PETROL TAX.

Press, Volume LXIII, Issue 19154, 10 November 1927, Page 11

PETROL TAX.

MONEY FOR ROADS.

IS N.Z. GOING TOO FAST?

DEBATE ON THE BILL

(FRESS ASSOCIATION TELXOBAM.)

WELLINGTON, November 9,

The Motor Spirit Taxation Bill, providing for the imposition of a Customs duty of 4d per gallon on motor fuels, and for the allocation of tho revenue derived from the tax, was before the House of Representatives to-day. In moving the second reading of the Bill the Hon. Mr Williams, Minister for Public Works, spoke of the reasons justifying tho introduction of the Bill. He also placed on record the increase in the goneral rates for roading purposes in counties between 1914 and 1926. The figure in the former year was £666,477, whereas in 1926 it amounted to £1,501,145. Regarding the allocation of tho revenue to be derived from the petrol tax, ho said it might appear a small amount that was going to be spent outside the cities. But ho said that after listening to requests for better facilities, and to statements as to the inability of country settlers to meet the burden of local charges, he would have been failing in his duty had he not pointed out to the Government the position, and the necessity for a more equitable distribution of taxation. It would depend upon the revenue realised how far the scheme proposed by the Government could be proceeded with. It would not be safe to embark on a too-elaborate scheme until it was known how the money was coming in. All users of petrol, except users of the road 3, would be entitled to claim exemption. Objection to Exemptions.

Mr Wilford (Hutt) said he would have thought that the first to protest against this changed policy of the Government would be the large oil importing companies, but, strange to say, this did not seem to have occurred. One of the most interesting features in connexion with the oil industry was the system of bulk distribution, which was as good in New Zealand as in any part of California. That bulk distribution had reduced the price of petrol, and, so far as he could see, the Government was putting on to the people by way of taxation the amount which the oil companies recently took off. The trouble with this Bill was the number of exemptions it contained. Personally he would have no exemptions, and would have, first a tax of 2d per gallon on petrol, which would be sufficient to maintain our roads; for the rest he would impose a tyre tax. If these two taxes did not realise quite as much as the 4d per gallon proposed by the Minister, it would at least bo a just tax, and would be paid by those who used the roads. He believed the increased price of petrol would curtail development, and that would defeat the purpose of the tax, which would bo unfortunate. So far as the maintenance of roads was concerned, if this new system of maintaining roads was to be substituted for the old system of voting money on the Public Works Estimates for division among the counties, then he thought it was unfairly taxing one section of the community to raise money which should be raised from the whole of the community. He advised to withdraw this petrol tax of 4d per gallon, impose a tax of 2d per gallon, supplemented by a tyre tax, and instead of trying to construct main highways at breakneck speed, to go slower, and spread the expenditure over a longer period of years. The Hon. Mr Buddo (Kaiapoi) also favoured reduction of the petrol tax to 2d per gallon. The amount to be raised under the Bill was 50 per cent, greater than it should be.

Mr Hudson (Motueka) asked the Minister if he would consider the advisableness and justice of the Govern l. jut taking over full responsibility for the maintenance of main highways, • hieh at present imposed a heavy burden on settlers, who got comparatively little benefit from these roads.

Mr Parry (Auckland Central) ex pressed the opinion that while a vigorous road improvement policy was need ed there must be a limit to taxation, which in this case was an inequitable imposition on motorists, and would be difficult to collect. This petrol tax of fourpence, plus the existing tyre tax, and the registration fee, was too much. Twopence on petrol, without exemptions, should suffice to meet requirements. The additional tax would mean that many .motorists would have to abandon their vehicles, and as a result the income from the tax would fall far short of expectations. The Users of the Roads. The Minister for Lands (Mr McLeod) said the first question to be asked was who was making the greatest demands for road improvement. The answer was the users of motor-cars, including backblocks people. Good roads meant a saving to motorists, and" consequently they should not feel the proposed tax as a burden, since with i*; the cost of petrol would b« no more than it was, say, three years ago. Though roads had been improved, the motorists were still calling for further improvements throughout the country. This work on the highways had started with a large accumulation of funds, and had progressed to such an extent that last year expendi ture exceeded revenue by a quarter of a million sterling. The Bill was an :.ttempt to equalise the burden of taxation over all motor users of roads. The general opinion to-day was that the pro posals did not go far enough, so far as country people were concerned. With the enormous increase in motors in this country, it was manifest that rural roads could not possibly stand up to the stress of additional traffic, and local ratepayers were faced with an alarming amount of local body taxation. To try to keep the roads in repair the Government was now making an attempt to provide for the renewal of roads as they became worn out. No one desired to see the general condition of our highways go back, and therefore additional funds were necessary to maintain them, and at the same time to extend better roads.

Mr Sullivan (Avon) considered it to be most difficult to collect the tax owing tj the exemptions, since farmers, for instance, mostly had motor-cara as well as milking and other machinery, and they would find it hard to define the proportions used in cars and for other purposes. Mr Sullivan thought the tax was more than was warranted. The country, like the individual, should not ndertake a greater burden than it could afford. The Dominion must ask itself if it could afford the loading policy laid down. He considered that they should hasten slowly, and engage in highways extension and improvement only so far as they could afford to do so. Probably 50 per cent, of the tax would he collected from city users of motors, and they would get a very much smaller proportion in return for city road maintenance. The restriction on municipalities regarding expenditure epi

highways within their boundaries ought '■ be modified. Sir George Hunter (Waipawa) said the greatest need of tho hour was restriction on the use of motors in this country, and greater care should be exercised in the issue of licenses to drivers of motor vehicles in view of the number of accidents occurring. In Defence of Tax. Mr E. P. Lee (Oamaru) said it was refreshing to find the member i'or Avon showing bo much concern for the country's ability to bear the burden of expenditure. That was a chango from the Labour point of view when asking in the past for various social amenities Roads were needed —there waß no doubt, about that—and therefore money must come from somewhere to provide them. There was no suggestion that expenditure on highways was being undertaken rongly, but there seemed to be a dis position on the party of city representatives to try to shelve an undue share of the cost of road maintenance on to the country taxpayers. The most equitable tax was one like the petrol tax, which fell on those who used the roads, and was in a measure self imposed. If a motor owner found the burden too greats he could reduce his use of his car.

Mr Savage (Auckland West) said thp fundamental principle of this system of taxation was wrong, because it was too easily passed on. Big firms could afford to pay this tax, and would do sn for the purpose of running the small man off the road, and onco having got him off the road, the public would be made to pay. If 4d per gallon was to be imposed, then some of the other taxes on motorists should be removed. Failing that, the petrol tax should bo reduced by half, and if more money was required there should be further increases on big incomes.

"Monstrous and Iniquitous." Sir Joseph Ward (Invercargill) argued that £750,000 per year, the amount to be raised from motor-owners under this tax, was altogether too great. It was equivalent to the annual interest on a loan of fifteen millions, and what Government that proposed to raise a loan of fifteen millions for expenditure on roads could stand. There was a current suspicion that this taxation was being levied to kill competition with the railways. He personally did not share that opinion, but it was putting taxation on motorists on a betterment principle. This had never been done for the railways. Why should it be done against the motorists T Under these proposals they were drawing out of the motorists of New Zealand more than the farmers from the North Cape l to Bluff were paying by way of land" tax. It would ruin many owners of garages, and it was a monstrous and iniquitous proposal. Prime Minister In Reply. The Prime Minister said that if the Government attempted to borrow the money necessary to keep up 9400 miles of road to the present standard, they would be accused on all hands of excessive borrowing. This proposal avoided borrowing, and put the burden on the shoulders of those who used the roads. After all this taxation had been raised froia motorists, there still remained about one million of money required for the upkeep of roads, which would have to bo found by the ratepayers. This was tax on the users of roads, and it was scientific, because the weight of a machine indicated h,ow much petrol would be used, just as it was revealed by the speed at which the machine travelled. To repeal the tyre and other taxes would be unsound, and would mean driving the costs of maintenance back on to the land and on to the primary producer. There was land now which could not be occupied if it was charged with accumulated rates, and it was their duty to see that our primary industries were not ruined by excessive costs. If fewer motor-cars were brought into the country, it would do no one any harm, but excessive costs forced back on to the land and the primary producer might endanger any one of our primary industries. The petrol tax might be heavy, but it was at least equitable. He felt certain motorists would pay it, and pay it willingly, provided they got the results. Mr Ransom (Pahiatua) said the Minister for Public Works had stated that the main highways could not be maintained on the revenue available. He wanted an explanation of how the enormous expenditure had come about. Under the Main Highways Board the expenditure, if not ahead of the times, was far beyond the power of the people to bear. He had always favoured a petrol tax, but always with a stipulation that all other taxes on motorists, which were so unfair, should disappear-

The Bill was read a second time. The House went into Committee on the Bill and passed the 6hort title. Progess was then reported, and the ouse rose at 2 a.m.