THE FINANCE BILL

Otago Witness, Issue 3313, 12 September 1917, Page 7

THE FINANCE BILL

TAXATION ON CIGARETTES. NEW PROPOSAL BY MINISTER. WELLINGTON, September 4. In the House of Representatives this evening several amendments to the Finance Bill were introduced by Governor s Message. Sir Joseph Ward said he had had a report made on tho proposal to put a penny stamp on each packet of cigarettes, and had found it impracticable. lie moved asking the House to agree to certain increases in the duty on cigarettes, which would give the country the benefit of an additional £BO,OOO of revenue. The resolutions imposing the new duties were agreed to. The following are the new Customs duty resolutions: —"Resolved that the duties of Customs imposed on Cigarettes by sections & and 5 of "The Custom's Duties Act, 1908,* and by certain resolutions from Committee of W ays and Means, dated August 1, 1917, be revoked and that on and after September 5, 1917, there bo levied, collected, and paid to and for the use of his Majesty the duties of Customs following:—On e.garettes not exceeding in weight 2JJb per 1000, £1 5s 6d per 1000; on cigarettes not otherwise enumerated, 10s 6d per lb; resolved that the foregoing resolution shall not extend to any of the islands situated within the boundaries sot forth in the first schedule of 'The Cook Islands Act, 1915. "

The House then went into committee on the Bill.-

Sir Joseph Ward explained that the amendments introduced referred to life insurance companies, making the taxation Jaiorc equitable, on the lines suereested by Sir John Findlay during the debate. A proposal was also made to pay the cold duty to local bodies prior to the export of the gold, so as to assist their finances. An amendment was also introduced to facilitate contributors to the War Loan obtaining advances from the banks. Mr Sidey asked whether the Minister •would not, in view of the success of the war loan, strike out the retrospective compulsory clauses, as it was unjust to punieh a man for not doing what he was not legally bound to do. Sir Joseph Ward said there was a moral obligation on him to subscribe. Dr Newman made an appeal to the Minister to differentiate between earned and unearned incomes in favour of the former.

Mr Buddo put in a plea for the email shareholders in companies. Mr Wilford asked how tho banks stood with regard to the gold reserve, as there ■was a rumour that it was going to be abolished.

Sir Joseph Ward, in replying to the discussion, said there would be no unfair use of tho compulsory clauses of the Bill. The loan had been so generously subscribed that unless absolute shirkers were discovered they would not be brought into force'. In discussing the differentiation between earned and unearned incomes, he declared that he could not let any revenue go, and therefore he could not decrease the tax on earned incomes, but would have to increase it on unearned incomes, which would afford no satisfaction to the people for whom Dr Newman was appealing. Any system of imposing taxation on companies would necessarily be full of anomalies, and while ■war taxation was being imposed in the dominion it would be impossible to get rid of anomalies. Regarding the gold reserve in the banks, he said there was no suggestion to abolish it, and he could not understand how such rumours got about. He had been told that day that the United States had contributed £2,500,000 to the loan. As a matter of fact, there was no outside money in the loan at all. On _ the Subject of taxation of banks he explained the method on which the taxation was collected, and he expressed the opinion that some day the banks would have to pay on their income instead of under the present system. 'On the subject of the taxation of mortgages he said he was prepared to propose an amendment extending the exemption by £1 on every £2 over £3OOO, so that it would disappear at £6OOO instead of £SOOO, but beyond that he was not prepared to go, as otherwise he would not be able to hold the revenue. No member had been able to make any suggestion by which the revenue would be protected if mortgages were exempted. Mr Veitch supported, and Mr Pearce spoke against, the Minister's mortgage tax proposals. The discussion on clause 1 was continued till 10.52 p.m., when it was passed. Clauses 2 to 23 were passed without amendment. A minor amendment waa made on tho motion of the Minister in clause 24, and in clause 25 the proviso was struck out on the motion of the Minister. At clause 34- the Minister moved a new proviso providing that if a shareholder's return from a company exceeds 6 per cent. no exemption shall be allowed. —Agreed to. At clause 37, dealing with compulsory subscriptions to the war purposes loan, Mr M'Combs and Mr Anstey asked that it be reconsidered, as it did not get at the real shirker. Sir Joseph Ward said the provisions had been before the country for some time, and he had not received a single protest against it. He had been meeting the leading men in the dominion's finance since the Bill was introduced, and not one had raised the slightest objection to it. If cases of hardship arose out of the operation of the clause there was a board to adjudicate on them. After a further brief discussion machinery amendments moved by the Minister were agreed to, and the clause was passed. The House rose at 11.40 p.m. DETAILS OF AMENDMENTS. SPECIAL WAR TAX ALTERED. ALLOWANCE FOR CHILDREN EXTENDED. (From Our Own Cokbesfondent.) WELLINGTON, September 4. New sub-clauses are added to clause 37 (oompulsory subscriptions) providing for tho establishment 'of a special board of appeal, consisting of the Controller and Auditorgeneral (who shall be the chairman), the Commissioner of Taxes, the Secretary to the Treasury, and tho Government Insurance Commissioner. Every appeal shall be heard and determined in private. For the purposes of an appeal the board shall have file powers of a commission appointed under Commissions of Inquiry Act, 1908." . The second schedule referred to in clauso $6 (rates of special war tax) is struck out, fnd the following is substituted: —(1) On fccomo assesaable under subsection 3 of

section 112 of " The Land and Income Tax Act, 1916," tho special war tax shall be at the rate of Is 6d for every £1 thereof; (2) in all cases other than those referred to in the last preceding clause the rate of special war tax shall be determined as follows s—(a) Where the income on which the special war tax is payable does not exceed £4OO, the rate shall be 6d for every £1 thereof, increased as provided in paragraph (c) hereof: (b) where tho income on which the special war tax is payable exceeds £4OO, the rate shall bo 6d for every £1 thereof, increased by one-two-hundredth part of Id for every £1 in excess of £4CO, but so as not to exceed 3s in tho £l, and further increased as provided in paragraph (c) hereof; (c) to the rates prescribed by paragraphs (a) and (b) hereof respectively there shall be added an additional rate equal to 50 per cent thereof, and tho total shall bo the rate of special war tax payable by the taxpayer. • Tho State Fire Insurance office is to pay income tax. A new section dealing with gold duty reads as follows: —"While this section remains in force duty shall be payable on gold held on behalf of the Imperial Government by any bank carrying en business in New Zealand as if that gold had been exported from New Zealand. Such duty shall become payable immediately on the receipt by tho bank of the purchase money and shall bo paid within 4-8 hours thereafter. No duty shall thereafter be paid on such gold on its export from New Zealand. _ All money so paid shall bo dealt with as if it had been paid under the Gold Duty Act, 1908. This section shall remain in force during the present war and for six months thereafter. A new clause is inserted to protect banks in respect of advances to clients for investment in the War Purposes Loan. The special exemption in respect of dependent children of a taxpayer is extended. At present an allowance of £25 is made for every child up to five, but the limit of five children is now removed. A clause dealing with foreign insurance companies provides that the taxable income of a foreign insurance company carrying on the business of insurance shall be deemed to be a sum equal to its total investments of any kind in New Zealand diminished by an amount equal to 2 per cent, of its investments in New Zealand, the income from which is not exempt from taxation In the Bill as printed the compulsory subscription clause makes it the duty of every taxpayer to subscribe whose taxable income for the year ended March 31, 1917, was not less than £7OO. The year 1917 appears to have been a misprint, as it is now altered to .1916.

WELLINGTON, September 5.

This afternoon the House of Representatives went into committee on the Finance Bill

At clauso 39, Sir Joseph Ward stated that if members desired he was willing to agree in connection with the tea duty to put in tho schedule an ad valorem duty of 25 per cent., so that tho higher-priced teas would pay a higher duty than the cheaper teas. — J.he clauso was agreed to. At clause 46. the Minister moved to increase the duties on cigarettes manufactured by machinery from 5s 6d to ss. and on cigarettes made by hand from 2s to 4s per lb.—Agreed to. At clause 52, Mr Yeitch objected to the amusements tax on the ground that it was unsound, in incidence, and tended _to increase the cost of living io the working man. If imposed at all, it should only be on the higher-priced tickets. —A lengthy debate took place, many country members objecting to the tax on the ground that, there being no sixpenny tickets in the country, their districts would not participate in the exemption.—The clause was affreed to on the voices.

In replying to Mr Statham, Sir Joseph Ward said entertainments which were not given for private gain would be exempt under claiise 58.

A new clause—27a—extending the special exemption under income tax in respect of the dependent children of taxpayers was added to the Bill.

A new clause —33a—providing that the State Fire Insurance Office shall pay income tax was agreed to. A new clause—33b —making special provisions with respect to the income of foreign insurance companies, and a new clause —47b —respecting the payment of gold duty to local bodies before gold is actually exported, wore also added. A new clause —65c —relating to protection for' banks in respect of advances to clients for investment in the war purposes loan was agreed to without discussion. Further new clauses were added authorising companies and local authorities to invest in the war loan.

The House then passed on to the consideration of the schedules. The second schedule was struck out. On the third schedule Mr M'Combs objected to the tax on tea as tending to increase the cost of living. He moved to reduce the proposed duty on packet tea from 5d to 2d, and to strike out the duty of 3d on tea in bulk. —-Messrs Hornsby, Anderson, Vcitch, Webb, and Statham declared against the tax on the ground that it was part of the policy of the National Cabinet to reduce the cost of living, while, so far from reducing the cost, this was an actual increase amounting to £99,000 per year. —Dr Pomare, Mr Wilkinson, and Mr Pearce supported the tax. —Messrs Isitt and Ell urged that the tax be abandoned, and that the revenue be made up by an extra duty on spirits.—Sir Joseph Ward -ombatcd the idea that the revenue could be got from spirits, as the revenue from that source was steadily falling. After the discussion had continued along similar lines till 11.15 p.m., Mr M'Combs intimated that ho would not press for a decision on the question of the duty on packet tea, which was agreed to, but he called for a division on the question of retaining tho duty of 3d per lb on tea in bulk. On a division the duty was retained by 37 votes to 21. 'Die following is the division list: — For the tax: Allen, Bollard, Buddo, Buick, Dickie, J. M. Dickson, J. S. Dickson, T. A. H. Field, W. H. Field, Forbes, Fraser, Guthrie, Hanan, Harris, ilenare, Hordman, Hemes, Hudson, Jennings, Lee, M'Callum, Massey, Myers, E. Newman, Okey, Parr, Pearco, Pomare, Reed, R. 11. Rhodes, Russell, Scott, Thomson, Ward, Wilkinson, Witty, Young. Against: Anderson, Anstey, Brown, Ell, Fletcher, Hornsby, Hunter, leitt, M'Combs, Mander, Dr Newman, Poland, Poole, G. H. Smith, Statham, Sykes, Talbot, Veitch, Walker, Wcbk Wright. Pairs. —For t ? '.■© tax: MacDonald, Carroll, Findlay, No Worthy, Colvin, Ngata. Against: Thacker, Wilford, Sidey, Parata, Glover, Craigie. The remaining schedules were passed, the next schedulo being substituted for the second schedulo previously struck out. A number of MaMafea—b fe«

traduced by the Minister were adopted without discussion.

The Bill was then reported from Committee with amendments.

The House rose at 11.50 p.m. Further amendments to the Finance Bill introduced by Vico-regal provide that, if the Commissioner is satisfied with respect to a shareholder in any company liable to income tax that hia total income from all sources during the income year did not exceed £4OO, the Commissioner may pay to him an amount equal to the difference between tho amount of tax payable by tho company in respect of an amount of its income equal to the dividends paid by it to tho shareholder and the amount of tax that would have been payable by the shareholder in respect of those dividends if they had formed part of his taxable income, provided that no such payment shall be made of such an amount that the total amount received by that shareholder by way ot dividends on his shares, together with tho payment under this section, shall exceed 6 per cent, of the total amount paid up in respect of his share. 1 ?. With regard to the investments of local authorities and public bodies in the war loan, it is provided that no moneys required by law to bo used for any speciiio purpose shall be so invested, except with the precedent approval of tho Governor-gcneral-in-Council.

A new clause is inserted validating all investments by trustees, companies, local authorities, and public bodies in the loans of 1916 and 1917.

WELLINGTON, September 6. In tho House of Representatives to-day Sir Joseph Ward moved tho third reading of the Finance Bill. Ho thanked the House for tho favourable reception given to sucli a complicated measure, and he was extremely pleased with the shape in which it i merged from committee. Ho proposed to have the Bill held over for a days before it went to the Legislative Council so that certain phases of the measure might be brought under review, but _it must bo understood that this would not apply to the principles underlying the Bill. There had been considerable discussion on the question of the tea tax, but he would like to assure tho House that that was not the only point he had been compelled to oppose. The total concession winch ho felt it his duty to resist amounted to £1,849,000. It must be remembered that this was war legislation, and we wero not entirely masters of our own requirements. There could be no uncertainty in our position. We must be sure of our grcund, and we must be able to do what was required of us in the matter ot rinding the money necessary to send men to the tront and equip them there, 'iiiere were many provisions in the Bill which would never be submitted by any Government and would never be sanctioned by any Parliament in normal tunes. There had been criticism of some of his proposals and other forms of taxation had been suggested, but he warned the House that it was not possible for a Minister to drop one set of taxes and adopt others in the miust of a crisis. The most feasible suggestion in this direction made during tho debate /"'at. the resumption of tho profits tax. "' Hat was impossible if the Bi.'l wan to ho adopted. It was no use siyin£ that Australia had a profits tax, because tho conditions were altogether different. His finanre wa«> based on land tax and income tt.x, aiH if the profits tax were superimpojed on ihese then right away a reduction wrulf hivo *o be made in the land and ircomc tax, becauseto a great exten', fcho same people would have to pay all three taxes, which Wwdld be beyond their means. The fundamental basis of our finance must be a strong one, and he asked members to remember the herculean task which the country had to face in finding money for pensions and other charges. We could not afford to have anything m the shapo of sentimentalism in finding money for tho war. Our finance must be on a basis that meant strength to tho wholo of tho population. The finance of New Zealand was on the strongest basis of any country engaged in the war, and it must be so owing to our distance from tho great markets of the world, as wo would be tho first country to feel the pinch which would arise from a shortage of shipping and other c*U"*Ca beyond our control.

The Hon. Mr MacDonald, in reply to a remark made by Mr Hindmarsh, denied that ho had been thrust aside by the Prime Minister or any other Minister. Ho still held tho portfolios given to him when the National Government was formed. Ho also denied that, tho Government had tried to extract tho last farthing from tho British public. All it had asked was to be put on tho samo footing as other dominions. The Prime Minister .said tho Board of Trade consisted of good, hard-working men, who had done their best to perform the duties placed on their shoulders. They had heard a good deal about tho cost of living, but if any member could make suggestions to him or tho Board of Trade regarding profiteering which eould bo proved, the Government would put the law in motion. .Mr Massey proceeded to defend the tax on tea, and said the increased pensions would cost three times the amount that would bouorivod from this tax. He did not believe tho working classes obiected to contribute their share of the cost of the war. Tho Prime Minister went on to state facts to show that good work had boon done by iho Board of Trade. The enormous figures provided for in tho Finance Bill indicated the extremo seriousness ol tho position. Judging by the outlook, if tho war continued for any length of time, and if wo wero to meet our financial responsibilities, our exports must be kept up to not less than £50,000.000. To do this all the energy and enterprise of which iho people were capable would lie required. The "Government did not intend to go in for a system of compulsory industrial service, but believed that tho people would do what was required of them, and, if the need arose, women would bo able and willing to give groat assistanoe. The third ?&*<?rng was carried on the voices, and th*> "Bill was passed. Tho House rose at 11.5 p m.