LAND AND INCOME TAX

Greymouth Evening Star, 2 September 1927, Page 12

LAND AND INCOME TAX

DEBATE IN HOUSE.

(Special to "Star.”)

WELLINGTON, Sept. 1.

The annual Land and Income Tax Bill came before the House for the second reading to-night. The Minister of Finance reminded the House that in the Budget he pointed out that the income tax scale was not on a proper basis, as war increases and subsequent decreases had upset the fairness of the gradation schedule, therefore it had been recast, but the minimum rate 7d and the maximum 4s 6d were the same as Idst year. The re-grading therefore did not impose further burdens on the small man, nor did it meantime afford relief to the individual or company on the highest grades assessable. Incomes, in the £3OO to £4OO class, in respect to which no alteration was made, totalled over seven millions yet, when allowances and the reduction was taken into account, the taxable balance was only £382,432, involving an actual tax of £10,656. Re-grading would not affect a man with £4OO a year, while in respect to the class between £5OO and £6OO the table of incomes only totalled a million, and the actual tax paid was £28,000. As the scale ascended, the taxable balance more closely approximated to the full income. This regrading was an essential preliminary to any consideration of reductions in taxation, otherwise anomalies would be accentuated.

The Minister explained that under the new schedule a man with £BOO a year and no children, went up from £25 to £2B, whereas in Queensland, he would be paying £5l and in England £65. A further consideration was that this re-adjustment should be considered in conjunction with the revision of the tariff, wherein he hoped the effect would be concessions to a greater extent than the increases which were incidental to re-grading the income tax. The Minister discussed company taxation, pointing out that while some critics suggested it was a double burden on the individual taxpayer, who was a shareholder, others declared it was a burden on the community, because the tax was passed on. The best authorities on income tax were of opinion that this tax should not be passed on. He believed if the Government further reduced the weight of taxation, most of the opposition to the present system would disappear. Mr McCombs thought the Bill very disappointing, seeing that the Government had year after year promised readjustments of taxation. Under the system of taxation in operation in New Zealand, companies paid the company tax and there was a large body of income receivers that was virtually tax-free. Industry was hampered because a portion of profits had to be set aside to meet the company tax. Why was not the graduation made more steep, regarding companies with headquarters outside New Zealand. It was difficult to know how much of their profits was made in New Zealand. It should not be beyond the ingenuity of the Depart* ment to frame legislation to rope in those companies. The fact that an anomaly existed was no reason for con tinuing the present system of company taxation, under which local people were at a disadvantage in competing with imported goods. Mr Lysnar said he would like to have seen the anomalies removed as regarded taxation on debentures. Company and municipal debentures should be placed on the same footing as others. Under the present position the farmer was suffering because money was being invested in companies and in municipal debentures, instead of in farming securities. Something would have to be done to remedy that. There was no justification for leaving the tax on municipal debentures issued before 1923 at 2/6. Capital was chasing the cheap income tax debentures, and nothing was being done to help private individuals. Was the Government trying to keep people on the land, or did it want to drive them into the cities? Sir J. Ward said that the Government should consider whether it was necessary to increase taxation under any head. The Postmaster-General (the Hon. W. Nosworthy): This is straightening out the position.

Sir Joseph Ward pointed out that it had been said this was merely a preliminary move. How could doctors, dentists, chemists and others in that grade of income live without passing the charge on. The comparisons the Minister had made with other countries would not bear examination. Hon R. A. Wright: Why? Sir Joseph Ward said there was no company tax in Australia, such as we had in New Zealand. England was not a dear country to live in for the average working man and woman. It was no use setting up a commission on taxation. The Minister and his officers must act. If the Taxation Commission report had been acted upon, it would never have worked. No Government could have acted on the Commission’s material recommendations. The graduated land taxation s'ystem was introduced for the specific purpose of forcing large land owners to cut up their estates for settlement. That system had served its purpose, and it was criminal now to make the taxation still larger. The country needed reduced taxation just now, instead of increases being made, and the Minister should look at the question from that point of view. He agreed with what Mr Lysnar had said In regard to the land tax. Replying to the debate, the Minister of Finance said he understood it was not the practice of the Department to personally claim on a man who could establish the fact that he had no means of recouping himself out of land. The practice was to come back on the man who had some .equity. Regarding the local body debentures on which there was a tax of 2/6, it was true that when the matter was adjusted in Mr Massey’s time, that gentleman was under the impression that it would not be fair treatment to the debenture holders to revise their taxation if they had established their rae of tax before a certain date. The speaker thought that, a debenture holder was in the same'position as anyone else, and that his taxation could be changed. Mr Fraser: The debenture holders will feel they invested their money vnder false pretences. The Minister: Any other mortgagee might hold the same opinion. The Bill was read a second time.