FINANCE BILL DEBATE

New Zealand Herald, Volume LV, Issue 16824, 15 April 1918, Page 4

FINANCE BILL DEBATE

HOUSE PASSES MEASURE. INCOME TAX EXEMPTIONINTEREST RATES NOT AFFECTED. [BY TELEGRAM.—PRESS ASSOCIATION.] WELLINGTON, Sunday. The House of Representatives met at 11.30 a.m. yesterday, and went into Committee on the Finance Bill. All the clauses up to 9 were passed practically without discussion. The House adjourned at 1 p.m., and resumed at 2 p.m. Clauses 10 to 13 were passed without amendment. Considerable discussion arose on clause 14, providing for the exemption of investments in the War Loan from income tax. Mr. A. H. Hindmarsh (Wellington South) contended that the system would have the effect of raising the rates of interest on private loans all over the Dominion. He quoted an affidavit made by a large lending institution, to the effect that the investments in the War Loan at 4£ per cent., free of income tax, were equal to 6£ per cent, in other securities. To get money private borrowers, therefore, would have to pay 6J per cent, if they wanted money. Mr. John Payne (Grey Lynn) declared that the Government was simply playing into the hands of capitalists and money sharks. Sir Joseph Ward resented these remarks, I and said they were cowardly. The motives of the Government ought not to be impunged in "that way. Rates of interest could not be raised to 6i per cent., as suggested, as the moratorium protected private borrowers against such increases. If unfair rates were imposed the Government would step in and stop it. Large sums of money must be obtained in order to make the loans successful, and this was the only way in which to secure them. If the House did not approve of the exemption 'from income tax, and preferred to raise the loans at 6J per cent., then it was open to the House to do so. New- Loan Not Fully Subscribed. Mr. C, E. Statham (Dunedin Central) was unconvinced by the arguments of Minister. He said it was only offending the intelligence of the House to argue a« the Minister had done. At the same | time if the Minister insisted that the j necessary money could not be obtained without exemption, then he supposed the I House would have to vote for it. | In reply, Sir Joseph Ward declared that | the £9,500,000 loan had not yet been nearly j fully subscribed, which went far to prove that the 4£ per cent, free of income tax was not such a tempting investment in the estimation of capitalists as was contended. Mr. Massey admitted that at 4i per cent, the war loan was a good investment for the large capitalist, while the present high rate of income tax was being collected, but that condition was not going to last long, certainly not a3 long as the period of the loan. The advantage I'would then disappear. I Dr. A. K. Newman (Wellington East) ! contended that voluntary loans should be | abolished. Life was being conscripted and wealth should also be conscripted. | The exemption from income tax was cerj tainly a great advantage to the large I capitalist, but the proportion of the I advantage was not so great to the small investor. He suggested that voluntary | contributions shoul-i be discontinued in I the case of future loans.

The Compulsory Clauses. After further discussion a division was called for on the clause, which was carried by 40 votes to 18. At Clause 16, the Minister moved an amendment, intended to bring companies and corporations under the compulsory clauses of the Act. This was agreed to, and the following subclause was also agreed to:—"The amount which any person may be required to contribute to a War Ptrposes Loan shall not exceed six times the yearly average of land tax and incoma tax, exclusive of excess profits duty paid, or payable, by him for the three years ended on March 31, 1918." _ Further sub-clauses were added, giving the • Government power to exercise compulsion on agents in the Dominion, appointing a Judge of the Supreme Court as the Board of Appeal against the decision of the Commissioner, giving the Commissioner power to sue for the amount awarded against the taxpayer, and providing that money raised compuleorily in excess of the amount required could be transferred to the public revenues of the Dominion. Clauses 17 and 18 were passed unamended, but clause 19, extending the duration of Parliament until December, 1919, proved contentions. After discussion the clause was .carried by 43 votes to 19. A new clause was added restricting the importation of immature spirits. The House rase at 5.30 p.m. and resumed at 7 p.m. The Bill was read a third time and passed. In the Legislative Council the Bill was read a second time.