N.Z. TAXATION

Grey River Argus, 8 September 1945, Page 3

N.Z. TAXATION

BILL FURTHER DEBATED

Position of Companies

pA. WELLINGTON, Sept. 7. In the House, the debate on the Taxation Bill was resumed by Mr. W. S. G-osman (Nat., Waikato), lie said the National Party advocated a reduction in the rate of taxation. If something was not put back into the land nothing could be taken out. The Government was farming people for taxes. Private enterprise required a tax structure that encouraged inventive thrift. All money which the Government had distributed came out of industry for which private enterprise provided the money. The Minister of Finance had said that no more taxation could be derived from the top so- he. therefore, went to the bottom. If the National Security Tax were remitted lower paid people vvith incomes under £5OO would be relieved to the extent of £14,000,000. If costs in primary industries were not kept down, we would be unable to export goods. Primary industries were the foundation of our economy, and costs must be kept in proportion. Mr. Parry said the Government objected to and condemned people who bought land in wartime while soldiers were away fighting, and who put sharemilkers on that land. If private enterprise were allowed unfettered control, there would be an orgy of land speculation, preventing the settlement of soldiers. The retention and increase of sales tax had been justified by the huge war expenditure. Why the Government did not abolish the sales tax was because of the extraordinary position in which the Government found itself with 60,000 unemployed. When the Government increased the sales tax it also altered its incidence and gave greater relief to those buying the necessaries of life. The sales tax to-day was mostly on luxuries. Hon. A. Hamilton (Nat., Wallace) said the Opposition was not objecting to taxation because it was taxation, but because of the amount imposed and who paid it. Government opinions on taxation and capital were really alarming. Britain was the leading capitalist country in the world. The New Zealand Government was condemning that system. He sought a clear definition of a capitalist. That Government apparently had in its mind that a man became a capitalist when he had a home and £BOO in the bank. Mr. Hamilton said the present company tax was in a sense unfair. He did not object to such taxation in war-time, but expressed the opinion that if companies were relieved now of portion of the taxation burden they could reduce the costs of articles they produced. . Opposition voices: They would do it-

Mr. Hammon said that the country in future that kept its costs and taxation down wduld get a large share of world trade. The Government had more or less expressed the opinion that they could spend the people s money better than the individual. The State, he considered, should be more like a referee and not get into the business game itself. Mr. C. M. Bowden (Nat., Wellington West), said that Government members, when speaking of companies, had a tendency to regard them as some great octopus. He reminded the Government _ that companies consisted of individuals, just as the State was an aggregation of individuals. He considered companies should have more of their liquid assets left them to allow them to assist in maintaining the standard of living in New Zealand. There were four directions in which the Government could afford some taxation relief: Firstly, relieving the family man of the national security tax; secondly, some reduction in the 33 1-3 pel cent, surcharge, particularly on the smaller incomes; thirdly, the removal of the penal rate on unearned income which, as operating at present, discouraged thrift; fourthly, removal of anomalies in rates of taxation. Mr. Bowden said the Minister of Finance was collecting as many millions as he could this year with the idea of ending up next year with a surplus of £40,000,000 to £so,ooo,ooo—with the window full. Mr. Bowden said that he for one did not believe the figures of requirements stated in the amended Budget. The people of New Zealand realised it was not necessary for these amounts to be extracted from* them in order that the full rehabilitation programme could be carried out. Taxation could be reduced without prejudice to returning servicemen. Mr. T. McCombs (Govt., Lyttelton), said companies had been able to do well despite the high taxation. Share prices had risen 24.9 per cent, from 1938 to 1945. The general investing public would not have been prepared to raise their bids that much if the Government was crushing industry. The Government had stimulated industry by increasing purchasing power and also by its housing policy. The Government was planning to give further scientific research aid to industry in New Zealand.

Mrs Ross (Nat., Hamilton'), speaking in the afternoon, said that failure to reduce taxation was disappointing to women of the country, especially in view of high clothing prices. Taxation fell most heavily on larger families. ' Unless mothers could be assured of more comforts and amenities and more goods for money their husbands earned, there was very little encouragement for larger families. She urged the Government, to give more consideration to matters affecting the welfare of women and children when taxes were imposed. Hon. W. Nash, replying to the debate, said that, to the extent that we maintained taxation, as opposed to borrowing, our returned servicemen must benefit. Unfortunately, it was impossible to meet the whole of the costs of war from the taxation of' those who stayed at home. Some borrowing was inevitable, and we had borrowed, in the main, from those who had stayed behind while others went to fight. It was wrong to borrow on the future, because that meant that men who had been away for years lighting would come back and have to pa.y I’or shots they tired to protect those at home. Discussing points which had been raised concerning the income of elderly persons, Mr Nash said that if a person, during his _ lifetime, saved money and set it aside for the later years of his life, and, to that extent saved the State, it was unfair that he should get less than he would have received had he not saved the money. There was now a provision that such a person would not be put in the position of getting less out of his savings than would have been available to him from social security. Mr Nash said he agreed that the depreciation of the currency was false taxation. He thought that we had t.o find some way of controlling the currency. It was correct that the Government had maintained the prices of essential commodities at low levels. Was it the best economy to l«t the price of bread soar to a level where it hit the family man, or 1o keep the price of bread on an even keel, and tax the rest of the community out of its surpluses? Mr Nash said that, if taxation were to be reduced in the income tax field, it would have to be increased in some other field, or else we must borrow

more money, which would be an imprudent policy. We could not meet the commitments falling due this year until we raised the amount of tax for which this Bill provided. Mr R. M. Algie (Nat., Remuera): The Minister win have just the right amount.

Mr Nash: Perhaps just a little more. But we' must have sufficient money for meeting the costs of demobilisation. Mr Nash said that there would be a reduction in taxation next year. Opposition voice:. You bet The House then went into the committee stages. Mr Algie moved an amendment to insert an additional clause to enable persons contributing to national savings to pay income tax on such contributions annually, or when the principal sum was repaid. The amendment limited the option to an amount not exceeding one hundred pounds yearly. The Chairman of Committees, Mr R. McKeen, ruled that such a clause was foreign to an annual taxing bill. He said it could be moved when the Land and Income Tax Amendment Bill was before the House. The House adjourned at 4.35 p.m. until 2.30 on Tuesday. Mr Fraser said he expected the financial debate would finish on Thursday, and that discussion of the Brett.on Woods Conference report could be held on Friday. There would be interesting legislation coming soon, which might occupy the House until the end of November.