The Southland Times. PUBLISHED EVERY MORNING. Luceo Non Uro. FRIDAY, JULY 14, 1916. THE FINANCE BILL.

Southland Times, Issue 17785, 14 July 1916, Page 4

The Southland Times. PUBLISHED EVERY MORNING. Luceo Non Uro. FRIDAY, JULY 14, 1916. THE FINANCE BILL.

The discussion on the second reading of the Finance Bill, which provides the machinery for carrying out the war taxation proposals outlined in the Budget, showed a general desire on the part of members to remedy some very obvious defects in the Minister’s scheme. The hulk of the criticism has been centred on three aspects of the new taxation. In the first place the levy of a five per cent, tax on all incomes has been objected to for the good reason that it is subversive of established principles. The system of graduating taxation according to ability to pay is so obviously just that there is no reason for departing from it, even though the provisions of the present Bill are intended to operate for the war period only. It is manifestly unfair that small and moderate incomes should be taxed as heavily as large Incomes, and had the Minister's original intention been put into operation the finances of the average household' would have been seriously burdened, while those in receipt of opulent incomes would have been contributing a much smaller sum than they should be called upon to pay. An amendment, will he introduced in Committee, the Minister's intention being to reduce the tax on Incomes up to £9OO from 5 per cent, to 2% per cent., and to leave the levy at 5 per cent, on incomes over £9OO a year. This suggestion does not go far enough, and we see no reason why the Minister should sacrifice portion of the sum which he expected to raise from this source. The rebate of one half of the tax proposed to be levied on all accessable incomes up to £9OO must amount to a considerable sum, and there is no reason why it should not be added to the proportion borne My incomes over £9OO, the tax being increased beyond 5 per cent, on the

very large incomes enjoyed by the fortunate members of the community. The debate indicated the strong preference of members generally for adherence to the principle of graduation, and this view is likely to be strongly urged upon the Minister in charge of the Bill during the Committee stage. The second defect in the Bill was the omission to provide for the appointment of an Appeal Board. Sir Joseph Ward was the first to admit that the administration of the Act would involve the exercise of a great deal of tact. The new taxes cannot be applied by rule of thumb, and there will be many instances where exemptions will be necessary and desirable

in order to avoid unnecessary hardship and loss.. It is unreasonable that the Commissioner of Taxes should have vested in him the sole power to determine applications for exemption And for the variations that are provided in the Bill. No one could be expected to adjudicate with complete infallibility on the complex and varied problems that will be presented for the Commissioner’s decision, and it is most necessary that there should be a Board of Appeal, on which there should be at least one commercial man of wide experience, and perhaps a highly skilled accountant. The merits of the demand for an Appeal Board have been recognised by the Government, arid provision for its appointment was included in the amendments introduced by Governor’s message last evening. Another aspect of the new taxation which was freely criticised was the/ levying of a 45 per cent, tax on "excess profits" instead of upon "war profits,” and there is much to be said in favour of the arguments advanced by those members who contended that war profits form the most just basis of taxation. The fortunate individuals and firms who are reaping monetary advantage from the war, advantage, which they would not have gained but for the war, will find it difficult to advance a single sound reason why the State should not take 45 per cent_ or indeed a much larger proportion, in order to meet war expenditure. By the rfieans suggested for calculating “excess profits,” even with the inadequate provision for the exemption of a percentage of the profits earned by. new capital, there will be many instances where the application of the new tax will be unjust. It is possible that with a reasonable interpretation of the grounds for exemption the revenue raised by the 45 per cent, tax will fall far below the amount anticipated, and that an equal sum could have been raised on purely war profits, against the heavy taxation of which there can be no. justifiable objection. There are other minor defects in the original Bill which will require amendment in Committee, 'and the debate on the Second reading indicates that the Bill will not have so quick a passage through Committee as. the Minister anticipates. Members have shown an earnest desire to make the measure as fair as possible, and with this kind of assistance from Parliament the Bill, when it finally reaches the Statute Book, should distribute the burden of the war as evenly and justly as can be hoped for under present day conditions.