NEED FOR MORE REVENUE

Taranaki Daily News, 23 July 1930, Page 11

NEED FOR MORE REVENUE

INCREASE £BOO,OOO IN DUTY EXPLANATION BY THE PREMIER. CRITICISM Of THE PROPOSALS. PROMISE OF AN ATTACK LATER. By Telegraph.—Press Association. ! Wellington, Last Night. The House of Representatives resolved itself into a committee of ways and means to deal with the resolution© affecting the tariff, the proceedings being accorded urgency. The Prime Minister read a lengthy otat'ement outlining the effect of the resolutions with regard to the collection of increased revenue. “As members are aware,” he said, “owing to the low prices obtained recently for ©ome of our staple products in the markets of the world and the exchange restrictions which have been imposed by v the banking institutions, it is expected that there will durino- the present financial year be a considerable decrease in the importation of goods, and consequently in the amount of revenue obtained through the Customs Department. It is essential that the sum of £9,145,000 should be collected from Customs and excise duties (including the duty on New Zealand brewed beer, but not including petrol tax or tyre tax). “If no alterations were made in the legislation now on the Statute Book it is considered that the revenue the Customs Department would collect by way of Customs and excise duties during the present financial year would be: Customs and excise duties (other than beer duty), £7,750,000; beer duty, £000,000; total, £8,350,000. This means that about £BOO,OOO roust be obtained by way of increased Customs and excise duties. Even if this extra amount is collected, the total received will be approximately £370,000 less than that collected last year from the same sources.

“It is proposed that this increased revenue should be obtained (I) from an increase in the duty on foreign goods; (2) from a surtax to : produce revenue in excess of the primage duty; (3) from an increase of th© duty on cigarettes and cigarette tobacco, both imported and locally made; (4) by taking steps to prevent inroads upon the revenue caused by the present duties on imported leaf tobacco.and on locally manufactured tobacco and cigarettes; (5) by abolishing the allowance for un-der-proof spirits; (6) by increasing the duty on New Zealand brewed beer.”

HELP FOR TIMBER INDUSTRY. Referring to assistance to the timber industry, Mr. Forbes said the stat© of the industry has for some time been engaging the attention of the Government. Th© duties on timber were increased in 1927 but th© increased protection had not had th© desired effect of limiting the importation of timber and increasing .the use of the local product,. It was therefore proposed to increase the present duty on rough sawn timber in ordinary sizes from 5s to 7 s 6d per 100 superficial feet, and to fix the rates on timber in long. lengths and large cross-sectional area and on sawn dressed timber at 2s less and 4s greater respectively than this rate. “The Government has also decided to grant further assistance to th© clothing manufacturing and motor body building industries,” continued Mr. Forbes.°“Theso industries employ a considerable number of hands. The total importations of apparel and hosiery during the last five years are: 1925, £2,801,167; 1926, £2,709,456; 1927, £2,458,105; 1928, £2,675,728; 1929, £2,743,724. These show the extent to which th© New Zealand manufactured article is displaced by the imported product. Th© result of the combined surtax and increased rates of duty is to grant further protection to the clothing and hosiery manufacturing . industries of over 6J per cent, on British made clothing, etc., and of 14j pei' cent, oh the foreign article. “With respect to the motor building industry, it will bo seen that the increase in the body duty is set down at 1£ per cent, It must be remembered that the' body duty is payable on the whole motor-car, and according to the generally accepted view the increased duty represents an additional 5 per cent, on the value of the body. “It has been decided to make a concession on barley, which is an important food..in the raising of pigs. lam advised that barley is the best cereal to ■supply carbohydrates, which as proteins are necessary in diets of skim milk or whey.

PREFERENCE TO EMPIRE. “As has been indicated, it is part of th© Government’s policy to increase the preference granted to goods manufactured 0" produced in the British Empire. During recent years there has been a decrease in the proportion of British made goods imported into the Dominion and it is proposed to make increases in the preference on 158 items of the tariff. The total number of items is 449 and the number of items upon which preference is granted is 295. There is another aspect of this matter which deserve© consideration. It has frequently been urged that owing to the high tariffs which are being imposed by certain foreign countries on New Zealand products we should adopt a policy of retaliation. The Government is greatly concerned regarding- tariff and other barriers which ar© being erected against our products. I do not think that as a general rule retaliation is a satisfactory method to adopt in dealing with such matters, although I reeogniso that there may be instances in which retaliation is the only satisfactory way left. I think it is far better to proceed by way of negotiation. In pursuance of this policy th© Government does not regard all th© increased duties which have been im]?osed on foreign goods as necessarily permanent. “It is noticed that during recent years there has been a tendency on the part of some foreign countries to provide in their tariffs for minimum and maximum rates of duty, and the Government is willing to enter into negotiations with any foreign country which treats or is prepared to treat New Zealand goods fairly in tariff matters.” Air. Forbes added that in accordance with the tariff agreement between Australia and New Zealand none of the increased duties would apply to Commonwealth products, except by agreement with th© . Australian ..Government or after six months’ - will..b© , olnxirvcd/’ he..sn’id, 44s

to retain the primage duty on Australian goods but that wheat and wheat flour have been exempted. I should perhaps mention that recently the Hon. P. A. de la Perrelle had preliminary conversations with Mr, J. E; Fenton, Australian Minister for Trade and Customs, while he was at Auckland, and I believe that as a result of the discussion more satisfactory trade - arrangements will shortly exist between the two Dominions.” Air. Coates asked whether it was intended to treat the increased petrol tax as ordinary revenue or was it to be paid into the highways fund? i “INDIRECT TAXATION.” ! Mr. H. E. Holland said it seemed the I Government was adopting the principle I of (retting revenue by indirect taxation. He'considered necessaries that could not be produced in the Dominion should be admitted dub free, while goods which could be produced in the Dominion should be subjected to a protective rather than to a revenue-raising tax. With regard to the petrol tax he asked how the industries, particularly the carrying industry, were to be affected. Air. A. Harris said the Government’s only objective seemed to be to extract more and more from the already overburdened taxpayer. Mr. H. T. Armstrong asked how much revenue it was hoped to obtain from the imposition of the increased petrol tax. It would drive out a number of men in business in a small way. Furthermore, the tax did not give protection to any industry in New Zealand. Air. C. A. Wilkinson expressed regret that the duty on wheat had not been removed. Mr. W. D. Stewart said he did not think New Zealand industries should be protected by an embargo. They should be'afforded some protection, but they should not be placed behind a brick wall. Mr. C. H. Chapman urged that there should be provision that a percentage of motor-cars imported should be without bodies, which could be manufactured in New Zealand. Replying to various questions, Mr. Forbes sta’ id that the extra petrol tax would be paid into the highways fund. It would be disclosed in the Budget what would bo done with the money. The petrol tax was now the same as in Australia. He did not believe in giving any industry a monopoly, as it would always be better as a result of a certain amount of competition. It was expected the increased taxation, excluding the petrol tax, would amount to £BOO,OOO. “TO COMBAT CLEARANCES.” Mr. Forbes, stated that cinematograph films would be dealt with in th© Budget, Replying to Mr. Stewart he said the reason for anticipating the Budget was to combat abnormal Customs,clearances. The reason for increasing the duty on cigars was to place them on the same footing as cigarettes. The system of a stipulated number of local-ly-built motor bodies had not worked successfully in Australia. Several members expressed the opinion that the resolutions would provide a disagreeable surprise for the country. Air. A. E. Ansell said the Prime Minister had shrouded in mystery the ultimate destination of the proceeds of the petrol tax. Working people in the suburbs would suffer as a result of the increase because it was almost certain that bus fares would be increased. It would appear the Government was endeavouring to bolster up the railways at the expense of motor transport. If the Prime Minister imagined he was going to stem the progress of motor transport ho would be a modern King Canute. The Government must seek co-operation with motor transport. Mr. H. M. Rushworth protested against the increased’ duties, which he described as a blow to industry. The additional taxation would be passed on to the primary producer, and in conseJuence exporters would be placed at a urthcr disadvantage. Mr. H. G. R. Mason advocated additional protection for the New Zealand wine industry. There was only 6s duty on wines compared with 36s on other intoxicants. Mr. G. C. Black urged that all packets of tobacco and cigarettes claimed to be locally grown should bear some mark indicating the actual percentage of the local product in the contents. The duty on New Zealand tobacco should not be increased. Mr. W. Nash (Hutt) said he estimated the actual, tax on petrol would be per gallon, because a sub-clause of the fifth resolution provided for a stipulated addition in lieu of primage duty. This would mean that the duty would be increased by over 100 per cent. PETROL PRICES TOO HIGH, Mr. .W. H. Field expressed the view that some means should be devised whereby it was possible to import petrol more cheaply. At the present time the price was too high, and with the increased tariff it would become almost prohibitive, Air. R, Semple submitted that thepetrol tax would aggravate the problem of unemployment. It would put many struggling carriers out of business. Mr. W. J. Polson said he viewed the proposals with the greatest consternation. Air. W. E. Parry; Do you want an aspro? Mr, Polson; Many members will require more than that before they have finished. I had the impression that this Government intended to' tackle this problem with some vision and courage. One effect of th© proposals must be' to increase costs. Th© whole thing almost made one despair, Mr. Polson said, and it was evident that little attention had been paid to sound economics. Th© Government should have placed the extra tax on genuine luxuries, which would have provided far more revenue than the present proposals. He could not see how the Government was going to justify the tax on foods when there was no increase on such luxuries as films. Instead of that the Government was increasing the duty on such trumpery thing© as onions. Mr. H. E. Holland appealed to the Prime Minister to take the House into his confidence with regard to what he intended to do with the proceeds of the increased petrol tax. He added that it seemed to bo the impression that the Government was entitled to have its resolutions passed, but when the details come before the House for subsequent consideration the Labour Party would take action where it was considered necessary. INFORMATION IN BUDGET. Air. Forbes said the petrol tax proceeds when paid into the highways fund would be used for the cop.nties( : requirements and road making,particularly .. •. ■■ '• ' fetoi.'!■

back-block roads. Details of the proposals would be contained in the Budget. The petrol tax would not amount to 84d.,' but would be seven and seventwentieths pence when the surtax was added and the primage duty deducted. Air. Coates agreed that the Govern-' ment was entitled to th© passage of the resolutions, but he presumed that no member was bound to support the proposals merely by his voting for the resolutions.

Mr. W. E. Barnard said there were many things in, the proposals which many members would consider gravely. The Government was likely to find it necessary to accept several important amendments.

Air. J. S. Fletcher asked why it had been necessary to anticipate the Budget when it was du© in two days’ time. A policy statement should have accompanied proposals such as those before the House.

Air. W. E. Parry agreed with this view and likened the Government’s attitude to the well-known parallel of a mother and child. Tho Government was asking the country to open its mouth, shut its eyes, and see what th© Government would give it. Mr. J. Bitchener advocated greater protection for the British motor industry. Mr. E. J. Howard said he would like to know how much money there was in the highways account. He could, not see how the additional revenue was necessary. The Highways Board had not spent the money already at its disposal. He feared the petrol tax would kill the goose that laid the golden egg, and he foresaw the displacement of the petrol engine by the Diesel engine burning oil fuel. He mentioned there was a six-wheel vehicle in use in Britain that would convey a heavy load at a much lower cost than a vehicle with a petrol engine. There would be very much smaller revenue derived from such Diesel oil-burning vehicles.

Air. C. A. Wilkinson asserted that the Government, perceiving it could not fulfil its pledges to the country, should have resigned rather than submit such proposals for increased taxation. Air. Polson, speaking for th© Independent members, stated that they would not oppose the resolutions, but they would be guided by what appeared in the Budget in hotly opposing the Customs Bill. The resolutions were then adopted by the committee, and the House rose at 11.58 p.m. till 2.30 to-morrow.