Land and Income Tax

Hawke's Bay Tribune, Volume XIV, Issue 234, 10 September 1924, Page 5

Land and Income Tax

Increase Since 1914 SOMRINWRUCTIVE COMPARISONS BILL PASSES SECOND READING. (Per Press Association.) Wellington, Sept. 9. When the House of Representatives resumed at 7.30 p.m. Mr (Massey ros.i t:» move the second reading Or the Land and Inicome )Tax (annual) Bill. In speaking to the motion he said there were only two clauses in the bill, one reducing land and the other reducing income tax /as previously announced —viz., land tax by ten per cent and income tax by 13 :l-3 per cent. In tracing the progress of these forms of i taxation, he pointed out thta on March 31, 1014,, there was paid in land tax .£767,451, but by March 31 this year the amount had increased to £1,426,462. Incomo in 1914 amounted to £554,271, out this year there was levied and paid £3,781,531, which -gave members an exceedingly interesting comparsion. The Taxation Commission had recommended that it was essential in the interests of the Dominion {that the weight of taxation be reduced as speedily as possible, and he agreed with,that extreme ly concise statement of the position. In support of this i opinion he quoted a statement made by the Secretary to the Treasury of the United States of Ame rica, and what applied to the United States applied withjequal force to New Zealand. .SERVICEABLE REDUCTIONS.

«*We have already made a start in the reduction of taxation,” continued Mi Massey. ‘‘Wetmay not have done much, but what has been accomplished has been very serviceable and the Government's proposals for further reductions this year have been well received all over the country.” The culj complaint he heard was that the reductions were not big enough. Every country in the world where it was possible to do so had been reducing taxation and he was prepared to go further than he was doing now fo scon as it was possible to do so. i«ater on he would be willing to go irito the whole question cf company taxation, but the Taxation Commission, did not consider it wise to attempt too much at onqe. We could hot increase, but we must decrease taxation if we were going to avoid depression. The reduction of taxation had a w’«ie influence and he « A uoted as a case in point the agreement recently nuide with the Sugar Refining Company, who agreed to a concession in the pri«*e < f sugar as soon as they knew taxation would be reduced. If we were going to reduce the cost of living taxation must come ’down. The reductions would also provide more employment, as proved by the fact that we had next to no junemployment this winter. We could not expect to get back to normal yet awhile. We plight never get back to the rate of taxation paid in 1913, but ( we could only do our best by pursuing a policy of economy. It was because of this policy x that our credit was so high in London. That was something which we must maintain. He hoped members would do what was right by passing the bill'and so reducing taxation. In moving tho motion the Premier intimated, that .if the second reading was agredfl fo he would refer the bill to the Public Accounts Committee.

LIBERAL LEADER’S QUESTIONS. Mr T. M. iWilford said that with a *■ good deal of what the Premier had * said he agreed, but he (disagreed with him in this—that his remarks applied to people on the lower rung of taxatoin, but had no application to men vho were drawing .huge salaries and incomes. Quite recently a return was laid on the table of the House which showed that 10,080 persons in this country owned land worth from £20,000 to £60,000, and as the Premier had promised to supply (the House with all possible information before the bill passed the committee /stage, ho would ask him to state: (1) What was lost to the Treasury by the recent remission of income tax on land? (2) What was lost to the Treasury by the remission of income tax on incomes over £500? (3) What was the loss to the Treasury by the remission of land tax to owners of land of £lO,OOO and over in value? His party stood for the i land tax and would not sanction its abolition. . • FOR SMALL MEN ONLY. Mr Wilford said tho Taxation Com-* mission', recommended .it, and he believed that while the Premier would not propose its abolition all at once, he would, if opportunity offered, so Whittle, it down that it w’ould practically disappear. For this tho Liberal party! would not stand. The land tax was a stable form of revenue, andthere must always be such tax. Ho therefore wished to make it plain that his party would not sanction the reduction of income tax on big incomes or, the reduction of land tax on high land, values. There should be a .reuuction of taxation for the small man, but not for the‘.big man, and if the Premier Insisted on the reduction of 10 per cent, on land and 13 1-3 per cent on the incomes of everybody then they must oppose him. If he was willing to make a reasonable graduation they were willing to confer with him to \ arrive at what was a reasonable graduation. He did not believe the Premier’s proposals had been well received throughout the country, at least that was not the information which had reached him. Before the present reductions- in taxation were agreed to the House should be told what the Premier’s commitments were goriTgTd be, because to reduce taxation without knowipg what our liabilities were going to be was to deal with a huge question in a piecemeal fashion. / THE FIRST STEP.

The Hon. J. Q. Parr said it was encouraging to find the Liberal party in agreement with the principle of the bill—viz., reduction of taxation. Mr Wilford: On the small men. Continuing, Mr Parr proceeded to argue that all countries which were seeking to restore trade and finance generally to normal conditions were striving to reduce taxation as the first step, and he quoted a number of eminent authorities in support of this coarse. To Mr Wilford’ s contention that the Government would abolish the land tax, he gave an emphatic denial. The Government had no such intention, but what the Government was seeking to do was to abolish double taxation. Until recently a farmer paid income tax as well as land tax. This was unjust, and the Government considered that when a farmer paid land tax he had done his fair share. He did not understand Mr Wilford to propose additional taxation on large landowners, and if he proposed to hit the man with big incomes tnen he must hit 70 per cent, of the companies in New Zealand, because this was the source from which most of the big incomes came. Mr Wilford in the past * had argued in favour of a reduction in taxation on companies, and he (Mr Parr) had sympathy with that view, because a great proportion of the Dopiinion’i industries was carried on by

companies, and high taxation restricted those industries. Company taxation in New Zealand should be reduced to bring it into line with Aus tralian rates, as many of our companies were struggling to-day to keep going owing to the burden of taxation. He agreed that companies as such should pay something for the eonce.-: sion they enjoyed under the statute law, but they should not be oppressed. As the small man was already pro tected by his exemption no injustice was done by reducing taxation af the same rate all round. The Labour Government in Britain recognised as sound principle that if there was a large surplus the legitimate use of that surplus was to do what this bill proposed to do—reduce taxation. REDUCTIONS OPPOSED BY LABOUR. M. H. E. Holland said the Labour party would oppose the reductions in taxation proposed in the bill, because the country could not forego revenue until many social requirements, such as increased pensions, etc., had been met and public servants’ salaries had been restored to the pre-war purchasing power. The Premier had referred to taxation in 1914, but he said nothing of the increase in our national liabilities. . He said nothing of tthe enormous increase in our private wealth or in our exports, which were the best guide to the increase in our national wealth. Incomes in the Dominion had also enormously increased. Therefore, what became of the argument that income tax payers must have a reduction because of the position in which they found themselves? The Labour party opposed the reductions in the bill because the small man was going to get no appreciable benefit, while under last year’s remissions it was generally understood the Bank of New Zealand was benefited to the extent of £64,000 and the National Bank to the extent of £43,000, while both institutions paid dividends of 13 per cent. The same argument applied to small land owners. He was prepared to go before any meeting of legitimate working farmers and prove his contention., which he supported by tabulated statistics. Tn any caso his party was opposed to these reductions because the revenue could not be spared and because the remissions were not going to benefit those who required them, but were going to benefit large land owners and those carrying big incomes. He would therefore move an amendment: “That in the opinion of the House there shall be no reduction in direct taxation.”

The amendment was seconded by Mr F. Langstone, who refuted the contention of the Hon. C. J. Parr that the land owner was paying double taxation.

After the supper adjournment the debate was continued by Messrs O. J. Hawken, G.. W. Forbes. W. Nosworthy. W. E. Parry. F. J. Rolleston. H. T. Armstrong and A. L. Monteith. The division on Mr Holland’s amendment, which was taken after 1 a.m., resulted in the amendment being defeated by 42 to 16. After the Premier had replied, during which he denied any intention to abolish the land tax, the bill was read the second time and referred to the Public Accounts Committee. The House adjourned at 1.30 a.m.