Strong Appeals For Revision

Manawatu Times, Volume 69, Issue 211, 6 September 1944, Page 8

Strong Appeals For Revision

(Per Pres* Association.) WELLINGTON, Sept. 5. The House of Representatives settled down to the second day on the Land and income Tax (Annual) Bill this afternoon after urgency had been taken. The second reading debate was returned by Mr, W. te. Goosman (Waikato; who spone for a few minutes. Mr. W. A. fencat (Patea) deait with taxing anomalies and discussed the effects ot the tenants' protection legislation on taxpayers. He quoted the case of a man who owned a home which was let who had to pay £1 a month mere for a rented home for himself although he would have preferred to occupy his own home. Then ho had to pay taxation on the rent received from his own home as on unearned income, and in addition the rents from his home increased his taxation level. Mr. F. Findlay (Hamilton) again raised the question of the destruction of equipment by the forces. Ho said he had visited a tip at Hamilton during the woek-end and had seen boots, clothing and ground sheet? tvnich were delivered at the tip by Air Force lorries to have oil and petrol poured on them so that they could be burnt. He produced a pair of boots which he had rescued from the tip. He said all defence property was the property of the people and suggested that unwanted stores should be auctioned so that the public would be able to secure needed articles and the money realised would be available for the prosecution of the war. Mr. T. H. McCombs (Lyttelton) said the records showed that in spite of increased taxation companies had done exceptionally well. The total incomo declared by companies for income tax purposes for the year 3935-36 was £11,900,000 while for 1940-41 it was over £26,000,000. As for nest eggs, it could be pointed \ out that there was about £120,000,000 at the credit of the people in bank deposits and savings, while companies had more than doubled their incomes. Mr. E. M. Algie (Remuera) said so far from the prodigality of which Mr. Fraser had accused Mr. Holland, the Opposition merely sought a revision of taxation anomalies such as double payment of tax and hardships suffered by pensioners. Mr. J. T. Watts (Riccarton) said there was already a slight difficulty in finding employment in the Dominion. If that were so to-dyy it would be much worse in a few months’ time. The main job in rehabilitation would have to be done by industry which must be given a chance to plan for postwar production and employment. Taxation had an important bearing on that planning. Mr. R. McKecn (Wellington South) said there had never been a perfect system of taxation and the anomalies the Opposition was clamouring about would always exist. Opposition members were appealing for relief for big, businessmen while the workers who were the ones bearing the main burden of taxation were content to go on paying until the war was won. Anom- ; alies should be eliminated wherever 1 they occurred, and one of the most : vicious anomalies in the taxation system was where dividends were paid to wealthy people who did not pay any < taxation on dividends received. It would be said by the Opposition that taxation had been paid by the company paying the dividend, but the point was that the company to be able to pay both taxation and dividends had increased its prices to the consumers with the result that the general taxpayer was paying the taxation for the wealthy man who received tax-free dividends. Mr. McKeen also expressed the opinion that companies paying big dividends could not claim taxation relief on the grounds that the money was needed for postwar reconstruction. If money were needed for that purpose it could be taken from funds set aside for the payment of dividends. Mr. W. A. Bodkin (Central Otago) criticised payments from tho War Expenses Account in the form of subsidies. He said if the Government tried to tell the country the War Expenses Account had been examined and ap- ; proved by the Public Accounts Com-, mittee it was misleading the public. ! Last year owing to tags by the Auditor- . General the Government agreed to refer a comparatively small part of the account to the committee, but Opposition * members of the committee were warned , that the information was strictly con- : fidential and could not be discussed 1 with their colleagues. Contrary to the general belief the committee’s report * was signed only by the chairman and * not by members.

Mr. Bodkin said there was a deficit of £4,000,000 on bulk buying by the Ministry of Supply, and £109,000 for maintaining the Ministry in New Zealand. He challenged tho Prime Minister, who preferred to do these things behind closed doors, to produce the account in the House. Mr. Bodkin said £40,000 had been paid out for the Eastern Supply Group Council, a substantial sum for the adjustment of miners’ wages, and £1,286,000 as sugar subsidy. N

Mr. Fraser: Hear, hear. Does the honourable gentleman object? Mr. Bodkin added that there had been a subsidy of £33,000 for bread and another subsidy for salt.

Hon. A. H. Nordmeyer said the Opposition had expressed concern about taxation incidence, but they were not unanimous as to the actual taxes which should be removed. One members of the Opposition wanted to remove the Social Security tax on certain classes of taxpayers, overlooking the fact that there had been anomalies under the old unemployment tax scheme which the Government had found necessary to remove in shaping its more recent legislation. Any Government got into trouble if it started making special exemptions. There was hardly one form of taxation the Opposition had failed to criticise yet they avowed it was necessary to impose heavy taxation in wartime. Mr. Nordmeyer asked if there was ever a time when some interest was not claiming that the taxation system needed overhaul. The spokesmen in the House of the Chambers of Commerce were simply giving vent to the wishes of big business. If there were any case for investigation of tho taxation system —and the Opposition had not made out such a case—the inquiry should be by a committee of the House.

# The Minister said {axation in wartime was necessary to pay for war and to limit spending power. Even if the war in Europe ended to-morrow we would still have to carry on against Japan. Mr. Nordmeyer said it was estimated that when hostilities ended 12 months would be required to return all the United Nations 1 soldiers to their homes. He hoped it would not take that long to bring the New Zealanders , home, but much shipping would be required even for our forces. Costs would certainly come down, but they would still be verv great. lie did not hold any hope of a large diminution in our

war expenses for the current year. The question of the payment of gratuities and rehabilitation needs were two reasons why large sums would have to be raised for some time to come after peace was achieved. Moreover, it had been necessary to borrow much money for the war both here and abroad. He hoped the Government would introduce a scheme for the amortisation of our war debt, not leaving it unpaid for 40 or 50 years. He hoped taxation in some iorm and in certain directions would be retained for the specific purpose of wiping out tho waP debt at the earliest possible moment, otherwise the Government would be failing in its task. Discussing the need for limiting

spending power, Mr. Nordmeyer said according to the Abstract of Statistics the total of salaries and wages earned in the year 3937-38 was £98,000,000; in 1943-44 it was £177,000,000. Income from all sources in 1937-38 was

£173,000,000 and in 1943-44 it wa £280,000,000. For that reason m Government alike to its obligations t< the people would lightly reduce taxa tion though it could gain popularity thereby.

Regarding the Opposition advocacy of postwar credits, Mr. Nordmeyer said before the last sixpence in the pound was added to the National Security tax the Government sympathetically examined the possibilities of making it available as postwar credit, but administrative difficulties made this impossible. An Opposition voice: We could have done it.

Mr. Fraser: It will be done befo: you come over liete.

Mr. Nordmeyer said the Opposition wanted the Government to make a compulsory interest-free loan from the people. The Government instead had asked the people voluntarily to contribute their savings on which interest was paid. Administratively postwar credit was not possible in connection w r ith the National Security tax. It was possiblo in connection with the income tax and he doubted if the income tax payer was generally the class of taxpayer entitled to receive first consideration. Mr. Nordmeyer said family benefits were more democratic than the increased exemption allowance for each child which tho Opposition had championed. The latter would make for inequalities. .The man on the lowest scale of taxable surplus would save £8 Gs 8d if another £SO were exempted, whereas tho man on the highest rate would save £37 10s. Tho Minister also claimed that the existing scheme for deferred maintenance made reasonable provision for the farmer and businessman who might need money for maintenance and replacement when labour and materials became available. Mr. H. T. Morton (Waitemata) said he had been visiting institutions, including a Japanese jmsoner of war camp, and the treatment meted out to the prisoners was a credit to New Zealand. He hoped British subjects in Japanese hands would be as well treated. He had also visited what must be the largest poultry farm in the Empire breeding table poultry which was charged to the War Expenses Account. It had cost £25,000 to build a henhouse where they reared cockerels. Another £37,000 had been spent on shelters for Government offices and a most expensive funkholo had been erected for the Prime Minister and his Cabinet. It had walls fixe feet thick and a roof cf concrete and iron. Mr. Fraser rose to a point of order. He said that the term fuukhole was a reflection on himself and his colleagues and asked leave to make an explanation. Opposition members interjected that “funkholc” was an ordinary term for a shelter. Mr. Holland said if the words were unparliamentary' the Speaker could have ordered their withdrawal. He considered that it was quite out of order to interrupt a speech to make an explanation. Mr. Fraser said ho objected to the word funkholc. -A shelter had been built to enable executive officers and the War Cabinet to carry' on even if Parliament Buildings had been in ruins.

Mr. Morton said he would gladly withdraw the words which were common in the last war, and if the Prime Minister had seen as much of tho last war as this one he would have understood their meaning.

Hon J. O’Brien said New Zealand had spent £353,000,000 on the war and Opposition members were picking on small items they considered should not have been spent. He added that New Zealand had made the best war effort in the world.

Opposition members: What about China 1 What about Russia? What about Britain?

Mr. O’Brien said if sick people, including soldiers, needed delicacies, was there anything wrong with the Government building a poultry farm to supply them?

Mr. Poison: How are you going to get eggs from cockerels?

Mr. O ’Brien said taxation in New Zealand was heavy, but no heavier than any other country at New Zealand had not suffered from the war, but at one time there was a threat of invasion and there had been a rush to provide shelters. Some of that work might have been done badly but the provision had been necessary at the time. New Zealanders could be proud of what they had done and if some of the money used should not have been spent or should have been charged to some other account that could not be helped now. When the Army wanted something for the prosecution of the "ar the Government could not argue with them about it. It had to be provided. The debate was carried on by speakers on both sides of the House which adjourned at 11.12 p.m.