TAXING BILLS.

Lyttelton Times, Volume CXVII, Issue 17206, 28 June 1916, Page 8

TAXING BILLS.

FINANCE ACT READY.

NO USE IN PROTESTING.

•SIR JOSEPH WARD’S ADVICE TO

THE COUNTRY.

[From Our Correspondent.] WELLINGTON, Juno 27.

The Prime Minister, os well as the Minister of Finance, aro being bombarded with suggestions about the new war tax, but Sir Joseph Ward assured tho House to-day that it is quite useless endeavouring to change tho Bill. “ What is in tho Bill is in the Bill,” declared Sir Joseph. “ Resolutions proposed quite naturally in various parts of the country may be subject mat-tor for consideration when the Houso is dealing with tho Bill, but everything about these proposals has been fully considered- When the Houso sees I ho Bill it will see that there is provision to meet the exigencies of business by flexible arrangements meeting varying conditions.” As for the demands for relief or deductions Sir Joseph Ward said that while tho Government was anxious to do what it could it must havo an equivalent amount out of the same people in Soother way. All tho Budget proposals would be included in the Finance Bill, which would be .brought in on Wednesday afternoon or evening. The Bill would lie telegraphed throughout tho country for general information, and members would ljave sufficient time to study tho contents before the second reading was taken, probably next Tuesday. . Mr Wilford: If there are any good suggestions will you consider them ? J3ir Joseph Ward replied that tho Bill must come down iu its present shape. Mr Witty: That means you will not accept amendments. Sir-Joseph "Ward: If any member can suggest anything helpful it will bo welcome. A Member: Especially to bring fresh revenue. LAND AND INCOME TAX. The Land and Income Tax Bill was brought down to-night by Governor’s message and given urgency. Sir Joseph Ward in moving the second reading, explained that though tiro measure contained 169 clauses it tv as mostly of a consolidatery nature. Opportunity had been taken to have the whole of the taxation proposals in connection with the Land and Incomo Tax Department put in one Act for convenience, both of tho peoplo and the Department. It would enable the whclo law' to bo more effectively carried out. Sir Joseph went on to explain that owing to the now provisions there was an altc-vcition enabling objections to assessments going before the Commissioner before going before a Magistrate. ABOLITION OF MORTGAGE TAX. Ho explained, that tho clauses dealing with ordinary land tax omitted mortgages from assessment. In other words the mortgage tax was abolished. Under this part of the Bill provision was made requiring notice °f transfer of property to be given to tlm Commissioner. ' It was necessary in connection with assessments made to have such advice. In part VI., dealing with graduated land tax, a shareholder in a company owning land was not to bo assessed for tho full tnx if his interest in tlm land of the company, other than business premises, was £oOO or less. 110 pointed out that tor revenue purposes tho exemption would not mean much loss. _ There was no alteration in tho existing law respec - ing the taxation of Native lands. EXEMPTION OF MINING COMPANIES. In regard to the part dealing with income tax there was an important new provision for the encouragement of gold mining. It was proposed that tho income of a New Zealand company whose sole, or principal business was gold mining should be exempt from taxation, leaving individual shareholders to be liable for assessment on their dividends. Provision was made for gold mining companies deducting taxation from di\ 1dends of absentee or other shareholders. Under the old law these companies were taxed on half dividends. The object of tho new law was to try to promote gold mining and encourage the industry. Mr Poland: This does not deal with war profits. Sir Joseph Ward: No war profits are dealt with iu this Bill at a If. Another provision under this part, explained the Minister, was one which proper,ed that wlien computing the o per cent allowance on the value of land dues there should be deducted from that allowance the amount of interest paid by the taxpayer on puy mortgage secured on the land. The Government was substituting ineotne tax for raortcage tax, and as a result of that interest pavahlo on the amount ot land was payable for income tax purposes. Unless deductions were made of interest on mortgage there would bo a double concession. Tho clause was inserted' to prevent anything in the shape of a double concession. , THE “ K.T.C.” CASE. Clause 92 of the Bill, continued Sir Joseph', dealt with the apportionment in cases where income u as pai tly dei ived in New Zealand and partly elsewhere. It was in order to give effect to the judgment of the Supreme Court in connection with the case known as the Kauri Timber Company’s case. One of the main points in dispute was whether the Taxation Department iu New Zealand should calculate income tax on the values of timber exported from New Zealand on a cost, including freight, basis. It was decided that the Department should collect income tax on f.o.b. values. THE DOUBLE TAX. Clause 93 contained the important proposal of exempting income not derived from New Zealand from taxation if it were chargeable with tax in any other part of tho British dominions. It meant that if a person in New Zealand were deriving income in any other part of the Empire and was being loxott on income derived from that investment in another country, he would not be mulcted in double taxation, but if a trading company were charged income tax in England on the earnings of produce shipped to the Old Country from New Zealand, that income would not be regarded as income from investment in another country. Income tax inv,u that would be collectable by New Zealand because this country would be the source of produce. The Minister explained that the estimated loss to the Department under this heading was only about £4OOO, but it was hard to say what might occur in future. In England they lmd already made amove in Hie direction of reciprocity. The proposal in tho Bill was a small move, but later on tliev might go further and apply tho abolition of doublo income /tax in a fuller sense. The exemption of banks from income tax upon last year’s two milliou loan was continued. This meant a concession of £450 per annum. Unless we made up our minds to a high rato of interest the country must permit freedom from incomo tax on debentures raised by the Dominion during, exceptional times. The new clause would euable tlie Taxing Department to treat, the agent of a person carrying on business in New Zealand for an outsido person, such as theatrical proprietors,, as the principal for purposes of securing tax.

The most important change in the Bill w«» ujo a bo:, in u ot to-. -.orCgtge rax, tho other alterations being more of an administrative character. THE DEBATE. Mr Willoiu au.u taut me principles oi taxation t,ci out in tins nm w,.-.o so nueruoven wall mo finance Jtnii to come later, ana in wii.-cn iaxauoii ou war prunes v.ounl be dealt wnn, that ho icit it liuposmno to ueai \um one witnoui trenenmg on the otiler, no thereioro thought me most satisfactory course woinci be co ueior cruicwn until tho War IToiirs lull came down. They then would have tho whole taxation proposals before them, and be note to discuss them in better perspective, tie himself did not feel persoua.iy capable of dealing with the au eiumients brought clown b.f tho National Government, and lie wished to enter his protest against the manner in which this Bill was being rushed through. Air Pearce endorsed Air Wilford’s protest. The same thing happened last year, when the Taxation Bill was pushed through, with tho result that taxation was heaped ou the farmer that no one suspected. For instance, the income tax on farmers was made retrospective for two years. Sir Joseph 'Ward: That was not

Air Pearce: Well, I don’t know what clso it was, when two years’ taxation was duo oil the date of the first collection. Tho super-graduated tax worked out most unfairly, and he considered this Bill should have contained some repeal of the principle that made a man pay tax on bis debts.

Air Witty protested against the Bill being rushed through, and while not intending to take up the time of the Houso discussing the Bill, which he had not had time to read, he would vote against the second reading, to mark his displeasure at the manner in which the Bill was being forced through. AD Al’Combs said that sufficient had been said during the past half-hour to justify the Government in postponing further consideration till members bad timo to consider the Bill at greater length. It was true it was to a great extent a consolidating measure, but he thought tho question of taxation was now before-the House, and the old law, as ivell ns tlie proposed law, had to be considered. Dr Newman asked for further time to consider the Bill. The question of double taxation on companies would be a most serious matter, and unless it was dealt with cautiously lie was‘afraid that many companies in New Zealand and England would have to close down. Ho advised the postponement of the whole question till the Premier and the Treasurer bad an opportunity of looking into it in England. Air Forbes said that tlie whole incidence of taxation required review, especially tlie graduated land tax. What was wanted was a tax that would make a man part with land in excess of what ho could use to advantage. He condemned the system of acquiring land compulsorily on tho basis of a subsidiary roll, under which not a- single estate had been taken during the eight years in wliie.b the Act had been in force. Grave dissatisfaction existed regarding land valuation and assessment. The constitution of the Assessment Court required amendment in the direction of giving objectors representation on it. as in tho case of the Arbitration Court. Unless this were done settlers would havo little confidence in tlie manner in which valuations wore dealt with by the Court. He advocated generous treatment to the Government Life Insurance Department in the matter of taxation, to encourage its existence and enable it to compete with foreign offices. These and other principles of taxation might well have been discussed by tho House at length, but as it had been decided to force this Bill through there was little use discussing it.

Tito Hon A. T. Xgata said that the Afinister had informed the House that there was no change in the legislarion regarding 1 Native land, but lie held a different- view. The interpretation clause made tlie progeny of a fullblooded Alaori and a half-caste a European, and as there was no Native land in tho Dominion that was not now owned by a majority of those who under this Bill would become Europeans, this meant that all Native land would come under land tax, ordinary and graduated. He wanted to know whether this was tho deliberate intention of the Cabinet. In past years the Government had kept- the graduated tax off Native land, but this Bill was going to bring almost every Native block under its influence, and lie thought the Alinistcr bad been the victim of the vagaries of the law draftsman. Mr E. Newman and tlie- ITon D. Buddo endorsed Air Forbes’s contention, that tlie time was ripe for the revision of tho graduated land tax. Air Buddo contended that circumstances had greatly changed since the present system was adopted, and now many small farmers were paying graduated tax on an area of not more than 60 acres. This was never contemplated by Parliament, which levied the graduated tax for bursting up big estates. Air Anstev said that opportunity should have been taken to thoroughly revise the graduated land tax, especially at a time when land is wanted for soldiers’ settlement. He approved the abortion of the mortgage tax but .favoured the reduction of tlie exemption on incomo tax to catch single men with an income of £3OO per year, who now nnid next to nothing by way of taxation.

AU Payne said that evasion of payment- of income tax shot!ld lie punished by imprisonment. The time had arrived wlien exemption of income from taxation should be abolished, so that every one should pay his quota towards war expenditure. At the same time taxation on companies should bo so regulated as to avoid pressing too hardly upou> those people deriving small incomes from shares. Mr Young contended that representation should be given to objectors on the Assessment Court._ He further contended that under this Bill no exemp tion was allowed for mortgages in the payment of ordinary land tax. Sir Joseph Ward, in renl.v. said the Bill was mainly a consolidating Bill, and no attempt had been made by Cabinet to reconstruct the whole system of taxation because such a task could not be undertaken by a National r*„i,:,-.,-i .nJ '’<•> did 11 ot- fopl disnrvnj to be booted about and stabbed in tho back by members on either side of the House Without defending himself. IU contended there was nothing in tlie Bill

FARMERS— A WORD WITH YOU. 7WOW that you n.ro being called upon to ■t' pay fo high n ’nric" for your 'and it behoves vou to get the utmost possible ouf of -be soi' vou are tiling or grazing. Oi’by’s College has just had specially prepared at giect expense, by on Expcr Aeri-cu'turi.-t lns'ructor, and ho’der of the B.Sc. degree, a non-tcchnioa! Course of Lessons in PRACTICAL ACRiCCLTURE. This Course is complete in fifteen highly informative and in.ensely interesting papets, dealing with such subjee s as u.e Rature of boils, Manures, Conserve.ion of Fcrti.ity, Plant Life, Marketing of Produce, Breeding and Re.ring of Live Stock, and many other mutters oi lirst-rate imporianco to the scienlifieai y p,aeticrl farmer. Tho papers are posted to you os required and may be studied at your own fireside in your leisure hours. > Let us hear from you, that we may write you a personal let.er, giving fuithgr partieu ars regarding this all-important course. THE 1 * DIRECTOR. GILEVS COLLEGE, LIMITED, Next to Chief Post Office, Cathedral Square. cl - trinK-ntnl to the Government Life Insurance Department. As a matter oi they wvre reducing; the taxation oi tho Department, not increas'iig it, its many members supposed. Much liad been said about the Government taxing farmers on their ‘‘debts through mortgages but ho wished to sav th-.irc was no way out of it. Tii’e only reason this system of taxation was ever introduced into this country was because it was unavoidable, and bring unavoidable it had to be continued. Referring to the omission pointed out by Mr Young, Sir Joseph stated there was an obvious flaw in the Dill, and ho was under the- impression that to r'd the Bill of that flaw it meant the restoration of the mortgage * tax. He would have a. further opportunity of conferring with the advisers of the Govern men ♦ on the point, and\he would make o. statement to the Hofiso 'later on. For tho moment, however, he wished to sav there was absolutely ito intention to duplicate taxation on small farmers under this particular clause rebut‘■"d the contention of Mr Pearce that farmers had to pay two years’ income tax in one year. The farmer had been treated in exactly the same manner as any other member of the community. Regarding tho remarks of Mr Ngnta, lie had been advised that tho interpretation clause would not bear the construction put i pen it bv tbc honourable member, and therefore' the Bill did' not have the effect he supposed. He would,*'however, refer the point to the Crown law officers for further consideration. Inconclusion lie stated that there was no reason whv the Bill should be undulv -pushed forwrfM. and lie was prepared Ia ,-rive, members further time to consider it, as they now had heard all the ex nlan a t 'on• The second reading was agreed to on the voices.