NEW TAXES

Evening Post, Volume CXV, Issue 47, 25 February 1933, Page 11

NEW TAXES

NEED FOR REVENUE

INCREASED CUSTOMS

LABOUR CRITICISM

'WARTIME EXAMPLE

.The necessity for finding additional revenue was emphasised by the Minuter of Finance and Customs (the Bt. Hon. J. G. Coates) when movin^ the second reading of the Customs .Amendment Bill in the House of Representatives last night. A criticism ,of the Government's proposals -was made by the Deputy-Leader of the ;Labour Party (Mr. M. J. Savage) pvho led the debate on behalf of the He suggested that the jfcredit of the country should be utilised for the purpose of carrying '.tout a constructive policy. In moving the second reading Mr. jCoates said that the first necessity of *he Government at present was to increase th© revenue coming to the- Consolidated Fund. All forms of revenue —Customs, income tax, stamp duty, etc.—had fallen short. He knew that there would be criticism of the Government's decisions, but increased revenue ■was essential if New Zealand was to meet its obligations and liabilities. _ Beferring in the first plaeo to the increase in tobacco duties, Mr. Coates eaid that he wished to stress the & ct that more revenue was absolutely necessary. The tobacco, industry had grown to big proportions in New-Zealand, and 4™<L<S eSti°Vr se whether they should import any tobacco at all. _ Complaints had been made that tie Increased duties would be detrimental ,to the industry, but it had'to be remembered that when the House went into srecesa a Commission of inquiry would be set up to inquire. Into the whole ouesttonj* tariffs as affecting the economic porting of the Dominion's industries. •. M'« £• Langstone (Labour, Waima*ao)i That's just jargon. ' fcn^i; 6S: 1 wiU *sk the honourable feentleman. not to be rude in his inter;wptxons. in view of the fact that there %j£~° % * mquiry, the tobacco industry and its economic position will bo !"&.e™?£: and oom Preheilsively reTOBAOCO BUTIES. The Minister went on to say that tfhe alterations which had been made in ithe Customs and excise duties on tobacco and cigarettes in recent years Sti» nt ca a ™ abnormal elation be- ' -wdtV a ? °? those Soods' In W»?« xI 7 °a m Porte<* cigarettes was fixed at approximately 13s 6d per lb, while that on cut tobacco was in- "?*« w« ? A* lb> That meant th^t •£K? ort duty on imported cigarettes '£w° 6 an di uble that on Sported tobacco. The effect of the alterations >w « t0 reanC6 the "^sumption of C°mparetl With that of ■ . Mr. Coates quoted the following +fwL S oWi ng-the total quantities of .tobacco and cigarettes entered for Unty during the years 1929-32:— Tobacco manufactured. Cigarettes. Total fji. ii ni That meant that while in 1929 ci- ea-s-ettea represented about 36 per cent. :.of the total quantity of tobacco and •SI?!? 8" Cl6ared ~in New Zealand in .1933 the percentage had dropped to 23 S? ri C£ n*' ■ 3Ct was obvious therefore that if it was desired to obtain extra +r eiS^" ana that was the olbieet of the Bill"—an endeavour had to be made to lessen' the disoarity between Jhe duties on cigarettes and tobacco ; Mr. Coates said there was no desire to affect detrimentally tho tobacco industry in New Zealand. If the effect t>£ the tariff was to destroy the industry, then he for one would say that, hard up as New Zealand might ibe, it would not be worth while to increase the tariff. It1 was a matter for wander to him. that the manufacturers in New Zealand had not taken advantage of the favourable duties to «neourage the use of New Zealand tobacco leaf in the manufacture of cigarettes. Very strong representations had been made to him by the member for Motueka (Mr. K. J. Holyoake) that the duty on imported leaf should be increased by fid a lb, but he had not seen his way to comply with the request. , His main ground for refusing the request was that the need for revenue was so urgent that it could npt be overlooked;. Personally, he did not see that the alterations which were being made were going to have the detrimental effect on the tobacco industry that some of the growers suspected. Referring to the increased tax on petrol, the Minister said ho thought the necessity for the increase would be understood. This remark was greeted with laughter from the Labour benches. Mr. Coates: Understood, but fiot appreciated. Again it is a question of revenue. Any other Government would have to find money. Mr. A. S. Eiehards (Labour, Eostill): They would get it by some other means, perhaps. The Leader of the Opposition (Mr. H. E. Holland): To what extent will the main highways suffer? Mr. Coates: The main highways-will iot suffer. They get the amount they got last year. They get none-of this. The Government also proposes to retain the £500,000 which was previously, diverted from the Main- Highways Fund to the Consolidated Fund. The Minister then went on to refer sri detail to the various clauses in the Bill. , LABOUR'S KEPLY. . ' - Mr. M. J. Savage (Labour, Auckland .West) said that the Government's taxation policy was only adding to the burdens of industry and the people, and those with, small incomes and large "families were carrying a greater share of the taxation than ever. Tho Minister of Finance had stated that there was to be a Commission of Inquiry into the New Zealand tariff, and one wondered what would be the personnel of such a Commission. Perhaps it would be another case of the Government endeavouring to shelter behind a commission. For years they had listened to the philosophy of British preference, but so far there had been little indication of a trend iv that direction. Instead there were people talking about trade with Japan. Both viewpoints could not be right, and if New Zealand bought less from Great Britain, then Great Britain in her turn would not be able to buy as much from the Dominion. New Zealand had financial obligations in England, and this point should be remembered when overseas trade was being discussed. . The Minister of Finance had stated that there had been a fall in revenue, but this was only to be expected when the Government adopted a policy of breaking down the incomes of the people. If they went on long enough they, would arrive at a time when there would be nothing left. It did not matter^ what form of taxation was applied, it came from the incomes of the

people. The bulk of the revenue of the Government was being raised by indirect means, and the result was that the people did not realise the oxtent of the taxation they were being called upon to pay. It -had been stated by the Minister of Finance that imported cigarette tobacco could not bear another 8d per ■ lb in duty, but he had made his argu- - ment ineffective by adding 8d to New Zealand-grown tobacco. Perhaps the New Zealand growers were easy to get at. Not only that, they had already recorded their vote, and much, water would flow under the bridge More they would be called on to record another one. "UNJUSTIFIABLE." A further increase was being made; in the petrol tax, and with the exception of the fishermen, this would mean I an increased burden. To anyone ac- 1 quainted with the fundamentals of sonnd taxation the petrol duties could ' not be justified. The tax had been ' raised in .the first place to provide . money for the construction of high- j ways, and had been earmarked for this purpose, but when the* Government got into difficulties part of it was taken 1 for the Consolidated Fund. Now a further £500,000 was to be raised from this 'source for general revenue pur- i poses. It did not appear that any i member of the House would live to "j see the day when tho tax would disappear. One wondered if the Government was going to do anything in the ' way of making tho oil companies bear ' some of the load of this taxation. ] They were surely able to carry some . of it, and if they could be induced to shoulder some of the taxation, the re- ' suit would be that those trying to make i 'a living by carrying on a form of , transport would have a better chance of making ends meet. "It does not matter what form of ' taxation is being applied today," ' said Mr. Savage, "we are overdoing it. \ we cannot go on as we are going. Everyone is being sacrificed, and , everyone is tumbling over. This is " not the, Only way we can carry on. When we needed money during the , war we did not think of the different forms -of taxation, but we used the public credit-without asking the per- \ mission of anyone. The money was raised by the übo of the printing f press, but it has been the habit to , ridicule anyone who suggests that the public credit should be used for carrying _on the activities of' peacetime. ( During four years of the war we raised - £25,000,000 for pay and allowances " alone, but today we are trying to raise money by means of a petrol tax for ( the^ purposes of reconstruction. When it is suggested that we should follow the precedent of wartime for the pur- ( pose of putting men into industry, the £ reply _is that the proposal is one of < inflation. No one talked about inflation during the war. It appears to j me that the Government is hopeless. It will_ not attempt to reply to any suggestions—it. simply says that they . cannot be carried out. No reason is ' given." ' . : Mr. Savage said that there Vere • thousands today in a pitiable position * and thousands on- the eve of facing un- ' employment, .but the Government ' seemed to be incapable of grappling . with the situation. It had already ex- \ hausted all forms of taxation, but-it \ was possible that Cabinet, knowing that it could not carry on much longer < was having a final flourish, and was leaving its successors to cope with the mess which had been made. There did not seem to be a gleam of hope. j TOBACCO INDUSTRY. ' i Mr.. ILAtmore (Independent, Nel- . son) referred to the growth of the to- ' bacco industry in the Nelson district, ' and said that this year the estimated value of the yield would be £200,000. J New^ Zealand could grow tobacco of • extremely, fine character, and it was ] only right that the industry should be fostered. The increased petrol tax must be passed on to the people. Sugar ; also was touched upon by Mr. Atinore, who said that he would vote against 1 the Bill on every possible occasion. Mr. B. Semple (Labour, Wellington East) said it would be disastrous to * impose a tax on a growing industry, < like to the tobacco industry. He considered that New Zealand was capable of growing all the tobacco needed, arid plant second to none in the world could be produced. It was a fatal mistake to levy a tax on tobacco. He contended that the Government would not receive the revenue estimated -from the ( petrol tax. Sales had already de- ' creased, and it would probably lead to increased unemployment. The taxes * had been imposed without mature consideration. In particular, the petrol tax would.te hard on the carrier who now had difficulty in getting a living. Surely the oil trusts and combines 1 could be made to bear the cost of the 1 tax so as to enable the consumer to be J protected.' Many business men in the ( cities were in just as bad a position as 3 the farmer, and he -was in difficulties. 1 Instead of tho business man • being C given assistance, he was tolled on to I help the other section of the commun- ( ity., Any measure of relief had to be i of a national character. All the legis- ] lation passed this session had been designed to help the farmer. The rest of the community should be saved also. The second^ reading was carried at 4 o'clock this morning by 37 votes to 20.