LAND AND INCOME TAX.

New Zealand Herald, Volume LIII, Issue 16267, 28 June 1916, Page 5

LAND AND INCOME TAX.

SECOND READING CARRIED. MORTGAGE TAX ABOLISHED. INVESTMENTS * ABROAD. f [bt TELEGRAPH CORRESPONDENT.] Wellington, Tuesday. The Land and Income Tax Bill was introduced in the House of Representatives to-night. Urgency was claimed for the measure, and the second reading .•was taken forthwith. • - >*■•*&' Sir Joseph Ward, in moving the second reading, said the Bill consisted of 169 clauses, but it was largely a consolidating measure. One of the new clauses gave the commissioner power to amend an assessment on objection. This obviated the necessity in certain cases of an appeal to a magistrate. The" most important clause in the Bill was that abolishing the mortgage tax. Another new clause provided that notice must be given to the commissioner of change of ownership of land. Exemption was given to the income- of New Zealand companies solely or principally engaged in. gold mining. Under the old system .gold mining companies were being taxed to the extent of half of their dividends, and the change was made with the distinct object of trying to promote gold ' mining in this country. As the mortgage tax was abolished, a clause was put in the Bill making the interest from a mortgage assessable for income tax. 1 Now only the equity owned by a man, in land* was subject to assessment. A clause' had been put in the Bill to exempt' from ; income tax all income received, here from abroad if that income paid income.-tax in any other part of _ih« ; British dominions. ■ This would not apply to trading concerns carrying on business "in Hew Zealand, exporting New Zealand produce. These concerns would pay income.tax here, because this was the country from which their produce originated, and they-would • pay even although the British Government required them to pay income tax in England. The estimated amount of this concession was £4000. ■- • Life Insurance Companies,' .'■ The Act of last session,- continued the Minister, had provided for the exemption from income of bonds' or 'deberitiires issued by the Government at,.4| per., cent. The Government-was--being»advised '"not to make this exemption,- but it was very necessary at present that the exemption should remain if the. rate of interest were not to rise. A change was proposed in the methods 'of ' assessing life insurance companies. The new clause provided that the taxable income of any foreign company carrying on the business of. life insurance should be deemed to be a sum equal to its total income from investments of any kind in New Provision was made for the prevention of evasion of the tax by the formation of " dummy" companies. Alterations were made regarding ike-time.of grace allowed.,.. Taxes unpaid, at the-expiration of 31 days after the 4fte date: were subject to 1Q per pent. surcharge, after three months to 12| per cent., and- after six months "15 - per cent. The jcoihmissioner also was"/ given power to charge treble tax in. a case of evasion, without the necessity, of first securing a conviction, leaving 'it. to .the taxpayer to object. This was .the- mode of I procedure in England. ~*;/--."-."'

Double Taxation. *,» I ■* '? . . > MessTs. Watford, Pearee, Witty, and McCombs protested against the. BUI being rushed through. ~ " . ..TJ.7 Dr. A. K. Newman (Welllngtori J East) said doubift taxation on companies was a most . serious.. matter,' cand' ■unlessxrifcr was dealt with- cautiously lie was-afraid, many companies , trading" both inl ' and England" would have to "close, down. •, He advised-, postponement of ' 'the whole question till the Prime Minister »and. Minister for Finance had had an opportunity of looking into it in England. - -";* ? Mr. G. W. Forbes (Hnrunui) said what was wanted was a tax that would make a man part with land in excess of "what he could use: to advantage. Grave dissatisfaction' ' existed* regarding land valuation and assessment. . The constitution & of the Assessment Court required amendment in the direction -of giving to objectors representation on it. . He advocated r generous treatment to the" Government Lsfe Insurance Department, in the matter- of taxation to enable 1 itrto compete with foreign offices. Position : of Native rliand?.- 7 The Hon. A." T. Ngata said the "Minister * had informed the House that there was no change in legislation regarding native land, but he held a different view. c TThe inter- ■ pretation clause made the progeny" of a full-blooded Maori. and a ■ half-caste a European, and as there was nonative'land in the Dominion that - was not now .owned by a majority of those who under ? this Bill would ' become Eurbneahs, - this "meant that all; nativeTland Woufd:corna~tjhffer the land tax, ordinary and graduate!. He wanted to know whether this- was;*he* deliberate intention of Cabinet. »3{tal Mr, Edward Newman (Raffgitikei). and Hon. D. Buddo endorsed Mr. slsrbes's contention that the time was-Hpe/for revision of the graduated land , tax. Mr. J. Anstey (Waitaki) said -the" opportunity should have been- - taken to thoroughly revise the graduated land tax. He approved of the abolition of the mortgage tax, but favoured reduction o£ the exemption on " income' tax Ho'catch single meni with 'an' income of £300 a year who now paid next id : Bothing by way of taxation* — r- L : •> -, a/i - --"

Small Incomes from Shares. Mr. J. Payne- (Grey Lynn) said-evasion of the payment of the income tax-.should be punished by imprisonment. Thg,time had arrived when, exemption of income from taxation should be abolished. Taxation on companies should be so' regulated as to avoid pressing too hardly, upon., those people deriving a small income 'from shares. -...•..-;"». ■?.: - An Obvious Tlaw. £ Mr. J. A. Young (Waikato) t contended that representation should- be' given to objectors on the Assessment Court. He further contended that:under. the Bill no exemption was allowed for mortgages in the payment of ordinary land tax:; '""'" Sir Joseph Ward, ha.-reply, said 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 Cabinet.' He- contended that there was nothing in the Bill detrimental to the Government-Life Insurance Department. As a matter of fact, they were reducing taxation on ' the Department.,. Much had been said, about the Government taxing." 'farmers, ' on....their "debts" through mortgages; Tratiiewished to say there was no way out: of*it. - The only reason this system of.'.taxation was ever introduced into the country: was because it was unavoidable, and, -_'being 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 Bill, and he was' under the impression that to rid the Bill of that flaw meant restoration of "the mortgage tax. He would have a further opportunity of conferring with the. advisers of the. Gov-' ernment on the point, and fie, would roako a statement later. There was,absolutely no intention to duplicate taxation on small farmers under this particular clause. Re-, garding- the remarks of Hon. A. T. Ngata, he had been advised that the interpretation clause would not bear the construction put upon it by the . hon. , member- and therefore the Bill did not have the effect supposed. He could, however, refer tho point to the Crown officers for further consideration. He. was' prepared-to,- give members further time to consider it after x they had heard all the necessary explanations. . •-.'::: The second reading was carried on the voicet^ : •' _ .': - ,'',,/",'"' : ~ ■■:x':,v , /., *--, " .. .„ ~. . .--;,.