PARLIAMENT IN SESSION

New Zealand Herald, Volume 82, Issue 25301, 7 September 1945, Page 8

PARLIAMENT IN SESSION

TAXATION_DEBATE REQUESTS FOR RELIEF PURPOSE OF LEVY ON LAND MR NASH STATES ATTITUDE (P.A.) WELLINGTON, Thursday A discussion on appreciation of land values arid the right of the State to appropriate a portion of that appreciation by levying land tax was initiated by the Minister of Finance, Mr Nash, in moving the second reading of the Land and Income Tax (Annual) Bill in the House of Representatives this afternoon. Mr Nash said the land tax was not levied for the purpose of providing some service, as were local body rates. Jt was levied to ensure that a portion of the appreciation of value was retained for the State. He thought the correct thing would be for the whole of the value that accrued to land without exertion by those occupying or owning the land to go to the people as a whole, who created it by the general progress of the community. Land tax revenue had gone down from .£987,000 in 1944 to an estimated £930,000 in 19-10, mainly due to the cutting up of large estates. Position ol Companies Dealing with income tax, the Minister claimed that the present principle of levying it had resulted in people having a greater residue after paying tax than ever before. There was considerable Opposition objection to this statement, and Mr Nash asserted that it was correct to say people had never lived better than thev were living today and more money had been saved than ever before. Companies were also better off. Referring to details of company taxation, Mr Nash contended that the residue left to companies after all taxation had been liaid was more than they had ever previously had. In 1934 the residue left to companies was £7,300,000, and £13.100,000 in 1937. Mr M IT. Oram (Opposition—Manawfttu): How many companies wore thereP Mr Nash: I do not know. That is a very pertinent point. I shall check on all details. In 1940 the residue was £12,600,000, continued the Minister, and the reason that the total was below that for 1937 was because companies began to pay social security and national security tax in 1940. Figures for 1942, 1913 and 1944 were £11,100.000, £13.200,000 and £14,700,000 respectively. Tax on Individuals Discussing income tax on individuals, Mr Nash said it was a thoroughly equitable tax. The basic rates had been fixed at«j2s 6d in the pound on the first £IOO of taxable income, rising to a maximum of 12s in the pound on the last £IOO of men earning £3BOO taxable income yearly. The basic rates had been fixed in a manner enabling an additional levy to be made if further money was required, or a discount could be granted if less were needed. The Leader of the Opposition, Mr Holland: It has never reached the point, vet where a discount could bo given. Mr Nash: Not vet.

The Minister' emphasised that, although the maximum rate of I2s in the pound, when the wartime surcharge was added and national and social security taxes also were included, meant a total' tax of 18s in the pound at the level of £3BOO, it should be remembered that nobody paid 18s in the pound on his full income. Mr Nash said that taxpayers should be considerably assisted by the decentralisation of the Land and Income Tax Department, which had now established 14 branches.

Mr F. W. Doidge (Opposition—Tauranga): Is that preliminary to instituting a "pay-as-you-go" system? That system was under contemplation, replied the Minister, but it was found that in any case it would have been a physical impossibility unless the department was decentralised. The opening of branch offices must come first, but lie did not know when the new system of payment would bo instituted." Reduction In Burden Urged Mr W. J. Poison (Opposition—Stratford) said that New Zealand had sustained high taxation during the war iu spite of injustices involved for such sections as superannuitants and those on fixed incomes. Companies were labouring inider conditions which restricted competition and reduced them to the level of tax collectors. The time had now come for some downward variation. The Minister of Finance was (in a position to make such adjustments. He now had £9,500.000 in the kitty and could go into reverse gear. Mr Nash: Before you '"to reverse I you have to go into neutral. Mr Poison: The Minister does not know the meaning of the word neutral. When the Government needed sinews of war it wooed the thrifty and having done it attacked them by taxation, Mr Poison continued. High taxation was partly responsible for the bottleneck in the housing construction. The Government was no longer entitled to take from the people such enormous amounts of money now that _ the war was over. The country was simply crying for relief. Move to Defer Bill Mr Poison then moved an amendment that the bill be read a second time three weeks hence to enable the Government, to review its proposals and give much-needed relief to the people in general, particularly to those responsible for the upbringing, maintenance and education of children. Mr A. S. Richards (Government — Roskill) said the test to he applied when considering if taxation was too big a burden was not the amount that was taken from a person, but the amount he was left with after taxes had been paid. One indication that the payment of taxes by farmers was no hardship was the amount they paid in insurance premiums. The policy of the Government and of Labour generally was to

lay the burden of tax on those best able to pay. That was just, moral and right in every way. A division was then taken on Mr Poison's 'amendment, which was defeated by 37 votes to 34. Mr Poison: What a fright, they had. Mr W. A. Bodkin (Opposition—Central Otago) said it was unreasonable to levy the same amount of taxation in 1945 as was necessary in 1942 when they were in the depth of the war. It was reasonable to ask the _ Government to review the whole position to decide whether the enormous amount of taxation which had been obtained should still be forced from the community. Ihe Budget disclosed a substantial amount! in the War Expenses Account which could be used for rehabilitation purposes. The onus was on the Government to establish that the same high level of taxation was necessary for peacetime economy as for war. Thousands of people had been receiving substantial sums for overtime, _Mr Umlkin continued. When their earnings reverted, as thev must soon do, to the old award rates'without, £2 or £3 overtime each week, those, people would find it impossible, to continue paying the high rates of taxation they had met during the war. Every Government except New Zealand seemed to be preparing for a reduction in taxation to enable employers to reabsorb demobilised men into industry. Unless taxation concessions were made it would be returned service men who would suffer because business would not be able to expand sufficiently to find jobs for them. "Folly to Let One Penny Go" Resuming the debate tonight, Mr R. M. Algie (Opposition—-Reinuera) said that by increasing the social security benefits to £2 a week the Government was acknowledging the argument that the currency was being depreciated. Mr I''. Langstone (Government —Waimarino) said the Opposition wanted to reduce taxation so that more money could be lent to the Government at 3 per cent. It would be foll.v for the Government to let go one penny of taxation at present when it had the responsibility for tremendous undertakings. Now was not the time for anyone to quibble about taxation. .Mr T. O. Webb (Opposition —Kaipara) said that Mr Langstone had declared that the removal of the national security tax of Is 6d in the pound would benefit those with big incomes, but the fact was that the bulk of income tax, including the security tax, came from those earning not more than £'7oo yearly. If the national security tax was abolished those earning not more than £7OO yearly would share the benefit to the extent of £7,700.000, whereas those in the higher group would gain only £1,875,000. Mr Webb suggested that men returning from active service should be exempted from taxation for a year or two to enable them to cope better with the heavy expenditure which would face them. The Cost of Living The Minister of Health, Mr Nordmeyer, said the Government statistician's figures showed whether old people were better off in the past than today. The figures showed that in many respects the cost of living was as high in 1920-21 as today and in some respects it was higher. The argument that increases in social security benefits did no more than compensate for the increase in the cost of living was untenable. Discussing the Budget estimates, Mr Nordmeyer said that there were many commitments for war purposes still to lie met. While the Minister of Finance now estimated for increased expenditure to cover the conclusion of the Dominion's war expenses he had not asked for any further taxation. Provision had to be made for meeting during the present year all the commitments relating to the war effort. The alternative to reduced taxation this year would he to borrow still further. Obviously provision would have to be made by either this Parliament or the next for taxation to bo reduced, but to reduce it before war expenditure had heen met would be stupidity of the worst possible type. Mr Oram asked why did the Minister of Health give the House the cost of living figures for 1920-21 when the cost of living then was the highest it had ever been in New Zealand. Payments From Patriotic Funds

Mr E. P. Aderman (Opposition—New Plymouth) said that representations had been made to the Minister of Finance that any distribution of patriotic, canteen or welfare funds should not he taken into account for taxation purposes, but the Minister's reply had not been entirely satisfactory. The Minister had given some assurance that small intermittent payments from patriotic funds might be exempted, but had said that if payments were regulafr or sustained in any way he not give such assurance. Mr Aderman said there was a strong feeling that patriotic funds which had been subscribed for the benefit of servicemen should not be used in any way to penalise the recipients from a taxation point of view. The debate was interrupted by the adjournment at 10.30 p.m. STATE HOUSING SCHEME PROJECT IN WAIKATO (0.C.) HAMILTON, Thursday The Housing Department intends to call tenders immediately for some of the 100 houses to be erected in the area set aside for the purpose just outside the Hamilton borough boundary at Maeroa. This information was conveyed to members of the Hamilton Borough Council last night by the superintending engineer, Mr J. R. Baird. NEW CAMPING GROUND (0.C.) TAURANGA, Thursday As the result of negotiations with the Minister of Works, Mr Semple, 15 acres of Crown land have been made available to the Mount Maungauui Borough Council for use as a camping ground. Formerly there were several privately-owned camping grounds at Mount Maungauui, but they had been closed and there was some concern over ihe provision of facilities for campers for the next liolidav season.