"STONEWALL" ON SALES TAX

Evening Post, Volume CXV, Issue 40, 17 February 1933, Page 8

"STONEWALL" ON SALES TAX

SLOW PROGRESS IN COMMITTEE

HOUSE AGREES TO SECOND READING

GOVERNMENT INVOKES THE CLOSURE

The indication given by the Labour Party earlier in the week of its hostility to the Sales-Tax Bill was realised when the House of Representatives commenced its sitting yesterday afternoon. The Prime Minister (the Rt. Hon. G. W. Forbes) obtained, urgency for the passage of the Bill, but Labour's attitude was unaltered when the second reading debate was resumed. Indications had been given earlier that the Opposition would take every available opportunity of expressing its disapproval of the measure, and as the night progressed these indications were fulfilled. It was only by the application of the' closure shortly before midnight that the second reading debate was carried. The Committee proceedings proved no exception, and the passing of the short title of the Bill accounted for a further four hours, after which another tactical move was made by the Opposition with the object of further protesting against the Bill. Up to, the breakfast adjournment at 7.30 o'clock this .morning it had been found necessary to apply the "gag" in order to enable progress to be made. Members of the Labour Party showed plainly that they were determined, to fight the Bill at every possible stage, and the indications were that the measure would not be passed before the House had been asked to sit the longest period of the present Parliament.

Mr. H; T. Armstrong (Labour, ChristT church East) said the legislation was : another of the shocks that had been given to .the people recently. The Bill, he contended, would have a paralysing . effect on business.* There were many ... lines which the people could do without, and after the passing "of tho legislation they would do without them. He wanted to ,know what had happened in the last five or six weeks to make the Prime Minister change his mind. Except: those who refused tosee, anyone could see a few years ago where the ■ Government's legislation w'oulr 1 lead to. The. need ..for the legislation was ea,tirely due to the artificial.pegging of the .rate of exchange, which had brought about a decline in Customs revenue and an increase in interest on the overseas '■-. debt. When the ex-Minister of said that: the Sales Tax, Bill was not . the result of the higher exchange, he . must ; have been speaking with his "tongue in his cheek." If the exchange had been left where it was, and next year's deficit wiped out, then there would have been no need for the • present legislation. Important industries employing hundreds of • people '. would be put out of business. The passing of • the Bill would make it necessary for the: Government to put into operation more economies than,would lave been needed had it not been for the Bill. What the Government gained in one direction, it would lose in another. The worker was getting the worst of the deal in regard to every piece-of legislation the Government had .passed in recent years. "I am going strenuously to oppose every. clause of the Bill,"he said. "The need for the legislation has been brought about'by - the, Government's own nonsensicallegis- . Jation passed recently.'? The Bill would kill the building industry, which had just begun to; revive. . \ .. . . STATE ENTERPRISE. Mr. H. M. .Campbell (Government, Hawke's Bay) said, he regretted the. .measure. . A good deal of the necessity which had prompted the Bill might - have been avoided had the Government : kept clear,' from various State enterprises. -,■■...■. . .'.■'. Mr. P. Praser (Labour, Wellington Central):; How about State control of the exchange rate! , . . Mr. Campbell: That. illustrates1 my case almost better than. anything. If the exchangeratehad been left to take .'its proper course fourteen months ago, it'would- have gone up to 25 per cent. One interference leading to another V had been the cause of'today's troubles. He advocated a cutting in State enter- ' prises and State and per T initting private individuals to do the 'job more cheaply and more; efficiently , than the Crown. Mr. Campbell criticised the clauses relating to the powers the. Bill conferred on officers, and contended that those powers were too drasv V "A VICIOUS MEASURE." .'■ Mr. P. Jones (Labour, Dunedin South) described the Bill as a vicious measure. Under the sales tax, people with-large incomes would escape. If the sales tax were necessary, then services should be included. People who rendered services would not escape under income tax. Many shopkeepers would go out of business as a result of :the legislation. :^ The middle class would not stand for the Government's He trusted that the Govern-ment-would do something to meet the position, of -the unemployed. He also wanted to know why newspapers andJiewsprint- should be exempted from the sales tax. . Mr. J. Hargest (Government, Invercargill) said the Sales Tax Bill had given the Labour Party an excellent talking point. He regretted the introduction of the Bill as much as anyone else, but it had been made necessary by stern realities'.: The greatest virtue of the tax was that it was productive, but he intended to support it because he believed the Minister of Finance would not,have brought it down if it had not been absolutely necessary. He expressed regret that the tax was being made applicable to timber, as it would have the 'effect of stopping building and1, causing more" unemployment; He suggested that the Minister of Finance should consider the imposition^ a, 2 per cent, tax on exports. ' ..' A. good. deal- had., been given to the farmer lately and he. should be prepared to make some contribution to the .country in the time of its need. RESULT OP POiilCY. Mr. D. W. Coleman (Labour, Gis- , borne) saidtha.t it had been stated that necessity had been responsible fo. the imposition of the sales' tax, but the position which had been created was ■'■ the result of the disastrous policy of : the' Government. Wages reductions and pegging of the exchange had been devastating to the economic situation in the Dominion and had caused wider ' spread distress. The Government's ac- ' tion was increasing unemploym at and increasing the cost of living. The sales ' tax was an. imposition which business ! and trade could not stand. Many businesses today were in a. serious. plight, and the new burden would mean that some of them would face bankruptcy. As the result of the increased tax on petrol it would be impossible to buy petrol in some parts jf New Zealand for. leas than 3s per gallon, and this ■ would not only cause hardship to small carriers but also cause a rise in trans- , port costs. , Mr. T. D. Burnett (Government, Tenruka) said that the country was now paying' for the mistakes of the last , 'thirty years. However, other countries were worse off, and New Zealand should face the position and put her house =' in order. In England taxation amounted to £I' 68s per head, while retail prices had risen '43 per cent." above the 1914 level. .In Australia the taxation per head amounted to £13 ss, while the retail prices were 21.8 per cent, abovo the 1914 level. In. New Zealand the taxation per head was £11 9s 6d and

the retail prices were 29.1 per cent, above the 1914 level. ' ■■> ' Mr. A. S. Richards (Labour, Boakill) said that the Government's policy was rapidly driving the Dominion to a repudiation of the country's debts. Every Government member has apologised for 'the Bill, and if the Government did not want the Bill it was certain that tho community did not desire the measure. The programme of the, Government/was slowly chloroforming the pub; lie into a state from which it could not recover. The sales tax and .other taxes were being imposed in order to pay the overseas bondholders, but the time had arrived when.the first consideration should be the welfare of tho people within the Dominion. .In the case of most goods on which the tax was imposed.the increased coat to the consuming public would, be'around 20 per cent. In addition to that the exchange was really another form of sales tax as far as'the bulk of the people were concerned. The tax would decrease the purchasing power of the reliei workers, whose families would also suffer. There was a danger of malnutrition amongst the child life of the Dominion In prosperous years the Government had whittled away its reserves for the benefit of its friends,.and was now asking the weaker section of the community to carry the burden. "WITHOUT A FRIEND." Mr. E. A. Wright (Government, Wellington Suburbs) said the Bill was practically without a friend, in the House; it. was an absolute orphan. "But notwithstanding that the Bill will be passed," said Mr. Wright, "and all;w<i who oppose the Bill can. do is to speak against it and vote against it." He did not see how the. sales tax was going to make- the' country solvent, as tho revenue that would be' collected would not balance . the Budget. The Bill would increase the taxation imposed on the people tremendously. The Government was following the example of Australia, and he'did not know that that was a. good . example to follow. He could, npt understand the Prime Minister saying that the tax would" not be collected until April 1.. The tax was actually being levied now, although it might not be: collected by the Government until the beginning pf; April, .MrWright described the economists who' advised :the-; Government; piW/th©; high exchange issue—and-possibly.-the salos tax as well—as .a-, packed.^committee/ and said it was significant fthat;, Professor .Murphy;-; who: opposed- high *ex--change, was not a member. 'The Bill' was a sequel to high.exchange.'." It was said that farmers were1 living on-their reserves, but there were thousands of: business people in the same position, and the sales tax would have the effect of putting many of them out of business altogether! There were also "hundreds of people who had lost everything tney possessed and were penniless. Mr. Wright referred to the high cost of collecting the taxation and said the Government would have to increase its staff very considerably in order to deal with the returns necessary under the Act. Business firms would . also have to increase their staffs in order to comply with its terms. ; , INSPEOTOBS NEEDED. A number of inspectors would be required to see that the provisions of the Act were.not evaded; continued Mr. Wright. The clause empowering officers to arrest without warrant, on grounds Of reasonable suspicion, , was a direct violation of-MagnaCarta. Similarly, it was doubtful whether there was any provision in the criminal code as far-reaching-as'that which enabled the authorities to: hold a man until they could find ■ out something about him. Unless a majority of the House took drastic- action against the clause it would be passed; in spite of the pious speeches of some, of the loyal Government supporters. The clause, in addition,, assumed that the commercial community was dishonest—a most undeserved charge. ■ Taken; as a whole, the commercial community.' were an honourable body of men. The section generally was a travesty of justice, and also- an unmerited, condemnation of a body of people in New Zealand. Mr. Wright attacked the . clause which placed the burden of proof on the defendant..- He said it was quite possible under the Bill for.the Government to issue regulations exempting Government Departments and municipal bodies from the taxation, and that would be another great injustice. He believed there were other sources of taxation. Many big corporations were escaping taxation. ACTION NEEDED. Mr. H. Atmore (Independent, Nelson) said that action was required today. "Facing the future with calm determination' V would only take the country where the Government was leading it—into a financial morass. The farmers were hard up because people could not buy, yet the Government had further decreased purchasing power and increased the cost of living. He contended that public indignation would rise, before tho end of tho year. v The people were denied the use of the goods—the real wealthf—which they produced. There was a guaranteed price for wheat,'apples, and tobacco, and yet the idea Of a guaranteed price for other things was ridiculed. The Government was doing-nothing to reach the root of the trouble. He claimed that real wealth was not ..assessed at its proper value, otherwise there would be no trouble in the world today. The world was wealthier today than ever before, but men and women were not being liberated from the drudgery of toil. The remedy would be applied in- utilising the credit of the people. At one moment the Government put a bonus on timber for building, and the next appliod a tax. He; intended to vote against the Bill. AMENDMENT MOVED. Mr. D. G. Sullivan (Labour, Avon) said that apparently the Government had no desire to be popular with the poorer .people of New Zealand. Eefer-

ring to criticism of the attitude of Labour in Australia, he said that in the Commonwealth there had not.been a Labour Government strong enough to put its measures through because the Senate was unsympathetic. He moved the following amendment:— That all the words after the word "that" be omitted, with a view to inserting the following words: "This House refuses to accord a second reading to a Bill which imposes an additional burden of taxation on relief workers, old-age pensioners, pensioners of every kind, and other impoverished sections of the community, and which is calculated to so interfere with the conduct of. industry and business as to increase the numbers of the unemployed people of the Dominion;" Mr. Sullivan said he was not moving the amendment with the object of delaying consideration of the measure, but because he'considered it his duty to let the people of New Zealand know what was in the Bill. Exchange, plus sales tax, meant approximately a 20 per cent, cut in wages. Relief workers had no resources to meet the additional taxation, and the House had to realise that the taxation would be collected from money which had been spent on food and clothes, because the relief workers had" no money for anything else. It seemed to be utterly hopeless to appeal to the Government. BILL NOT APPROVED. The. amendment wag seconded by Mr. W. E. Parry (Labour, Auckland Central), who said he thought it fitted the expressions, of those who had spoken on the Bill.' Not one member of Parliament approved of the Bill, according to, their , speeches, and no section of the community was in favour of it. Under those circumstances it was straining the loyalty of the members of the Government Party to ask them to vote for the measure. The position of the overseas markets was not satisfactory. Would the Government sell the unwanted■ meat-to the starving unemployed? If the country's creditors refused to take payment for debts in. meat and other produce, what other arrangement-would be made? "INQUISITORIAL." Mr. P. Fraser (Labour, Wellington Central) said that the Bill had to be buttressed with a system of terrorism before it could be put into operation. It was inquisitorial in the extreme and had not been commended by one member of the Government. It had not even been damned by faint praise. The.ex-Minister.of Finance considered that £4,000,000 of the deficit was due to' the high exchange, and this was in itself a striking condemnation. The Government had pursued a policy of deflation and, at the same time, had imposed increased taxation- burdens on smaller salaries1 and wages. The Labour Party had brought down an alternative policy which it wished to be examined. The chief problem was to organise the Dominion interaally, despite world prices and conditions, in order that all who gave service should have adequate remuneration and that they .might live in keeping with the tremendous volume of "wealth within the Dominion. What was wanted was a policy of enlightenment and not one of gloom and despair. The Prime Minister, in speaking on the Bill, had acted like a bankrupt shopkeeper, saying, "Well, gentlemen, this is all I can do." The"Minister of Finance, who had. sponsored the Bill, Bpoke, with no certainty and no assurance. At one time New Zealand led the world, but now, by adopting the sales tax, it was following the; lead of. a long list of small, backward countries such as Korea,- Costa Eica, Ecuador, Luxemburg, and Turkey. "I don't think .the Minister will defend the principle of the! Bill," said .Mr. Fraser.' "AH he can say, is that it is necessary because of. the position in which the Government finds "itself. The; Labour Tarty says that this, position is the result of the Government's policy of deflation. While it is not the job of the Labour Party; to provide a policy, it so realises its' responsibility at the present time that, it has put forward a policy, and ■that policy is directly opposite to that •of.vthe Government's." ;^J.j. '' CLOSURE MOVED. -;3.t 11.50 p.m. the Minister of Labour ■'(the Hon. A. Hamilton) moved the closure, and this was applied by 43 votes, to 26. ..'■■.''■-■:.: The Labour amendment, on a division, was defeated by 44-votes to 26. The second reading of the Bill was carried by 44 votes.to. 26. The division list was as follows:—- ---'.-. , AYES (44). Ansell jull • "■ Bitchoner Kyle Bodkin ' Linklater Broadfoot ' Lye ' Burnett McLe'od Campbell' . McSkimming Clinkard ' Macmillan Coates Macpherson . Cobbe Massey, J. N. Connolly . Massey, -W..W. de la Perrelle Murdoch Dickie Nash, J. A. . . Endean Ngata - Field ' poison Forbes ' Ransom ' Hamilton . Eeid Hargest " Smith Harris . , . Stuart, A. Hawke Sykes Healy .To Tomo . Holland, H. / •. > Williams Holyoake ' Young , . NOES (26). Armstrong Mason Atmore ~ Munro Barnard Nash, W. Carr O'Brien ■ Chapman . . Parry Coleman Bichard3 Fraser Savage Holland, H. E. Semple Howard Stallworthy Jones ■ Sullivan Langstone Tirikatene Lee ' Wilkinson Me Combs Wright IN COMMITTEE. The House went into Committee at 12.15 a.m. "■" Members discussed the short title until 4.10 a.m., arguments advanced during -the second reading being reiterated. The closure was applied by 39 "votes to 23. The short title was agreed to by 41 votes to-. 23. . At; 7.30 a.m., when the breakfast adjournment was taken,- the Committee was considering the. second clause of the Bill, dealing with interpretations. In the ordinary course of .events interpretation clauses are allowed to go through without discussion, but on this occasion the Labour Party is discussing every aspect of ■ the clause. _ Another hour witnessed tho adoption 'of the administration clause by 39 votes to 21. At 12.25 the clause relative to the constitution of districts for the payment of the tax was retained by 41 votes to 22. • 'y After two and a half hours' consideration the .Committee adopted the interpretation clause by 39 votes to 22. Consideration of the administration section was commenced at 10.45 a.m. In reply to questions it.? as indicated by the Minister that it was not tho intention of the Government that the taxation should apply to the sale of land, houses, or livestock. When the fifth clause, providing for the licensing of wholesalers and manufacturing- retailers, was reached, it Was suggested by Mr. C. A. Wilkinson (Independent, Egmont) that the Government should agree to forgo the provision that wholesalers and manufacturing retailers should lodge a security. Mr. Wilkhißon said it was conceivable that tho provision would prevent young