PARLIAMENT.

Timaru Herald, Volume CXXV, Issue 18652, 22 August 1930, Page 10

PARLIAMENT.

LEGISLATIVE COUNCIL. By Telegraph—Press Assoc*' t'on. WELLINGTON, August 21. The Legislative Council met at 3.30 p.m. to-day. Crimes Act. The Crimes Act Amendment Bill was put through the Committee stage and passed. Imperial Conference. Sir John Sinclair moved that the Council record its view that Empire unity be the guiding principle with the coming Imperial Conference. He expressed the hope that nothing would be done at the Conference to imperil the present relationship between the Dominions and the Mother Country. The motion was seconded by Sir James Allen, who said it was becoming increasingly difficult to keep parts of the Empire together. As a result of the 1920 Conference the Dominions had been given extraordinarily wide powers, and New Zealand’s delegates should do everything possible to bring about closer relationship between the various Dominions. The Hon. J. A. Hanan said that today a wider view was being taken of world affairs, but he did not think they had yet reached the stage when they should cease to develop the British Empire. Sir F. D. Bell said there was greater need than most people realised for the motion. Replying, the leader of the Council (Sir T. K. Sidey) said the Government was quite in accord with Sir J. Sinclair’s motion. He realised to the full the importance of its coming Conference. The motion was carried. Defence System. In moving the second reading of the Defence (temporary) Amendment Bln, Sii T .K. Sidey said the main object of the Bill was to effect a saving of £295,000. Sir James Allen moved that the Bill should be read that day six months. If economies were to be effected, he said, that could have been done by reducing the estimates. New Zealand would make a poor return to Great Britain if it scrapped its defence system. It was impossible in tire space of twelve months to decide whether a volunteer system would be a success or not. The debate was adojurned at 5 o’clock, on the motion of the Hon. J. A Hanan, and the Council adjourned until 2.30 to-morrow afternoon.

HOUSE OF REPRESENTATIVES. The House of Representatives met at 2.30. Notice of Bills. Notice was given of intention to introduce the following Bills:—lndustrial Conciliation and Arbitration Act Amendment Bill (Minister of Labour, . Hon. S. G. Smith), Destitute Persons Act Amendment Bill (Mr W. E. Barnard), Child Labour Mr Barnard drew the attention of the Minister of Health to an allegation in a local newspaper concerning the employment of child labour to the detriment of health and education. The Hon. A J. Stallworthy stated that instructions had already been given that increased efforts should be made to bring such an unhappy state to an end. The matter would be investigated. Gift to Parliament. The House adopted a motion placing on record appreciation of the gift to i the New Zealand Parliament by Mr Macgower of mezzatints of all the Prime Ministers of Great Britain. Imperial Conference. The Hon. G. W. Forbes laid on the 1 table statements published yesterday ! concerning the New Zealand delegation to the Imperial Conference. Power Boards Bill. The Electric Power Boards and Supply Authorities Association Bill (Mr J. M. Nash) was introduced and read a first time. Second Readings. The Shearers Apcommodation Act, Amendment Bill (Mr F. L-ngstone) was read a second time forma, and referred to the Labour Bii s Committee. The New Zealand Institute of Architects Act Amendment Bill (.Mr R. A. Wright) was read a second time pro forma, and referred to the Education Committee. The Industrial and Provident Societies Act amendment bill (Mr G. H. R. Mason), and the Shipping and Seamen Act Amendment Bill (Mr Mason) were read a second time pro forma, and referred to the Statutes Revision Committee. Taxing Bills. Urgency was accorded the passage of the Land and Income Tax Amendment and Land and Income Tax Annual Bills. In moving the second reading of the Land and Income Tax Amendment Bill, the Prime Minister, explaining the measure, said one of the principal provisions was the abolition of the supertax on land It had to be recognised that owners of land had been hardest, hit by the fall in the values of primary products, and it was necessary that this relief should be given them. The next clause made cleat the extent to which land was subject to income tax. All estates of an unimproved value exceeding £7500 were assessable. Another clause brougm South African War veterans in line with Great War pensions in granting them exemption from taxation of pensions. Referring to a clause reducing the exemption allowed in respect to income derived from the use of land, the Prime Minister said that formerly this had stood at five per cent, on immoVed value. It was considered, in the case of city buildines, that an allowance of five per cert, was too

because the actual depreciation in the ease of buildines constructed in steel and concrete would not amount

jto more than one half per cent. I annually By fixing the basis on un-

improved instead of improved value, I the exemption became more workable. ; Special provisions with -respect ;'o ! assessment for income tax of insur- ! ance companies whose headquarters were outside New Zealand brought these companies on to the same footing as isevv Zealand institutions. Formerly they had enjoyed an advantage, and their income tax was a long way short of that paid by New Zealand companies. There was ro reason why cvei seas institutions should not contribute at the same rate, j Mr W. D. Stewart said the Bill afforded another instance that the Government was guided by experience, and only by experience detrimental to the taxpayer. The Reform Party had protested against the supertax when the proposal was before the House, ' and the views expressed then by the i Opposition had been sustained by a j Roval Commission appointed to deal with hardships. Referring to other fea- | tures of the Bill, Mr Stewart said the : picposal to assess income tax on returns from land of an unimproved value exceeding £7500 was in line with the modern trend of political. opinion, and was an approach to an ultimate basis of taxation on income alone. Opinion was not yet quite ready for total substitution of income for land tax. The Bill would bring city and country taxpayers on to the same footing. Both would be liable to income tax, both would be liable to land tax, and both would be entitled to five per cent, exemption on the ’ unimproved value of land. The new basis of granting exemption would place the rural taxpayer on a more favourable standing than the city man, because the unimproved value in the country practically amounted to two-thirds of the capital value, while in the city tht> proportion was very much smaller. He pointed out that a change might very well have a detrimental effect on “chain” business. They would have no means of passing the tax on to consumers, and if their businesses suffered there might be a consequent increase in unemployment. Continuing Mr Stewart said it seemed to be the policy of the Government to make maximum taxation for one year the minimum for the following year. The Prime Minister might next year find himself faced with a continued fall in values of produce, and it might not be possible to repeat this year’s programme of increasing taxation. He bad said he had made all the reductions possible in Departmental expenditure, but this claim had not been accepted by outside critics as being sufficiently demonstrated. He asked Mr Forbes to take a long view of the situation. If he were again confronted with a difficult position next year it might be well for him to have his claim that it was impossible to reduce expenditure supported by the finding of independent experts, and for that reason Mr Stewart suggested that it would be wise to set up a commission to investigate expenditure. The Prime Minister would need to be prepared to show that he could do without extra taxation, or that he could effect a saving in spending, failing which he should be able to show that outside experts concurred in the claim that reduction of expenditure was not possible.

The deputy Leader of the Labour Party (Mr M. J. Savage) said Parliament would soon be a thing of the past. They were going to set up an outside inquiry into the running of the civil service. Surely the Government could undertake it. It was the Government’s responsibility. He submitted that in a matter of taxation both farm and city people should be treated alike. The five per cent, allowance on unimproved value instead of our capital value was a step in the right direction. Statistics showed that there were still many incomes capable of bearing a greater degree of taxation. The great bulk of assessable incomes were above the thousand mark, and lie contended that there was a grea f er case for taxing those sources than for raising additional revenue from Customs. The land tax seemed to bt the weakest Haw in the Government’s proposals. He regarded the removal of the special land tax as a retrograde step, and suggested that the super-tax should have been retained on estates above £20,000 unimproved value. That would do no injustice to the small men on the land. The principle of land tax should be to make it easy to use land for its full production, and in the case of big estates the land was not being used to that extent.

Mr C. A. Wilkinson said there was a limit to which taxation could be imposed, and that was being approacheu now. The proposal for special exemption in respect of income derived from the use of land to be based on unimproved value would result in hardship, and would discourage building. He asked the Government to amena the clause to provide a reasonable allowance for depreciation. Mr R. A. Wright referred to the differences between the taxation policies of the three main parties in the House, and said he believed the Reform Party’s policy had been correct. The supertax on land had been introduced with a great flourish of trumpets, but the Government had now found it advisable to abolish it. He congratulated the Prime Minister on having made the change. Mr •vioDt supported the remarks of Mr Stewart with regard to the hardship that might be created by the changed basis for granting five per cent, exemption with respect to land taxation. Mr D. Jones said the Government was apparently hauling down its flag in connection with the supertax on land, and. he was satisfied the Reform Party’s attitude throughout had been the correct one. The House adjourned at 5.30 p.m. The House resumed at 7.30 p.m. Continuing the debate on the second reading of the Land and Income Tax Amendment Bill. Mr Jones said there said there were a number of reasons why Mr Savage’s suggestion that estates of an unimproved value of over £20,000 should be subject to supertax was unfair. For instance, the land might already have been subdivided and offered for sale without result. It might have been subdivided and scld, onlv to fall back a -fin on the taxpayers’ hands. In other cases it might be subject to a long tenn lease, rendering subdivi°ion im r 'n cc, ’ble. j Mr Jones added he believed the time | would eventually come when farmers would have to pay only income tax

It should be recognised that local rates constituted a sumciently heavy burden on land.

Mr J. S. Fletcher said he did not chink there should be any differentiation between the treatment of a man in the country and of a mail in a city, as far as taxation was concerned. He favoured income tax alone as a basis of taxation. He did not think the unimproved value of land should enter into consideration. If a man owned an estate valued at over £7500, but did not make a profit, he should not be taxed, but if a man owned land of an unimproved value of only one thousand, but earned from it an income over £3OO, he should be taxed on the same basis as a man in tne city.

Mr W. D. Lysnar declared that the amount paid in land tax by a farmer should be deducted from his income tax.

Mr J. A. Nash: “Would you do that to a city man too?”

Mr Lysnar: “Certainly not. A city man can pass his land tax on, but a farmer cannot.” He urged the Prime Minister to make such a concession to the man on the land. There would be no real prosperity in this Dominion until the burden on the land was relieved. Mr J. Bitchener also asked the Government to ease the burden on the farmer. He asserted that it was difficult for many men to carry on, but the Government appeared to be showing consideration only for those on Crown lands. Even then it was finding a difficulty in getting Crown lands taken up. Mr A. W. Hall objected to a double tax on farmers, and read a quotation to show that Liberal members had objected to it in the past. Mr J. A. Young said that the effect of the super tax had been to destroy industry and create unemployment. The Hon. J. G. Coates reminded the Government that it had been in office two years, and it had produced two Land and Income Tax Amendment Bills. He wondered what it woiUa produce next year. The consequence of last year's Bill was well known, and it was unfortunate that the present Bill demanded an increase of taxation at a time of depression. A return to confidence was important, and this could be induced by granting some relief from taxation. Mr Coates favoured income tax as the basis of farmers’ taxation. An unfortunate feature connected with land tax vas the almost impossibility for farmers to get a full allowance for improvements, with the result that the unimproved values on which they were taxed were too high. Mr W. H. Field also urged that farmers' taxation should not be too heavy. He said he considered a tax on income was the fairest method, but at a time of stress like the present In had no objection to a land tax so long as it was not allowed to be oppressive. Replying to the debate on the second reading, the Prime Minister said, that it was claimed that the great fight of the Opposition saved the farmers of the country, but 150 u farmers only were affected. The supertax would have been satisfactory if it had not been for the low price of wool and other produce. Continuing, Mr Forbes said there was a difference of opinion as to what exempting should be allowed on ferro-concrete buildings. He had before him a prospectus for a ferro-concrete and steel building, and depreciation of one quarter per cent, was allowed. Mr Hamilton: “That is a life of 400 years.” The Prime Minister: “The amount can be fixed.” Mr Fletcher: “Who is going to fix it, if the Prime Minister and the Government are not?” The Prime Minister: “It will be fixed by experts.” The Bill having been read a second time, was then considered in Committee. Mr A. Harris asked If foreign insurance companies would be taxed on the same basis as the Government Life Insurance office. Mr Forbes rented that that /as so. Mr C. A. Wilkinson gave notice |V-at he would move an amendment to fix depreciation on brick or concrete buildings at three per cent., and on wooden buildings at 44 per cent. Mr W. E. Barnard asked if tnere had been a departure from the Budget regarding taxation of life insurant companies. Mr Forbes said that the rate of depreciation on buildings would be uxeu. The rates mentioned in Mr Wilkinson’s amendment were fairly handsome. and they could not be adopted, because rates could only be fixed after the matter had been carefully gone into. Mr Coates referred to insurance companies, and said that the proposals dirl not place foreign companies on the same footing as the Government Department, because the Government Department did not pay dues which had to be borne by private companies. After objections had been raised by members to the claus - relating to h e insurance companies, the Prime T inistei stated -Jiat he would have ro oblection to discussing the posit-on befoie the Bill came before the legislative Council.

The short title was passed at a 1.45 p.m. When the clause relating to payment of income tax by occupiers of land, the unimproved \alue of which exceeds £7500, was reached, Mr A. Hamilton asked the Prime Minister whether it be possible to increase the minimum to £IO,OOO. Mr Forbes said he could not do so. Mr C. A. Wilkinson asked whether notice would be taken of the wages paid by the father of children. Mr Forbes said this would be done if it cculd be shown that wages were actually paid The clause was passed. When the execution clause came the committee, Mr Wilkinson moved an amendment that the rate of of premises be fixed it not less than four p.c. per annum in the case of wooden buildings, and 24 per cent, in the case of brick or concrete is was defeated by 53 to 14. Mr H. M. Rushworth then moved an amendment providing that the question of assessment of deductions foi improvements should be in the hands of the Minister of Finance intea d of the Commissioner of Taxes. He pointed out that until some principle had been evolved a g sat deal o, ; taxing authority would be required. A T '. rubh". servant should be entrusted with such powers. •'ll Force* stated that, experience had shown the Commissioners of Taxes had always been very reasonable men. Mr Ruhworth remarked that it was at a question of reasonableness or competence. There would be many pioblems arising, and a great deal of authority would have to be delegated. Furthermore, when disputes arose it would be possible to ask the Minister -*f Finance questions on the subject, but it would not be possible to deal in the same way with the Commissioner. Mr A. M. Samuel pointed out that nlacirg the necessity to decide in the hands of the Minister of Finance would a him open to charges of parfcv bias, and similar embarrassments. He that appeals against the Commissioner's rulings could always b»> brought before Parliament. The amendment was lost on the voices, and the original clause was passed. Mr .F Langstone moved that an additional clause be added to the Bill providing that in computing the annual taxable income of any registered comoany under the act of 1908. no exemptions should be allowed on directors’ fees in excess of £2OOO in that company. He pointed out that by payment of very large directors' fees, cornua nies avoided paying a fair share ol income tax. 'Ebe motion was ruled out of order. Mr H~ S. S. Kyle moved to add a clause providing that the mortgage

exemption should be restored from £7500 to £IO,OOO. He contended that under the Bill before the committee a liners would find their taxation burden heavy, and additional exemption on mortgaged estates would provide some protection. The motion was rejected by 38 to 29. Both the Land and Income Tax Amendment Bill, and the Land and Income Tax (annual) Bill were then reported to the House without amendment. Speaking on the third reading of the Amendment Bill, Mr A. M. Samuel expressed appreciation that the Prime Minister had agreed to meet members of the House and representatives of insurance companies to discuss the new clause relating to insurance company taxation. Bill Passed. The Land and Income Tax Bill was read a third time and passed. First Readings. The followng Bills were introduced from the Legislative Council and read a first cime:— Law Practitioners Aet Amendment Bill; New Zealand University Act Amendment Bill, Coroners Act. Amendment Bill, Offenders Probation Act Amendment Bill; Prevention of Crimes (Borstal institutions establishment) Act Amendment Bills. The House rose at 1 a.m. till 2.30 to-day.