LEGISLATURE IN SESSION

New Zealand Times, Volume LII, Issue 12239, 10 September 1925, Page 6

LEGISLATURE IN SESSION

LONG DISCUSSION ON ANNUAL TAXING BILL

A MIXED DAY IN THE HOUSE

INTERESTING STATEMENT BY PRIME MINISTER

The chairman of the Finance Committee in tho House of Representatives brought up the committee's report on the Land and Income Tax (Annual) Bill yesterday. The opportunity afforded for discussion was seized upon by Labour members, and Mr McCombs (Lyttelton) argued that the substantial reductions proposed in the bill were meant to benefit the wealthy. Under the circumstances of the country which, wanted the money he objected to these proposed big reductions in the taxation on the higher incomes. There was call, he said, for a change in the incidence of taxation in New Zealand, which was the most backward country in the world in this respect. In the bill the proposed reductions were going to benefit those with the higher incomes. In the case of the smaller incomes the reductions were verv little, but when they came to the incomes above the £B7OO mark the savings, ran into hundreds. For instance, on an income of .£IO.OOO the saving would be .£197, on £15,000 £291, and on £20,000 £3BB. “DISTORTION FACTS” Replying to Mr McCombs the Prime Minister 6aid the Government had given an undertaking that they would consider whether the graduation should be continued from tbe £B7OO mark up to £lO,000, and whether 4.10 d 3-sths should stand above the taxable value of £IO,OOO per annum Mr Coates deprecated very much some remarks made by Mr McCombs that the Government were preying upon the people of New Zealand, robbing them of oread and butter and the necessities of life. Such statements were neither more nor less than distortion of the facts and were not in accordance wi£h what the Arbitration Court itself had said. The Labour Party had tried that sort of thing ever since they had come into Parliament. It was an election cry, of course, and as soon ae the elections were over they would hear very little about it. There was no analogy with the suggested decrease in income tax with the civil servants or anyone else—no analogy at all. There were not many private incomes at the £IO.OOO mark. Most of them at and above this figure were from, companies, and the proposed reductions would the effect of encouraging people to invest their capital ip the development of industries, which was what the country wanted. It would prevent those with capital from sending it to other countries for investment. should be no preference gjven for the investment of money with local bodies as compared with the money that might he invested with farmers. MAKING THINGS EQUAL If farmers wanted money for developing their farms surely the Government must put them on the same basis as local bodies at least. There should not be a difference. That did happen. The present proposal made them equal. ’ilio Taxation Commission's recommendations were being put into effect. The latestinquirieg from the Taxing Department led to the conclusion that nothing could be attempted in the way of finding out what the incidence of taxation would l be until the necessary information was to hand. Then that would open up the whole question of taxation. Until these returns were available for investigation no Government would be able to come to a decision as to what form of taxation should be followed in the future. The present proposal had an equalising effect, and that was something to he desired. VERY SMALL REDUCTION It was quite wrong, as Mr McCombs had suggested, that the Government was deliberately taking the bread and butter out of the mouths of the people fu? the purpose of handing hack to people with £IO,OOO incomes £l2O a year. If they wished industry to prosper in this country they must encourage people with capital to spend the money in the country in the development of its own indue* tries. No country could develop industries if you taxed capital out of existence. The reduction that was suggested was a very small one.

THOSE WHO BENEFIT Mr H. E. Holland, Leader of tie Labour Party, said that of the 36,091 income tax payer© in the Dominion, 28 would receive nearly one-third of the total remissions proposed by the bUIThe total remissions would be £150,000, and tbe 28 taxnayers mentioned would receive the benefit of £43.000 of it. These people paid last year £30,170. while the bill proposed that they should pay £27,769, an average remission per taxpayer of £2401. Further figures were quoted bv the speaker,.who showed that in 1922 165 taxpayers—including person©, firm?, and corporations had received over half the remissions on income tax, benefiting by £427,656 of the £764,386 remitted. This, he contended, showed that the benefits of reductions were going to the pockets of a mere handful of people.. Mr J. W. Munro (Dunedin North)

voiced his determination to fight the bill on behalf of those who were below the level of paying income tax. It was not so much the members of the Government, he said, who controlled these matters, but the reductions were merely the “cracking of the whip of the men behind the scenes —the men who really owned the country—the minority." COMPANIES BENEFIT When the 5.30 adjournment arrived it appeared that the report had been talked out for tho day, but at 7.30 the Prime Minister moved that the discussion should continue. Labour called for a division, but ultimately allowed the Prime Minister's proposel tp be carried on the voices. Mr J. O'Brien (Westland) moved that the report should he referred back to the committee for further consideration. Mr W. E. Parry (Auckland Central) seconded. \ Sir James Parr said that those paying tax on £IO,OOO and over were only 23 individuals, while the number of companies paying was no fewer than 177. The total reductions enjoyed by paying on the £IO,OOO and over amounted to £130,000. Of this amount ,£123,500 went to companies and. only £6500 to individuals. “CLASS ATTACK” Mr H. Atmore (Nelson) 6aid the Labour Party's attitude was really a class attack, and continued to outline the advantages of relieving as far as possible the operations of industry, for this would reflect upon the worker and relieve the unemployment'-the very matter upon which the Labour Party was frequently complaining. The power to tax, if pushed too far, became a power to destroy, he said. There was no Government in the world which could handle money so economically and more in the interests of the workers than the private business man, for he was an expert, and the Government was not. Mr W. D. Lysnar (Gisborne) said the Bill not calculated to relieve the smaller incomes, but aimed at giving relief to those who paid the most. The debate was continued at length, Mr E. J. Howard (Christchurch South) attributing the concessions ychich were being granted to the wealtlly as the cause of a general unrest throughout the world, the result of which had been a serious strike among shipping workers. New Zealand, he declared, contained the elements of a big upheaval. WHAT BLOCKAGE WOULD MEAN Mr F. J. Rolleston (Timaru) said the motion to have the Bill referred back to the committee might be construed as an attempt to block the measure altogether. If this were accomplished, he

pointed out, it would mean a remittance of not only £150,000, hut of millions, for unless the Bill were sent through no provision could be made for the levy and collection of land and income-tax at all. He. was inclined to oppose the reduction in income-tax, however, and said that the finances of the country were in such a state that it could not afford a remission of even £IOO,OOO. If this step were taken now, 6ome future Minister for Finance would probably find himself in the unfortunate position of having to reimi>ose it. When figures were gone into it would be found that the man who received £IOOO per year and had several children was paying less now than he did prior to the war. This was logically so, because the prewar commencing rate was 6d, without any deduction, while the present rate was only a penny more, with concessions for every child and for insurance, Hfr was therefore better off generally. NOT PAYING ENOUGH

“The man with the £1000," the speaker went on, “can afford to pay more. A few years ago ho was paying £80; now he is reduced to £4B; and if he does not pay more, someone else will have to pay it for him. There is> not a demand for a reduction in income tax in New Zealand, for the more money a man receives, the more he is willing to pay in income tax." ALL NIGHT SITTING Shortly before 1 a.m. a division was reached on the motion to refer the report back to tho Committee, and Labour was defeated by 48 to 15. • The Government then proposed to commit the bill forthwith, with a view to putting it through all its remaining stages before the House rose. Labour raised technical objections to the effect that the Standing Orders did not allow this, but Mr Speaker ruled against them, and the Government proceeded to the task of getting its measure through. The House was still sitting when the

“Times" went to press, and members were expecting to be there at breakfast time.