INCOME TAX REBATE.

Grey River Argus, 18 January 1922, Page 7

INCOME TAX REBATE.

TO BENEFIT A HANDFUL. THE AMUSEMENTS TAX. Speaking on the Finance Bill (No. 2) in the House of Representatives, Mr H. E. Holland said:— There are two items in this Bill to which the strongest objection ought to be taken. The first is the principle of the rebate of five per cent., and the second is tax on amusements. It is a most extraordinary thing that the Government should put up a case in favour of giving a five per cent, rebate to those who do not need it while they are, under their retrenchment proposals, heavily taxing the wage-earners and public servants. I understand the retrenchment proposals have been modified to sonic extent, but still at the very least £l5 a year is to be taken away from the lower paid public servants. Now £l5 a. year from a man getting a certain wage—

Mr Massey That is not in the Bill. Mr Holland: But the Bill covers it and it is open to discussion. This is a Finance Bill as the Prime Minister knows, and while he proposes to levy a tax of £l5 a year on the lowest paid public servant who is to be retrenched. Mr Massey: That is not a tax at all. Mr Holland: Then I should like to know what the Prime Minister will call it. If the Prime Minister goes to the public servant and says, “This coming year I want £l5 off your wages,” it I does not matter whether he calls it a tax or not. It is a tax. For all practical purposes you arc levying a tax of £l5 a year upon that man. Mr Massey: Would you call it filching when we gave it as a bonus? Mr Holland: The Prime Minister has I to remember that during the war period no increase .in the lower salaries ever came anywhere near in amount to the increase in the cost of living. Mr J. R. Hamilton: They were never better off in their lives. Mr Holland: I will take the word of the member for Awarua for it that he himself was never better off in his life than during the war period, but the men who were working on wages were at least 40 per cent, behind in the matter of the increased cost of living. The Government statistician only deals with The Three Food Groups. He docs not deal 'with drapery, clothing, boots, and all that kind of thing. Everybody knows that the prices of clothing went up enormously during the war period. Now, while the Government is proposing to levy what is practically a tax upon the wages of the public servants, and while the privately employed wage workers in every department of industry are being called upon to submit to reductions along with other disabilities, the Government comes along and proposes to make a rebate of 5 per cent, of the amount of income tax to whoever pays his tax before the expiration of 21 days after the due date. The man who is really hard up and cannot pay within 21 days will get no benefit. Then the Government goes a little further, and in Clause II proposes that whoever shall pay the tax in advance shall receive

interest equal to the post office savings bank interest. But the Government differentiates here, for the clause says that interest shall not be allowed save in respect of an amount of £lO or a multiple of £lO. Now the latest year book returns show’ that last year we had only 44,084 income tax payers and 53,807 land tax payers, so that at the very outside the Government’s 5 per cent, rebate proposals involving a sum of from £500,000 to £600,000 will benefit only some 44,000 people. This is under Clause 10. Under Clause 11 the benefit will not be extended to anything like that number for the interest is only to be payable to those who pay a tax of £lO or over. In 1918 the special return which was prepared for that year shows that out of 30,355 ordinary income tax payers about 19,500 paid less than £lO. Of course in that year there

was a special war tax in addition to the ordinary income tax, but it is quite clear that from 10,000 to 20,000 people at least will pay Less than £lO income tax and that being so they cannot get the benefit of the interest rate provided for in clause 11, supposing they were able to pay their income taxation in advance. However, the main objection is that clause 10 provides for the allowance of the rebate to 44,000 people who do ..not need it. It has been stated over and over again that nobody can be called upon to pay the income tax unless he has the clear net income. Liberal deductions are made. Sir W. 11. Herries: They are taxed on last year’s income. Mr Holland: Well, if it is on last year’s income they can only be made to pay if they have had the net income. Sir W. H. Herries: Last year. Mr Holland: It does not matter whether they 'had it last year or will have it this year or next year, they can only be made to pay if they have the income. If they have had the income they are under no disability. If this year their income is not sufficient, next year they will not have to pay income tax upon it. That goes without saying. They can only be called upon to pay if they have had the money. Mr J. R. Hamilton: It has disappeared. * Mr Holland: The honourable member will disappear from this House sooner or later; that also goes without saying. It is extraordinary to say that the money has disappeared. Practically

the honourable member says, “We have used it up, and therefore we should not have to pay tax on it.” What injustice can there be in the case of the person with an income being asked to pay an income tax? He must have a net income of £3OO. Very liberal deductions are allowed in the ease of each child for insurance premiums, and so, on, and he is asked to pay what is not a heavy income tax after that. Many of the income tax payers pay amounts that run into hundreds of pounds, and where the injustice comes in it is very hard to see. What is quite clear is that out of the 44,000 there arc 20,000 who will not benefit to any appreciable extent by the rebate, while 20,000 Will Benefit. very materially, and the 20,000 who benefit hugely will benefit at the expense of all the rest of the community in New Zealand. In order that these may get a benefit the public servants are to be retrenched, there are going to be wholesale reductions, and additional indirect taxes are to be levied. First of all, the Government proposed to tax the 6d tickets of the children who go to the picture shows. I think the protest made from these benches is influencing the Government in the direction of reconsidering that proposal and it may be that an equally strong protest effectively made will have the effect of causing the Government to reconsider clause 10, as it stands at present. Sir, it seems to be an extraordinary thing that we should be asked to place still further taxation on the amusements of the people. I am not going to worry over the amusements of the well-to-do. They are not such a

large class and you can tax them as heavily as you like. Mr McCombs: They can pay it out .of the remissions they get. Mr Holland: They can pay it out of the remissions they get, as suggested, but when you come to levy a special tax on the rank and filo of 1 lie people | through their amusements, then it seems I to me that A Very Stupid Thing is being proposed, and a very wrong thing. When men and women work as they do in this and every other country, when they work on the average eight hours every day in the week except ! Saturday, and at a higher tension and | their work is far more productive than ! the 12 hours’ day was in bygone times ' —when they have performed that day’s j work, what have they except some j home recreations and tlie ordinary placi cs of amusement. ' Mr. J. R. Hamilton: What recreations I have the farmers? Mr Holland: I do not know; they I I certainly ought to have the same amuse- ( I meats and recreations as anybody else. : j But when recently I put up a case in j this House against taxing musical in- ! I struments that go into the farmers’ j 1 homes, the honourable gentleman who j interjects voted for the tax when the division bell rang. I am in favour of , the widest possible amusement and re- ; creation for the people, because I do not want the whole of one’s life to bo filled m with work from morning till night. The whole of a life is not to work; the whole of life is to live, and they do not live whose lives are made up of toiling and moiling. I know from my own experience as a child, both on the land and in the country printing office, what it means to work from 12 to 20 hours a day, and I do not want to see anybody else doing it. i We are asked to say in this Bill that when a ■worker has done his day’s work and when he seeks relaxation at some place of amusement, he is to be

Made to Pay in the form of a State levy, not because it is necessary, but because the Government wishes to hand back £500,000 to people who do not need it. When they handed back £170,000 in the case of the land tax payers, the small men benefited in a small way—the large men, including the holders of large values in the city, benefited enormously. The Government would not dare to give us a detailed statement of what the rebate to individuals amounted to in those cases. And the very fact that they would not dare to do that proves that the rebate was wrong. I want to say that this Bill, like a great deal of the tariff proposals, is simply loading up the charges against the rank and file of the people, against the ordinary working-men of this country create for the wealthier. The whole of our legislation as brought down by the Reform Government —and why it is called Reform nobody seems to know, not even the members of the Government benches themselves —has been of a reactionary character, framed in the interests of the least useful class in the community, framed positively for the purpose of aiding the profit-making interests. The Government members get restive under criticism, especially when the matter under discussion is that of values. They seem to think that the working-men of this country create no social values. They .think the whole of the social values arc created by the interests they represent. Mr J. R. Hamilton: Do the workers not got paid for their work? Mr Holland: The honourable gentleman asks mo, “Do tin* workers not get paid for their work?” Every student of economies knows that urnler existing conditions no wage-worker receives more than at the very outside One-third of the Values which he creates, and that il is not possible under the existing economic organisation of society for him to receive more than that. The honourable gentleman thinks that when a pound of butter or a sheep or a bullock is put upon the market the value of that pound of butter, sheep, or bullock is

created solely by the men who work upon the land. That is just as foolish an idea as it would be if the coal miner were to suggest that he himself was the sole creator of the social value which is embodied in a ton of coal. All values are social values, and there is not a pound of butter produced in this country towards the value of which the wharf labourer, the railway worker, the miner, does not contribute quite as much as the worker on the land. There is not a ton of coal produced that the bona fide worker on the land does not contribute towards the social value of quite as much as the miner does. That is one of the economic facts that cannot be got away from, and the sooner we recognise that values are social and not individual creations the sooner will we recognise the community of interest that ought to link the bona fide workers together in the different industries. We are repeatedly obliged to listen to efforts to divide the various working-class interests. Mr J. R. Hamilton: Whose fault is that? Air Holland: On the one hand, the fault is with some very Hi-informed Gentlemen who belong to the farming community, who are always prepared to strike the note of bitter class antagonism when, if they are workers on the kind themselves, they ought to recognise that their interests are identical with those of the rest of the workers. It would be equally the fault of any other worker who would not recognise that the man on the land—the real farmer—is also a worker. An Hon. Member: Is he a worker? Mr Holland: The small man on the land who works and does not live on profits is of course a worker. The trouble is that he does hot always recognise it. Very often he thinks he is a capitalist in embryo. That is what my friend the honourable member for Awarua thinks instead of recognising himself as a bona fide worker—l am assuming that he is not a profiteer—whose interests are identical with those of all the other workers. Instead of persistently endeavouring to create antagonisms between his own and other seeftons of the workers, ho should see that one and all of them are equally the victims of a very planless system of production, based on profiteering, that is going on in this country —a system this Bill is framed to uphold, and in the interest of which the Government shape practically all their legislation.