BUDGET DEBATE

Otago Witness, Issue 3250, 28 June 1916, Page 47

BUDGET DEBATE

IMPORTATION OF MOTOR CARS

WELLINGTON, June 21

On the motion that the House go into Committee of Supply to consider the Estimates, Mr Witty said he regretted that the Government had done nothing to encourage economy amongst tho people. He commented on the number of motor cars being imported into the dominion, which he said were coming in by the thousands from America. They were to a great extent destroying 'the roads of the country, and by their purchase we were doing for America what we had done for Germany. He also drew attention to the? amount of cigarette smoking by youths of the dominion, ana to the failure to tax picture show tickets, furs, and other luxuries. The cost of living had' not been dealt with by the National Government, and the House was entitled to some further information. Concerning Ministers' travelling exDcnses and allowances, ho saw in this connection no evidence of the practice of economy on the part of Ministers. The allowance given to de : pendents under tho Defence Act required revision. New Zealand was one of the best countries in the world. If it was our duty to make proper provision for'those who might lose their breadwinners in the war, it was equally the duty of the Government to nationalise a number of our industries and carry them on in the interests of the people. He asked that Ministers should take members into their confidence, and give them the fullest information concerning the Bills they intended introducing. On Mr Witty resuming his seat, Mr Pearce sprang a surprise on the House by moving, "In the opinion of this House many of the proposals contained in the Budget are opposed to the best interests of the country, especially the producing interests of the country." This was greeted with laughter, and the interjection, " A vote of no-confidence." "Oh, no," said Mr Pearce, "it is not that at all. I don't want to bring it even to a vote. I simply want a discussion." Mr Pearce went on to say that he had arrived at tho House half an hour late on the previous evening, and found tho whole debate over, although he had been assured it would last eight or nine days. Mr M'Callum: "And a good thing too." Mr Pearce: "I don't think so. There arc a lot of things in that Budget that should be discussed." Mr Pearce said that the letting of the Budget go without a word of criticism was not a credit to the New Zealand Parliament, as it contained very important taxation proposals. Three or four irresponsible members had talked "war profits" continually for a month, and one would suppose that the farmer was swimming in war profits. He approved of the tax on var profits, but maintained that the prosperity of the farmers was largely due to increased production, brought about by increased energy and capital invested. The proposed assessment of war profits, by comparison with the average income earned n tho three years before the war, was almost childish. Very few farmers kept a balance sheet, and their estimates would be mere guesses. In such a product as w r ool there had been an increase of sd, all due to the war, but the cost of getting the wool to London had increased from Id to 3j,d per lb, or half of tho entire profit. The alleged profit of the farmer was "going to the middleman. He suggested that revenue would be more easily and more fairly obtained by an export tax. Ho asked the House to consider the extra cost of goods to the farmer, and cited several instances of increased charges. There were other taxes which should have been on the Budget. He would have liked to see taxation imposed to check the extravagance of the people. ("Hear, hear.") There was a great deal of extravagance. Farmers were spending too much money on American motor cars, and in the towns the people spent too much on theatres and pictures. He would urge that a heavier duty be levied on American motor cars and that a tax be levied on amusements. Pie did not suggest that the married working man could afford to pay taxes, and he would oppose any taxation that would press hardly on such men, but amusements were luxuries that any man could do without Ho complimented the Minister of Finance on his decision to abolish tho iniquitous and unfair mortgage tax. Last of all, he said that tho farmer. had to face very heavy taxation already—a land tax, a graduated land tax, a super-tax on the graduated tax. and also tho greater part of the Customs duties levied. Mr Okcy said ho _ would second the motion, although he did not believe in the export tax proposal put forward by the mover. To impose an export tax would put a burden on tho shoulders of a lot of poor men who would not be able to bear it. Ho approved of the taxation of war profits, but he suggested that some account should be taken of tho very generous donations made by some farmers to the patriotic funds out of their war profits. He disagreed strongly with tho freely-expressed opinion that the farmers wcro the only people in tho country making big profits, and contended that tho farmers were not by any mcanr; making more money than some other classes in the country. Ho warned the Minister of Agriculture that there was danger of our Hocks and herds beinrj depleted owing to the heavy slaughter of cattle brought about by tho present export prices, and he advised tho Minister to take steps to collect complete and accurate stock returns. This was very necessary, because tho country would bo in a very bad way if, when we had to accept reduced prices, our production should also be reduced.

Mr Payne spoke about banking', transports, Germans, and other familiar topics. Mr Nosworthy, in a. vigorous speech which made a deep impression on the House, said that as the principle of taxation of people on the land should bo taxation upon their income, lie find fault with the present incidence of taxation, and he would ask the Minister of Finance now that lie had become involved in a tremendous scheme of taxation, to investigate the position and secure moro equity of sacrifice as between the city and country taxpayer. He proceeded to quoto figures to show that the man on the land was bearing moro than his fair share of taxation. Under last year's taxation a man with £IOOO invested in land paid £1 18a 4d in taxes; a man with £IOOO invested at 5 per cent, paid nothing. A man with £2OOO invested in land paid £6 16s 8d in taxes; tho man with the same amount invested otherwise paid nothing. The other figures were as follow:—Capital: £3OOO taxes on land, £ll 15s; taxes on other investments, nil; £sooo—£2l lis Bd, nil; £10,000—£53 3s 4d, £6; £15,000-£93 15s, I

£ls; £20,000—£141 6s Bd, £32; £25,000 £196 13s 4d, £53; £30,000-£292 10s, £80; £40,000—£484 13s 4«1. £134; £50.000—£722 16s Bd, £189; £75.000—£1524 15s, £355; £100,000—£2618 13s 4d, £567. Hon. members could not say, he remarkcid, that farmers on the land were not doing their duty. Ho would not say, continued Mr Nosworthy, that the Budget emphasised and made greater differences between classes, but it did not reduce them. The man on the land was paying land tax, graduated land tax, super tax, and income tax with 5 per cent, surcharge, and now the 45 per cent, war profits tax. of which he approved, but he strongly disapproved of the scheme by which such inequitable taxes were levied on a man's debts. He was not trying to evade his proper share of taxation, nor were other men on tho land who were honest. After the war there would be no war profits, and this he commended for the consideration of those who talked so much about conscription of wealth. The greatest blot on the "Budget, in his opinion, was that it did not provide for the taxat-on of amusements. 'J he tax might not realise much, but it would have a moral effect on the community which would be undoubtedly good. He thought also that there ought to have been a reduction on the income tax exemption, for this war was not a struggle the whole cost of which ought to be borne by one or two classes in tho community. Nor did he believe that there were any classes who wished to avoid taxation; also, he asked the House to remember that a reduction of tho income tax exemption would hit the farmer just as it would hit other people. Farmers did not object to taxation, they objected only to inequitable taxation. He thought tho voting of £400.000 to the civil servants was " a "very, verv liberal measure and a measure that I tlv'nk may have to be reversed before wo see the end of this war." There might be retrenchment, as there had been in the past, and the time might come when the Government would have to take from these people what it had now given. However, the rospons : bility for all this was on the National Government, but ho warned tho Government that any attempt to impose on the primary producers a heavier burden of unequitable taxation would be so strongly opposed that tho Government would have to give un the attempt. Mr Anstey gave the Government credit for many proposals in the Budget, but there were some omissions. He agreed that more should be done in the way of taxing sports and amusements of all kinds. A STRAIGHT REPLY.

Sir Joseph Ward reminded members that the collapse of the debate was not tho fault of the Government. It would have been of assistance to tho Government to have heard the views of honourable members on the proposals the Budget contained. He could assure members, however, that every ono of the suggestions made concerning newtaxation had been already fully considered. He deprecated tho cry raised for more and more taxation. The Government was asked to tax racing, amusements, kincmas, and other things. The example had boon quoted that in England tho tax on amusements realised five millions. In New Zealand such a tax would produce £lll,OOO. The total amount paid by people for admission to races in the year was £3200 (sic)—an amount too small for consideration. As for tho taxing of kinemas, the people who went to these shows wcro not rich people, but poor people who could ill afford to pay taxes. Mr Nosworthy : Don't electioneer now. Sir Joseph Ward: Who said "electioneer"?

Mr Nosworthy: It's everybody's war Let's all pay for it.

Sir Joseph Ward went on to say that the Budget proposed to secure revenue from tho proprietors or owners of places of amusement upon their incomes and extra profits He believed thoy_ would obtain more this way than by shifting the tax on to the people, as suggested by some members.

It -was not fair to say, he contended, that the Government was imposing more taxation upon the farmer than upon any other section Of the community. To endeavour to create any such impression in war tlmo was most unfair. Mr Pearce: It is cprrect.

Sir Joseph Ward: Pardon mo. It is not. as any member who chooses to look at the figures in the Year Book of the total amount paid in land tax by some 44.000 taxpayers will see. That amount is only a little over £7OOO more than tho income tax increase* imposed bv-last year's Budget, which yielded over £800,000.' Of that £300.000 increase the farmers paid £240.000, with £29,000 still to be paid. Thus there was a difference of some £560,000 which was not collected from the farmers, but was secured from the town. Ho would further like to put on record a statement prepared for him by tho Commissioner of Taxes in April last. In his request to the commissioner ho had asked him to give the benefit in every case to the country when a man resided in the town and secured the most of his money from the country. For the purpose of this comparison he would exclude graduated land tax, as that had been imposed with the primary object of bursting up estates to facilitate settlement, and so must be eliminated in any comparison between taxation of town and country. The Commissioner of Taxes replied to him that in income tax the town paid £1,029.983 and the country £387.825; in land tax the town paid £452.572 and the country £550,931. The totals under both headings were:—Town, £1,492,555; country. £933,755, or n.n excess for the town o' £553,799. The commissioner said that in taking out these figures he had been guided by tho addresses 'of taxpayers except in cases where tuxes were paid by agents, and then he examined the accounts and allotted them in the division from which the majority of the money came. Freezing companies, dairy associations, mining associations, etc., were treated as being from, the country. It was a wrong thing in war time, declared Sir Joseph, to convey any impression that the Budget proposals would bear more heavily upon the country than upon the town, because it was not in accordance with fact. "THF WAR PROFITS CRY."

Kir Josop'h Ward said he wished io cay to thoso who urged the taxing of 75 per cent, of war pi-ofits instead of 45 per cent., that it was unfair to make comparison between the Old Land and New Zealand. In Britain many houses had been accumulating money for many hundreds of years. They had been able to secure; (heir money at or 4 per cent., and tiny paid smaller wages than did. employers here, so that to compare tho two positions was impossible. Provision would have to be made to provent any injustice to individuals here. He knew of one case where a firm had made losses for two years before the war, and on the third year made less than £IOOO. Since the war it had made just sufficient tc pay off tho overdraft, and with a via"-* to lay-

ing off for the future was now running such a risk that if the war ended within 12 months it would bo ruined by the 45 per cent. Avar profit. The Taxation Bill would have to make provision for such cases. lie had already forwarded communications to the Commissioner of Taxes from big houses in Wellington, which would ho so heavily hit under their proposals that unless provision was made they would be committing an injustice upon these linns, and alio upon the country. In regard to the cry for taxation upon American motor cars, they had to look at the question from all sides. It was only a few years since our primary products were firts,t allowed into the United States free of duty. Now the importation of motor cars from England wns restricted because of the war, and t.'io only thing America could give in exchange for our products was motor cars, which could not be secured from Britain. When the balance of trade was in this State we -could not for the sake of £5 per motor car, _or say, £2OOC a year, run the risk of having our products excluded from the Jnited States in the next revision-of th?jr tariff. Any such step would be merely cutting off our nose to spite our face. It was also incorrect to say that the Go vernment had not considered the cost of living. From ins own investigations he had come to the conclusion that conditions beyond New Zealand were such that we we're powerless to do any good, and would be powerless until the war was over. The great trouble was with the freightage of the world. He could assure the House that it the war went on for another year those who had anything to give would be required to give a great deal more than they had yet been asked to give. It could never be wise, however, to impose minor taxes of a. pin-pricking nature while we were obtaining a considerable revenue by ether means from the same sources. RIGHT OF APPEAL.

Mr C. A. Wilkinson opposed an export tax. He said that one danger likely to follow upon the imposition of an extra income tax was that the tax would be passed on. The farme*-, however, could not pass his tax on, ami he commended this to the Government.

Dr A. K. Newman said he did not see any reason why the taxation should be so heavy. Last year extra taxes were imposed, and we had a surplus of two millions. Such a surplus in war time was a very serious thing, and it was bad statesmanship to take so much money needlessly from the people when they were oppressed by the high cost of living. The country had a right to expect economy from the Government, but it was now_ going to levy three millions of extra taxation, a:..' there would be a huge surplus next year. Above all, the Government ought to economise, but the Estimates were more inflated than ever. The Budget was largely a Budget of taxation on thrift.

The shilling in tho pound extra tax meant an increase of 150 per cent, on last year, and an increase of about 230 per eent. on the rate for the preceding year. This would press hard on people of modesty incomes. The Government could not possibly need the money, seeing that it had so much money stored up in England. lie hoped the Government would stay its hand in the imposition of taxation, because hard times would follow the war and the depression would be worse if taxation-were now made heavier. Mr M'Cbmbs occupied his half-hour with a treatment of the cost of living problem, and charged the Government with neglect to remedy the position. He also endeavoured to establish a connection between the Govcrnemnts of tho Liberal Party and the Reform Party and the National Government, and the increase in their respective terms of the cost of living. According to his figures, the cost of living on tho sovereign" increased BJ,d under the. Massey Government, and 10£d under the National Government. Mr A. Harris continued the debate, which was adjourned at 12.20, Mr Masisey stating that ho was unable to agree to a proposal that the House should adjourn for the Palrnerston Show. WELLINGTON, Juno 22. The debate on the motion to go into Committee of Supply was renewed this afternoon. Mr Wright approved of the 45 per cent. Lax en war profits, but warned the Treasurer not, to go too far in taxing such profits or they would disappear, for men would not continue their production on the same scale. Mr Hudson said that generally speaking tho taxation legislation propos. d was decidedly popular and fair. He would have preferred to see the income tax made on a graduated scale as at present. Mr Hindmarsh defended the land tax as a scientific one. It was not a tax on farmers, but on land. He went into tho matter from the economic aspect, after which he congratulated tho Minister of Finance on his bold budget, although he disagreed with some of the statements made. Dr Thnckor, after declaring that New Zealand, in addition to the -war, was suffering from a social, industrial, and economic epoch, said that the particular disease of the dominion had relation to its social and economic welfare, and the Ministry should be the nurses of our complaints. He went on to speak of the slow progress made on the new parliamentary buildings and (lie Otira 'tunnel—two urgent national works. Mr Field (Nelson) said that the extra impost, on incomes would he comparatively li.sjnt on his incomes. At 5 p.m. Mr Pearce's amendment—"ln the opinion of this House many of the proposals contained in the Budget are opposed to the best interests of the country, especially the producing interests_ of the country "--was defeated on the voices, and the House went into Committee of Supply.