REDUCTION OF TAXATION

Stratford Evening Post, Volume XXXIX, Issue 87, 17 August 1923, Page 5

REDUCTION OF TAXATION

LAND AND INCOME TAX BILL. A LATE SITTING. 1 Per Press Association. Wellington, August 16. The second reading of the Land and Income Tax Rijl was moved in the House to-night by the Premier. Previously Mr Massey had indicated that there would be a reduction of 20 per cent, all round in income tax. The remaining 10 per cent, super tax would, said Mr Massey, lie repealed. The tax on local body debentures would bo increased to 4s 6d. Mr Massey said that the companies tax would bo 4s 6d, but would not be retrospective.

The rates of land and income tax for the current year will be: — Whore the unimproved value does not exceed £IOOO, the rate is one penny for every pound. Where unimproved value exceeds £IOOO, the rate is a penny for every £l, increased by one twenty-thou-sandth part of a penny for every £1 in excess of £IOOO, but so as not to exceed in any case the rat© of seven and seventeenth-twentieths in the £l. On, income tax assessable under sub-Section 3 of section 116 of the Act- of 1923, the rate is to lie 4s 6d for every £1 thereof; provided that, on any such income due before the passing of this Act, the rate shall bo 3s for every £l. On income assessable under subsection 3 of section 118 of the Act of .1923, the rate is to be 4s 6d for every £1 thereof, provided that; on any' such income duo before the passing of this; Act, the rate shall bo 2s 6d for every £l. On the taxable income of all taxpayers ’ other than those already referred to, the tax, save as otherwise provided in this part of the schedule, shall be as follows;

(a) Whe r e , income on which tax ,is payable does not exceed. £IOO, the rate shall.be Is-for eveiy £l. ; (b) Where { •such' income exceeds £4OO. but does not exceed £6OOO, the- rate is Is, increased by . onehundredth part of a penny' for every £1 ip excess of £IOO. v * : V( c ) .Whdi-e such income exceeds £6OOO, tho rate shall be 5s 8d for every £l, increased by one two-hun-dredth part of a penny for every £1 in excess of £6OOO, but so as not to exceed in any ease the rate of 7s 4.d Tn tho £l. . Prom the income tax computed in accordance with the last preceding sub-clause, there shall in every case be deducted an amount equal to 20 per cent, thereof. The income tax payable by any taxpayer as hereinbefore provided shall be reduced by 10 per cent, of so much thereof as is levied in _ respect of earned income; provided that, if the earned income of a taxpayer for any year exceeds £2OOO, the reduction provided for by this clause shall be made only in respect of the sum of £2OOO, “A CHRISTMAS BOX.” Mr Massey said this was tlio annual Taxing Bill, and must be passed' before the land and income tax could be collected. It required little justification, because it was a Bill to reduce taxation.. An lion, member: It is a Christmas box.

Mi- Massey: Yes, that is the spirit in which I hope the people will receive it. Continuing, he explained the directions ui which the Government had already reduced taxation this session. He would like to have gone further than he had done, but what had been accomplished in conjunction with what was done last year had a very good elfect. it was a much discussed question whether the cooutiy siioukl tust pay oil its public rndebtednoss or reduce taxation, and personally h© favored the iauei course. Though we had not technically reduced our war indebtedness, there wore certain securities wuicu could bo set against our war indebtedness.

He regretted that the cost of living' had not laiien to a greater extent| titan was apparent, but there was. evidence that there was an improve- j meat taking place ail round, iheie would probably be some dilference o* | opinion as to tho proposed increase in the debenture tax, but he wisned ! to make u clear that the tax would i not be retrospective, that was, the j increased tax would not be collected ■ on debentures issued before the pass- j mg of tho Bill. Ho quoted the London Times to I show that New Zealand securities were held in high esteem by investors outside the Dominion, while our exports were expanding at a marvellous rate, winch went to show that New Zealand was truly a hive of industiy. Me did not propose to go into committee to-night on the Bill. He wanted local bodies to know what w-as being done. He did not expect the larger local bodies would b 0 affected by the increase in the debenture tax, because they borrow- in London. Smaller bodies might have some trouble, but as a matter of fact local bodies had had a good run during the last few years, and ho thought they could now w-ell afford to let the conntiy Pettier have a chance of getting money at a rea- ! sonahle rate.

THE LIBERAL POLICY. Mr T. M. Wilford (Leader of the Opposition! said bis party would support the Biß. as it was part of their policy to reduce taxation at the first

opportunity, it had been largely due j to the criticism of the Opposition that the increase in the debenture tax had been made. The flat rate ■' of 2s (kl on debentures had been din- j astrous to farmers, as it sapped themsupply of money, while it gave local j bodies so much money that an orgy j of expenditure bad taken place, j With regard to company taxation, j lie claimed that no company paid ( taxation, as it was all passed on be- ; fore the company could pay 7s 4d I taxation to tho Government, 3 l pm | cent, to its reserve fund, and a 7 : Tier cent, dividend to shareholders, j or seventeen per cent. All this meant high prices. The first thing to bo done was to take taxation off' companies and then to see that a corresponding reduction was passed on to farmers and others dealing with those companies. He believed a reduction of taxation was more vital than a reduction of the national indebtedness, which would come much easier owing to the increased

industry which would follow a reduction in taxation. LABOR’S AMENDMENT. Mr H. E. Holland (Leader of the Labor Party) wanted to know what reason under Heaven there was for reducing taxation to a person with an income of £IO,OOO, while no relief was given to a man who paid no income tax, but upon whom Customs duties made a constant toll. He understood the Bank of New Zealand would benefit to the extent of £IOO or'o0 r 'o by this Bill, and no detailed refutation of that statement bad been made by officers of the bank. He was convinced this was a class measure. The people who needed relief most would not get it, and therefore the Labor Party would vota arr°inst the Bill. f

j Mr TV C. Sullivan (Avon') moved the following amendment.; “That in the' opinion of this Hop so th°re should be a radical change in the incidence of taxation to ensure that the; burden of taxation should fall definitely on the | shoulders of those best able to bear it; that all taxation of an indirect! naturenot levied for the-protection j of industry’ should bo reduced; that the deficiency thus created should he made up bv ini* creasing the tax on higher individual incomes; that while affirming the desirability of changing the incidence:, of taxation so that the burden he lifted from those'least a hie, to; hear, it, this House is of opinion " that there should be no reduction in the total of the income tax levied until the wages of the workers in the pub-1 He service and of workers generally are restored to pre-war purchasing power, and until adequate provision is made for pensions for the blind and for invalidity pensions and adequate pensions provided for old age, widows and orphans,” The amendment was seconded b*. 7 . Mr E. J. Howard (Christchurch ! South), and the debate was still in progress when the telegi\aph office closed at 2 p*m'* . . L -,

THE AMENDMENT DEFEATED. SECOND READING AGREED TO. MR MASSEY’S TRIP TO LONDON. Wellington, August 17. Tho debate was cammed uu by members of the Labour Party until 2.30, when the Hon. bttwart raised a point of order, that t.e auiendment was in substance similar to one already moved this session. The Speaker ruled that there was suxiicient oxitereuce in the text of tne two ameuumeuts to warrant him submit taig Mr Sullivan’b amendment to the Home. A division was thereupon taken on it, when it was rejected by of to 17.

Hep lying to the debate, Mx Massey said he hud hoped to be able to go much iiather than tho BJI went; unfortunately. there had been severe Hoods m various parts of tho Dominion, and it had cost a great deal of money to repair tho damage. There had also been severe snowstorms in the South, and the loss m suick would be so serious as to gravely aliect die revenue, especially of the railways. Justifying the reductions in taxation, he declared that every authority acknowledged that no country could survive excessive taxation, and when w hat had been accomplished by any reduction was considereed, it : would be found that New Zealand had done better than any other part jof the Empire. Ho reminded the j House that if he wore going to Lon- | don he had only a few days in which ;to complete the business of the ’country, and he appealed to members to help him pass such measures as | wore necessary in the interests of ; the country. Ho had been specially j appealed to by the British Premier ’to be in London not later than the 12nd of October, and ho would not be 1 able to do that if be left on the 28th of August. He did not hope to pass either the licensing or elecitoral Bills, but they would bo printled and circulated, which would i facilitate the discussion and possibly their passage next session i The second reading of the Bill was ! then agreed to on the voices, and | the House rose at 3.15 a.ra. till 12.30 p.m.

HARBOR BOARDS* PROTEST. •<A BREACH OF FAITH." Wellington, August 17, , The secretary of tlie Harbor Board’s Association lins communicate

ed with the associated hoard?, ad* vising that a strong protest be made again't tbo incre so in '.he debenture tax to 4s 6d, on t 1 c ground that it will bo a distinct breach of faith with tho investor. Among the arguments used is that it will reduce the 6 per cent to 35, whereas the Cove nment is paying 5’ on debentures issued at 97, which pry no tax at all. It is claimed that the effect on harbour bo rds w II be o mcrca e tho port charges, despite tho criticism already levelled aginst ihem in Englaud.