DEBATE IN HOUSE

Hokitika Guardian, 27 September 1929, Page 3

DEBATE IN HOUSE

LAND AND INCOME TAX AMENDMENT BILL. WELLINGTON, Sept. 25. In 'moving the second reading of the Land and Income Tax Act Amendment Bill in the House of Representatives, the Prime Minister, Sir Joseph Ward, announced a further concession to the extent that the new super-tax on land will not be demanded on the usual date. It would, lie stated, bo demanded on February 19, and be had made this amendment, not as a result of any pressure from outside. He intimated he wo aid be willing to receive representations from deputations on the subject, provided they were made this week. This, however; did not affect the second reading of the Bill. The Bill would not be in the committee stage till some time next week'. Tuesday next, or possibly Wednesday, would be the last, day on which he would be able to receive representations. The Bill as now before the House had been, in some respects, materially altered from what had been ' indicated in the He had taken this course as a result of careful consideration > of all the representations tMt had been made to him on the subject. He pointed out that mortgage exemption was now £7509, diminishing at the rate of £1 for every £1 in excess of, that sum, so as to leave no deduction for mortgages if the unimproved value amounted to or exceeded £15,G00. The number of people affected by this change from the existing la\v would be eighteen hundred, compared with 4500 that would have been affected by the reduction to £SOOO. Super-tax was payable in respect of land of an unimproved value of over £14,090, and the rate would rise 1 per emt for every £SO until a value of £16,500 was reached, at which figure the sup-er-tax would he 50 per cent of ordinary land tax. Thereafter a further 1 per cent would he charged for every additional £275, until the value of £30.r09 was reached, at which figure super-tax would reach 100 per cent of ordinary tax. The number of persons affected would be 1450, compared with 1750 who would have been affected by the original increase. There was provision for a hardship clause, and a Commission would be appointed to conduct a careful examination of each claim. Sir Joseph Ward added that he had carefully compared land taxation in New Zealand, Tasmania and a.ll the Australian States, and he was satisfied that the New. Zealand system eeni"arod very favourably with the others. The increases in New Zealand’s taxation would only affect those who for years had been escaoir.g their fair share of the country's burden. He submitted the proposals to the ..House ajficl- to the country, with' complete .confidence. MR DOWNtE i STEWART’S CRITICISM. Mr Downie Stewart (Dunedin West) said that Sir Joseph Ward had amended his original proposals, but even s'* the Commissioner of Taxes seemed to think that there would be cases that would not be met by the hardship clause and in those cases it was stated Parliament could be petitioned for relief. Mr Stewart said it appeared extraordinary that legislation should bo placed before the House in such a state that petitions were anticipated. H£ had been of opinion that petitions were usually employed to meet unforeseen circumstances. It was a. fallacy to suggest that all large properties were capable of '.subdivision. He doubted whether mountainous country could be treated in this way, and it was to be regretted that the Bill contained no plan for classification of land. The new taxation proposals would impose a handicap dn New Zealand farmers in mooting fierce competition overseas. Sir Joseph Ward had stated that some landowners had for years escaped paying their fair share of the country’s harden, but Mr Stewart explained that farmers had been passing through hard times. They had been faced with falling prices and they had been at a general economic disadvantage. Many of the big profits to which reference had frequently been made had never existed. Every tribunal that had recently investigated taxation had come to the conclusion that land aggregation was no longer an evil, and in 1922 a Commission had definitely stated that graduated land tax was not necessary to break up largo estates. The same opinion had been expressed by the 1924 Commission. Air Stewart claimed that in the higher grades the present proposals amounted to a savage tax, that would absorb the whole economic value of the laud. The burden of local rates had also increased and altogether the large landowner was not in the happy position that some Labour members had indicated. UNIFORM SYSTEM WANTED. Mr Savage (Auckland West) stated that lie had hot considered it fair in the past that taxation paid on ih conicearned from land should not ho the same as that paid on income earned in the city. He had always been of opinion that taxation should be based on the principle of ability to pay. It had seemed in the past that the landowner .was receiving bettor treatment than the man in the city, but now that the new proposals were under consideration there was an outcry that landowners were being more harshly treated, and desired the same conditions as city people. He favoured the Bill because it gave some ef-

fect to the principle of ability to pay, but he regrotted that Sir Joseph Ward had , amended the proposal to reduce mortgage exemption to £5009 and had now fixed the sum at £7500. He approved of the principle of breaking up large estates. He considered wc should aim at a uniform system of taxation applicable to a! 1 incomes, whatever may he the source, whether in town or country. Tlmr •wore owners in the cities of verhighly valued areas of lands fron which they derived huge incomes, am the question arose as to whether i‘ was right to exempt that class o' land from the operation of super-tax Air Young (Hamilton) stressed tin uselessness of breaking Up certain o’asscs of land, and stated that sub division would only depreciate;/: Upvalue of land. Even if such proper! were larve they should not come into the taxable category. The answer (riven to this objection was the' hardship clause, but the principle of the: clause was wrong for it did pot dearly express what constituted hardship The clause referred to “financial postion,” which was a rough and read' way out of the difficulty. The Prim' Alinister had stated that comparatively few landowners would he affected by the proposals. ■ If that were put forward ns a defence of the increases it was wrong in principle. I was unfair to those who wore affected lAIPRO VE-AIENT ON' PRESENT CONDITIONS. . , • Air Armstrong (Christchurch East) said it Avas agreed that additional revenue was necessary. It had been stated-that produce .prices this year might be less satisfactory than they Avere last year, and that landoAvners. Avould therefore be less able to mec increased demands on their resourcesIf prices did fall the .Government AA'ould also lose revenue and there would be an even greater need for ex tra taxation. Air Armstrong asked in whose interest AA ; as hopelessly-mortgag-ed property exempted from taxation. The man aa’lio Avas struggling in vain to meet the interest hill Avould not benefit. His taxation bill Avas nothing compared AAyith his interest hill. It Avas only the moneylender avlio AA’ould derive any benefit. Air Armstrong aded he Avas not entirely in favour of the Bill. Avhich he considered did not. go far enough, because it contained nr. proposal to increase the tax on large incomes. HpAvever, taking the Avitb the bad, the Bill Avas an improvement on present ebndit.ions. and A\ r en + a little Avay in the direction he desired. “CONFISCATORY AND EXTREAIE” Air Lysnar (Gisborne) stated he re garded the Bill as a grave far-reach-ing measure, and he thought that tlm proposals AA'ere ill-advised, confiscatory and extreme. If the legislation wero placed on the Statute Book it Avould drive many farmers into the Bankruptcy. Court. He did not regard- it .as an equitable Bill. It Avould not encourage people to take'up land. At the nresent time there was a demand for dairying land, hut not for sheep or pastoral country. There Avas plenty of the former class available for closer settlement without application of the measures contained in the Bill. Air Langstone, (Waimarino) said he considered that the Prime ATinister should not- have departed from his original proposal in regard to mortgage exemption. He expressed the opinio” that the whole taxation system should he overhauled, and he particularly attacked “the eournany tax, AA’hioh he d”s”ribed as totally unfair, as it. iui™wor‘ the same burden on the shareholder in a small Avav as it did on the shareholder in affluent circumstances. It iiad been asserted that the Government’s proposals Avould bring down the nr ice of land. That might he a very eond thing for the people of Ncav Zealand. AYhen land values conformed with money values real benefit would have been created. MINISTER OF LANDS SPEAKS. The Hon G. W. Forbes stated tha! important concessions had been made in clie Bill, and he believed the country had appreciated Sir Joseph Ward’s reasonable attitude. The Reform Party, hoAvever, had not uttered a Avord of thanks and had continued to maxe party capital out of misrepresentation of the farmers’ position. It ivas incorrect to state that there Avas any lack of demand for land. He had received letters from hundreds of young men avlio Avere anxious to get on to the land, and the most effective Avay of establishing them there Avas by Government assistance. The Reform Party had been judged on its land tsettlemeat policy at the last election, and the United Party Avould he judged oi. the same basis. If it failed in this respect, it Avould suffer a fate similar to that of the Reform Administration The Alinister stated that lie Avas in favour of a uniform system of valuation, and it Avas his intention to hold a conference Avith leading officials of the Valuation Department to endeavour to devise a more equitable system than at. present. There had been references to classification of land, blit lie asked AA'here would the Prime Alinister be in raising revenue if he delayed until land classification had been undertaken. Why had not the Reform Partv classified the land Avliile it Avas in office? AIR POLSON’S VIEW. Air Poison (Stratford) said he believed that closer land settlement Avas essential to the progress of Noav Zealand. He had, hoAA-ever, to consider the interests of the farmers, and, Avhil<v he realised that the Prime Alinister had made an honest endeavour, he had to say that the Bill would hot

satisfy him. It placed too much of the burden on the working; faVmer. While lie had been opposed to the primage duty, he had agreed to the increase as a temporary measure. He would have been prepared to support come increase of taxation on larger estates suitable for subdivision, but the Hill went too fill’.. The methods proposed amounted to confiscation. Had the Prime Minister gone back to the pJO.f'OO mortgage exemption, he would have gone some of the way towards •idding h’*" p elf of opposition to the Mill. Mr Pobon contended that farmers from on® end of the country to 1 lie other were opposed to the increase in taxation as outlined in the Pill, and he was not yet too bite for <ome modification to he introduced. There was no doubt that land values would fall, and it was 'wrong in snv lower land val”es would he in the interests of the public. High Ian -1 ’’nines were an indication of intensive production and of prosperit” among, the general community. In V<>w Zealand local rates imposed an "liormous burden an the farming community, and he had honed that the Government would endeavour to ta 1 --. come steps in the direction of derat:ne farm lands, as had been aclney in Pritain. Mr Clinkard admi f terl +hn.t there were some lauds that we •n.-u suitable for subdivision, and it -be-ild not lie necessary to impose a "ennl f.a.r in such instances. . FJv -tressed the necessitv- for increased +ayntien. and stated that it. was right, +hnt the o'-tra burden should be. placed, wiierc it would least be felt. He considered that land was well able to ear this burden. Personally he pre-; "erred income tax to land ta,x. He \ ontended that prosperity did not depend on land values, hut that land values depended oil the prosperity of the country. Mr Hamilton (Wallace) urged that provision should be included in the .Mill to enable persons whose land was not suitable for sub-division to appear before some tribunal with a claim for exemption. There were two main principles under the Bill. One was to tax the wealthy man and the other was to cut up properties. H 6 would have no opposition to the proposal to tax wealth',, and in . that case the super-tax should begin after £2O,(XX). Hut, if the object was to tax wealth, .ien all wealth should he taxed and oot only farm lands. If the taxation vas designed to cut up large estates, he hoped it would not he permitted to ’-ill too many in the process. Tvro classes that would be hit by the Bill would be farmers on large areas of low value land and those carrying heavy mortgages. The wealthy farmer would simply pay the tax and hold on to his land. Mr Carr (Timaru) expressed the vie" Mint ihere were other avenues o f taxation that might have been emplov«d. He believed the present proposals would he beneficial in breaking un .lgrge,,estates. jL gnd.he.waa' glad ,thaj> the Priine Minister had increased the amount of mortgage • exemption .from the sum originally proposed. The debate was adjourned, and the • House rose at 10.30 p.m. .