TAXING BILL PASSED

Evening Star, Issue 21093, 4 May 1932, Page 2

TAXING BILL PASSED

LAST YEAR'S RATES REIMPOSED ONLY ONE CHANGE INCOME FROM DEBENTURES FURTHER PENALISED [From Our Parliamintakt Reporter.] WELLINGTON, May 3. With one exception, last year’s rates of land and income taxation were reimposed by the House to-night, the annual Taxing Bill, introduced by Governor’s Message at 8.30 p.m., _ being put through all its stages at the sitting. The one alteration relates to income received from local or public authority debentures and company debentures by taxpayers paying on the maximum scale, which for this year will, with other investment incomes, pay the 33 1-3 per cent, emergency super-tax imposed last year. Provision for payment of income tax on an instalment basis will be made in the Finance Bill.

An important statement on the question was made by the Hon. Downie Stewart when moving the second reading of the Bill. “ It is,” said the Minister, “ a duplicate of last year’s Bill, with the cxt ceptions that, while the schedule is a replica of last year’s, there is one respect in which wo have made a slight variation. The problem that concerned us last year related to the proper method of making people with investment incomes, ‘ or unearned income ’ (as it is sometimes called), contribute their share towards the general sacrifice. Argument then circled round the question as to whether we should make a voluntary conversion loan or adopt some other expedient. I held the opinion then, and’ still believe now, that a voluntary conversion loan on the New Zealand Government debt would not he likely to prove really voluntary, owing to the fact that the interest on our public debt is considerably lower than that on the Australian debt. I pointed out that these receivers of lixod income from debentures, mortgages, Government bonds, and other gilt-edged investments had more at stako than any other section of the community, and that, if the State were to maintain itself on a proper basis, they should contribute, in addition to what other sections contribute, a special tax. Therefore, in last year’s annual Taxing Bill we imposed the super-tax of 33 1-3 per cent, on investment incomes, which is still shown in the Schedule in the Bill before the House. It was imposed in addition to the 30 per cent, surtax levied on all incomes, whether earned or unearned. The net effect was that taxation %vas first of all increased by 30 per cent., and then, having ascertained the amount of tax pajqible, we imposed the 33 1-3 per cent.’ super-tax on that portion of income which was returned as ‘ unearned.’ In last year’s annual Taxing Bill wo treated as income from investment sources income from mortgages, bonds, loans, and debentures. We did not include interest received from local authority debentures or company debentures in the case of taxpayers paying on the maximum scale. Those two classes are now included in this year’s Bill, and will be subject to 33 1-3 per cent, super-tax.” The Minister said that in the financial statement he presented to the House last month he intimated that, having “ caught ” receivers of investment income with the higher tax imposed last year, it would bo unreasonable, if the House decided to make a flat rate reduction in interest of 20 per cent., for those taxpayers to bo “ caught ” on both wings of the argument. That group had been divided into two classes in the National Expenditure Adjustment Bill—those receiving interest from private mortgages and those receiving interest from Government bonds and debentures. The first group had been subject to the 20 per cent, reduction in interest, and tho second had been called upon to pay a special stamp duty of 10 per cent. In addition, the latter would continue to pay the emergency super-tax of 33 J per cent, on “ unearned ” income, imposed iu last year’s annual taxing Bill, and to bo continued under the Bill under review.

The Minister emphasised that the rates imposed by this year’s animal Taxing Bill were imposed on income earned during tho year which ended on March 31 last, anil in those circumstances it would not be possible this year to review the special emergency super-tax of 33i per cent. If relief were to be given from the 33J super-tax it would have to come next year. If an attempt were to be made to mix up incomes for the two years with tho idea of removing the tax lie would be entirely disregarding the fact that tho income was earned last year, and that out of its provision had probably been made to meet tho taxation required. “ Last year’s income,” added the Minister, “ bears last year’s burden. Any concession in taxation arising out of tho operation of the National Expenditure Adjustment _ Bill must _be made next year and in the following years. That, in a nutshell, is tho position, In promising in my financial statement to give relief this year I lost sight for the time being of what the actual position would be. It is not feasible to grant relief on last year’s income for tho receivers of investment income. They will receive it next year on this year’s income, and not this year on last year’s income. They arc in tho same position as Civil servants who have to pay income tax on last year’s income, although they have had a cut in this year’s income of 10 or 121 per cent.” Tho Leader of tho Opposition (Mr H. Id. Holland) protested against such legislation being brought down in the last days of tho session, contending that there should have been ample time for the Bill to be discussed. Ho was of opinion that the Minister had originally intended to impose drastic taxation on incomes—in fact, when tho wages cuts were made the Minister had promised to increase taxation on the higher incomes. Mr Stewart: This is most drastic taxation when taken in conjunction with tho reductions we have made in interest and rent. Mr Holland: I’m afraid the Minister cannot get away with that. He said the working men had suffered a wages out, and now, to relieve the wealthy, the Minister is going to use the country’s reserves, and tho whole of the dominion will have to pay interest on the money raised against those reserves. Continuing, Mr Holland said ho did not object to the reserves being used, but their use should have been taken into consideration when the Government’s policy was being framed, and wages reductions and taxation could have been based on the altered position. As it was, wages had been reduced and then a decision to use tho reserves had been made in time to save tho wealthy •section of the community. The Minister had said he was going to permit payment of income tax in instalments. Mr Holland asked: What form would