ANNUAL TAX BILL

Northern Advocate, 4 May 1932, Page 6

ANNUAL TAX BILL

NO INCREASES LABOUR ATTACKS MEASURE. PROPOSALS PASSED. (Per Press Association. —Copyright.) WELLINGTON, This Day. The Land and Income Tax (Annual) EiU was debated in the House of Representatives last evening after its provisions had been explained by the Minister of Finance, the Hon, W. Downie Stewart. Mr Stewart said: .“The bill is a duplicate of last year’s bill, with the exceptions that, while the schedule is a replica of last year's, there is one respect in which we have made a slight variation. The problem that concerned us last year related to the proper method of making people with j investment incomes, or ‘unearned incomes’ as it is sometimes called, contribute their share towards the general sacrifice. The argument then circled round the question whether we should make a voluntary conversion loan or adopt some other expedient. I held the opinion ; then, aihi still believe now, that a Voluntary conversion loan on the Now Zealand Government debt would' not be likely to prove really voluntary, owing to the fact that the interest on our public debt is considerably lowef. than that of the Australian debt. I pointed out that these receivers of incomes from -debentures, mortgages, Government bonds and other gilt-edged investments had more at stake than any other section of the community, and that if the • State were to maintain itself on a proper basis they should contribute in addition to what other sections contribute. “Therefore, in last year’s’ Annual Taxing Bill, we imposed a super-tax of S 3 1-3 per cent, on Investment incomes, which is still shown in the schedule in the bill before the House. It was imposed in addition to the 30 per cent, surtax levied on all incomes, whether earned.or unearned. The not effect was that taxation was first of . all increased by 30 per (cent, and then, having ascertained the amount of tax payable, we imposed the 33 1-3 per cent, super-tax on that portion of the income which was returned as ‘unearned.’ In last year’s annual taxing bill we treated as income from investment sources income from - mortgages, bonds, loans and debentures. We did not include interest received from local authority debentures or company debentures in the case of taxpayers paying on the maximum scale. These two classes are now included in this year’s bill, and will be ! . subject to the 33 1-3 per cent, supertax.”; Separate Groups. The'Minister said that in the financial statement he presented to the House Mast month he intimated that, having"“'caught'” receivers of investment incomes with the higher tax imposed last year, it would be unreasonable, if the House decided to make a flat rate reduction in the interest of 20 per, cent, for those taxpayers to be caught on both wings of the argument. That group had been divided into two classes in the National Expenditure Adjustment Bill—those receiving , interest from private mortgages and those receiving interest from Government bonds and debentures. The first group had been subject to a 20 per cent, reduction in interest, and the second called upon to pay a special stamp fluty of 'lO per cent. In addition, the latter would continue to pay the emergency supertax of 33 1-3 per cent, on “unearned” income, imposed in last year’s annual taxing bill, which was to be continued under the bill under review.

The Minister emphasised that the rates imposed by this year’s Annual Taxing Bill were imposed on incomes earned during the year which ended on March 31 last, and in those circumstances it would not be possible this year to review the special emergency super-tax of 33 1-3 per cent. If relief were to be given from 33 1-3 supertax, it would have to come next year. If an attempt were to he made to mix up incomes for two years, with the idea of ...removing the tax, ho would be entirely disregarding the fact that the income was earned last year, and that out of it provision had probably been made to meet the taxation required. Burden Apportioned. “Last year’s income,” added the Minister, “bears last year’s burden. Any concession in taxation arising out of the operation of the National Expenditure Adjustment Bill must be made next year and in the following year. That, in ft nutshell, is the position. In promising, in my financial statement, to give relief this year, I lost sight for the time being of what the actual position would be. It is not feasible to grant, relief on last year’s income for receivers of investment income. They will receive it next year on this year’s income, and not this year on last year’s income. They are in the same position as the civil servants, who have to pay income tax on last year’s income, although they have had a ‘cut’ in this year’s income of 10 per cent, or 121 per cent.” Mr Holland Protests. The Leader of the Opposition, Mr H. E. Holland, protested against such legislation being brought down in the la3t days of the session, and he contended there should have been ample time for the bill to be discussed. He was of opinion that the Minister had originally intended to im-

pose drastic taxation on incomes; in fact, when the wage cuts were made, the Minister had promised to increase the taxation on higher incomes.

Mr Stewart: “This is most, drastic taxation .when taken in conjunction with the reductions we have made in interest and rent. 55 Mr Holland: “I am afraid the Minister cannot get away with that.” He said the working men had suffered the wages cut, and now, in order to relieve the wealthy, the Minister was going to use the country’s reserves, and tlie whole of the Dominion Avould have to pay interest on the money raised against those reserves, and the whole of the Dominserves being used, but their use should have been taken into consideration when the Government’s policy was being framed, and the wages reductions and taxation based on

the „ altered position. As it Avas, wages had been reduced, and then the decision to use the reserves had been made in time to save the wealthy section of the community. The AHnister had said ho was going to permit the payment of income tax in instalments. Air Holland asked what form Avould those instalments take. Would they be half-yearly, quarterly or monthly, and Avould they be on an equal basis throughout. “The Government lias badly let down people with small incomes,” Air Holland declared.

•‘■Wjiat Of The Future?”

Air AY, E. Barnard (Labour, Napier) said he agreed Avitli the .AHnister that the taxation Avas iieaA’y, but ho would not admit that it was as heaA’y as tho AA’ttges cuts and pensions reductions. In making his statement last Friday the Minister had said that the discharged soldiers’ settlement reserve Avould all be absorbed after his present programme Avas carried into effect and any future deficit Avould have to be met Avith further economies and taxation.

“When Avill this process stop?” Air Barnard asked. “AVe are told that Ave may expect a smaller taxable ineofmo this year, and it may be still smaller next year, but still tho Minister talks of further taxation. AVhat does tho AHnister see ahead of this country? I must admit that the position Alls me with gloom. AVc cannot afford to AA r ait for Avhat may turn up overseas. AA r e must do Avhat avc can in this country.”

Mr F. Langstone (Labour, Waimarino) said be was losing what little faitli he bad had in the GovernI ment’s assurances. He alleged that after reducing wages and pensions, j the Government had not carried out ( the remainder of the programme that had originally been outlined. It had allowed people drawing large incomes from companies to escape a fair share of the burden. The Prime Minister, the Eight Hon. G. W. Forbes, said one would think ’ from Mr Langstone’a remarks 'that 1 there was an unlimited fund from 1 which the Government could draw taxation. Increased taxation meant reducing the fund on which the extension of industry and employment depended. Mr Barnard: "Doesn’t that also depend on wages?” Through All Stages. Mr Forbes said it was in the interests of this country to avoid further taxation. Xew Zealand’s company taxation at present was preventing an extension of industry and the provision of employment. The Minister of Finance at no time had stated that lie would increase income tax. Ho was beiug criticised because a particular section of the community had been called upon to pay its share in a manner different from that which the Labour Party favoured. Mr Forbes declared that no section of the community was escaping its fair share of the burden. There had been an indication that a sales tax would be imposed, but as “this tax would have affected everybody, including workers, • the Labour Party should offer its congratulations to the Minister of Finance that he hud been able to avoid the imposition of a sales tax. Mr Forbes added there could be no charge that a bill of a purely machinery nature such as the measure before, the House was "being rushed through. ’ ’ The bill was passed through all Its stages. "Deliberately Misled.” "The Government says there is no ground, for complaint about the court- j deuce trick Svhich has been ivorked, ” said Mr P. Fraser (Labour —Welling- 1 ton Central). Mr Speaker ordered the withdrawal of the expression, and this was done, 1 Mr Fraser substituting: "The Govern- ( ment has misled —deliberately misled f —the people.” j

Mr Forbes: “Who lias misled them?” Air Fraser: “The Government.” Air Forbes: “The Labour Party.” Afr Fraser; “The Prime Minister’s heart bleeds for the income tax payers, but it did not bleed for tbe widows and it did not bleed for flic miners dying of phthisis, or the miners’ widows who lose their pensions entirely.”

Ito the opinion of Air .1. A.-Lee (Labour —Grey Lynn) the Government’s idea of equality o'f sacrifice was to increase the rates on the wealthier sections slightly and inflict a staggering increase on the poorer classes. Apparently the Government was using company taxation as a way out for the individual shareholder. If taxation were lifted from companies and imposed at a heavy rate on the individuals in them, the companies would he able to trade more cheaply.