WAR TAXATION.

Timaru Herald, Volume CIII, Issue 15741, 27 August 1915, Page 2

WAR TAXATION.

THE NEED FOR ECONOMY. THE GOVERNMENT'S PROPOSALSThough, the demands are largo it is well within the capacity of the country to provide the .necessary ways and means to meet them, and it must not he forgot ten that every other country engaged in the present war has to face huge tleiioits and to shoulder burdens of an unprecedented nature. In this respect Now Zealand ii> in a similar position to other parts of the British Empire. With tho object of providing for the deficit, and for the interest and the sinking fund required for the final payment of all war expenditure, it is necessary that some adjustments iii taxation and in the rates for public services should bo authorised by Parliament. Th© financial position created by the war is one calling for prudent and vigorous treatment, and must bo faced by the Government and the- people v.tli inflexible courage. I annot too strongly impress upon every section of the. community the necessity for care and economy, especially in the matter of luxuries, until the great war now raging is over. I do not wish to suggest that there should be a diminution in employment. On the contrary, both Government and private individuals can mate-rally help the country in coming successfully through tho present crisis by maintaining employment at_its normal maximum and at the same time doing everything possible to prevent waste and extravagance. As a producing country we possess enormous advantages in comparison with most other countries, but we must uot rely upon the present high prices for our princ-pal products being maintained alter the war is over. Iho huge and unequalled war expenditure of the older countries must enormously limit the purchasingpower of their peoples until sufficient time has elapsed to enable the nation to taJce stock of the altered conditions and to adjust their taxation and finance to meet the requirements of tho new order of things. We shall require to do likewise, and it is our duty to take all reasonable precautions now to prepare for the exacting task that lies before us. If wo are to recover quickly the losses we arc suffering in the struggle in which we are engaged, there must be cordial co-operation and ready self-sacrifice from everyone. The future calls for self-sacrifice from •every one in the Diomuion, and I confidently appeal to those affected by the proposals 1 am now submitting to face the position with broad-minded and undaunted determination. In ail probability on the conclusion of the war, it will b? practicable to make very considerable reductions in taxation, and it is merely necessary to say that the Government will have very" great pleasure in doing so. It would not. in ray opinion, be prudent at present to base the extra amount required afc a lower sum than £2,000,000 per annum, and it will depend entirely upon tho duration of the war whether even this large sum will not in the future renin" re to bo increased I am hopeful that it will not, but this cannot be definitely determined at present. We may hop© that in a year from now the war will be over, and that the circumstances then will enable us to make a considerable reduction in taxation. In any event, though the burden is heavy the peoole oan be trusted to bear with equanimity whatever is necessary as New Zealand's share in maintaining the high traditions and priceless freedom of the British Empire. As it is essentia,! to distribute the incidence of the increased taxation over the widest nossib'e area in order that its direct effect ma.v be least oppressive. 1 u-ill submit a number of important alterations- to the House which I hope will commend Themselves to honourable, members. Tho increased taxation is proposed chief'y on account of tho war and partly owing to the general expenditure increasing out of proportion to tlie increase of revenue. LAND AND INCOME-TAX. I estimate the receipts for 1915-16 as follows: Land-tax, £s86,O00: in-come-tax, £j.,UtKj,oiM. It is proposed to increase the landtax by tne addition of 50 per cent, to the present rates of graduated tax on country lauds. The increase- in the income-tax will be obtained by an extension of the existing schedule of graduated rates from Is 4d to 25., winch rate will be reached at £o.ooo, and tho imposition of a super-tax of 33 1-3 per cent . to the schedule rates. Tin's will give a rate varying from 8d on the lower taxable incomes to 2s 8d on the hieher ones. b In view of the fact that many business people whose incomes are taxed are also paying land-tax, and in manv cases graduated land-tax, this is considered to be a high enough rate to impose, as in many instances the combined taxes wilj. be equivalent to a tax or over os m the £1 of income. It is not considered advisable to attempt to. obtain any increased revenue by lowering the exemption, as in ad dition to the fact that the additibS expenditure that would >•*, incurred would no be warranted by the rasuft the class that would be affected bv such a change ls already paying its taxat on through the Customs, and j e siiffi«£r?+ ly burdened by that and bv Ihe iS£" cd cost of living. It is "not proposed to increase the tax on mortgages the comparison between 'the est; mated tax for the current rear -in* the tax for last year is as Estimated Present Ordinary tax 307,000 307 000 Mortgage tax 240 000 2^'^ Graduated tax 339 340 265 100 (Net increase, £67,940) ' Income tax 1,090,660 539 000 (Net increase £-551,660) uov ' uw (Total net increase .-6619,600). It is generally recognised that those who have been making larc-e n ™«f due to the war shoull give^an^dd* 8 tional amount towards the financial requirements of the country. I S not be contradicted when I «av Z large profits have been derived from the sale of wool, meat, and dairy m? duce. To provide for a 2 n S tffSPSv* 0 def / ay »S" the cost of the war I pronose +l»n+ +tT ncome tax shall appl£ £%»£ de! rived fro m land. Five per cent of the capital value of the land will be deducted from the assessment or the income, aud the exenvction of £3OQ

wdll also be allowed. I estimate that £250,000 will be obtained by this alteration, and considering the high prices that have been realised for sheep, wool, meat, and dairy produce, it is not a large contribution from those affected. The total increase of income tax proposed will amount to £551.660, and will reach those whose additional profits have been due largely to the -war. INCREASES AND ALTERATIONS OP DUTY. To make up the shortage of revenue due to war conditions and to strengthen our finances, it will be necessary to impose duties upon some articles commonly regarded as luxuries. An all-round duty of 10 per cent, ad valorem on motor cars, and 50 per cent, additional on cars made in countries which are now or may be enemy countries. Bicycles, which have hitherto borne a duty of 20 per cent, if British and 30 per cent, if foreign, will be reduced to the same rate as motor cars, with the same conditions as regards enemy countries. A duty of 4d per gallon will be placed on motor-spirits and kerosene. I do not think any exception can be takon to the proposal for increasing the duty on petrol, etc., for motorcars. Kerosene, which formerly had a duty of 6d a gallon, is also included. Petrol cannot be taxed to produce the revenue necessary unless this is done. Tyres are to remain free from British and neutral countries, with a 50 •per cent, ad valorem tax on tyres coming from enemy countries. Excise beer, which has hitherto paid 3d per gallon by means of stamps attached to the casks upon delivery from the brewery, will be taxed by an entirely new method. The Government's proposal in regard to the beer tax is one that should commend itself * to the house. It alters the system chiefly to ensure that lighter ales—that is, ales with less alcohol in them—should be manufactured in this country. Tho duty will be assessed on the quantity and with respect to the specific gravity of the worts pitched for fermentation. The worts of low gravity will pay a minimum duty, which will increase with each unit of rise in gravity. Spirits will bo increased from 16s to 17s per proof gallon. The total increased revenue from the foregoing adjustments is estimated at £340,800, of which sum £55,000 is represented by increased beer revenue. As all classes of tho community will, I am sure, desire to join in the necessary sacrifices to help the country afc this juncture, I would ask those who use non-alcoholic beverages to join in providing a part of the extra revenue necessary. I propose that an excise duty of Id per gallon be put on all non-alcoholic beverages to be defined. It is difficult to estimate what the revenue from this will be, but I put it down, in round figures, at £20,000. Wo shall, however, not be able to ascertain definitely what is to be expected from this until it has had a full year's trial. The full benefit to the revenue of the increased duties on spirits will not accrue for many months, as merchants, anticipating changes in the tariff, have cleared from bond from all available stocks of these articles. The amount of inflation of revenue during the last two months due to this cause has been about £130.000. It should be remembered that the new duties will be in force for seven months of the .year only, that there are large stocks ' of 'motor-spirits and kerosene at present stored in the Dominion, and that the consumption of most articles will be reduced on account of war conditions, the absence of many of our men on active service, and other causes. Talcing all these facts into consideration I do not think the increases for the present financial year due to the new dutias can be safelv est : niatcd at more than £120,000. In these proposals I have elected to touch a few special articles, and not to increase the duties on the necesaries of life. The resolutions to impose th© additional duties wll be brought down tonight. STAMP DEPARTMENT INCREASES I propose- an increase on the duties ou conveyances, transfers, leases, settlements, common deeds, and other assessable instruments mentiqnied in the Second Schedule of the • Stamp Duties Act, 1908, by 25 per cent. The amount of duty realised from tifris - source during the last year was £175,000. Alter making allowance for a shrinkage in land transactions, it is I estimated that the ineerased tax will yield £40,000 per annum. Bank Cheques.—The duty is at present is 15s per cent., and realises £60,000 annua! ly. I propose to increase this tax to £1 per cent. I estimate that this increase will produce j £20,000 per annum. Bank Cheques.—Tre duty is at preI sent Id. 1 propose to increase the duty to 2d. This increase is eisti- | mated to produce £50,000 annually. There are large numbers of blank cheques stamped with Id in circulation, and these may be used with an additional adhesive stamp for a period ! of one year. All unused cheques stamped with Id will be called in and an allowance made for them. Receipts.—The' duty at present is Id. on every receipt for £2 and Howards. It is proposed to increase this duty to 2d. It is difficult to estimate the amount that will be. realised from his source, but after a careful consideration of all available data I have put it down at £40.000. Death Duties.—There is not much room for increase in these duties, nor is it desirable to increase the duty on small estates., although' they' receive liberal treatment under the "~ present law. There is one class of benefioiari.es however, which escapes very lightly inthe matter of succession duty. I refer to the children of -wealthy persons. At present such children do not nay. suocesion duty on a less sum than £20,000 each, which for all practical purposes exempts them from duty. It is proposed to reduce this exemption to £5,000 for each child and to impose a duty of 2 per cent- on successions over this amount. I estimate that tin's duty will realise £30,000 per annum. Mortgages of Land or any Interest therein. —It is proposed to impose a stamp duty of 5s per cent, on mortgages. This tax is estimated to produce £40,000. On release, reconveyance, or discharge of mortgage a fixed duty of 10s. This tax is estimated to produce £B,OOO. In he United Kingdom an ad valorem duty has been imposed on mortgages for many years. This duty is not a recurring one", and should not cause any hardship in its incidence. Subsales of Property.—A new stamp duty is to be imposed on all subsales of property afc the same rate as if the purchaser took a transfer or conveyance of the property. This duty is estimated to produce £IO,OOO per annum. It w'l'll fall almost entirely on the land speculator. Totalisator Dividends.—l propose as a war tax to impose a duty on totalisator dividends of 2k per cent. This is estimated to produce £75,000. POST AND TELEGRAPH CHARGES. I propose to make some small addi-. tions to the charges leviable for postages and telegrams; and, although it is anticipated that the amount realisable will amount to £380,000, yet, owing to the vast number of pieces of J mail matter and telegram* handled, it, is estimated a Very small increase in the minimum charges to which they are subject will yield the sunj jndicajfced. |

I propose that the initial rate on telegrams be increased by 2d, that 2d be added to the inland charge for cablegrams, that the initial charge for bureau communications within a radius of twenty-five miles be 6d for both subscribers and non-subscribers, instead ° f j % j at P resen * 3d for subscribers and 6d for non-subscribers, and that a special war tax of M be levied on all articles posted except newspapers. The amount realisable under each heading! is estimated as follows: ■! Telegram and cable messages: . Increase of initial rate of ! p 2d T .., - '4ooo! .bureau messages: Initial rate made 6d to all ... 20 000 Postage war tax of -id on all ' ' ' articles posted except news- I P a P Grs -. 310,000 £380,000 RAILWAY'INCREASES. ' The railway _ passenger and goods r * r?o™ l rL bo lncre£, sed to the extent or, £360,000 per annum. This becomes a necessity from causes due chiefly to the; war, and it is impossible for the Railway: Department to provide sufficient ways and means under conditions now existing. Prices of materials required for the maintenance and extension of the' services have risen enormously. After carefully looking into the whole position it is proposed that passenger rates-be raised bv 8 1-3 per cent., and goods (excepting*timber) by 10 per cent. Assuming that effect is given to this proposal, the rates operating for conveyance of dairy and other farm produce and live stock will be less than those ruling in 1894, when the industries were either languishing or in their infancy, while the proposed advance is eo infinitesimal as to be negigible as far as the increase -of prices over the counter is concerned. ; The effect of the proposed increase 3 o n , rates rouhl be as follows:—Butter, 8-J-d per £IOO of value; cheese, Is per £IOO of value; wool, Is 3d per £IOO of value; frozen meat, 2s 8d per £IOO of value; sheep, 4s 8d per £IOO of value; cattle, 3s 9d per £IOO of value. I omit timber for the reason that the increase would be on white pine £1 14s 5d per £IOO of value, and on red pine £1 5s 5d per £IOO of value. Timber is used more or less by all classes of the community, and the general increase proposed to be put on other goods if applied to timber would injuro the industry, which is at the moment, prejudically. affected by the war. .Discrimination in this article is consequently a necessity. In regard to passenger fares, the 8 1-3 per cent, proposed works out at a penny in the shilling, and this would be applied in all cases excepting workers' tickets. An adjust- | ment of excursion rates also will bo submitted. I estimate these changes will produce £350,000 per annum. My colleague, the Minister of Railways will furnish full details later on. The alternative to the increase of rates would be a drastic curtailment of the train-mileage run. Necessarily this would involve greatly diminished train services and the dismissal of a 'very largo number of employees. Such an undesirable course can be avoided bj the adjustment I have suggested. The whole of the taxing proposals and increases in the rates of the various public services will be revised with a view to remissions and reductions when these are made possible by improved conditions. In adjusti.ng the taxation and the rates for various publio services my object has been to do so without imposing additional charges on the cost of living. I have refrained from reducing the exemption for income-tax, which still remains at £3OO, and no tax is payable upon earnings of the people below that amount per*i*nuai. On f.he other hand, I propose to alter the in-come-tax and other taxes so that those who have been making large profits due chiefly to -the conditions produced by the war shall pay a considerable portion of their earnings to the country and this they should not grudge, as tho heavy borrowings incurred for waicharges have secured them in their possession, and in the inestimable blessings they enjoy as- members- of the British race. For the sake of convenience I summarise the proposed increases in taxation and rates as follows: £ Land and Income Tax ... 619,600 Post and Telegraph ... ?80,000 Railways 36U000 Customs 285,000 Totalisator Dividends ... 75,000 Beer Duty , ... ... 55,000 'Bank-cheques 50,000 Land-mortgages 48,000 Receipts ... ... 40.000 Conveyances, transfers, etc. '..". 40,000 Succession duties ... 30,000 Non-alcoholic beverages .... 20,000 Bank-notes 20000 Subsales of laud ... 10000 £2.032.600 I am, as I have indicated, estimating the total requirements at £2,UOO,UUU. A rev-vaij. of inward trade, winch there is good-reason to liope viu be me case, wouid he favourably reflected upon the principal Departments now aaverseuv affected,-and an eariy termination of tne war would materially reduce the prospective liabilities. We are reasonably entitled to take both-these as probabilities, and are justified in basnn- [ £2,000 WO It must not be forgotten that the full! amount of taxation and other-increases of revenue will .not come I into the lreasury during this year I I a f fe ? kat ,ve «™U recede .bv the dtst March next not more than £1,000,- | UUO rroni the increases now proposed. (It is impossible to give- a fairly reliable approximate estimate of the financial position of tho Consolidated Fund at i 31st Marclv next, it may be that there \ w-ill be a-deficit as the whole operation of the increased rates and taxes cannot operate fully until the. following year. I feel it to be my duty to point this out now. There need be no m£o-iv-ings on tins account, as w'nat I am now proposing, shomd when the changes are mfuMsway, more than-balance'the revenue and expenditure Tariff.--WhiLe [ realise that a neS^ f - r waging -the' Customs tariff generally in regard to,-.ei'tain matters, the subject is one of such imnnrt dealt with.it present. No donht tut quest on of encouraging new industries may become more pressing wheni tht war We must take steps to prevent Zealand being made the dumping-ground of oMmtrie?. goods to the serious injury of our industrlies manufacturers, producers and workmen. There is no doubt that the facilities offered to the German manufacturer and merchant in gaming access to British and Colonial markets have helped our- enemv to build up her large commercial and industrial establishments and to increase their .export manufactures,- thereby amassing great wealth from British countries, which has helped-to supply her with the smews of war. One of preventing Germany again becoming a great commercial and industrial nation with the assistance -of British countries, is to prohibit German-made goods being imported- .into. New Zealand and other-British countries. One 0 f 1 ?™™ duties for the future will be to make our neople, as far ns practicable, a self-reliant and- self! contained nation. The House will be asked to place a duty of 50 per cent on all importations from that are now or may be, enemies of, the British.Empire, excepting such goods : ?* m t y fe«appted from time to time by Order in, Council. ". COST OF LIVING. _ The steadily increasing cost of living is causing a great deal of anxiety. It

has become" a matter ,not only of national but of world-wide concern.

In New Zealand a Royal Commission, which was set up to inquire into the question and make recommendations for the consideration of the Government, furnished a valuable report.: While it:is-exceedingly difficult to deal effectively with, the causes which tend to / increase the cost of . living, it is the intention of the Government to take measures to remove any abuses that may exist, and to prevent any person taking advantage of the conditions associated with tho war to trade upon the necessities of the people. The object will be to ensure that the cost of the food, clothing, and shelter of the people is in no way unduly or artificially increased. Our desire should be that no part of the • field of business ■ opportunity may be restricted by monopoly or combination, and that the right of ■every man to acquire commodities, and particularly the necessaries of life, in an open market, uninfluenced by the manipulation of trust or combination, may.be preserved, and the people not exploited. _ In this connection, with a view of /increasing - the powers of municipal corporations and avoiding the expense incidental to special legislation at the instance of those bodies, it is proposed to amend:: the Municipal Corporations Act, giving powers somewhat similar to those given to the Cities of Wellington and Christchurch in the year 1914, under local Acts, relating to the inspection, sal#, and control of the local milk supply ■ the establishment and maintenance of milk stations; the establiEihment, equipment, and maintenance of markets, refrigerating chambers, and chambers for the cool storage of meat and other articles intended for human food; and also to establish; equip, and maintain local municipal bread-supply services. LOAN FOR PUBLIC WORKS. The Government- has very carefully considered the best method of providing moneys for carrying on public works, and, in view of the great difficulties in the way of borrowing in the Homo market except for war purposes, it has been decided to raise money by issuing debentures in- the Dominion. It is proposed to-issue free of income tax, debentures for-the'•sum :«f £5,. or multiples'"St £5, at.4£ per cent., and the period will vary according to the desire of the subscriber, but will in no case exceed twenty-five years.. It is ■the intention of. the Government to accept deposits on account of the 1 loan through the post offices in the Domin-, ipn, and through recognised brokers at a' commission of 5s for every £IOO contributed through them. The total amount"to be raised will be' limited to £2,000,000, and in this sum is included; £500,000 for additions 'to :open lines. -The-minimum value of a debenture has been fixed at a very low figure in order that all classes of the community may be able to assist tho Government, and I make this appeal to the people of the Dominion feeling confident that they will be glad of a further opportunity to express their patriotism. It may not be out of place if I here quote from a speech made by the Chancellor of the Exchequer iu the House of Commons in June last, when explaining the details of the recent great war l«an raised wltn'<mcb confrom; all classes of tire community,"at Home. Mr McKenna said, "He who 6ubscnbes to the country's need 1 at ;the present is in truth dqing an act his act benefitsbot£:hiri) try to which lie gives. \* : "He':vwh'QlsHbscribes new, and saves inorder.tp^subscribe/will be able to bear .the strains when the' war is over. He will be thankful for the efforts ho !nas made in the struggle to 'keep himself, but: still dearer to him must be the knowledge that every aid he gives "to himself ; he lis. multiplying for his country, • and -that his country will bless Kim for his providence and for his generosity. " I am hopeful that, in addition to moneys for public works, sufficient funds will be available to meet the reasonable requirements of t,ett!ers, workers, and local bodies from the deposits in the Poet' Office Savings-bank, and every effort will be made to do so. Local bodies must restrict their applications to necessary works, as it is not possible during these times to consider demands for conveniences that can be deferred until after the war is over. I take the opportunity of appealing to honourable members not to press for or i expect the Government to meet dei mands for buildings on a large scale. They must give precedence to other more pressing -matters. - CONCLUSION. There is no portion ;of the civilised i world which is' not, to a greater or less extent, feeling they effects of the war. The people of this Dominion, in' common with their fellow-countrymen in other parts of the Empire, are* offering their sons ungrudgingly in order that the Empire's cause.may be"successftilly vindicated, and no tribute that this House could offer to the memory of I triose men who have given their lives at their country's call would be too great. Nor is it possible to thank sufficiently those men and women who have sacri- • ficed "their-'moneyand their comfort in' .order that they may assist in succouring the wounded, and in other ways have furthered the great cause which to all of lis is a privilege trust and a sacred duty. . ■ ' i i Let us hope that before'l again have ] 'to submit _a.review,.of the Inances of ;t'ne Dominion to the House and to the ! •country, this devastating war ■will; be j a thing of the past, and. that the Em- j pire will have . emerged triumphantly jroni an ordeal however much | Sve.may- deplore its frightful incidents, had the effect of welding together more clos&ly the component parts of the Empire, 'and has taught it -afresh that in unity lies its great strength. The critical times through which we are passing have caused a wave of Tintr'rvtie enthusiasm to sweep through the Emoire, the pffppts of' which must inev'tablv make for liberty and justice and fnr the righteousness that exalteth ~a nation. ' -■ ' .. "... CHANGES IN TARIFF MADE. At. the .conclusion pf the reading of, the Budget, resolutions were passed embodying tho changes in the tariff outlined in the Statement. < Sir Joseph Ward said the Financial ' Debate would be opened on Tuesday < next. ._-. ~,,,.... ~.....„. ,-...,