TAXATION MUST REMAIN AT PRESENT LEVEL THIS YEAR

Wanganui Chronicle, Volume 89, Issue 213, 8 September 1945, Page 3

TAXATION MUST REMAIN AT PRESENT LEVEL THIS YEAR

DEBATE ON BILL IN THE HOUSE Debate on the Land anA Income Tax (Annual) Bill was continued in the House of Representatives yesterday morning and again in the afternoon. The Bill reached the committee stages after the Minister of Finance (Mr. Nash) had replied to the second reading debate, defending the Government’s policy of maintaining taxation at its present level this year with the object of reducing it next year. Among the speakers during the day was the Hon. Adam Hamilton (Opp., Wallace), who has not been heard very often in the usual run of debates. The disbanding of the War Cabinet no doubt affords him greater freedom for criticism of policy directed not to win a war which has already been won, but to cover the period of transition from war to peace, a policy which he himself has had no hand in making. Another speaker was Mrs. Hilda Ross (Opp., Hamilton), who told the Government tljat mothers, children and houses were more important to New Zealand than taxation. Mr. Nash, in the course of his repjy to the debate, said that the payment for war could not be met wholly out of taxing those people who stayed at home, so the Government had had to borrow, and the borrowing was done, in the main, from those who stayed at home while others went to fight. Press Association reports of the debate follow:

Mr. W. S. Goosman (Opp.. Waikato), resuming the debate this morning, said that the National Party advocated a reduction in the rate of taxation, and asserted that if something was not put back into the land nothing could be taken out. The Governmena was farming the people for taxes. Private enterprise required a tax structure that encouraged incentive iand thrift. All the money which the Government had distributed came out of industry, for which private enterprise provided the money. The Minister of Finance had said that no more taxation could be derived from the top, so he, therefore, went to the bottom- If the National Security tax were remitted the lowerpaid people, with incomes under £5OO a year, would be relieved to the extent of £l4 000,000, he said. If costs in primary industries were not kept,down we would be unable to export our l goods. The primary industries were the foundation of our economy, and costs must be kept in proportion. The Minister of Social Security, Mr. Parry, said the Government objected to and condemned people who bought land in war time while soldiers were away fighting, and who put sharemilkers on that land. If private enterprise were allowed unfettered control there would be an orgv of land speculation, preventing the settlement of soldiers. SALES TAX JUSTIFIED. Mr. Parry said the retention and increase in the sales tax had been justified by the huge war expenditure. He asked why the Government, contrary to its’promises before it took office did not abolish the sales tax. Mr. Parry said it was becouse of the extraordinary position in which the Government found itself, with 60,000 unemployed. When the Government increased the sales tax it also altered its incidence, and gave greater relief to those buying the necessities of life. The sales tax to-day was mostly on luxuries.

Mr. A. Hamilton (Opp., Wallace) said the Opposition was not objecting to taxation because it was taxation, hut because of the amount imposed, and who paid it. Government opinions on taxation and capital were really alarming. Britain was the leading l capitalist country in the world, yet the [New Zealand Government was conI rlemning that system. He sought a clear definition of a capitalist. The ; Government apparently had in its mind that a man became a capitalist when he had a home and £5OO in the bank.

Mr Hamilton said the present company tax was, in a sense, unfair. He did not object to such taxation in war time, but expressed the opinion that if the companies were relieved now of a portion of the taxation burden they could reduce the costs of the articles they produced. Opposition voices: They would do it.

Mr Hamilton said that the country in the future that kept its costs and taxation down would get a large share of world trade. The Government had more or less expressed the opinion that they could spend the people s money better than the individual. The State, he considered should be more like a referee, and not get into the business game itself. COMPANIES A*IE INDIVIDUALS. Mr. C. M. Bowden (Opp., Wellington North) said Government members, when speaking of companies, had a tendency to regard them as some great octopus. He reminded the Government that the companies consisted of individuals, just as the State was an aggregation of individuals. He considered that companies should have more than their liquid assets left to them to allow them to assist in maintaining the standard of living in New Zealand.

There were four directions in which the Government could afford some relief. Firstly, relieving the family man of the National Security tax; secondly, some reduction in the thirtythree and a third per cent, surcharge, particularly on smaller incomes; thirdly, the removal of the penal rate on unearned income, which, as operating at present, discouraged thrift; fourth, the removal of anomalies in the rates of taxation.

Mr. Bowden said the Minister of Finance was collecting as many millions as he could this year, with the idea of ending up next year with a surplus of £40,000,000 to £50.000,000 — with the window full. Mr. Bowden , said he for one, did not believe the figures of the requirements stated in the amended Budget. The people of New Zealand realised it was not necesary for these amounts to be extracted rom them in order that a full rehabiitation programme could be carried □ut. Taxation could be reduced without prejudice to the returning service-

men. | Mr. T. H. McCombs (Govt., Lyttelton) said companies had b?en able to do well despite the high taxation, j Share prices had risen 24.9 per cent, from 193 S to 1945. The general investing public would not have been preoared to raise their bids that much i* ; the Government was crushing industry. The Government had stimulated I • industry by increasing purchasing i power and also by its housing policy. | The Government was planning to give , further scientific research aid to in- j dustry in New Zealand. The debate was interrupted by the luncheon adjournment at 1 p.m. When the debate was resumed in the afternoon Mrs. Hilda Ross (Opp, Hamilton) said that failure to reduce taxation was disappointing to the women of the country, especially in view of the high clothing prices. Taxation fell most, heavPv on larger families. Unless mothers could be assured of more comforts amenities and more goods r or the money their husbands earned, there was very little encouragement for larger families. _ If i the sale* tax was reduced on building I materials would be more hom<?s ' f nr the peonle. Mothers, children and homes were more important to the country than taxation. She, urged the Government to give more consideration to matters affecting the welfare of women and children when taxes were imposed.

Mr. P. Carr (Govt., Auckland West) pointed out that a reduction now in taxation would mean that people would receive the benefit and the soldier would have to carry the burden. He considered that those who sought a tax reduction had done least to help the war effort. MINISTER’S REPLY.

The Minister of Finance, Mr. Nash replying to the debate, said that to the extent we maintained taxation as opposed to borrowing, the returned servicemen must benefit. Unfortunately, within the existing economic order it was impossible to meet the whole of the costs of the war, internal and external, from taxation of thosS who stayed at home. Materially, the war had to be paid for during its currency, and were that possible financially he would favour it. However, some borrowing was inevitable, and we borrowed, in the main from those who stayed behind while others went to fight. It was wrong to borrow on the future, because that meant that men who had been away for years, fighting, would come back and have to pay for the shots they had protect those at home. ...To avoid that we were taxed to the utmost thereby reducing the burden on the servicemen when they returned. ...He would like to free the returned men from taxation for a period after their return, were it practicable, but it could not be done. To advocate that step —as the Opposition had done—while at the same time voting against the present level of taxation, which minimised the burden to fall on the returned men in future years, was inconsistent. Mr. Nash said the load carried by this country after the last war was unfairly heavy because of the money that was borrowed, at high rates of Interest. All overseas commitments were met by borrowing overseas, which meant that the men who came back from the war had. to send away a proportion of eacn year’s production to pay for it. That had not been allowed' to happen this time as far as overseas expenditure was concerned. ELDERLY PERSONS’ INCOME.

Discussing points which had been raised concerning the income ot elderly persons. Mr. Nash said that if a person, during his lifetime, saved money and set it aside for the later years of his life, and, to that extent saved the State, it was unfair that he should get less than he would have received had he not saved the money. There was now a provision that such a person would not be put in a position of getting less out of his savings than would have been available to him from social security. It must be remembered that social security was introduced to meet the disabilities of life, which the average person could not cope with out of his own resources. That was why there was a i means test. To make the benefits uniiversal would require £31,000,000. and ■those advocating a reduction of taxation could not at the same time advocate making the benefits universal. Mr. Nash said he agreed that depreciation of currency was false taxation. He thought we had to find some way of controlling currency. It was correct that the Government had maintained prices of essential commodities at low levels. Was it best economy to I let the price of bread soar to a level I where it would hit. the family man, or . to keep the price of bread on an even i keel, and tax the rest of the commun|ity out of its surpluses. New Zealand I had the lowest cost of living of any I English-speaking country. Expendiiture out oc taxation for the purpose ot [maintaining prices as nearly as possible at the 1939 level was money well spent, he thought. The total cost of isubsidies was between £3,000,000 and £4,000,000, but he could not state the [precise amount at the moment. ] Mr. Nash said if taxation were to be [reduced in the income tax field it I would have to be increased in some l other field, or else we must borrow , more money, which would be an imI prudent policy. We could not meet ' commitments falling due this year un- | til we raised the amount of tax for , which the Bill provided. j Mr. R. M. Algie (Opp. Remuera): The Minister will have just the right amount. Mr. Nash: Perhaps just a little more, but we must have sufficient money for meeting the costs of demobilisation. Mr. Nash said there would be a reduction in taxation next year. I An Opposition voice: You bet! Mr. Nash pointed out that there had been no Increase in taxation since 1942.

i When the House went into the committee stages Mr. Algie moved an .amendment to insert 'an additional clause enabling persons contributing to national savings to pay income tax ion such contributions annually or I when a principal sum was repaid. The amendment limited the option to an amount not exceeding £lOO yearly. I The Chairman of Committees. Mr. McKeen, ruled that such a clause was foreign to an annual taxing Bill. but. ; said it could he moved when the Land I and Income Tax Amendment Bill was