LAND AND INCOME TAX BILL

Wanganui Chronicle, Volume 89, Issue 212, 7 September 1945, Page 5

LAND AND INCOME TAX BILL

DISCUSSION IN HOUSE OF REPRESENTATIVES

Parliament Bldgs., Sept. 6. Discussion of the appreciation of land values and the right of the State to appropriate portion of that appreciation by levying land tax, was initiated by Mr. Nash in moving’ the second reading of the Land and Income Tax (Annual) Bill in the House of Representatives this afternoon. The discussion was still proceeding when the House rose at 10.30 p.m.

Mr. Nash said land tax was not levied for the purpose of providing some service, as were local body rates. It was levied to ensure that portion of the appreciation of value was retained for the State.

He thought, the correct thing would b e for the whole of the value that: accrued to the land without the exertion of those occupying or owning land to go to the people as a whole who created it by the general progress of the community. That this was being done was shown by the fact that land tax revenue had gon? down from £987,000 in 1944 to an estimated £930,000 in 1946, mainly due to the cutting up of large estates. Dealing with income lax, Mr. Nash said the present principle of levying it had resulted in people having a greater residue after paying the tax than ever before.

There was considerable Opposition objection to this statement, and Mr. Nash went on to assert that it was correct to say we had never lived better than we were living to-day and (more money had been saved than ever before. Companies were also better off, and, dealing with details of company taxation, he declared that the residue left to companies after all taxation had been paid was more than they ever previously had. In 1934 the residue left, to companies was £7,300,|OOO and £13,100.000 in 1937. I Mr. M. H. Oram (Opp.. Manawatu): How many companies were there? Mr. Nash: I do not know. That is a very pertinent point. I shall check on all details. In 1940 the residue was £12.600,000 and the reason *hat. the total was below that for 1937 was because the companies began to pav Social Security and Nationa’ Security tax in 1940. The figures for 1942-44 were £ll,lOO- - £13,100,000 and £14.700,00 respectively. TAX ON INDIVIDUALS Discussing income tax on individuals, Mr Nash said it was a thoroughly equitable tax. Basic rates had been fixed at half a crown in the pound on the first £lOO of taxable income, rising to a maximum of- 12s in the pound on the last £lOO of men earning. £3800 of taxable income yearly. The basic rates had been fixed in a manner enabling an additional levy to be made if further money was. required or a discount to be granted if less were needed.

Mr. S. G. Holland: It has never reached the point yet where a discount could be given. Mr. Nash: Not yet.

The Minister of Finance emphasised that although the maximum rate of 12s in the pound when the wartime surcharge was added and National and Social Security taxes also included meant a total tax of 18s in the pound at the level of £3BOO, it shoul i be remembered that nobody paid 18s in the pound on their full income. That was merely the rate in the pound on any income earned beyond a given point. Mr. Nash said taxpayers should be considerably assisted by the decentralisation of the Land and Income Tax Department, which had now established fourteen branches. Mr. W. F. Doidge (Opp., Tauranga): Is tiiat a preliminary to instituting the pay-as-you-go system? Mr. Nash: That system was under contemplation, but it was found that in any case it would have been a physical impossibility unless the department. were decentralised. The opening of branch offices must come first, but he did not know when the new system of payment would be instituted. He pointed out, however, that people could even at present pay their tax in advance and receive li per cent, interest or discount on such payments. Mr. W. J. Polson (Opp., Stratford) said that New Zealand had sustained a high tax during the war despite injustices involved for such sections as superannuitants and those on fixed incomes. Companies were labouring under conditions which restricted competition and reduced them to the level of tax collectors. The time had now arisen for some downward variation. The Minister of Finance was in a position to make such adjustments. He now had £9,500,000 in the •‘kitty” and could go into reverse gear.

Mr. Nash: Before you go into re’ verse you have to go into neutral.

Mr. Polson: The Minister of Finance does not know the meaning of the word neutral.

He went on to say that the Government, when it needed the sinews of war, wooed lhe thrifty, and having done that, they attacked them by taxation. If we did not continue to get high prices for the produce we sent overseas we migl.it get into trouble, and high taxation, he contended, was partly responsible for the bottleneck in housing construction. The Govern; ment was no longer entitled to take from the people such an enormous amount of money. Now that the war was over the country was simply crying out for relief. AMENDMENT MOVED.

Mi*. Polson then moved fin amendment that the Bill be read a second time three weeks hence, to enable the Government to review its proposals and give much-needed relief to the people in general, particularly to those responsible for the upbringing, maintenance and education of children. Mr. A. S. Richards (Govt., Roskill) said the test to be applied when considering if taxation was too big a burden was not the amount that was taken from a person but the am -unt he was left with after the taxes had been paid. One indication that the payment of taxes by the farmers was no hardship was the amount they paid in insurance premiums in 1940-41. Th? policy of lhe Government and < f Labour generally, was to lay the burden of tax on those best able to pay. That was just, moral and right in every way. He wondered where taxation revenue would be obtained if relief were given to the wealthy sections of the community, for whom the Opposition was pleading, and if income and land taxes were reduced. A division was then taken on Mr. Polson’s amendment, which was defeated by 37 to 34. Mr. Polson: What a fright, they had! Mr. K. A. Bodkin (Opp., Central Otago) said it was unreasonable to levy the same amount, of taxation in 1945 as was necessary in 1942, when I we were in the depth of war. It was reasonable to ask the Government to review th? whole position to decide whether th? enormous amount of taxation which had been obtained should still be forced upon the community.

The Budget disclosed a substantial amount in the War Expenses Account which could be used for rehabilitation purposes. The onus was on the Government to establish that the same high level of taxation was necessary for peace-time economy as for war. Thousands of people had been receiving substantial sums of overtime. When their earnings reverted, as they must soon do, to the old award rates without £2 to £3 overtime each week, those people would find it impossible to continue paying the high rates of taxation they had met during the war. Every Government except New Zealand seemed to be preparing for a reduction in taxation to enable employers to reabsorb demobilised men into industry. Unless taxation concessions were made it would be the returned servicemen who would suffer because business would be unable to expand sufficiently to find jobs for them. If the Minister of Finance were frank he would admit th? Government dare not. reduce taxation because of the threat of inflation, but. heavy taxation would not remedy the matter if the Government at the same time embarked on an orgy of expenditure. If inflation was to be avoided the Government must make investment in industry sufficiently attractive for those who had capital at their disposal. The tea adjournment was taken at 5.30 p.m. DEPRECIATED CURRENCY

Mr. R. M. Algie (Opp., Remuera), resuming the debate to-night, made the suggestion that if pensioners earned from £5O or £6O to £lOO yearly this amount should be completely tax free. Mr. Nash, interrupting, said the amount mentioned was tax free. Two age beneficiaries could get £221 a year between them and one alone £136 10s a year free of Social Security and National Security taxation. Mr. Algie then went on to say that by increasing the Social Security benefits to £2 the Government was acknowledging the argument that the currency was geing depreciated. Mr. F. Langston? (Govt., Waimarino) said it was amusing as well as confusing to hear the Opposition speak of the “poor old working man” and the “old age pensioner” and of how they would benefit from reduction in taxation. The Opposition wanted to reduce taxation so that more money could be lent tg the Government at 3 per cent. It would be folly for the Government to let go one penny of taxation at present, when it had the responsibility for tremendous undertakings, and now was not the time tor anyone to quibble about taxation.

Mr. T. Clifton Webb (Opp., Kaipara) said Mr. Langstone had declared that the removal of the National Security tax of Is 6d in the pound would benefit those with big incomes, but the fact was that the bulk of the income tax, including security tax, came from those earning not mor® than £7OO a year. Mr. Webb suggested that men returning from active service should be exempted from taxation for a year or two to* enable them to cope better with the heavy expenditure which would face them. Mr. G. H. Nordm oyer, Minister o? Health, said Mr. Algie, answering an interjection from the Government benches, had said he was proud of being a University man. Mr. Nordmeyer said there were University men on both sides of the House, and thi fact that Mr. Algib had been in a University and had occupied a professorial chair din not entitle him to adopt the air of superiorly or supezcilious condescension so frequently seen in the House.

At this stage tnere were several interjections irom the Opposition side to which Mr. A. G. Osborne (Govt., Onehunga) replied “A pack of dingoes. He withdrew this remark at Mr. Speaker’s request.

Mr. Nordmcyer said that Mr. Algie in the House pretended to be concerned about the 010 people, but it was useful to look back into ihe past to see wnat was done for the old people then. Mr. Algie: It’s nothing to do with me. Discussing the Budget estimates, Mr. Nordmcyer said there were many commitments for war purposes still to be met. While it was true that there would be some surplus assets to be disposed of, the Minister of Finance had already allowed for that. Mr. Nordmcyer said provision had to be made lor meeting during the present year all our commitments relating to the war effort. The alternative to reduced taxation this year would be to borrow still further, and that appeared to be the Opposition’s philosophy—pile on to the future a debt which should be met to-day. HITTING BELOW THE BELT Mr. M. H. Oram (Opp., Manawatu) said Mr, Nordmcyer was an adept debater but his attack on Mr. Algie was hitting below the belt. He dealt at length with comparative income taxation in New Zealand. Australia and Groat Britain. We in New Zealand were very much worse off. Married men with families were penalised, and that was one reason why the National Party pressed for reduced taxation.

Mr. 11. E. Combs (Govt., Wellington Suburbs) said-we could not win the war or pay for the aftermath on time payment. If the payment of gratuities were postponed it would be asking the soldier to pay for themselves. Debt, services which w ere provided for in the Budget would cost New Zealand £22,500.000 and could only be paid out of taxation Mr. E. P. Aderman (Opp.. New Plymouth) advocated that g ! ft and stamp duties should be waived where gifts were made for rehabilitat’on purposes. He said representation had been made to the Minister of Finance that any distribution of patriotic, canteen and welfare funds should not be taken into account for taxation purposes, but the Minister’s reply had net been entirely satisfactory. Mr. Aderman , said there was a strong feeling that patriotic funds which had been subscribed for the benefit of servicemen should not in anv way be used to penalise the recipients from the taxation point of view. The debate was interrupted by the adjournment at 10.30 p.m.