NO EXEMPTION IN ACT

Evening Post, Volume CXXVI, Issue 89, 12 October 1938, Page 8

NO EXEMPTION IN ACT

It is quite clear that the conten-tion-of National Party speakers that there is no statutory exemption of social security benefits from social security taxation is correct. When the point was raised by Mr. S. G. Smith, Dr. McMillan, in his broadcast address from Oamaru, declared that section 10, part 2, of the Act exempted pensioners. On further examination Dr. McMillan found he was wrong in his reference, and telegraphed to Mr. Smith stating that exemption was made under section 111 of the Act. This section, however, does not specifically exempt pensioners, but gives power, by

Order in Council, to "exempt any specified classes of persons" from payment of the social security contribution, if, "on grounds of public policy," it is deemed advisable. This means that the question is left to the Minister and his advisers, something very different from specific statutory exemption not open to the arbitrary judgment of individuals. It is true that both the Prime Minister and the Minister of Finance have reiterated pledges that pensioners will not be taxed, but the principle of decision by Order in Council is thoroughly bad in matters like these. The power to exempt "any specified classes of persons" might easily become the object of political pressure to secure exemption for considerable classes of superannuitants or contributors to superannuation funds. It is highly undesirable that any such power should be held by any Government. Classes might justly claim that they are entitled to exemption, and political history shows only too many instances of legislative schemes affected by political influence and diverted from their original objects. We might add that we have pointed out this danger on several occasions and the Government has only itself to blame for its neglect in this instance.