STATE CONTROL.

Manawatu Standard, Volume LVI, Issue 259, 30 September 1936, Page 7

STATE CONTROL.

IN ALL INDUSTRIES. OPPOSITION ASSERTION. Per Press Association. WELLINGTON, Sept. 29. The second reading debate on the Land and Income Tax (Annual) Bill and Land and Income 'i'ax Amendment Bill was resumed in the House of Representatives this afternoon. Mr W. J. Broadfoot said it seemed to him that they had proof positive that there was an earnest desire on the part of the Government to cut the arteries of industries and bleed them to death, no matter of what type or what kind these industries were. In his opinion it was just one more method of eliminating the private element in industry and making the way entirely for State control. The 40-liour week, higher wages and the increase in ordinary taxation and graduated land tax were factors which, in his opinion, would gradually put industry where it would be impossible for them to make that profit which was an essential inducing factor for men to step out, create an industry and make profit, and not only provide for themselves, but also provide jobs for other people. He quoted figures to show that the bulk of the increased taxation was being carried by smaller incomes and by the small businessman, the civil servant and the shopkeeper. Mr Broadfoot said it was nothing more nor less than a deliberate effort to make it impossible for the small business-man and the man of medium income to carry on effectively. LABOURITE’S SUGGESTION Mr C. H. Burnett (Government) said thousands of young men were looking foi land, but there was none available. He thought there should be a stocktaking ot the land of the Dominion to see if it was suitable for closer settlement. He ’ agreed with the Prime Minister that the Bills were matters of urgency. He believed, too, that, if the present system was to continue, there should be a classification of land, because pressing taxation on land that was not really suitable for subdivision was inequitable. He would like to see a flat tax on tlie unimproved value of land with an exemption of £500; also a graduated income tax. He suggested that the Government should set up a committee during the life of the present Parliament to investigate properly systems of taxation to sec that taxation was placed as equitably as possible on the people of the Dominion. He thought the graduated land tax was a- fair one ; it meant that those who were in a position to pay did so. INCOME TAX PREFERRED. Mr H. G. Dickie claimed that no land tax was just or equitable. He said all land taxes should be wiped out and substituted by income tax. He said that where land was used for building the tax could be passed on, but where it was used for farming in many cases it could .not be passed on. He said that if the large estate were to be cut up the best way would be for the Government to take them compulsorily. Legislation to do that was already on the Statute Book, and it was the quickest way to do it. The graduated land tax would not result in cutting up estate, and had proved a failure in the past. He thought the present method of levying income tax was clearer and better than the intricate system of the past ,but it fell heavily on small incomes. He said those with incomes between £SOO and £6OO were harder hit than those with more than £IOOO. Rt. Hon. J. G. Coates asked if the graduated land tax was based on the principle of capacity to pay. Ho said

the Government, by its action in emphasising and reintroducing the graduated land tax, was perpetuating a principle that was defiitely unsound and unfair to every man, woman or beneficiary who came within the category where capacity to pay did not exist. He said the Prime Minister had spoken of altering the present system of taxation, and Mr Coates wondered if that was wise. He thought the Prime Minister should not talk of reducing the exchange, as it unsettled the minds of the business community.

PAST GOVERNMENT’S ACTION. Mr Coates said Mr Barclay had said that the Government then in power told only its friends about raising the exchange. That, Mr Coates thought, was a proper subject for an inquiry by a Royal Commission, and he asked the Prime , Minister to take a note of what had been said. He could imagine no more serious cliarg being made against anybody, and thought the Government should set up a Royal Commission to investigate the matter. He said it was not fair that men who had served many years in Parliament should be subject to remarks of that kind. Mr Coates then referred to the income tax and said the average increase on incomes between £3OO and £6OO a year was 60 per cent., but oil incomes between £7OO and £IOOO the average increase was only 15 per cent. The increase on unearned incomes between £7OO and £IOOO was only 7 per cent. The Government professed all along the line that ability to pay should bo the basis on which taxation should i be levied, and they found at the present stage that the Government was increasing the tax on smaller incomes by GO per cent, and on higher incomes by from 7 to 15 per cent. Mr W. J. Lyon said the Government i had been twitted with not keeping its election promises, but he reminded the Opposition that the Government had been in office less than twelve months and had two years yet to go in which to keep its promises. He said they would ho kept. Ho submitted that j the matters raised by the Opposition were arguments not so much against the Bills, but were merely arguments to discredit the Government. He said j that, if the Opposition were sincere i they would move an amendment in Committee to increase the tax on I higher incomes. i Mr Coates: The standing orders will not allow it. Mr Lyon: Is that not a beautiful let out? The member for Waitemata suggested that the Opposition should move a , reduction and ask the Minister to make an increase, Mr K. J. Holvonke said the last Government had made some reductions in taxation, and if it had been returned, it would have made more. The Opposition contended that the antici- ’ patecl increase in revenue was enough to pay for the extra social services! the Government had found. The great bulk of the present taxation would come from the rank and file. i The second reading of both Bills was ■ carried and the House went into Committee to consider the clauses. MINISTER’S DEFENCE. The Minister of Finance (Hon. W. Nash), replying to points raised, said there had been some criticism by Opposition speakers that the increases in higher salaries wero not in the same proportion as the increases in salaries between £3OO and £6OO. An exemption was granted for each child under the age of 18 years to the extent of £SO, and tlicro was also £SO exemption for a wife. The exemption for a wife previously disappeared between £6OO and £BOO. There was now an absolute exemption of £2lO j

for everybody, and in addition to that there was an allowance of £SU for a wife or housekeeper. Mr H. S. S. Kyle: How many housekeepers are yon allowed ? Mr Nash: Only one. The Minister went on to explain that a married man with a wife and two children, with an income of £3OO, paid no tax. With an income of £4OO, such a man previously paid £2 13s lOd. Now he would pay £3 Bs, an increase of 14s 2d, and the Minister did not think that would worry him when he remembered that oldage pensioners would receive £1 a week and later 22s 6d. With ail income of £SOO, a man would pay £4 17s Od more than last year, and with £6OO he would pay £6 16s 3d more. “The point, however, is nbt what a man pays, but what he has left after he has paid his tax,” said the Minister. He pointed out that a man with an assessable income tax of £3OO paid no tax. A man with an assessable income of £4OO, after paying tax had £396 12s left, and with an income of £6OO he had £577 12s left. A man with an income of £BOO would have £755 5s Id left. With £IOOO, he would have £929 12s left, and with £SOOO he would have £3970 left; so ho had nothing to worry about. A man with an income of £SOOO paid £214 more than he paid last year; so he would not say his tax had not been raised, and with an income of £IO,OOO he would pay practically £IOOO more, but would still have more than £6OOO left, and the average man could manage on that.

Mr C. A. Wilkinson said that if a man had £IO,OOO invested at 4 per cent, lie would have to pay £4 8s in income tax, but if he put the same amount in land he would have to pay nearly £4OO. The Minister: He would not have to pay £4OO. Mr Wilkinson: Yes, he would. He would have to pay land tax of £l4O j and taxes to a local body as well, j The taxing proposals would drive money to investments, j Mr Coates said the graduated land tax was nothing more or less than confiscation. USE OF THE CLOSURE. At 10 o’clock the Prime Minister moved the closure and this was carried by 36 votes to 10. The short title was also challenged hut was passed by 36 votes to 10. Progress was reported and the House rose at 10.30.