LAND AND INCOME TAX

Otago Witness, Issue 3419, 26 September 1919, Page 53

LAND AND INCOME TAX

BILL PASSED BY LOWER HOUSE WELLINGTON, September 18. In the House of Representatives to-day the Minister of Finance (Sir James Allen) moved the second reading of tho Land and Income Tax Bill. He explained that the Bill was the same as last year's measure, there being no alteration in the schedule of taxation.

, Mr M'Callum raised a protest against the laxity of the department in not making regular and equitable valuations of land, resulting in anomalies, injustice-, and discontent. Much revenue to the country was being lost. The Hon. Mr Buddo complained of tho inequitable nature of' the taxation on companies, particularly co-operative societies, which were mostly composed of small shareholders, who invested small savings in the companies, than which there was no better method of assisting the dominion. He entirely sympathised with Mr -.x'Callum's complaint about out-of-date valuations.

Mr Ell protested against the abolition of tho mortgage tax, which did not help the borrower.

Mr Pearee defended the present method of collecting the tax on mortgages by means of the income tax, which was much fairer all round. ' Mr M'Combs said he could not understand why, in view of all that had been revealed, the House was being asked to re-enact all the anomalies which had been exposed in the forms of taxation devised by Sir Joseph Ward. For this the Reform Party could not escape responsibility in this matter. He advocated the re-enactment of the war toiits tax. He regretted that no member could move any amendment to the Bill. Mr Payne condemned the present system of levying taxation, which was full of injustices. He advocated a complete revision of the Customs tariff,.with a view to relieving the poorer classes. _' He also favoured a considerable increase in the income tax, helping thereby to institute a system of taxation which would bear equally upon all classes of society. - Sir John Findlay denounced the present system of taxation, because it made no differentiation between earned and unearned income. A hard working doctor or lawyer had to pay as much as a man who derived the whole of his revenue from investments, and towards which he did not do a hand's turn. This was absolutely unjust, and one day some Government would have this injustice removed. Asrain, anyone consulting a Year Book would see that the land values, o,f this country were older than the great war. _ That meant that the landowners were paying land tax on values far below the present value ; but this was not the case with people who were paying income tax. These taxpayers paid on the gross amount of income, and not, as the landowners were doing, paying on a rale 50 per cent, below the present day values. Much the"same thing was going on in regard to our Customs duties, under which we were paying on many articles far cut of proportion to the pre-war rates. Ho quoted instances to show how articles in common use "were paying taxation, nofcvon pre-war values, but on present values. Men's hose, for example, valued at 7s lid per dozen before the war, then paid 2s by way of duty, whereas now they paid 7s'l3d. From this he argued that we were not fair to ourselves, for surely if everything else was to be taxed on the present-day values, was there any reason why land should be taxed on valuations older than the war? The Hon. Mr Russell said ho did not see in the Bill any indication of a revised fiscal policy to meet post-war conditions. When we had been told that, we were to have a new world it was our duty to make this country a better country for people to live in. A Labour Member: "A New Heaven. Mr Russell':" Thank you. He weiit on to quote instances of enormously increased land values. A soldier coming back had'topay these high prices, and he asked if, in a position like that, it could be said that we were taking steps to establish a new world. There was nothing in this country at the present time but a wild gamble in land, and the good, humane, patriotic policy of the Government in seeking to place soldiers on the land and in going on to the open market for land to settle them on was one of the causes of the present inflation of values. What this country looked for now in view of a new world was that the saddle should be put on the strong horse, and those community-created land values caused by refrigerators, railway expenditure, and money on harbours and other such causes should pay their share. He moved as an amendment that the debate be adjourned to enable the Government to reconstruct the direct taxation policy of the country on the following lines —(1) The restoration of the graduated land tax on estates over £IO,OOO in value; (2) the establishment of a sharp graduated tax on ir comes of over £2500, rising to 40 per cent, on private incomes of over £20,000 per year; (3) the readjustment of taxation on the incomes of companies in order to allow small investors to receive 10 per cent, on their investments; (4). the limitation of the dividends and profits of joint stock companies to 10 per cent.; (5) the restoration of the tax on mortgages, making the tax payable by tho mortgagee. The amendment failed to find a seconder, and consequently it lapsed. Mr Holland said that no member of the Labour Party would second the amendment because they recognised that it did not represent reform, but merely a quarrel, between two sections of the House. He declared that our methods of taxation stood in need of revision, and needed it badly. Tho Labour Party was determined to see that those who should pay did pay. It was determined that tho monev required to carry out the war policy should bo found by those who made large profits out of the war. To this the Labour Party, which was deter-

minedly opposed to the Government's system of taxation, would ece in the near future, when it took possession of the Treasury benches, driving in the process both the Reformers and the Liberals into one common camp of opposition, and might be into outer darkness.

Mr 'Anstoy condemned the Bill, .as it imposed taxation on an unjust basis. Ho went on to show how this operated against companies, especially co-operativo societies. The state of the country called for a complete revisal of the taxation policy, because at present it favoured tho idle wealthy and tho monopolists. Dr Newman made an appeal to tha Minister to tax unearned income on a different basis from earned income. Some relief should be given to mayricd people, while tho anomalies should bo removed from the 1 Ci.stoms tariff, which anomalies were strangling some of our industries. What we needed above everything elso was an anti* dumping olause. Sir James Allen, in reply, said he did not pretend that our system of taxation was perfect. At the same time it was not unduly harsh, and many provisions had been made even during the war by which deductions could be made in cases of hardship. He recognised that there was a certain amount of hardship in connection with taxation on companies, but tho fact waa that during the war money had to be obtained. When he was previously Minister of Finance ho was considering proposals to remove that hardship, and had the war not intervened some of these suggestions would no doubt have been carried out, but even in these cases there were provisions to give relief in cases of individual hardship. It had been said that taxation should be put upon those best able to bear it. :He contended that this was being done. The, sum of £6,219,000 was collected from income taxpayers, £1,500,000 from the land tax, and £3,830,000 from tho Customs, That, surely, was burden enough for the people of tho dominion to bear, and he only regretted that he was not in a position to announce a reduction soon. As to Sir John Findlay's instances of unfair taxation! on men's sooks, he ridiculed the idea that working men bought socks which paid a duty # of 7s l|d. Ihe working men bought socks made in New Zealand, which paid no duifcy at all. As to land valuos, he could only say that the Valuation Department had been short-handed. Men had gone away to fight instead of remaining to value land, but as., soon as things became normal he would be glad to bring before his colleagues the necessity of having the land valuation throughout the dominion revised. The Bill was read a second time on the vo'ces. . ■ - '

The Prime Minister claimed' urgency for the measure, which was put through all s its stages without amendment, on the ' motion "of the Prime Minister! •"• The Houso rose at 9.49 p.m.