FIRST INSTALMENT

Evening Post, Volume CII, Issue 113, 9 November 1921, Page 9

FIRST INSTALMENT

REDUCTION IN TAXATION

REBATE TO LAND-OWNERS

INCOME TAX TO FOLLOW.

" This is the first instalment in the way of the reduction of taxation ■which must take place if this country ib to prosper." was the way in which the Prime Minister spoke yesterday ' in the House of Representatives in moving the second reading of the i Land Tax Amendment Bill, under : which it is proposed to grant a rebate of 10 per cent, for prompt payment. He said a reduction in the income tax would follow, but he would not commit himself to the * amount. Mr. Massey explained that he had .arranged for the reduction in the land tax to take the form of a rebate, because it was necessary to give those concerned an incentive to pay promptly. Mr. H. E. Holland (Buller): "This will benefit all but the hard-up man. The hard-up man will stall suffer." Mr. Massey: " Unless he communicates with the Department and makes it perfectly clear that it is a case of hardship. I have given instructions that things shall be made as easy as possible." To illustrate the manner in which land tax had increased of late years, he said that for the year ended 31st March, 1914, the amount received was £767,421, •whereas for1 the financial year ended 31st March, 1921, the total was £1,688,978, an increase of £921,557. Mr. Holland: " What was the increase in the unimproved value?" Mr. Massey: "It has been great, but ] the increase in the unimproved _ value does not pay the land tax or the income tax." Mr. J. A. Young (Waikato): "You can't borrow any money on.the increase." Mr. Massey said the land was producing less per acre in relation to the value than it was in 1914, while the land tax had gone up tremendously. THE INCOME TAX. Mr. A. Harris (Waitemata): "Will there be a reduction in the income tax?" Mr. Massey: " Yea, but let me qualify that by saying that I am not able to say now what it will be. Ido not know that it will be 10 per cent.; it all depends on what happens in the way of financial legislation between now'and the end of the session." Mr. Harris: " But there will be a reduction?" ■ , Mr. Massey:," I think it is ten to one in favour of that." He added that a great deal depended on the prosperity of the country. The outlook at present was much better than it was three months ago. They were having a pretty good season, but the difficulty lay in the prices received abroad. He was not asking Parliament to help the payers of land tax because they were not facing their liability. On the contrary, they ' were facing the position willingly. Mr. W. H. Field (Otaki): " Can you make the date to - which the rebate operates the end of the month instead of the 28th?" Mr. Massey: "I cannot promise that., but I rather sympathise with the member." Mr. T. K. Sidey (Dunedin South) expressed regret that the Bill had been brought in when so many members were absent. Mr. Massey replied that he had plainly stated on Friday that it might be necessary to bring in the Bill on Tuesday. Mr. Sidey maintained that the House should have had placed before it the whole of the Government's proposals instead of this ■ one instalment. Some members were not sure that, if there were to be remissions, this was the most important. . Mr. A. S. Malcolm (Clutha)' supported the measure as the first of a series. He submitted that, with the reduction of taxation, the country should accept a curtailment of expenditure; this was a time for patriotic unselfishness. THE BIG LANDOWNERS. Mr. W. A. Veitch (Wanganui) agreed that something should be done to reduce taxation', but he felt that the burden was falling more heavily on certain sections of the community than on the big land holders. Every reasonable man would be willing to make a concession to those fanners- who were hard hit, providing similar concessions were made to men in other spheres hard hit. The Bill, however, was too sweeping, for it gave the concession to many who did not deserve it. It was a wise policy that land tax should be so arranged as to bring about the subdivision of large estates, but this Bill did not < recognise that point. Reviewing the position generally, he made a plea on behalf of the industrialist! of New Zealand and pointed to Australian development. The Government should puih on with the hydro-electric schemes for the aid of the secondary industries, reasonable concessions should be made regarding company taxation with a view to encouraging local industries, and every effort should be made to produce a high standard of industrial peace, so as to make it possible for the secondary industries to carry on. : He moved as an amendment that the Bill be referred back to' the Government for further consideration, with a view to limiting the benefits to holders of land of a reasonable value, and providing that no concession be granted to holders of large areas of valuable land. The amendment was ruled out of order by the Speaker on the ground that it Was a motion which could be moved in Committee of the Whole. Mr. D. Jones'(Kaiapoi) supported the Bill, and said he was glad to hear the Prime Minister say that the question of hardship in connection with other 'taxes would be considered. He raised the question as to whether the Government should not accept promissory notes from those unable to meet the tax immediately. He denied that \the Government was protecting the large land holder, and, to support his point, quoted the effect of the 1920 laud taxation. ACCEPTANCE OF INSTALMENTS. I Mr. C. E. Statham fDunedin Central) •aid the Bill really was not-giving relief to the men who could not pay their taxes; it benefited the large landowner with a reserve behind him. The Government should bring down legislation providing power for the acceptance of the tax in instalments. / _ j iMr. Massey: "Don't you see how it •would effect the account for the financial year?" Mr. Statham: "I quite see that, feet—"

Mr. Massey: "I am arranging it as fs>r as I can.'

Mr. Statham: "But there should ba legislation for it." Mr. Maseey added that ha most hays money with whicb to carry on the business of the country. Mr. Statham replied that the big man would pay just the same whether he was allowed 10 per cent, or nol,. It was tho unfortunate small farmer who would

feel the pinch. ;He, however, would support the second reading in the hope that necessary amendments would be introduced in committee. Mr. W. H. Field (Otaki) welcomed the Bill, although he did fear that it would benefit the larger rather than the small man. There would be ho need for reducing the land tax if the farmers were not being deprived of much of their earnings by people in Britain, who had no claim whatever to a percentage, j He argued that the best way to reduce taxation would be to bring the cost of living back to a proper level. He suggested that there was need for considering the law under which money paid by a husband to a wife could not be considered as expenditure; that, he thought, should be left to the discretion of the Commissioner. Another matter which needed consideration was Whether income should not be taken over an average of five years. There were many men who, through losses, had to enteT into mortgages; subseauently they made a profit, but instead of having the whole to meet mortgages they had to pay heavy taxation. One other improvement he suggested could be made by taxing the profits made by land speculators over their sales. . ! , Mr. J. T. Horn (Wakatipu) pointed out that shearing operations commenced later in i the south than-- in the north, and therefore he suggested that South-' erners should be allowed' until 28th January, 1922, for the payment of their tax, without penalty. ; Mr. D. G. Sullivan (Avon) said the Government was leading farmers to believe that they were securing a Big concession, while, on the other hand, it was proposing to increase their indirect taxation by means of the Tariff. Mr. 0. J. Hawken (Egrmont) said the small man had been doing quite well up to da-te, while the large man had been hit—the dairy farmers and wheat growers had been prosperous, whereas the sheepman and cattleman,had suffered. No man had greater faith in. the small farmer than he had., but he was British enough to dislike hitting a man when he was down. The large landowners' were now badly hit. The extra taxation Vas imposed on them to compel them to sell their land, but it was not possible for them to sell at present, and to prevent them from having the advantage of. this concession would amount to confiscation. "WHO ARE THE BIG MEN ?" Mr. G. Mitchell (Wellington Southj thought the concession should be limited to men with land of an unimproved value not exceeding £20,000. Mr. Massey: "Would you deduct the mortgages?" * Mr. Mitchell: "No, I don't think I would." The country required more settlement, and they ' should encourage the small settler, and discourage the big men. It was the big men who could pay who were going to benefit. Mr. Massey : "Who are the big men?" •'Mr. Mitchell: "I'll give you a list of names." The Hon. W. Nosworihy : "You ought to make a speech at the Trades Hall." Mr. Mitchell': "Yes. I suppose lam | a Bolshevik." ' Mr. Nosworthy did not dispute this. Mr. Mitchell": "The honourable member is one of the other kind of Bolsheviks—with only one hand—the hand that takes. He talks a great deal of patriotism, but I have not seen much of it." He did not approve of the proposal to give this ,am to the big landiowners, and put it on to the CustomsTariff. ' Mt. Massey s "Well, vote against the Bill." • • , Mt. Mitchell: "I intend to, or, at least, I intend to vote for limiting it to men with land less than £20,000 in value." • , Sir John Luke (Wellington North) said this question should not be dealt with in a sectional way. Many of the large landowners had suffered ctnormous losses. He believed, however, that it would still Be better for the country if some of the larger estates were cut up and settled in smaller holdings. "ONLY PATCHWORK." Mr. H. E. Holland (Buller) saidi that whatever way the proposal was looked at, it was a rich man's proposal. The | small man who wished to get the benefit would have to get the money from the bank at § or 7 per cent., and the bank would thus obtain the major portion of the benefit. What had become of the immensely increased land values? A member: "You can't borrow on them:" Mr. Holland 1: "Surely the dtay will come whei> we will think in other terms th&n of borrowing." •.■■■>■ A member : "They have to borrow to live."\ Mr. Holland : "Well, would' it not be better to work to live?" Mr. Holland said the Bill, was only a .patchwork proposal, but he would support it if it wero limited to the small landowners. c RICHES ON PAPER. The Hon. A. T. ' Ngata. (Eastern Maori) said he intended to vote for the Bill. "This does not happen to be the /right year to rail against the big landowners. In theory, it is all right, but in practice it is the big landowner who is suffering most severely from shortage of cash." When■ these' men were supposed to be putting by big reserves, they, were paying land and income tax, and having to contribute heavily to war loans. In his district some of them backed the accounts of returned soldiers. After doing all ; thi», they found themselves rich on paper, but poor in their bank account*. - ' •,' Mr. E. Newman (Manawatu) said Mt. Holland had alluded to the increased unimproved values; but those were only, paper values. No one was buying sheep lands now. A circular had been sent to woolgrowers in his district by tho agents, telling them not to send lowgrade wools ■or locks and pieces to Wellington, as they were not worth the freight. THE WRONG WAY. Mr. J. M'Combs (Lyttelton) saidi it must be remembered the pastoralists had mads big profits in previous years, which should; be set against the lack of profits this year. Subscriptions to war loans had been mentioned. Would it not be possible for the ixovernn/ent to accent to 20. per cent, of tie tax in d*ebentures? A member:- "At par?" Mr. M'Combs: "Yes, all round." They must remember that this concession would apply also to the big companies, who owned valuable sites in the cities. Relief could be given to the small farmer much more effectively by remitting fch«, Oustoms taxation on.some of the articles in common use.not manufactured in this country. Th« Government was only making a stalking-horse of the pastoral«st«, in order to remit taxation to it ß big friend*. Mr. J. R. Hamilton (Awarua) said unless the lands of New Zealand as a whole j j could be valued in the one year, justice I could not be done in the matter of tax. I ation. He pointed out that the increase in the valuations made in certain" districts lately would increase tho taxation by a greater amount than this rebate would reduce it. PRIME MINISTER'S REPLY. Tho Prime Minister, in reply, said the debate had been longer on this first proposal, to decrease taxation than upon the first proposal to increase taxation for the war. He said no country was made prosporous by heavy taxation. His policy was to make every man pay according to his ability. .His first duty as Minister of Finance was to keep expenditure williiu income, and very .satisfactory progress in the policy of reducing expenditure had been mado during the past month

or six weeks. He characterised the statements of the member for Wanganui as most extraordinary; what the member for Wanganui suggested was a form of charity, and no farmer would accept it. The principle underlying the speeches of some members was that if a man owned more than three, acres and a cow Ire should be imprisoned for six months. It was nonsense to talk of aggregation at the present time. It would be necessary lor him to ask the House to increase taxation in certain directions shortly, but that was voluntary taxation—a matter of luxuries. His aim was to get back to the stage when expenditure was covered by income without high taxation. His sympathies had always been with the small man, but that was no reason why he shoulvl do an injustice to the so-called large (nan. In a ibrief reference to subsidies, Mr. Massey denied that they were paid fqr the benefit of the producers. The Bill was read a second time. The Bill was taken into Committee Mnmedi'ately. ' . ' Mr. W. A. Veitch (Wanganui) moved his amendment to limit the concession \o owners of land of an unimproved value of less than £20,000. The Prime Minister raised the point &f order that as this was an amendment affecting the revenues of the Crown, it was out of order. Mr. Veitch contended that the Speaker had already ruled that the amendment was one that could be moved in Committee. The Hon. 'A. T. Ngata said that both the Prime Minister's clause and Mr. Veitch1 s were to reduce taxation, but the latter would reduce it to a less fflctent than the former. Mr. Malcolm, Chairman of Committees, ruled the amendment in order, and quoted an explicit ruling from May's Parliamentary Procedure. The amendment was defeated by 38 votes to 15 (Messrs. Bartram, Fraser, Holland, Horn, Howard, Isitt, Jennings, M'Combs. Mitchell, Poland, Savage, Seddon. Statham, Sullivan, Veitch). The Bill was passed.