FINANCE BILL.

Timaru Herald, Volume CXXV, Issue 18650, 20 August 1930, Page 2

FINANCE BILL.

SECOND READING PASSED. HOUSE SITS LATE. By Telegraph—Press Association. WELLINGTON, August 19. j Replying in the House of Representa- ! tives to the debate on the second read- ! ing of the Finance Bill, the Prime Minister, speaking after the Telegraph Office had closed at 12 a.m. said there had been a good deal of criticism with regard to the Highways Board. He submitted that if the Government had discontinued payments to the Highways Board and made no provision for road construction, there would have been ground for complaint, but it had made such provision, and money for the purpose was being obtained from the additional tax of 2d on petrol. He contended that when the arrangements had been made with motorists regarding the Highways Board’s grants it had never been expected that it was to continue irrespective of the state of the finances of the country in future. As a matter of fact he considered the time had come when the question of the Highways Board should be reviewed. It was his intention either before or during next session to submit the whole question to the Public Accounts’ Committee of the House to ascertain whether the present system of highways taxation could be placed on a more satisfactory basis. The finances of the country appeared to be getting into an unsound state when complaints were being made that there were certain funds on which no one must lay hands. Referring to the Bill generally, Mr Forbes said it had been framed in such a way that the necessity to cope with the strain on the Dominion’s finances had been met without imposing an undue burden on any one section of the community. Mr Sullivan had complained against the decision that the South Island Highways Board should have to provide the cost of restoring certain roads in the earthquake area. The Prime Minister said the funds of the Board were in a far more buoyant position than the Consolidated Fund. All the Board was asked to do was to repair the roads under its own control. Dealing with the film hire tax, the Prime Minister said that despite the fact that there had been over a 100 per cent, increase in the returns from films last year, there had been a drop in the duty paid, from £37,000 to £26,000. It had become apparent that less footage was required in the case of sound films. Further, In view of the anticipated increase in the duty there had been such a heavy clearance of films from bond that the increased taxation on a footage basis would have not had to have been so heavy to provide the extra revenue required from those cleared during the remainder of the year that an undue burden would have been imposed on theatre proprietors to meet the situation thus created. The new method of taxation had been devised to meet this end. The Bill was then read a second time, and the House rose at 2.35 a.m. till 2.30 p.m. this afternoon. DISCUSSION RESUMED IN HOUSE. By Telegraph—Press Association. WELLINGTON, August 19. When discussion on the Finance Bill was resumed by the House of Representatives this afternoon, urgency was accorded the proceedings. Mr W. D. Stewart (Dunedin) took exception to the remarks of the Hon. E. A. Ransom yesterday concerning the

Reform Government’s attitude to the Treasury. He said the Reform Administration had always kept in close touch with the Treasury, and its relationship had always been on a very friendly footing. The Prime Minister, replying to references to the allocation of the petrol tax, again mentioned his intention to have the whole question investigated. It was probable that town and country motorists contributed approximately on a fifty-fifty basis, and it did not follow that town motorists would always be satisfied with the amount of money allocated for city requirements. It might even be necessary to set up separate Highways Boards and funds. Mr R. A. Wright and Mr H. Holland drew attention to the large proportion of tax paid by city motorists. Mr H. E. Holland pointed out that the interests of both sections of the community were collective. The cities must depend on the country for food supplies, and the better country roads could be made, the better it would be for the whole Dominion. He advocated the appointment of a Recess Committee to consider the question of the Highways Board. If the Board was to continue in existence, it was important that small boroughs and town boards should be included in the scheme, so that they should be able to get better treatment. The Hon. J. G. Coates declared that small boroughs and town boards already had adequate provision made for them under the Highways Act. The Highways Act, whatever faults it might have had, brought thousands of miles of good roads to this country, and had provided better access from the city to the country than had ever been enjoyed previously. Mr Coates suggested that the rate of duty charged on foreign sound films would result in New Zealand being deprived of the opportunity to witness the better class of- productions.

Mr Forbes said the amount of duty fixed was comparatively light. He was amazed that anyone should raise objection to the tax, in view of the thousands of pounds that had been going from this Dominion annually to large film corporations. Mr K. S. Williams said the Highways Board had been criticised for constructing good roads pai*allel with the railways. This was not quite fair, because in order to connect various centres it had been impossible in many instances, owing to the configuration of the country, to get very far away from the railway lines. The House adjourned at 5.30 p.m. The House resumed at 7.30, and consideration of the Finance Bill was continued in Committee. Mr D. McDougall urged the substitution of additional income tax, to yield two millions, for the tax on petrol. Income tax would then be restored to something like the 1921-22 total. If such a course were adopted, the Prime Minister should have no difficulty in getting the Bill through in time to leave for the Imperial Conference. The short title of the Bill was passed at 8.15. Mr Coates asked the Prime Minister to reconsider the clause imposing a conveyance duty on transfers of shares bought in companies in other countries. He had referred to the point during his second reading speech, and he asked the Prime Minister how much revenue he thought it would produce. Mr Forbes: “About fifteen hundred pounds.” Mr Coates pointed out that the clause offered possibilities of evasion on one hand, and of double taxation on the other. The Prime Minister said he thought the principle involved was quite Mr G. H. R. Mason said he did not see how it would be possible to enforce

collection of the tax. It would conduce to diminishing respect for the law.

The clause was passed. Reform members protested against the increased duty on mortgages and on discharged and variations of mortgages, from 2/6 to 5/-. It was pointed out that numerous increases of the type would become costly, especially to workers and small farmers. Mr Forbes stated that the charge of 5/- would only cover Departmental costs in the matter.

Mr H. E. Holland said the Labour Party also did not like these irritating little items. He suggested that the Prime Minister should drop this and other similar clauses, ascertain the loss of revenue it would involve, and recompense for that loss by a steeplygraded tax on higher incomes over £IOOO a year, and restoration of the supertax on estates valued at over £20,000.

Mr D. Jones said the Prime Minister might have considered covering Departmental costs by reorganisation, instead of by increasing charges to the public. Mr Forbes said his budgeting had been fairly close. If he had a few thousand up his sleeve he would be able to meet members’ objections, but that was not the case.

The clause was retained on a division, for which Reform members called, by 47 to 26. Mr J. T. Hogan urged the Prime Minister to consider carefully before imposing the increased rate of duty on Bank notes. He pointed out that such a step might have a detrimental effect in decreasing circulation. Mr F. Langstone (Waimarino) complimented the Prime Minister on the inclusion of the clause, and added that it would have been still better had the State decided to issue its own notes. Mr W. D. Stewart (Dunedin) suggested that the increased duty would increase the cost of borrowing to the public. It would add to the costs of producers who sought accommodation by the banks. He did not think the Government, after it had provided a gold reserve, would gain much by taking over the note issue.

Mr Forbes said he was satisfied the convenience afforded the banks by the note issue was such that the increase was a fair one. He did not think there was necessity for anyone to “shed tears over the poor Banks.”

Mr H. E. Holland (Leader of the Labour Party) complained against the time that he said was being wasted on the Bill. There had been an honourable agreement that there should be no waste of time, and Labour members would honour it. If Reform members really wanted to oppose a clause under consideration they could do so by calling for a division. The Leader of the Opposition (Mr Coates) said he wished to reply to Mr Holland’s complaint, especially because there had previously been an unfair reference to the Reform Party. On that occasion, when the Customs Amendment Bill had been before the House in Committee, Reform members had spoken fifty-nine times. Labour members fifty-nine times. Independents twenty-two, and United members thirty-eight. On the present occasion there had been nine Reform and twelve Labour speeches on the short title. He protested against Mr Holland’s attitude of “injured innocence.” Mr D. Jones said nothing could be gained by dividing the House on this clause. He asked the Prime Minister if he w’ould accept an amendment to limit the operation of the clause till no longer than October Ist, 1931. Mr Forbes said' he could not give preferential treatment to one form of taxation, but he assured members that the whole position would be reviewed next year, with a view to ascertaining whether any forms could be remitted. The clause was then passed. When the clause dealing with the increased totalisator tax was under consideration, the Hon. W. Downie Stewart said that he thought the tax on dividends would cause less discouragement to the public than the tax on investments, as the Bill proposed. Mr H. T. Armstrong submitted that bookmakers would gain as a result of the increase. Referring to the fall in totalisator investments at the Grand National meeting, Mr Armstrong said that many people had been under the impression that the new taxation was already in operation. The clause was passed. When the Committee was dealing with the amusement tax. Mr Coates urged that the tax should be removed from 1/6 tickets. He pointed out that there were very few 1/- tickets nowadays, and many poorer people would have to pay 2d tax on 1/6 tickets if it was retained. He contended further that the picture theatre industry was in a shaky position at present. Mr P. Fraser also requested the Government to remove the tax from 1/6 tickets. Mr Forbes said it seemed to have been indicated that it was the wish of the House that there should be no tax on a 1/6 ticket. He was prepared to drop this, but it would be necessary to make up for approximately £40,000 loss in revenue when the Land and Income Tax Bill came down. He mentioned that another one per cent, on income tax would provide the necessary amount. Mr C. A. Wilkinson suggested that the loss of revenue could be made up by increasing the tax on higher priced tickets. This view was endorsed by Mr R. A. Wright, Mr W. D. Lysnar, and Mr Coates. Mr W. D. Stewart said certain areas such as Fanning Island desired to have their own stamp issues. The Government could gain a good deal of revenue in that quarter. The clause was then passed with the amendment relieving 1/6 tickets from taxation. When the clause amending certain provisions of the Highways Act was reached, Mr G. H. R. Mason moved an amendment to the effect that the alterations should apply for only one year. This would enable the position to be reconsidered next year. The highways clauses were still under consideration at 1 a.m. Consideration of Mr Mason’s amendment was deferred. Reform Members divided the House on the proposal that interest should be paid out of the Main Highways Revenue Fund on capital moneys previously transferred from the Public Works Fund. The clause was retained by 43 to 28. There was another division on the next clause providing for payment of subsidies to local authorities in respect to general rates out of the Highways Revenue Fund instead of the Consolidated fund. The clause was retained by 44 to 28. tionment of revenue from the petrol Mr Forbest stated that the apportax must remain undisturbed at present. The 8 per cent, allocation to cities would be restored after March 31 next. (Left Sitting.)