FINANCE BILL

New Zealand Times, Volume XLVII, Issue 10853, 19 March 1921, Page 8

FINANCE BILL

REDUCTION OF IMCOME TAX?

TEN PEE. CENT. FORESHADOWED

FOR NEST TEAR. RAILWAY ''UNAUTHORISED.” INCOME TAX BY INSTALMENTS. The Finance Bill, summarised olse\vhere > -was introduced by Governor-Gen era-Fs * Message yesterday. Dealing -with the principal clauses or tho measu-re. the Prime Minister sai that it was proposed >in the bill to considerably increase the railway unauthorised expenditure, as the Government would have to .pay for 2500 railway wagons, 45 locomotives, and 10,000 tons ot rails which were on order and ©xpectea to come to hand during the yaer. The amount of milway ‘'unauthorised” tor 1920-21 was «£i20,090. It w!as proposed to make it this year -£650,000. One of the most important provision® was to extend the term, of the Parliamentary appo-priation from June 30th to Oc- , bober 31st. On the last occasion of the Minister’s going Home it was extended till December 31st.

Mr J. A. Young (Waikato): that Parliament may not meet till' the end of October, Mr Massey: Yes; it may; but in mT opinion it will meet at the end of August or the beginning of September. It is a hundred to one that it will. The ordinary “unauthorised,he added, would also be extended 1 . There were also olau-ses Tendered necessary by the taking over of the Westport Harbour Board. The land tax would be collected in November as uaual, and the rate of the land tax would be that provided in the amending Act of Last year. There would b© no reduction, except that it was proposed to remedy a flight omission in the legislation of last year, by providing that declarations made for the purposes of the land and income tax should be exempt from stamp duty. The income tax was generally collected at the end of February, tout provision would* be made enabling the Minister for Finance to take, if any taxpayers so desired, a first half-instalment of the income tax in July next and the remaining half in February. Mr A. Harris (Waitemata): That means they would have to -pay the first half half a year ahead? Mr Massey: Yes; but the Finance Minister has the right to call up income tax at any time. The right has been used tin my experience, but I 'hope it will not b© necessary again. Mr D. Jones (Kaiapoi): Will you alto them interest on the money paid an advance? (Laughter.) Mr Massey: We will not charge them interest on amounts not received till February. (Laughter.) ,£750,000 REDUCTION IN TAXATION? "We may be able to reduce taxation," added the Prime Minister. Mr V. H. Reed (Bay of Islands): In what direction? Mr Massey said that he could not eay definitely yet the extent of the reduction; but they would know when the House met again. Taking info account, however, savings and tno subsidies on flour and butter, which would not be needed this year, he thought that the reduction would not total less than 14 millions. (Hear, hear.) He proposed to reduce the income tax by 10 per cent. (Hear, hear.) Mr Reed: This year; Mr Massey: No, next year. He added that he took the income tax because farmers and business metn both paid in°°Mr A*S. Malcolm (Clutha): Exempt th© farmers. , , , ~ . Mr Massey: We cannot do that all at once The 10 .per cent, will mean reducing the income tax by about .£750,000. Mr W. H. Field (Otakj); No reduction of land tax? - , Mr Massey: No; but farmers pay land tax under the present law. Mr O. Hawken (Egmont) :I don t think they wdll this year. ilr Field: They will nop have the incomes to pay the tax on. (Laughter.) Mr Massey: I don’t think that. People have to send in their returns by the end of March, and some pretty substantial returns have come in already. Tnere would not be, he was sure, the of! that some people imagined. What was causing the present difficulty was the enormous stocks of goods held up m every centre of population throughout the Dominion. ~ , Mr Reed: When will the reduction date from? . Mr Maeeey: April Ist—no March 31st, 1923. He could not promise it definitely, ho said; but that was what he was aiming at. The next clause contained a provision asked for by Mr Luke (Wellington North) and other members for the shortening of the terms of local bodies’ loans. It seemed, though he

did not know why, that people were willing to lend for a ten years term but would not look at a twenty years term. Mr T- M. Wilford (Leader of the Opposition): Will yon Keep control of the rate of interest?) Hr Massev: Oh. res. ■ There was, he stated, another olauso mating it possible for members of Parliament to retain their seats in Parliament, although appointed members of the new Health Boards

SUPERANNUATION BONUS.

Mr J. MoCombo (Lyttelton), and Hr T. M WilfoTd strongly contended that if it would be possible to reduce the income tax as suggested, the cost of living bonus to superannuated railway men and other public servants should certainly be oonE .Parry (Auckland Central) strongly objected to the reduction of the income tax. Ho urged.tho necessity for building more houses. Mr Massey : It is not in tho bill. T)r Newman (Wellington East) put in a plea for the reduction of the 8s 9d income tax on companies, many of the shareholders in which were small people, he also suggested that retired public servants and their widows should get a bit more. If the sinking fund payments were suspended for a year Qr two tho Finance Minister would have .£500,000 or so tjf play W Mr H. E. Hellnad (Buller) contended that if the reduction in the income tax is made it would not benefit the country as a whole. It would only relieve those who could well afford to pay, and it would racaji lof*s money aval.able for educational needs, tor old age and other pensions, for necessary public works, and S °The Hon. J. A. Hanan (Invercargill) stressed the need for strict economy in all State Departments, by which, he maintained, hundreds thousands a year oould be saved. Taxation reaching tho breaking point in some directions. Ho expressed the hope that in the epurse of tho forthcoming tarifi revision, Customs taxation would not be increased for revenue purposes. Mr D. G. Sullivan (Avon) also pleaded tho case of tho superannuated public servants. Tho Prime Minister said that the country was staggering under the present load of taxation. Take a company with a net income, before paying taxation, of £2OO0 —he knew that was a small sum Hit it was an illustration. On that the company had to pay 9s in tho £ income tax. or £9OOO out of £20,000; and tho result was that the companies had to charge it to the consumers in higher prices, and some had had to dismiss a number of employees. To weather the present slump increased production and rigid economy would bo necessary. They might even have to go in for drastic retrenchment in tho Government departments, etc.; and if that was necessary the first salary to suffer was his own. Referring to tho hooping problem, he stated 'that the Labour Department estimated that Ohflfi houses had been built in !New Zealand

during the past year; and h© thought that was not a bad result. At the Railway Department’s Frankton mill standard timber would be cut for all Lousing P^? r ” poses. Replying to Mr Holland, Jh© 4aid that he would look into the question of providing money for the miners at Ranunga to build their own houses. He believed that was a bettor way than the Government building houses. Referring to Customs taxes, he said that during the past year they had practically collected two years' Customs taxation in one, but that meant that wa should get much less by way of Customs revenue this year. There was, he believed, a bad time ahead during the coming winter and the Government had set by a reserve fund to meet it. He would deal the next day with the economies that the Government were making, and he believed that members would be satisfied. The grant of £190,000 for the bonus to superannuated public servants was made in October last, he thought, and that being the case there was no immediate need to deal with the question now He ivculd bo glad to do what he could in the matter, but wished first to know more definitely what the financial position of the country was going to be later in the year. , . At 11.35 p.m. the bill was read a first time. BOMB FUR THEIR PROVISIONS. In addition to the clauses dealt with by tho Prim© Minister on th© introduction of the measure by Governor-Gene-ral’s message laet night, th© Finance Bill provides (clause 7) for the partial exemption of insurance companies from incom© tax, the amount of the tax payable being reduced by one-half. By clause 8 reduced the rates for the penal tax, for default in payment of tax ly due date are mad© applicable to the land and income tax for the year commencing April Ist, 1920. Clause 10 empowers th© Minister for Finance to vary, in respect of rat© of interest or duration. the conditions subject to which local authorities are authorised to borrow moneys. Claus© 11 increases from <£500,000 to £2,000,000 the Umitation in regard to th© guarantee by the Government of loans raised by local authorities.

LEGISLATIVE COUNCIL

ANOTHER SHORT SITTING,

The Legislative Council met at 2.30 p.m.

SIR THOMAS MACKENZIE.

The Council was notified by Governor's message that Sir Thomas Mackenzie had been called .to the Council. LEAVE OF ABSENCE.

Leave of absence for the remainder of tho session was granted the Hon. P. J. Nerhen.v.

The Speaker announced that, accompanied by other members, he had presented the Address-in-Reply to the Gov-ernor-General. The Council rose at 2.35 p.m.