LOANS FREE OF TAX.

Taranaki Herald, Volume LXVIII, Issue 16823, 23 August 1920, Page 9

LOANS FREE OF TAX.

PRIME MINISTER’S STATEMENT. OPPOSED TO THE PRINCIPLE. The Prime. Minister defined Ins .attitude towards the issuing of loans with the interest free of income tax in the House of Representatives on Tuesday night in a brief statement in which lie said he was entirely opposed to the principle. The matter was raised by Mr. J. M'Combs (Lyttelton) when the Statutes Repeal and Expiring Laws Amendment and Continuance Jiill was under discussion in committee. Mr, M‘Combs feared that a clause making provision for the extension of the duration ol power to issue debentures in respect of land acquired by the Crown would perpetuate the freedom of income tax . principle. The Prime Minister was understood to say that he was not in lavonr ol the principle. “Will the Prime Minister make it clear that lie does nor intend to continue the freedom irom income tax principlef 1 ’ asked Mr. 11. E. Holland (ilnller). \"J. have no objection to making that perfectly clear,’’ replied Mr. -Massey. •'1 am not going to ask the House, now or in the future, to do anythin:/, oi the sort. Thorn is finance legislation coming down, and il the point is not made clear now 1 am quite willing to have it put in there.'’ Mr. M’Combs still seemed to think that it was necessary to something .specific in the present Bill, and moved as an amendment the audition of words providing that the income derived from the debentures herealter should not he free of taxation. Mr, G. W. i-’orbes (Hurtinui) asked for information as to the Government’s proposals in regard to rates ot interest, in view of the Jnet that it seemed unlikely that landowners would bo prepared to take debentures bearing -U 10 o per cenr. interest. Air. Massey replied that the rate at , which the Government intended to borrow would tie disclosed when die finance legislation camo along. As a mailer of fact, however, lie could lull them that since the session had opened the. Government had raised some hundreds of thousands ol pounds outside at 5 per cent, without freedom Irom income tax. The lion. I. A. Honan (Invercargill) asked the Prime Minister whether anyono had received payment lor laud by debentures free of income tax. Mr. Massey; “Not to my knowledge.” He could not, however, bo ; certain as to what had occurred prior | to the time when I\e look over the port- : folio. j The Minister of Education argued that Mr. M'Coiubs’ amendment was nni necessary, as lie understood that the i Crown Law Officers find given an opin- ; ion that the existing laws did not give ! the right to issue debentures for laild j free of income tax. ; In answer to further discussion, the ■ Prime Minister said that the freedom of income tax principle had been used for ono purpose only, and that was to get money for wai; purposes. Hie rais-

in.a; of money in payment for land by debenture's was quite a different thing. Mr. G. Mitchell (Wellington South): “Did the principle over apply to land. Mr. Massey; “Not that I know of. Not in my time.” The groat majority of tho members were apparently prepared to accept the Prime Minister’s statement of tho position and his assurances as to tho Government’s attitude. They accordingly negatived Mr. M‘Combs’ amendment by ■l4 votes to 9.