TAXATION REDUCTIONS

Evening Post, Volume CX, Issue 62, 10 September 1925, Page 9

TAXATION REDUCTIONS

GOVERNMENTS PROPOSALS ,

ATTACKED BY LABOUR PARTY

LONft DEBATE IN HOUSE

CHARGE OF ELECTIONEERING

/When the Land and Income Tax (annual) Bill was reported bacjc from the Public Accounts Committee without amendment to the House of Representatives yesterday, afternoon, the Labour Party initiated a debute which occupied the whole of the sitting, ending, at daylight this morning. The Labour members ,were accused of attacking the Government's taxation reduction proposals for electioneering purposes—a charge which some of them candidly admitted. / ■'' :"• ;';" • ■ "• '■ ..' •;'■■ -. ' .;. /.'■ '' . "

Mr. J. M' Combs (Lyttelton) said that the Bill provided for a reduction in income tax by< about £150,000, and <practi6ally the whole amount would go to tfie big men. Mr. M'Combs proceeded to' show how those with large incomes would receive the benefit of large reductions. The^ Government proposed to ladle out reductions in a wholesale manner, and had reduced ithe amount of tax ,for-the big men by an additional 4 ;,2-3d in the £. In the case of a man on the £10,000 mark the ..additional "4.2-3 d in the fl. meant. £194 "odd. The: man on the £8700 mark received a slight reduction of £12. -All these reductions were being made at, a time when the country was wanting more money for eld-age pensioners, when ( more inphey was wanted for the blind, arid" at a I time when .the Public servants .were being- inadequately ■'paid; and' when their standard of living had. been'reduced much below the 1914' standard. The reductions were; being made to the big income tax payers of the .country. ■ He' thought that the least that the.Government'could have done 'when it was 1 making the reductions was to have worked orijsome equitable basis.* \A' percentage reduction on an amount'up to the £3000 mark would be-a fair thing, .although he was not jn 'favour of remissions at all., I: ..The-Minister :of Education (Sir James Parr):' ""Do you suggest a reI duction by a Jat rate?" Mr. M'Combs: "No. A percentage reduction on- k : tax - that;- is already graded .would riot be a flat rate reduction." TKe. remissions were'boingmade at, the expense of tho •Public servants land/ '. of the working, people;'. There was some ground for a readjustment of company i taxation, because'at present the companies paid ,th& tax'jand the shareholders 'were practically tai free'l- The - companies I were -forced •to icpllect the tax from the public iii the same way that they colloctecl Customs taxation. No at- ' tempt was being made by the Govei'ninent to deal with the incidence of taxation,\andvjt was refusing to readjust the income tax in th® way that .other- countries, had done.l He opposed any , reduction: taxation because the State wanted all the money il could get. As things were, the man with even"£soo or £600 a year could almost, escape taxation.

"A DISTORTION"

Tha Prime Minister (the Hon. J. G.- Coate's) said>he -had given an'uudertaking.to Mr M'Combs and other members at the meeting of-the/ Corn,; mittee that morning that the Government -would' reconsider continuing the present graduated tax on incomes, from £8700 to £10,0" 00, or, in other 'words,' that the ,4s 10Jd on incomes of "£ 10,000- .per- annum should stand; To say that the; Government was robbing people of breadand butter and the 'necessities,'-of life was nothing more or less than a distortion: The figures submitted! by' the Arbitration Court showed that. . ,

Mr.- W. E. Parry (Auckland Central)-: "We'll deal with them." '. The Prime Minister:',' The honourable' gentleman has been trying to deil with ,the Court for the past three yeaYs,. and lias ' done nothing. It is an: election cry. Almost immediatelyafter the election is over we hear no more about it;' It is like a snowb'all-^----it gathers more as time goes on." Mr., C'oalcs remarked that where, the cost of living had increased 60 per cent, since 191.4 there had ;been a corresponding increase in the basic rate^ For the single man the basic rate today . was., sufficient, although for the' married .nian it was not,'.but. how were they'to get-past-that?"-'

'Mr..M'Combs: "Operato your'hardsliip clause." ;. , './■, , ■'..-; The Prime.^Minister: "Every-,-case that is brought up is on the assumption that ithe's'e arc all married, men, but they are not all married-nicn at all. ;But married men certainly have some cause for complaint." »There \Vas no analogy between the suggeptcd decrease of taxation and the incomes of -the Civil sorvants or- anyone else. Why was it essential that New Zealand .should, reduce taxation? iShould NcWZe.ala.ud.bc different from other countries in regard to. its taxation? '■■■.'■■. . '■•■.-■' " •';. „ .

Mr- Parry:"lt is." t The.Pijinie Minister:, "ft is not.". Even, when the proposed decrease was put :into operation. New Zealand's income.tax would be only Id less than, that: of .Australia. He ventured to say that, two-thirds of the big incomes to which reference had been made were, those of companies, and'not private individuals at all. -Whft was the effect of our taxation in regard to the. development ' of industries?. Were, people more Jikoly to use their capital'-in developing/industries in New Zealand if taxation was high, or.ivoro they more likely to/transfer their. capital to other places where taxation was loss?. Were the' producers, on whom practically J.OO per cent, of the peqplo were dependent, likely to have the opportunity to develop ■ their industry' unless more capital was available'?

The Leader of the Labour Party (Mr. IT.. E. Holland).-.. "You would not. suggest that, this Bill will malic capital ■ available." ■ . ■ Mr.- Coates'.replied that if • a:'tax of Is IQ.d trae levied uu iu.oney_ for far-

mers as against a maximum of 4s 6d. on local body debentures, then the •local bodies would get preference. He contended that preference should not be given to the local bodies. .The pro-, posal; was that the amounts 'should be brought down to the. same level.: ' "Bring ihem up," interjected Mr. M'Combs. , .:'. ■ ' ..." ' : ...)'■■ Mr. Coates said that: if farmers were to have money for the"- purpose of improving their farms, they should surely be put on the same basis as locjal bodies. ' The Bill -did that. Mr. M'lCombs's way- of making. them equal was to bring them up. The Government did,not do that; it brought, thetn down to a level,basis. Nothing could be attempted in-the way of finding but what the incidence of taxation should be until certain statistical .information ask'^d for: by the Taxation Commission came to' hand! The Government had instructed that that information should be procured and be made available next year.

v .','l refute absolutely," proceeded Mr." Coates, "that the Government has deliberately taken the bread and butter fi^om the "mouths of people for the purpose of handing back to people with incomes of £10,000 a sum of £.190 a year. It is simply exaggerated talk which cannot count with'reasonable people. ■•-.;.■'■' :_..'-''..''.'--.-..

On the other hand, we say if you want industry to prosper and your country to develop, there is only, onb thing to do, and that is to encourage people with ' capital to spend money in the country and develop/its industries. No one will invest capital if you are going to tax it out of existence.

TAXATION COMMISSIONS^ RE-

COMMENDATIONS

It was quite clear from' the Taxation. Bills that had' been' brought down, said-Mr. T.K. Sidey (Dunedih South), that there ■ would be no alteration in the incidence; of, taxation this session. v The Commission set up to deal with" public taxation recommended , the abolition of the graduated land tax, and ho wanted to know •when effect would be.,given to that, recomm^ndatioin They had had long enough to consider the matter. What was proposed? It jdid seem unfair to give awafy: taxation before >aii alteration .was made in the incidence. The amount involved in the remissions was not so .great that it would make^ any difference in regard to: investments on mortgages. „'••. . , „'.'' , Mr. JT. Langstone (Waimarino): " A mere drop in theXocean." ' / Mr. 11. T. Armstrong (Christchurch East) • said that the Prime Minister had made no. effort .to: answer the statements that had been made by Mr/ M' Combs._ Income tax reduction had- not assisted the primary producers, who were • sufforing to \the' same, extent- as the wage-earners. The .primary producers were not as prosperous as they we-rV before, - notwithstanding the .fact, that they were producing more and wore receiving better prices.; It was the : wage-earners who were the people-entitled to re: lief, as the standard of living in .New Zealand was as low as, and in some cases, lower than was the case in, other' parts of the Empire.' New Zealand was giving away revenue, but at the same time was borrowing to an alarming extent. The total indebtedness was £172 per head; — surely a world's record. .' . > The .Leader of the Labour Party/ ■(■Mr. H. :E.. - Holland) said that, the Labour Party was opposing the reductions in taxation because money w-as needed for localXnd social wants, and because the proposed remissions did not give, relief to thos,e who needed relief most. Tho ■ table of remissions showed 1 tlie absurdity,of tho 1 I proposals.: The man.with the taxable income of £300 got a remission of £1 ss; and;tho man with a taxable income of £900 received a similar remission. - Then,, going up ,thb> scale again, they found that the man with a | taxable incomo of £9000 received a remission of £50 Is. That was the man who did not need any remission at all. It was. the man.without a taxable income—the . nianv wlib -paid indirect taxes — who needed remissions. Tho.: man' with a taxable income of £10,000 received a rebate of £104 8s lOd, and the individual with £30,000— -lie did not know if there were many private, people ill New .'Zealand, receiving that income,' but he Had no.donbt'Hint thero wore' some— would receive, a remission of as much, as £,500 ■6s 6d. There were- people .with enormous -jncpnies who . were ■paring: no incdnio tax at all—people who were holdingUarge ai''eas.6"i: land. A (study of the.figures: showed that out of 36,000. taxpayers 28 received as much as £43,000 out'of the total of £150,000— -nearly -on^-third of tho totnl. 'That meant thry-,.tlie grcat'b'ulk of-the. taxpayers received "no benelit at all. .'The .Government had' altogether remitted £5,304,032 of ,the i amount ieceived : iuiueomo tax.. ■".'

A GOOD RECORD?

Mr. T. W. Rhodes (Thames): "A good record." • ... . - , Mr. Holland: "It is a good record if viewed from the viewpoint of those who received the :benefit'of the remissions." . How. could,thel-Govern-ment say that the.record was a good one when; the remissions'went to the small minority, of taxpayers in roceijpt of the largo incomes?' During the past .throo. years/, declared. Mr. Holland, tliß ..CJpxc£Jimcjit had tak?.3l

£8,000,000 from - the workers and Public' servants of the Dominion. They'had done'this by reducing the wages of Public servants, and by forcing legislation through the House giving the Arbitration Court power to reduce wages by special order. Incomo tax -was- only levied on those 'with incomes of over £.300, but the Customs and, Excise duties were paid by everybody, and it was the latter taxes which the; Government hacl increased. Mr. Holland concluded by comparing New Zealand rates, of income tax with those obtaining in .the Australian States and in Great Britain, and said New Zealand's position was a most favourable one. The Bill they were considering was almost laughable as ¥ar as the relief it afforded the man with the small income was concerned. \ -

.: "We know perfectly well that it.is simply an election : dodge," f remarked Mr. J. W. Munro (Dunediri. North) in opposing the Bill. : Big business men, they had been told, were behind the fusion negotiations, but the Labour Party represented people who were receiving less than, the income-tax standard, and it would.fight all proposed remissions. By such a Bill the Government was "helping to put the Labour Party on the Treasury benchesi for it was carrying out a policy of ;"spoils to . the victors," who were the big people behind the fusion negotiations. . The -wealthy people of, the country were striving to avoid their responsibility of paying for the.war. The Prime Minister and his party often boasted that New , Zealand was the lowesttaxed country in the Empire, and yet Mr. Coates said, that if we in--creased taxation the people would transfer their I 1 capital elsewhere. "Where would they take it to if.the taxation in other countries was higher! a The Prime Minister's argument was puerile and fallacious. Mr. Munro predicted that the Dominion was on the verge of serious industrial trouble simply because of the Government's policy, which was dragging the people's standard of living down to that of the yellow races. The Hon. A. D. M'Leod:'"putting up taxation is not.going to improve wages.",' •■■; . . .■ ■ ■ 1 Continuing, Mr.. Munro said that the Government had reduced the taxation of* the wealthy, but/ had , taken money from the people,.through the Customs. He, strongly opposed the, Bill, believing it to be" against the best .economic' interests of the counTry.". ;;.'.'■■'-;.'.■:::.,"/■''■■ > V '•', '•' ■''• Opposition to>the Bill was also voiced by'.Mh J.;O'Briek (Westland), who, just before 5.30 p.m., was warned by the" Minister of Education that he was running a risk of "talking cut" the committee's report.

Mr.: O'Brien:.."l am trying to. get some humanity and • ■ comnion-senso into the •Government, but I understand that that is quite impossible, Mr. Speaker. ' As far as talking the report out is concerned, I dare say if that is necessary it -will be talked out"; '• . .■.'"■ ■•*■■,■■.-■.' ...""•.'■ •■.',.'.•

The debate was interrupted' by the dinner adjournment. . ..'. :

UNEXPECTED DEVELOPMENT

' When the House resumed: in the evening, instead of'proceeding to the Orders of the Day, there -was ah unexpected development, for the Prime Minister moved that. the , debate on the Public Accounts Committee's Eeport shouldl be:'continued.- j '•''Does not a motion of that-kind requiire notice?'.' inquired, Mr. M'Combs

Mr.; Speaker, after counting ;'the number of members present, said tho Standing Orders ■'wore quiteslear. 86 long as forty members were present a motion of the kind before.; /the House could be moved ■without previous notice. :

The Labour Party called ", for a division on the motion, but after the floors, had been locked and the usual interval/before, divisions observed, it did not press 'the matter. " . " Mr*, O 'Brien then 'resumed his l interrupted speech', arid concluded by moving, that the report be referred back to the for further consideration. ■"''.... ■ ' , . / Largely repeating what he had said in'; the afternoon, Mr.. M'Combs again advanced, reasons against, the Bill at some length.. '.'-.. ; .■--. The arguments.of the members on the Labour benches were replied to by the. Minister of Education- (the Hon Sir James Parr), who remarked that he thought their attitude was pretty well understood. It was nothing more or less than a "gestui c " to: the •; working people. The House had listened all the afternoon to the members on the Labour bench es, and not a single; good speech had been delivered. The same things had been heard in the ; House ■ for years, and the House knew .what .'to expect every time a motion for reductiQn in taxation was brought forward. . When New Zealand, war groaning under war: taxation which effected nearly half the big incomes in tho. country, the Labour Party took up precisely the same attitude; they vigorously opposed even % then any reduction "in taxation, altliough the" country' was up to the very limit of war taxation. No economist of any note could be found-to .defend the extraordinary „ attitude of the Labour Party. "I challenge . the Labbiir Party," said Sir James, "to produce -a single bankerj^coinmercial man,- or business, leader in America, in England, in the .world,; who advocates that the best' thing for a countiy is crushing taxation." , .The Minister, went, on to review. tho present position in regard-to income taxation. New Zealand had the heaviest income tax- in the Brit-, jsh Empire. And, yet the Labour Party insisted that, this heavy taxation, crushing as it was t-upon the business life of . any community, should be maintained at such an exorbitant rate. . The .Minister said, lie had yet.,,to learn that tho wages of the working people could be reduced by .crushing with heavy, income the industries aird businesses vrhich provided the wages for the workers. He would nob insult 'the intelligence of i the members of th,e Labour Party Try supposing that they did-not'know 'tiint. That justified him, • therefore, in saying that all the talk they had • heard"-from the' cross benches 1, was merely' a "gesture" to the people outside.. ' . ' ..■■•-.-

Examining.'the facts of tho situation, the' Minister, pointed .out that the. Bill proposed a reduction from 4s 10. 2-ud to. 4s Cd in tho.^fi on '..t graduated scale. . "It is.^ difficult to' understand -,tho objections raised by the Labour Party," ho remarked. "Ono moment they, tell us that the reduction is .infinitesimal, and. upon my soul, when you examine the figures I am not so sure that they fire, not right.- The striking fact is-that it is' extremely mild—that the man with siiioOO income gets/a reduction ot only v U\v aliillinfis, " ,It iraa

merely wasting time to raise; objection, he maintained. Mr. Holland: "It is. wasting time tp put it before the. House.", „,;,' Sir James repeated that the rednetiona svere infinitesimal. ;" •'■'"■

"Until you come to the £10,000 a year man," added Mr. M'Combs. . Sir James said that the official figures showed that very few £10,000 a year men were affected. ' The figures showed the utter hollowness of. all the talk that had taken i place. '' These . villains in tho,' play ": -who got £10,000 a' year/and more, and who received a present of £194 per year in reduced taxation:'numbered only 23, while 177 companies also paid tax-aboye that amount., :•;

-•^f"How many, outside Now Zealand?" inquired Mr. W.. E. Parry (Auckland Central)., ■

The Minister declined to be inter-, ruptecl. V : ; .-.',...:' ■■;■:"

1 The. amount of reduction these people would obtain, said Sir Jaines,.was £130,000, of which £6500 would go to the individuals and £123,000 to the companies. He emphasised the fact that 177 out of 200 taxpayers on the maximum rate were companies. There 1 could be. no argument, he submitted, about the fairness of 'reducing the taxation upon these: people. The facts- were fully set Out in the report of the Taxation Commission. Probably no/country in the world taxed companies more heavily than did New Zealand. How were wages to be_ decreased by maintaining such heavy taxation? If any present!was being given at all by the, Bill, he continued; it was being made to those who were most seriously in need of it. ■

Mr. Monteith: "Don't be, humor .ous."- " : ' . .' ■'.■.'■...•"' . ' . '. '■. .;

"The 'Bank of New Zealand," suggested Mr. Holland. '

Mr. Armstrong: "A new turn at Fuller's." :: ;'"•■ :;'' ••..: „

"FIGMENT OF THE BRAIN"

The talk about the hardships upon the poor man, said the Minister, was purely a -figment of the brain^ (Labour dissent.) ,- "The poor man in New Zealand paid no incomeTtax..The relatives of the' wealthy man also paid no income-tax. .■■•' In no other country in, the British Empire was there so high,ah exemption as there was in New Zealand. ■ No family man with less than £10 per week' paid tax in New Zealand, if one took into account the exemptions obtained upon- children and upon life' insurance. He knew of more than one trading company which was hard put to it to-day in many: ways, particularly in regard to taxation, to make bothj^ends meet,.and:those companies . were . employing very large numbers of" workers. - It: mu^st .bo; obvious tliat the relief given to companies :was more than -justined. Mr. : M'Combs had declared that the taxation of the war was being; shifted onto the masses of the people through the Customs. An examination ,of the Customs duties, however, would absolutely disprove that statement. It was sufficient to say ;that the honourable gentleman could not point out any other country-in~ which the working man had as free a; breakfast table as in New Zealand. '■. Customs taxation did not touch the working, man. . The- workingjinan was not paying, for the- war, but the big tax-payers. Before the war the maximum incometax was Is: 4d in. the £, and now it was 4s .10 2-5 din the . £.- .. .We';had: a l6ng way "to go • yet before, direct taxation dropped to the pre-war level. As a matter of'fact, it could never be reduced so far.' .•■''•:■'■■■-' :, ;: -Mr. Monteith: "It -will 'get', there pretty soon.i? '■" '_' : ..': ; .'•;. ■'

Clearly, said the Minister,.the only object of the Labour Party, .was to, iprolong.thp discussion, and- obstruct thebusiness of; the; House«; They hid descanted upon' the, "report-all the afternoon without producing a single fresh argument.; ■;'■■■ '„ .:-■':;:- f Mr. Armstrong inade^ an interjection about the 'Keform Party getting scorched." 7 / '• . ■■'

"IVthink the country will -.. have something to say. about that," re-: torted Sir James Parr. "The electors are not so foolish as the honourt able gentleman things." •.•'-■ , /

Mr. Monteith: "They would not believe you." , „ V : ..

Sir James, said surely there ; could be no good tactics in hanging up the Bill. He remarked that the, Labour members had been afraid to.face the test on the division when the Prime Minister moved that < the report^ be further considered after the dinner adjournment/ The .Bill' would go through, no, matter" -whethey they talked all that night, and the following night. Every'economist knew that every relief in taxations percolated through .the strata from the top to: the bottom, and that ■ everybody benefited. The Labour Party ivas opposing the proposals for the simple reason that they thought they could impose,-on the credulity -of the workers outside. 'V,".■■.■ j ■ j

The Hon.' J.A. Hanan (Inyercargill)' saw no good reason for referring the Bill back to the Committee. '.'.-.

Mr. 11. Atmorc (Nelson) suggested that the Labour criticism was not based on the • matter:, before .the' House, but was entirely class; criticism, arising out of class feeling, which 1 was "blinding the natural .'po'w- ( or of criticism''which. Mr. M'Combs undoubtedly, ; possessed in a • muchhigher; degree than his fellow-mem-bers on-the Labour benches. - The less .money "any Government . took from the hands of the private (employer wlio could use it% to nmeb better... advantage - than /any* Government,., the better it-was for the co'un-, try. "I - am. sure 'many of the f arseeing workers throughout the' Dominion will . repudiate 1 the action takeji up in their behalf,'' proceeded 1 Mr. Atniore.in "further,attacking; thp Labour members for..';claiming that-thoy-w.ere tho, solo: representatives of the workers. Mr. Atiiiore said lie would go further in the direction of reducing taxation. The Labour members, throughblind class -fooling, were trying to strike a blow- at .a.re-, duction of . taxation which, would leave more mone,v in"the hands of those'who could/expand t4ie scope of. employment.. "I think-.: this is only a waste of time, "said Mr.. Atnioro,' "but in view of the sentiments coming from the Labour beXchea I fcnl" it is;uecessary'to sa} r a few .words;so that my constituents and others outside will know that I was no party to, such absurd statements." Mr. AtmoTQ said ho did not say the Bill was framed on; true scientific principles, but any man who. opposed, a /reduction of taxation.was not going' to improve wages, and was not doing anything to raise the purchasing power of the people.

Tho Bill was characteristic by Mr. Langstonc (Waimai'ino) as a: "most infamous' -proposal." He ■■ stated,' iiite'r alia, that, no income-tax payer in New Zealand was paying'his own life-insurance'premiums. Through its cj'stein of ler^iug taiatiou^tho :^si'

ernment, was paying: the life Insurance premiums: of every taxpayer,' jbut- the man who had no taxable balance had^to pay; his own; premiums.; Colild the/tiovcrnmentPjustify; that, system, particularly ' after: exempting the ' 'squatter' 'altogether last year! He maintained tbjat there. wa,s 'no; need for any reduction in taxation, and- lamented that :■ the Prime' Minister : shquld weep ;" crocodile"; tears''; over/the "huge burden of;taxatipn>" ■which did; not exist. . :

HELD TO BE INEQUITABLE

"We. don't-oppose a.reduction> in taxation," declared Mr. E. Mastors (Stratford) on behalf of the Nation-' al Party." "We. would too only .top; pleased to ;see a .reduction; in taxation, but we say that that reduetio.n 1 should] be equitable." ;To - his Tnind- the; present Bill/did' riot propose 'ledud-' tion on aft equitable; basis. The Bill would have' very,little, effect inj making land values attractive,to in-! '\estors because the damage wag done when the preferential. rate of, taxa-. 'tion on local body, debentures .was passed. There'were , huge sums invested in';'local body ..debentures. If ■at the time tho preferential local body rate , was proposed the Prime Minister had expressed the same.sentiments as he'had-that day, it was possible, that:.they would not: have, had such- a huge' sum: invested in local body debentures bearing a preferential rate of; 8s ■ 4'dTin ■ the " &. .If, the Government was going to reduce, taxation while ■ Government Departments were showing huge- increases, the : money wquld have'to-be made; up in another direction^r-from the Customs! Tho proposals of the Government would .benefit those "at.the top of the tree." Mr. Masters said that the increase in Departmental expenditure, amounted to £17,058,832 per annum, which was due to the lack, of business : methods in the. Depart; Dients. In view of .the huge increases that were ' taking place in the cost of government of the country they could not afford to give .away taxa-' tion. Until such time as" there was a direct reduction 'in. Customs taxation he.:.wpuia. oppose::any reduction, in taxation to -the big men who; were earning incomes of- anything from £1000 to :£3o^oo. -r- '-,;-~- v- :i:lv.:: Mr. ; F. '■. J. Bolleston (■ (Timaru) ; de-* clared that he did not approve of. the Bill. The subject of reductions in income tax.) should not .be; discussed; in any partisan spirit, but from ; .the point of View of what ■ the nnancesv of the country would' stand."". Generally 'speaking,' although* our finances' were healthy enough, he didnot think; they were in such a condition that we coulii afford' to make a remission of' £150,000. ,-The- Minister might ; find himself under, the painful■■;necessity, after the Bill was passed, of having to reinstate; the tax he had remitted.; Mr. Bolleston said that the, reduction proposed would make no appreciable difference in the amount available.for .the development of. the. country.:;; In regard,to;the remarks that-had been made as to the pressing nature of 1 the present taxation on . companies, he said it seemed. to hint that, the; proper remedy was to change the incidence of taxation; and not to reduce the tax on companies co-incident with the taxation ;on individuals. It was not sound 'or scientific*td'-attempt to: get over the' difficulty by the means adopted in the; Bill under discussion. He could,not understand-how it could be said ;tha't New. Zealand was the most h.eayily-taxed country, ia the, world.:• In 1914 income-tax in New Zealand was 6d in the £ without -any deductions except for life insurance premiums. .Under the present Bill, although ; there were war: and other obligations to meet, the rate proposed was 7d in-the '£„only Id more, than before; the war; moreover, large ; ex-" emptions;'were;now: given: in the case of families" which were "not given- in--1914. It would sbe found that, the £1000-a-year man was paying actu-. ally less now than he paid before, thewar... ::'- •'■; "■. ;■- '■■'■y i ' .'■' .-,■ '.■■.•',■.'■' - '■■ ■■■''■' •.'■■. ■ Sir James ParrVMDp youi say ho should pay moref" ';:-;■-. ■:'■;Mr.' Bolleston:7"Tes, I do.*'.'.'.-,;.'-. After,-further/ discussion;.-,' the ■ proposal to refer the Bill-back to 1, the Committee was defeated, at 12.45 a.m. by 48 yotes.to:ls.' .f.: v.;i,,.-.:.-,'; '■'.;, : i The,-^Finance Minister; (the Hon. jW. Nosworthy)' then 'moved- that the: Bill be committed: forthwith.. - -v. -:;' ■■■■:'- -.■>:•;,- Mr. M' Combs raised a point of 6fj der that the Bill could,, npt begone lon with as it was: not:on- the Order Paper,"for second reading at that sitting...,;. ;■■:■■■ :::---r:-::-y. -f;-.:.:i ';: :'-■:" The Speaker., ruled against; Mr. M' Combs." ■":;'i;'":';:-'': i!;:::':?:;' vJ'■■■;"'.;;:' ■Mr. P. Fraser (Wellington Central) then raised; a-point' of order on; the ground that, it was not:. permissible to call upon, new business^ after-12.30 a:m.y but. :. Mr. Speaker- again ruled 'against .the point. ,-.':'■; -:■, ■i : v .-' ..;-■.■'■'■ .-.■;•;•'

A BREACH OF FAITH ?

■:'■■ "I want to remind the Prime Minister, " "said Mr. Holland, Vof having spoken to him someVVimebacki..and of having asked'him;whether ifr was. proposed: to go >on ' withcthe second, reading' stage. He will, remember that he distinctly told me that he-did not propose to go on with the second reading staged .Perhaps the Prime 'Minister has forgotten.''-, \ ' The Prime. Minister: ""I /havenot forgotten.'? t ; ■■■■;■■■■■ "';'';; ■;•/■'-.''..■'; :r '■ '■':'" Mr. Holland: :" Ever since I have been in the House, when I ; : have re-, ceived- a statement or promise on" behalf of the Prime Minister, that statement has always'been lived up to in the paßt. 'If the Prime Minister departs from that; statement now it will lie the first time, in my experience that the' Prime -Minister on the -Kefprm, benches: has not lived; ,up to a state--niont made to the Leader of the Labour Party. X hopo tho Primo ter will not persist in going-on with the matter at thisstage.'? • ■'■.: '

Mr.'Coates said. that, when' Mr. Ho.l-: land s,poke. to. him and. asked him if. ho proposed to put- the' Bill through, all stages, ho. replied, that it was 1 not .in ten d od, ■to .do.. so. A-t. that time he thought'-'th'aj- it. was^not.possible, cause tho Bill' was,not. on tlfe : Order Paper, ■However, Mr. Holland had aroused his curiosity, and he had had inquiries made.'accordingly.:.., A little later;'.a: Whip pf; the. Labour; Party* (Mr. Sullivan) intprviewed him \Wth fclie object of seeing whether some nr,I'an'g'emcnt could not.be,cone to.. The. speaker made a suggestion/ that the" Jiist thrcq Bills', on;-the Order Paper should', bo taken,' but: that was uriacceptablo ,to : Mr. Sullivan. ; : Mr. Sullivan: "Wo offcrctl two.tovou.'' '. " ■ '*•■.-'■,. '.'; ".'.:' -S.;"."?::. ":.'..'■ '" Mr. Coates: "Yes. The Samoa Bill r.nd the Counties'.Amendment Bill, ' which.-'would- ■ probably take about, three minutes' of the time-;.of.'-the House. -.My proposal was, completely i turned; down. I >said,7'yery,.well,'the; only thing is ;to go on.', \JNTp\y; th.c' honoura^sle .'gentleman says it..ia. a matter of. breaking, a promiso. y Wcllj r.Vsp'pk'e' with;alT":goo<J ..faith.;to' r begin >,' with! T'r'egret .thafc'T did iiot.iiifotm the honourable.' geaj.lcnian that; »ince

the; Labour .'■ Party I have. takea uponV-' . themselves'; to;'direct ■;th« business of Parliament and to^ say what memberi;;. of Earliamont have; to subject: --■.'Belves'Y-to'.ute'./'Buit'^tlieir^'pijri^Bisi/^X-:-----thought; I,' was; :perf eptly justified "'in' ' saying that the.Bill should go through ■;■',-'.-.. all its etagesl .My;reply to; ' mp-'.'i I, lieader ,of the Lab6ur Party was:quits :/ Off-hand.•",He says it "was; a definite:.j promisp.;-;; If. Ije;jdoes;.'l;hink:;that^.Well,:- ; . j I am sorry for ,: ■';■ lV .l:: i,.^.';V:'; '.'-, : Mr. Holland: :' rI took it as a de-;; finite statome'nti''-. :'• :. '."■'" i ''■ '' "'■; ";."..■■ ; Mri.Coates.said that at;the' time he ;- was speakiiig to Mr: Holland he wag - v; quite prepared- to; allow the report to:----go through; and to take a reasonable ;' amount; of_!■ business.: • for the day.- ---! "Buf^f"Baid^Mr. Coates,;;'f~we have ji; done' nothing the whole day. My re-;: ply to the .Leader of the Labour .; Party:is/ihat; if ■;he 'took '■■. that v.as ;a ■;;.-- definite .promise I am sorry -i or- him; The GovernmentV must : make aome"; : "show. . If he calls it double-crossing, ; . I: regret -,it' ■ very. ■ much.''-.'. -—'• ■■'■'a ■- ■ ■}-■ : r. «■<' ■ . ..A'.Labour member: "Business b'«- '• fore promisei. ' V .'• -. ;7.....:' .•;:: ■..'-; ■; ';:'.]'.:!; ;.-'.-..-■ '•. '■:.'.'?li think the.whole House wiUwgre^'? said Mr. Sullivan, "what hasjust happened in regard to!- a breach v of faith on the part of the Prime Min-' ister afterindioating; to; the Leader,,-: ,; of <the Labour Party that it was npt>;i his iritentiqn,to proceed'with the; sec-;! .end: reading:.'■?..'.";-i'.'i-■.';■:■'-:";-:;'':,'^-'■■■'..i:?':- ---■ Mr. J. Bitchener;(Waitaki)'raised'\ a point. of order as to whether -Mr;:':' Sullivan accuse '■:'. the- JPrimeMin- i ■.ister.--of\:i»-\breach I:ef.-::fa'UhVi:.^;.:.,v.;:.^;'.ry'- i ':,-. A Labour member: "It is a; breacli ' .of > faith. "r-;?::.:-:, ,;;y^;:c.:-::j.'-^;.<:-.:■.: ■/■' Mr. M' Combs:'/'Undoubtedly it• vi ■' X ::^'] '.•.■; i,','\: -..':;■ :,'";.■•>,■' .-;. The Prime Minister:-"Sayvit;is;»;':'' ! ■; ■breach^of' faith, a^d; go , ahead litnd- 1 do,your: worst,"^' .>.'- ;':]:\f\.'] : ~'-: Mr. Speaker "said he did; not think:' he could rulo against Mr. Bitcheneri; ; Mr. Sullivan:" I, do ,not wish io go .:/. any/further- with'--the^ matter; except ■:■': to say that: it i«: a definite breach'of *:' faith, and: to .say. also.that:itCis'.tteifirst time in the relations of ;theiLa^-,-."• our Party" with;a; Prime;Miriistei(tha^;;/ ••Wjß:h'av'e\fbund-'a'.-Pr^e'-ji^ii'ter- L'wfia-i'-'' has.':not 'lived-up;,td r .his Zwoiii given J. .to -the iLabourlfarty;:";:.;;;-": :X^j.:-^^:X^': ■ -The-discussipnr.was-, renewed,^:and:at';f •2.4& ■■ iuin^ :lE VP;- ¥raßer (-^ellingtpjts^ Central); inoyed^that; the^Bill be ''re^ f erred back''to the "Government \yith ";: a recommendation 'that there be s -no :: = further reductions., in"'income taxaV: tion. The amendment was put a^ 5.10 '•; a.m., theJLabour Party being -:deicat T '-. ed;by: l^vo'ter-'-to--16.". -.The ■■ishprt ■ ti'tley';'/ ifas. passed 'at' 5.50, when Mr^. Howard • : announced,;.j;.''We'r.e going .' home ■.' '.^PKJ.',^;-~Th'e;^C9inMttp"e,':\''B'tag'e'*';i'jlfas'?;::'. .then disposed of with dispatch; ■_&'. ;;':, iy.

A WftdNG PRlNciPtE 1 v ''*

Speaking on the third reading,, Mr. 'r Holland said he wished to -draw >ait- '.'•''■■ tcntionto^ the fact: that ;thei Labour-; Party had fought the" Bill- because ' < they., were' opposed [ to \ the 'f undameri-'/ tal principleof. the: measure' and ;for . ■•'.;■ ■the ■.reafcons i which^had; beenv clearly -I' Btated.over and : over.,again by; dif-i; feront'speakers of 'his \ party. Th6ir.'i main'object was to regißte'ritheir pro-.;.' test against what they considered • to.' be a wrong principle embodied ;in tho {• ' Eill,: and: to" draw: the attention- pf : the^country, jto^.legislation which injtheif opinion was distinctly class Jeg-v islation. -When-the Bill was in 'Com-' ;•' mittee,: had; it been '.."., possible,.; they, ■•..(• would have moved: amendments tothe main clauses, but. Mr. Speaker had. ruled that: they could not move to; increase-taxation, therefore: it : was . hot-- possible for -them < do; as • they; •■:■ ■ desired. 1 "I think it "will be found/; , said Mr. Holland, '' tha,t the vast, ma-'. :■, -jority.-pf'the people in this country v will endorse the stand which the'tab-f., our members have taken ifr opposing ;:> the- Bill:?* \r-.s: .;K;•■;•. ■-', ■ •■ -;*. f;

Minister of -Finance (the Hon. .;'\ W;-; Nosworthy;}-Bald-thai'there had ;■: been a; great deal-of-talk about thei : '-• reduction of;; ;taxatibni'' and how it; : benefited-the rich men,; and he point- ;;;" t ed out that most of': the companies: in-;,' the Dominion .consisted of smallshareholders. He repeated thp .figures, : quoted-by Sir James;vParr,; and ,de-; elared .that the allegations of. the Lab-:'"; oui, Party, wero^ absolutely: unfair- aiid: ;' unjust.': The;GovernmentT.had. 'a'p- '■'■;'.'■ : pfoached the ; Bubject;. from the point,i;;. of .view of giving everyone;'' a-tf'air; ; i deal. 'They, had cleared iip the old; scale of rates, and. had: substituted ia'**.-; scale .which.anyone;could understarid.:; There -was not a bit of dissatisfaction ■; for any reduction the ;; Government v tad made.; He would: leave the;couri-' : try,to ;formits, judgment of !the, Gby-.-.::'•• ernment's action' when; it< went to tlie > country..'; 1-. ■■'■■'ji)' : '::[- .;';:'-:;.u.' :V.-v..;ij;^.;^\ ; This Bill was then 'put ■ through; its;- ■ \ final: stages and passed, and; ;;the V House adjourned at ,6.10. a.m.: Vuntii-, : 2.5P:p.m.--to-day.... ;/■' -k:..:^.■■.- ''(■':'■'■'■} ;.,.:; ";'::