of another brewing company which paid only ■! per cent. The Oioverimmnt was not shielding any interest, and did not wish to do so. It desired to obtain revenue from all sources. Humours had been circulated that he was interested in breweries in this .country. He wished to state that he had never had a share in any brewery or in any hotel m tins country. He -had had relatives that had been interested in hotels, but he had never acted aa trustee for those relatives, who were now dead. Nor was ho connected with the American Meat trust. The Mutual Life Offices. The point raised by Sir John Findlay regarding mutual life offices had teen carefully examined in the past day or two, and it seemed that some readjustment of the taxation on these associations would be necessary. He had been a*ked to adopt the English system of taxing of shareholders in companies, in England there was a flat rate of income tax of ss. in the pound. But if. we adopted the English, system here we would lose £630,000 in revenue and if it were to be taken off it would have to be reimposed in some other way, probably in such a way that there would be | danger of bursting every company in [New Zealand. He was sorry that tie concession asked for could not la granted. A reference had been made to the low capitalisationi of the firm ot Armour and Company, the Meat Trust, in this country-noimnally .£2OOOO. lie wished to inform the House that theie was power in tho law to deal with this matter, and the matter was being investigated with a view to action.

Taxing of Companies. He wished to refer to one of the arguments that freezing companies ought to be exempt from war taxation, "was not possible to release any company from, liabilitv to bear its part. _ Mr. "Wilkinson: Supposing a company 'I- Joseph Ward said that it would not bo the desire of the Government to put undue stress upon any company. Mr. W. H. Kcld: Or individuals "Si? 1 Joseph Ward: No, but I am afraid that individuals will have to take upon themselves the obligation to repay ma few years what is required of them if we are to get what is required to carry on th AV V hon. member: But if they can't d Vir ? .Toseph Ward: "The cases where it can't be done will require to be shown to the satisfaction of the board at tho present time. 'At the same -fame I want to say that these compulsion _ clauses, which are not mandatory need not be enforced. If the people provide the moneys required by the Government say, fourteen millions by September .1. fl e aic not going to-start then and chase round all over the country to find out whether neoplo have done their duty or not, but wo are ensuring that if there ana any financial shirkers in this country they are- not going to be allowed to shirk the responsibilities of all the people who are undertaking a very difficult job at the present moment. He went on to Hay that he had been discussing with the banks their proposals for making advances to.investors in the loan, and possibly he might bo able to arrange for an extension of the term of tho advances. But it would be no excuse for anyone to sav that ho had to borrow to pay his taxes or to invest in the loan. Hundreds of people had had to borrow to pay thentaxes last year.

Loan Likely to be a Success. "I believe f.ho firstloan is going to lie 3 complete success, hut we will not lessen our efforts in the slightest degree because we must be ready to go on with the second part, for wo may not bo able to confine the second part to ten millions. The Bill was read a second time. THE ESTIMATES. The House v;ont InTo of Supply on the Estimates, and passed the Legislative Department's vote in four minutes. • • The Primo Minister moved to report progress, and the House rose at 9.30 p.m.