LAND AND INCOME TAX

Timaru Herald, Volume CXLII, Issue 20532, 25 September 1936, Page 13

LAND AND INCOME TAX

DEBATE CONTINUED IN HOUSE MONEY FOR PENSIONS By Telegraph—Press Association WELLINGTON, September 24. In the House of Representatives this afternoon, the Minister of Finance (Hon. W. Nash) moved the second reading of the Land and Income Tax (annual) Bill, and the Land and Income Tax Amendment Bill, which were considered together. Regarding the payment of income tax by instalments, Mr Nash said that it was permissive on the part of the Government, by Order-in-Council, to fix several dates on which instalments should be paid. There was nothing permissive as far as the taxpayer- was concerned. He knew that Lhere would be anomalies regarding the graduated land tax, but there was provision in the existing Act to meet such cases. Mr W. J. Polson (Nat., Stratford) said that New Zealand citizens would not permit the sacrifice of all liberty at the bidding of any band of misguided theorists, and most people were beginning to realise it. As far as he could realise, there was no sympathy on the part of the electors for the policy which the House was now discussing. Before the election, the Prime Minister said that further taxation was out of the question. Adjustment of taxation, the Prime Minister had said, must not be interpreted to mean increase in taxaion, which had already been overdone. Where, Mr Polson asked, was lie mandate to place this staggering burden of taxation on the shoulders of the people. He claimed that, it was a breach of the solemn pledges made on the platforms of the Dominion, and he thought, the responsibility lay largely with the Minister of Finance. The House now knew where the money was to come from. It had to come from confiscatory taxation on the thrifty. That was the road, and that was the method. If the Government had disclosed before the election that all its promises meant only a heavy turn in the taxation screw, he wondered if the Labour Party would have had the success it did have on election day.

Mr A. F. Moncur (Lab., Rotorua): It was a good one. Mr Polson: It was a lucky one, but it will not occur again. He went on to say that from an already meagre national income, the Government were going to take double the toll In the way of more payment for workers and record taxation for the Government. If they were giving more payment to the workers, well and good, but if the Government were going to extract further taxes, the effect would be more serious than the Government realised. The Government's policy was really to attempt to take two crops from one field. In some cases taxation would absorb more than half the income. Industry could not function without reward, and he was satisfied the Government knew that, and that the present measures were the means of advancing its common ownership plan. The Labour Party was plunging blindly towards its extraordinary objective, without any consideration for the injustice they would create in doing it. He held that there was no justification for the graduated land tax, either in principle or in theory. The effect of the legislation would be to put thousands of acres of marginal land out of production. He said it was a Trades Hall conceived plan, created by a class for a class, and put into operation without realising what the repercussion would be. The graduated land tax would be especially severe on the sheep farmer. It would be a blow for the farmer and for industry generally when the Bill went on the Statute Book. No Conflict with Principles Mr J. Thorn (Lab., Thames) claimed that nothing in the present legislation conflicted in any way with the principles expounded during the election campaign. He said that if the history of land taxation for the last 14 or 15 years was looked into, it would be seen that the abolition of the graduated land tax was the act of a Government solely determined to help its wealthy land owning friends, and it would also be seen that the estimated revenue from what was now proposed to be the present Bill was considerably less than that collected by way of graduated land taxation in any year between 1922 and 1925 inclusive. In 1931, graduated land tax was abolished. Revenue from land tax then fell, and In 1935 land owners paid £650,000 less than they paid in 1931. No one would deny that as far as land taxation was concerned, the past Governments had treated big land-owners with most generous consideration, but the generosity to their wealthy land owning friends did not stop at abolishing the land tax. In 1924 all incomes derived from land were exempt from the payment of income tax. The Government responsible tried to make it appear that this was done to assist the small working farmer, but actually the only people to benefit were "the well-to-do, and the very rich farmers. It applied only to those receiving incomes in excess of £3OO and only 5536 land owners were bi that fortunate position, so it could be said that practically no small working farmer benefited at all. The taxation he said, had been transferred from the rich to the poorer sections of the community. Should Have Been Broadcast The House resumed at 7.30 p.m. Mr S. G. Holland (Nat. Christchurch North) expressed the opinion that as the legislation was probably the most important of the session, and as £1,300.000 was to be taker, from the people, the debate should have been broadcast. The people had been told over the air where the money was to be spent, and they should have been told where it was to conic from. He claimed that the graduated land tax would bear very unequally and very unfairly, and in some cases would amount to a capital levy. He believed that the re-introduction of the graduated land tax was to break up big units, but at times big units were necessary for economical production. The tax would place finality on capital invested in large concerns. The taxation should be based on the ability of the taxpayer to pay, but that did not apply In this Bill, and it would drive another nail

into the coffin of private enterprise. He said that provision for hardship cases should be made in the Bill. It was placing too much responsibility on the officer to tell him to use his own discretion in such cases. Mr J. G. Barclay (Lab. Marsden) denied that the legislation was an attack on private enterprise. The Government wanted money to pay pensioners and he would defend the tax on any platform. He thought that any cases of hardship could be sifted out by the Commissioner of Taxes. He agreed that the debate might have been broadcast, so that the people in the country would know how money was to be used. Mr Nash had said that the extra taxation was needed to pay the increase in pensions. Cat Out of Bag Sii’ Alfred Ransom said that Mr Barclay had let the cat out of the bag when he said the object of the Government in re-introducing the graduated land tax was not to break up big estates but to secure money to pay pensions. He said that despite the election promises of the Prime Minister that there would be no increase in taxation, the Government’s taxation had now established a record, and amounted to 4/- per head of population increase on the last Government’s taxation proposals of £3 per head of population. He argued that an increase of more than £3,000,000 in revenue should have been quite sufficient to meet improvements in social services without having to raise another £1,500,000 by income and land taxes. He thought that the graduated land tax was particularly unfair in cases of large blocks of land in isolated country. The tax was so unfair in its incidence that it might lead to confiscation.

The Hon. H. T. Armstrong said that it vzas entirely wrong to say that taxation was higher now than it had ever been, especially as far as land and income taxation was concerned. Sir Alfred Ransom: I was speaking of the total taxation. Mr Armstrong said that the total taxation rose or fell with the national income. It was not the amount of taxation a man paid that mattered but. what he had left after paying it, and the present Government would see that he did have something left. Farmers .should not be exempt from all forms of taxation, and surely no one would deny that a man with property of an unimproved value of £5OOO could pay more in the pound than dairy farmers with 50 acres. He said that the taxation in the aggregate might be higher than it had ever been, but when the incomes of the people were considered, it was proportionately less. Road to Socialism Mr W. P. Endcan (Nat. Parnell) said that the Bill was another step on the road to socialism. He said that New

Zealand was still a part of the world, and it was impossible for a country of her size to lead the world. Excessive taxation was one means of destroying the economic structure of a country. The imposition of the land tax disregarded ability to pay. It was wrong in principle, and should not be endorsed. The debate was adjourned and the House rose at 10.25 p.m.