THE EXCHANGE BILL

New Zealand Herald, Volume LXX, Issue 21414, 11 February 1933, Page 13

THE EXCHANGE BILL

COUNCIL PASSES MEASURE ONLY FOUR OPPONENTS SIR FRANCIS BELL'S VIEWS [BY TELEGRAPH —PRESS ASSOCIATION] "WELLINGTON. Friday The debate on the second reading of the Banks Indemnity (Exchange) Bill was continued in the Legislative Council today. Sir Francis Bell said he regretted that they were unable to send the bill to n Select Committee in order to ascertain from tli£ Treasury and the banks the liability of the Government under the legislation. It had been stated that the bill was designed to keep men on the land, but under laws already passed relating to mortgages, there was sufficient safeguard. It was in the interests of mortgagees that competent farmers should be kept on holdings. Not long ago members of the Government had denounced the raising of the exchange, and had Mr. Dovvnie Stewart prevailed, they .would still be using those arguments. As a result of the Government's action, local bodies would have to meet £BBO,OOO in additional payments on overseas debt charges and their position would be intolerable. Common Sense Needed The Government should have ignored the advice of the experts and applied common sense to the question. After all, economics was not an exact science. The raising of the exchange meant that a great majority of people would pay for the premium which was being received by a small section. Because of its increased overseas debt charges, loss of customs revenue and liability to buy surplus exchanges, the Government would be faced with the position of having to create a floating debt, which would grow annually larger. Australia was being embarrassed by her floating debt at present and still had the difficulty to faco. The Government did not seem to realise that by taking over control of currency and exchange, it was doing something which for years had been advocated by Socialists and Communists. In his opinion, the policy was a contravention of the Ottawa agreement and even although it might be his last speech in the Council, he would strongly oppose the bill. Paying Bural Bates The Hon. R. Masters, Minister of Education, said as a result of the high exchange farmers would be able to pay<their rates and county councils and other local bodies would be in a better financial position. There were difficulties in the way of conversion of internal debt, as almost half the money was held by Government departments It might be theoretically sound to say that prices would rise as a result of the high exchange, but the Australian experience had been that the reverse had been the case. Mr. Masters said if he was assured that the depression was to be permanent, he would be against the high exchange, but the international situation gave hope of recovery and as prices rose, the exchange could quickly and easily be brought back to par. None of the alternatives offered had been convincing. The second reading was carried by 14 votes to 4, the opponents being Sir James Allen, Sir Francis Bell, the Hon. M. Fagan, and Sir Thomas Sidey. The bill was quickly. put through the remaining stages and passed. The Council rose until Wednesday.

OLD TAX REVIVED

POPULARITY IN EUROPE VARIATIONS IN CANADA Although the sales tax was used in ancient Egypt and Rome and also in the middle ages, it is only since the Great War that it has become popular with Governments as a means of raising revenue. Since 1918, it has been adopted by Germany, France, Austria, Czechoslovakia, Hungary, Poland, Italy, Belgium, Portugal, Russia anil small States which achieved nation status after the war. Canada followed Europe's lead in 1920, and Australia in August, 1930. Canada has varied the amount of the tax on 12 occasions. When first imposed in 1920 the tax was 1 per cent on sales by manufacturers and by wholesalers on imports. Two months later, the scale was varied to 1 per cent on sales by manufacturers to wholesalers, and cn sales by wholesalers, and to 2 per cent on sales manufacturers to retailers or consumers. A number of other alterations saw increases in the tax until it reached a peak of 6 per cent on sales by manufacturers or producers and on importations, and 3 per cent on goods on the restricted list. There were then gradual declines until June, 1931, and on April 7 last year the scale was restored to 6 per cent and 3 per cent. Australia's first sales tax was at the rate of 2£ per cent and became operative on August 1, 1930. The tax was subsequently raised to 6 per cent.