SPREADING THE NET

Otago Daily Times, Issue 23930, 4 October 1939, Page 8

SPREADING THE NET

LAND AND INCOME TAXATION NEW PROVISIONS EXPLAINED NET INCREASE OF £300,000 EXPECTED (From Our Parliamentary Reporter) WELLINGTON. Oct. 3. A net increase in the revenue of at least £300,000 is expected to result from the operating of the Land and Income Tax Amendment Bill. This statement was made by the Minister of Finance (Mr Nash) when moving the second reading of the Bill in the House of Representatives to-day. In reply to a question by Mr S. G. Holland (Opposition. Christchurch North), the Minister said the concessions under the Bill were likely to total about £200,000. On the other hand, the increased revenue would be about £400,000. "I should think, taking all the factors into consideration, that we would be at least £300,000 better off," Mr Nash said. "I think that is a conservative estimate." The Minister said that because of the fact that the law was written in a certain way, some taxpayers had found a means of getting round it. The Bill, if it became law. would make evasion more difficult. There had been a number of cases of evasion inside the law. The Insurance Exemption Mr Nash traversed the more important clauses of the Bill, and gave several examples of the manner in which the new clauses would operate. He said that in the cases of big incomes paying somewhere near the maximum rate of tax persons might obtain insurance for a payment of 12s in the £. For example, one taxpayer paid £450. in insurance premiums and so saved £l4l lis 3d in tax. Thus he was obtaining his £450 worth of insurance for £3OB 8s 9d. Similarly, the saving in tax in the case of a person who paid £I4OO in insurance premiums was £865. "We are of the opinion that that is not quite fair, because he has 62 per cent, of his insurance premiums paid by the State." Mr Nash said, when explaining that a clause proposed to limit to £l5O the amount that would be exempted for insurance and superannuation payments. Mr W. J. Poison (Opposition, Strat;ord): You mean that it is an oppoi'tunity of getting a little more taxation. Mr Nash: No. This was irrespective of the need for extra taxes. It is a case of equity and fairness. Mr H. S. S. Kyle (Opposition, Riccarton): You will get it in death duties. A , , . .. Mr Nash: We want it before they die Referring to a clause which limits the exemption in the case of a husband and wife to a total of £250, Mr Nash said that under the existing, law if an income of £9300 was split into two the tax would be £2423. If, however, it was taken as one, the income tax would be £3740. Small Landowners Included "It is proposed to bring them in like everyone else," the Minister said, when dealing with the clause requiring landholders with properties worth less than £3OOO in unimproved value to pay income tax. " They pay tax only if they have an income." There was one case, he said, in which a man with a property of an unimproved value of 'ess than £3OOO made a net income of £4316 and did not pay a penny in income tax. His tax would, had the present proposal- been law, have totalled £6lB. An Oposition member: He must be a remarkable farmer to get such proU Mr°Nash: He is a wonderful asset to the country. _. . Mr J. G. Coates (Opposition,, KaiDara): Well, knock him on the head. Mr T D. Burnett (Opposition, Temuka): He won't be an asset long. The Minister explained that overseas income was exempt from tax if it had already been assessed for tax in the country where it was earned. It was felt however, that it should be taken into consideration to determine the rate of tax in New Zealand. Mr Poison: It would give you heart failure if you found yourself reducing taxation one day. Arbitrary Assessments The clause empowering arbitrary assessment to be made in the case of certain companies was mentioned by the Minister. He said that some companies' returns showed that they never made a profit, but the department had an idea that they did. "We are taking power to make an arbitrary assessment," Mr Nash exMr Holland: An obituary assessment, you mean. SCOPE OF MEASURE OBJECTION TO TWO-FOLD PURPOSE (From Our Parliamentary Reporter) WELLINGTON, Oct. 3. Objection to the Government levying substantial taxes under a Bill that did not purport to be a taxation measure, but merely one for removing anomalies, was taken by Mr W. J. Poison (Opposition. Stratford) during the second-reading debate on the Land and Income Tax Amendment Bill in the House of Representatives to-night. "The Minister has told u s that at a conservative estimate the Bill will result in another £300.000 in taxation," Mr Poison said. "Perhaps it will be nearer £500,000. I think that half a million is a high cost to remove a few anomalies, and personally I would rather have the anomalies." It did not matter how much the purpose of the Bill was dressed up; it was still levying extra taxes, he added. It might be called a Reforming Bill or an Anomaly Removal Bill. The Acting Prime Minister (Mr P. Fraser)- Or an Honesty Enforcement Bill "Apparently the Minister thinks that there should never be a closed season for the taxpayer, but that he should be able to take a pop at him at any time," Mr Poison said. Mr F W. Doidge (Opposition. Tauranga) described the Bill as remorseless pursuit of the taxpayer. He asked why there was such a hurry to get the measure through, and suggested that the real reason was to fill the empty pockets of the State Both Mr Doidge and Mr W. A. Bodkin (Opposition, Central Otago) criticised the clause aggregating the incomes of husband and for tax assessment, and said that a man and a woman living in adultery were in a better position financially than a married couple. Dr D. G. McMillan (Govt., Dunedm West): Come off it. Mr S. G. Holland (Opposition, Christchurch North) said that the Bill was not the innocent measure that the Minister would have the House believe. While it sought to remove some anomalies, it created others and would, he believed, result in many injustices.