TAXATION EEDUCTION

Southland Times, Issue 19345, 10 September 1924, Page 6

TAXATION EEDUCTION

THE GOVERNMENT PROPOSALS LABOUR AMENDMENT DEFEATED (Per United Press Association.) WELLINGTON, September 9. In the House of Reperesentatives to-night, the Premier moved the second reading of the Land and Income Tax (Annual) Bill. EXTENT OF THE REDUCTION. In speaking to the motion, Mr Massey said there were only two clauses in the Bill, one reducing the Land Tax and the other reducing the Income Tax as previously announced, the Land Tax by 10 per cent., and the Income Tax by 13.4 per cent. In tracing the progress of these forms of taxation, he pointed out that on March 31, 1914, there was paid in Land Tax, £767,451, but by March 31 this year, the amount had increased to £1,426,462. Income Tax in 1914 amounted to £554,271, but this year there was paid £3,781,531, which gave members an exceedingly interesting comparison. The Taxation Commissioner had recommended that it was essential in the interests of the Dominion, that the weight of taxation be reduced as speedily as possible, and he agreed with that extremely concise statement of the position. In support of this opinion, the Prime Minister quoted a statement made by the Secretary to the Treasury .of the United States of America, and what applied to the United States applied with equal force to New Zealand. They had already made a start in the reduction of taxation. Much may not have been done, but what had been accomplished had been very serviceable, and the Government’s proposals for further reductions this year had been well received all over the country. The only complaint he beard was that the reductions were not big enough. Every country in the world, where it was possible to do so, had been reducing taxation, and he was prepared to go further than he was doing now, so soon as it was

possible to do so. Later on he would be willing to go into the whole question of company taxation, but the Taxation Com-

missioner did not consider it wise to attempt too much at once. “We cannot increase, but we must decrease taxation,” said Mr Massey, “if we are going to avoid a depression.” The reduction of taxation had had an influence, and he quoted as a case in point the agreement recently made with the Sugar Refining Company, who agreed to a concession in the price of sugar as soon as they knew r that taxation would be reduced. If they were going to redu« the cost of living, taxation must come down.

The reductions would also, claimed the Premier, provide more employment, as was proved by the fact that they had next to no unemployment this winter. They could not expect to get back to normal yet awhile, and they might never get back to the rate of taxation paid in 1914, but they could only do their best by pursuing a policy of economy. It was because of this policy that New Zealand’s credit was so high in London. That was something which must be maintained, and he hoped that members would do what was right by passing the Bill, and so reducing taxation. In moving the motion, the Premier intimated that if the second reading was agreed to, he would refer the Bill to the Public Accounts Committee. LEADER OF THE OPPOSITION. Mr T. M. Wilford, said that with a good deal of what the Premier had said, he agreed, but he disagreed with him in this: that his remarks applied to people on the lower rung of taxation, but had no application to the men who were drawing huge salaries and incomes. Quite recently a return was laid on the table of the House, which showed that 10,000 persons in New Zealand owned land worth from £20,000 to £60,000, and as the Premier had promised to supply the House with all possible information before the Bill passed the Committee stage, he would ask him to state: (1) What was lost to the Treasury by the recent remission of Income Tax on land; (21 what was lost to the Treasury by the remission of Land Tax to owners of land of £lO,OOO and over in value? His Party stood for the Land Tax, and would not sanction its abolition. Mr Massey: That has not been suggested. Mr Wilford: The Taxation Commissioner recommended it. He said he believed that he would, if opportunity offered, so whittle it down that it would practically disappear. For this the Liberal Party would not stand. The Land Tax was a staple form of revenue, and there must always be such a tax. He therefore wished to make it plain that his Party would not sanction a reduction of the Income Tax on big incomes, or the reduction of the Land Tax on high land values. There should be a reduction of taxation for the small man, but not for the big man, and if the Premier insisted on a reduction of 10 per cent, on the land, and 134 per cent, on the incomes of everybody, then they must oppose him. If he were willing to make a reasonable graduation, they were willing to confer with him to arrive at what was a reasonable graduation. He did not believe that the Premier’s proposals had been well received throughout the country, at least that was not the information which reached him before the present reductions in taxation were agreed to. The House should be told what the Premier’s commitments were going to be, because to reduce taxation without knowing what the liabilities were going to be, was to deal with a huge question in a piecemeal fashion. TO ABOLISH DOUBLE TAXATION. Hon. C. J. Parr said it was encouraging to find the Liberal Party in agreement with the principle of the Bill, namely, a big reduction in taxation. Mr Wilford: On the small men. Continuing, Mr Parr proceeded to argue that all the countries which were seeking to restore trade and finance generally to normal conditions, were striving to reduce taxation as the first step, and he quoted a number of eminent authorities in support of this course. To Mr Wilford’s contention that the Government would abolish the Land Tax, he gave an emphatic denial. What the Government was seeking to do, was to abolish double taxation. Until recently a farmer paid Income Tax as well as Land Tax. This was unjust, and the Government considered that when the farmer had paid Land Tax he had done his fair share. He did not understand Mr Wilford to propose additional taxation on large land owners, and if he proposed to hit the man with the big incomes, then he must hit ,70 per cent, of the companies in New Zealand, because that was the source from which most of the big incomes came. Mr Wilford in the past had argued in favour of a reauction in taxation on companies, and he (the speaker), had sympathy with that view, because a great proportion of the Dominion’s industries was carried on by companies, and high taxation restricted those industries. Company taxation in New Zealand should be reduced to bring it into line with the Australian rates, as many of the companies were struggling to-day to keep going, owing to the burden of taxation. He agreed that companies as such, should pay something for the concessions they enjoyed under Statute and Law, but they should not be oppressed, as the small man was already protected by his exemption. No injustice was done by reducing taxation at the same rate all round. The Labour Government in Britain recognised it as a sound principle that if there was a large surplus, the legitimate use of that surplus was to do what this Bill proposed to do—reduce taxation. A LABOUR AMENDMENT. Mr H. E. Holland said that the Labour Party would oppose the reduction of taxation proposed in the Bill, because the country could not forgo revenue until many social requirements such as increased pensions, etc., had been met, and the public servants’ salaries had been restored to prewar purchasing power. The Premier had referred to taxation in 1914, but he said nothing of the increase in the National liabilities. He said nothing of the enormous

increase in New Zealand’s private wealth, or in the exports, which were the best guide to the increase in the National wealth. Incomes in the Dominion had also enormously increased, therefore what became of the argument that income tax payers must have a reduction, because of the position in which they found themselves? The Labour Party opposed the reductions in the Bill because the small man was going to get no appreciable benefit, while under last year’s remission, it was generally understood that the Bank of New Zealand was benefited to the extent of £64,000 and the National Bank to the extent of £43,000, while both institutions paid dividends of 13 per cent. The same argument applied to the small land owmer. He was prepared to go before any meeting of legitimate working farmers, and prove his contention, which he supported by tabulated statistics. In any case his Party was opposed to these reductions, because the revenue could not be spared, and because the remissions were not going to benefit those who required them, but were going to benefit the large land owmers and those earning big incomes. He would therefore move as an amendment : That in the opinion of the House there shall be no redutcion in direct taxation. THE AMENDMENT SECONDED. The amendment was seconded by Mr F. Langstone (Waimarino) who refuted the contention of Mr Parr that the land owner was paying double taxation. Mr Langstone said that 50 per cent of the land tax came from owners in cities who could well afford to pay more because it was the country settlers who went into the backblocks and felled the bush and thus gave added value to these town lands. He opposed the reductions because they did not benefit those who needed benefit and when they had the opportunity of explaining facts to the people they would see that Labour was put on the Treasury Benches to start and set matters right.. REDUCTIONS WOULD BENEFIT WORKING MAN. Mr O. Hawken argued that when taxation was high it was 4 always passed on to the public, but when it was kept at a reasonable rate this was not done; therefore reduction in taxation must confer a benefit on the working man. If it was contended that the small man was getting little benefit from the reductions, it only went to prove that the small man paid scarcely any taxation at all. On the small men, direct taxation was not excessive in New Zealand to-day. “FAVOURING THE BIG MAN.” Mr G. W. Forbes said that there was no doubt excessive taxation crippled the progress of a country but it was a fact that these concessions could plainly help the big man and it was unquestioned that there never was in the history of the ebuntry a better year for those running sheep than last year. Last year most valuable concessions were made to the wealthy people and this year the process was to be repeated. He did not know how* the Government, could face the people with the proposals such as these. He would not support the Labour amendment because it was advisable to have some reduction in taxation, but there were directions in which reductions could be better made than those proposed in the Bill. . AMENDMENT DEFEATED. A division on Mr Holland’s amendment, which was taken after 1 a.m. resulted in the amendment being defeated by 42 votes to 16. After the premier had replied, during which he denied any intention to abolish the land tax, the Bill was read a second time and referred to the Public Accounts Committee.