“TAX ON DEBTS”

Poverty Bay Herald, Volume LV, Issue 17067, 27 September 1929, Page 11

“TAX ON DEBTS”

GOVERNMENT’S MEASURE j LABOR PARTY SUPPORT BUT AMENDMENTS WANTED j (Vnr Press Association.) ! WELLINGTON, last night. The adjourned debate on %lie second reading of the Land and Income Tax Amendment Bill was resume l in the) House of Representatives by Mr. A. W. '• Hall (U.), who claimed that the Government's proposals would amount insome cases to taxing a man on his debts. The super-tax was designed to break up large estates, ybut he considered that the Governmetn should 5 concentrate on the settlement of on-, occupied Crown lauds before paying a higher price for land that at the present time was producing practically as much as it would if subdivided., H>- thought an income tax would be much fairer than a supertax. If,l however, the Government was determined to apply the super-tax, it should first classify the land into three divisions: (1) Ltfml suitable and immediately required for subdivision; (L*) land suitable, but not immediately required for subdivision; and (3) land unsuitable for subdivision. Alt;. W. A. Bodkin (U.) said .Reform members had made much of Iho unsuitability of certain lands for nubdivision, and reference had been made in this connection to the mountainous country in Central Otago, lie agreed that there were areas on which stock, could be grazed for only a few months in the year because they were above, the snow line, and that in sutpli cases there had to be sufficient area of low country grouped with high country in order that stock might be carried through a severe winter. Experience had shown that the greatest loss of stock occurred where areas were unduly largo, lie favored a. limited subdivision into reasonably large areas, and this, he contended, would be responsible for a large decrease in the death rate in consequence of a greater degree of care of: stock which it would be possible to exercise. “MASTERLY INEQUITY.”

Mr. H. M. Campbell (II.) said lie was* afraid I lie result of the proposed legislation would be to hinder the development of [and, and hundreds of thousands of au'es would be idle. The bill would have a disastrous effect on land values, and farmers would have a great difficulty in securing renewals of mortgages. That was not going to affect- the rich man, who could afford to laugh at mortgages, hut it was going to hurt the small struggling farmer, who was carrying a big mortgage, lie predicted that the increased taxation would have a- very serious effect on the workers, and would add to the army of unemployed. He anticipated one of the worst winters the country had ever had, and the Prime Minister would have it on his own shoulders. Mr. Campbell described the 'bill as a “most masterly effort of inequity." Mr. I). 0. Sullivan (L.) challenged the statement that the Labor Party had no consideration for the man on the land. He said it was fully alive to the interests and the welfare of small farmers, and had never proposed to increase* taxu'ion on that class of the community. It had never supported any such proposals. The present bill was designed to lax lartro landowners, and thorp was a clause to meet eases of hardship. Dissatisfcu tion had been expressed with that clause, but he imagined that if need for its alteration were urgent it could be accomplished during the committee stage of -.he bill. He added that if the bill would increase land settlement without imposing any undue hardship, be would be in favor of the proposal. “A CRIME TO SUCCEED.” Mr. F. Wn ito (Reform) stated that if the bill were passed it would damage' confidence in rural security and . would drive capital out of the country. He agreed with the view that it was the poorer farmer carrying a heavy mortgage who would be injured bv tiic bill. He said the motto of the Government, seemed to Ire "It’s a virtue to get on to the land, but it’s a crime to succeed there." The Budget had been described as a “get out” budget. It enabled the Prime Minister to get out of his election pledges, and it forced the fanner to get out of his holding. Mr. C. E. Macmillan (Reform) said United members had complained of alleged government by heads of departments during the Reform administration, but now the final judge of the fairness of the present taxation proposals seemed to be head of that department. He could not see how the proposals of the Government could possibly assist in the settlement of land, and lie supported the statement that there would he a drop in confidence in rural securities. In his opinion, exemption should be allowed for all mortgages, as interest rates were fixed in knowledge of the fart that the income tax on money would have to lie paid by the mortgagee. CLASSIFICATION WANTED. Mr. H. E. Holland (Labor) stated that the financial position to-day was largely due to the removal of the income tax on farmers at the end of the war, and that fact had to be taken into consideration, in relation to the present proposals, lie stated that the Government had been faced with two alternatives—to cut down expenditure, or to inpwse. taxay tion.' . The- former ■ course" would .hqvei necessitated a reduction in the. expendi-ture-on social services, and the only,, quarter itt which this would have been possible without imposing • some ■ hardship, on' the general community , would have been on defence,. but when the Labor- Party had sought a reduction in ibis vote, the Reform and United members had gone into the same lobby and upheld the estimate. The position, then, called for extra taxation, and in this respect .the only ,courser open , (ip use a :-rtmewhat worn-out,phrase),was to plan? tbe burden on the shoulders of those best able to-hear it. Mr. Holland said' lie was not going to, say that, taxation should lie withheld for n number of years to enable land classification to he carried out, hut he did think if the system outlined, in the bill was to function satisfactorily that task would have to- be taken in hand. LABOR LEADER’S SUPPORT. Continuing, Mr. Holland said that the lion. W. Downie, Stewart had stated that th© farmers bad been passing through hard limes, but that argument was not borne out by the export figures, which showed that the volume and value of production had increased enormously. Mr. Holland stated the Labor Party Was prepared to join with other members to devise a satisfactory method of meeting eases of hardship. He contended that all incomes front whatever source should be taxed equally. Tt would, however, be impossible to achieve one of the principal aims of the bill, to break up large estates, by a tax on incomes alone, Mr. Holland, continuing, attacked the statement that high prices of land indicated a. prosperous community. He said that there had been many instances

of tho artificial increase in the price of land as the result of frequent changes ot ownership, and in such cases the prices by no means represented the values. state was a. bad tiling foil trie man cm the land, and a bad thing for the community consuming the produce from the land. In conclusion, the leader of the Labor Party stated that inasmuch as the hill represented a. step in the right- direction, it had his support. He hoped that modifications in certain respects would be made during the committee stage. A CAUSE OF BANKRUPTCY

Mr. D. Jones (It.) stated that he intended to prove that the bill would a fleet thousands of 'fanners throughout tlie country. It was going to bring down land values, and in doing so it was going to destroy the equity of the farmer, the fruit of his life savings. This would he the lot of farmers throughout the Dominion, and many worthy men would lie driven into the Bankruptcy Court. Ho contended that responsible government, had ceased to exist in New Zealand. We were drifting along without rudder or course. That was the explanation of the present bill. Mr. Jones sail I it had been stated that the man who received exemption for his mortgages was not, paying his share ot taxation, He pointed out that a large proportion of the income tax was collected from income earned from mortgages lent to farmers. The farmer was paving income tax through his mortgage. . Mr. Jones claimed that New Zealand farmers compared unfavorably with Australian farmers in relation to land taxation.

Mr. H. S. H. Kyle (R.) stated that ■the farmers’ organisations of Canterbury which had plaecd proposals before the Prime Minister was not asking for exemption from taxation. If was not asking for mercy, but for justice. He claimed that the taxaion proposals would injure the middle-class fanners, and it was for them, as well as for small farmers, that the Reform Party sought justice. If the object of tho proposals was to bring about subdivision. lie suggested that farmers should he given an opportunity to place their land on the market before the supertax was imposed. It might not then be necessary to impose a burden which would break many farmers whose land was not suitable for subdivision. The Hon. IV. A. Veitch stated that the taxation proposals conlained in the bill were intended to meet a grave national need. Mr. Veitch, continuing. stated that land aggregation, as it existed to-day, was hindering production, hindering tly* solution of unemployment, and generally standing in the way of the welfare of the community. The aggregators were now standing behind the genuine farmers to protest against the bill.

The debate was adjourned, and tin House rose at 10.3 D.