LAND AND INCOME TAX BILL.

Dominion, Volume 6, Issue 1562, 4 October 1912, Page 6

LAND AND INCOME TAX BILL.

DEBATE ON SECOND READING. THE GRADUATED TAX. The lion. J. ALLEN (Minister for Finance) moved the second reading of the Land Tax and Income Tax Bill, explaining that it was the annual (axing Bill. It was an amende;! Hill this year, but the proposals it contained had previously been discussed in the Land and Income Assessment Bill. On tho advice of the committee, ho had taken them out of that Bill, and introduced a separate Bill. Mr. G. W. FORBES fllurunui) said the proposed increase in the graduated land tax -would not lnive Ihe effect the country desired in breaking down land monopoly, nnd thnt. the incWM! would bo nullified u ly- the neiv basis of valuation, Eβ ac.

dared that the increase of tho graduated tax was no plunk of tho Guvonimcnt party when in Opposition, but was hastily added to inept tho exigencies of tho. political situation. If the Into Government, had remained in power there would certainly have been (i substantial increase, in the graduated land tax. The present Government simply had to bring down the Bill to ;ccuro the, votes of tho't! 'who had joined them sinee tho election. -As u bit of bluff the Government had <lmii< very well in parading this Bill, but it would not in fact increase, tho tax. J I was tho same old Conservative party, walking about in Liberal clothesthe hands of Esau, but (he voice of .lacob. Tie declared again that there was nothing in tho Bill. A Challenge, .Mr. Allen: I chaliengo you to volo against tho <x>cond reading if there is nothing in it. Mr. Forbes: I will vote for any increa=e in the taxation of large estates. (Cries of "Oil!" ami laughter.) Ho would not vote against his principles. .Mr. T. M. WILFOHI) (Hutt) paid 'he Bill was a clever confidence trick, Hid it was going to make every member on the Opposition side of the House vote for it. (Laughter.) Arid tho reason was localise it provided for an increase in gra.luitcd land tax. He congratulated the Minister on the slim lies of his move. No member of the House could vote against the exemption of improvements as tho Valuation Bill proposed, and no member of the House could vote against the graduated land tax; but tho effect of the two Tolls together would not have the desir-ul effect of increasing on lrtud. By lowering the unimproved value the taxable asset would lie reduced, and the slight increase in the graduated land tax w.ould not compensate for the reduced valuation. The Bill was an excellent Bill for the big landlord. Bill Supported By Both Sides, Mr. G. LAURENSON (Lyttelton) said thnt not one member of tho Opposition would vote against the proposal in this Bill to increase the graduated land tux. At tho same time, they knew in their heart of hearts thnt the whole thing was a ruse and a blank. The exemptions' granted in tho Valuation of Land Bill would nullify auy increase made by tho present Bill. Mr. Anderson: Do you believe in taxing improvements ? Mr. Laurensou said that tho party to which tho hon. gentleman" belonged had taxed improvements during the term of the Atkinson Government. It was the Liberal party that had put an end to this system. He assured Government members yhat tho Opposition would not oppose this Bill. A Government member: You daren't do it!

Mr. Laiirenson predicted that the Bill would not break up largo estates, and would not promote settlement. Mr. 15. NEWMAN (Kangitikei) said that the leaders of the Opposition in front, middle, and rear, who had spoken upon the Bill, all agreed upon one pointthat they would follow Mr. Massey in voting on this Bill. The fact was that tho Opposition were sore, at the fact that the Government had tackled this question of graduated taxation., They had expected the. Government to shirk the question and to shuffle, and were disappointed because it had not done so. The taxation proposed 1111(101' the Bill was. reasonable. Estates in Hawke's Bay were being cut up at a fair rate, and on the West Coast of tho North Island there was hardly a big property left. He was wholly in favour of small settlement, but (here was no need to impose undue hardship 'on those who held land. The gentlemen on the other side who had complained that the Bill was not sufficiently drastic had no sympathy with pioneer settlers. It would afford him great satisfaction to see members of the Opposition trooping into the lobby with, the Prime Minister in voting upon this Bill. Sir Joseph WAJiD (Awarua) said that the Opposition had to thank the Government for adopting a proposal advanced in the Governor's Sueeeh to Parliament in February last. He could not understand tho member for Hangittkei taunting the Opposition because it supported the Bill. Personally he approved of the policy ot exempting improvements. The eft'oct of tho Bill before, the House wouUl not be known for two, years. It would have, liceii incomparably better to iinnose a heavier rato to come into operation tl.'ice years hence, and in tho meantime to give the landowners fair notice. Every sensible landowner in the country recognised that public opinion demanded tho cnttins up of large estates. Public opinion had compelled the party now in office to como right round on the question of the graduated land tax. The time had arrived in New Zealniid when a distinction should bo drawn, in taking incomes, between incomes derived from personal exertion's and those derived from property handed down by bequest. In addition the n:an with a'largo family should be taxed less heavily than tho bachelor or the man with one or two children. He very heartily supported the Bill. .

A Sharp Exchange. Mr. D. BUICK (Palmerston) said ho had not proposed to speak on 'lo Bill, because he recognised very early I'iat it was "oiuz on the Statute Book. This had been made doubly clear by the members of the other side of the House, 'the member for Hurunui had been very c'.isl rustful in declaring that the Bill was a fraud, but he had said he still wruld support it. He maintained that tho .£30,000 estates would bear a ; ot more taxation than they, had hitherto. Certainly if the estates wero highly improved they would escape α-xrcnt measure of taxation, but after all it was the.holder of tho big unimproved osta*e, men Jißo tho member for Avon, that outfit to bo taxed. He was speaking of his own farm, stating that Hie improvements on it had cost a great deal more than the (novornnieavt allowed. ' Mr. R. W. Smith: Will you take tho Government valuation for it !'ow? Mr Buick: What have you got to do with that? It's my home. Mr. Buick retorted with some heat, and Ins outburst was the signal for a chorus of loud laughter from tho Opposition party. He asked why ho should have to go out into tiio bush' now and make another homo for himself. "Why," ho said vehemently to Mr. Smith, "should a creature like you be allowed "■ Mr. Speaker: Order. Tho honourable member must withdraw that remark. Mr. Buick: He's not a creature. Mr. Speaker: Will tho honourable member resume his seat. Yon must withdraw the remark.' Mr. Buick: I withdraw the remark absolutely. If I hadn't be?n interfered with I would not have said it. Mr. Smith: It was a soro spot, wasn't

Mr. Speaker: Order. The honourable member must withdraw that remark. Mr. Smith: 1 withdraw it. Mr. Buick was allowed to .finish his speech without interruption. Mr. .T. PAYNE (Grey Lynn) said that when the Labour party camo into power, which would bo in three years, Hiej ■would introduce a Graduated Income Tax Bill which would go on and and on, and t-top nowhere, without any exemption. Then the small farmer would find that his Iruo friends worn in tho Labour part>. ■ Mr. Russell. Explains. Mr. G. W. RUSSELL (Avon) said thnt ho had been interested to notieo llio manifestations of "amused joy" from tho Government party, because members on tlie opposito isido of the House vero supporting this Bill. But a* a matter of fact it was tho policy of the Liberal party and not the policy of the Opposition. (Laughter.) It would not be lonS before tho Government party would l>3 in Opposition again. He said that the proposal eiiilKidied in this Bill wos reijlj the proposal of previous Government, and it was not to bo expected that the friends of those Governments would oppose them. But he challenged the Prime Minister to say when it became part of liis policy to increase tho graduated taxation on land. Tho Priine Minister had many times declared himself in favour of reducing taxation in order to bring down tho cost of living, but what had he done to reduce the heavy Customs duties? Mr. Fisher: Who put them on? Mr. Itussell declared that; the Government hod proposed to reduce, the taxation on land by Ihe new valuation scheme. He ri-ferrcd to M - . - . Bilick's farm, as an i.xumple, and he IHpivod it was a mode! example of what coul.l be done with 300 nerc-s. The improvements allowed by the valuers amounted to ,CG. and Mr. Buick hnd 'aid in effect that he would be prepared to claim ,C2I an acre on account nf tfieni. Mr. Bell: Thnt.'s what they cost. Hi - , Kusjcll wii tint if .Jaq . ijnj?jp.v&j

ments wciv to jump in tho ratio of .£6 to £it, or anything like it, there ivoulil be a big slump in the land tax this year. The Hon. D. BUDDU (Kaiapoi) said tha Bill was not a new one. The proposals had all been mado for ,the Govornnient, and he could not recollect n single instance of a supporter, of tho Government parly having advocated it at tho election. He did not think tli« land tax ■legislation of the Government would increase Uio land tax. "Property Scenery." , Mr. L. M. ISITT (Christchurch North) was the next speaker. "1 shall lmve to vote lor this wretched measure," ho said "and, therefore, for my own reputation's Mike, I want to put on record why I vote for it. I vote for it because it professes to be a measure to increase the graduated land tax, but I despise it because 1 look upon it as a Tory subterfuge. . . . We are anxious that this measure should pass because wo are sure that there is no other one thing that will so exhibit and display the hollow pretence of tho Government when they Ull the people thet they are anxious to break up the big estates, and put the peoplo on the land.'" He said tho cry of sympathy for the pioneers was worn out; the men who had sufl'ored hardships had long ago gone to their reward. Hr. E. Newman: I am one of- tliom myself. Mr. Isitt: I didn't know the honourable f;entlcman was a relic. I must fay he ooks a very juvenile pioneer. Mr. Ncivmau: I have led a virtuous life. (Laughter.) Mr. Isitt said that one proof that the Bill would do no good was that there had been not one squeak from Thk Dominion nbout -the measure. The paper recognised that the Bill would have no effect—that it was merely "so much property scenery." Mr. Massey: And you are going to vote for it! . Mr. Isitt said he proposed to vote for it because it would. show the hollownese of tho Government's reform proposals. Mr. H. G. ELL (Christchurch South) did not agree with the Government's land tax proposals because they would reduce taxation on land. Mr. Allon: Do you want it increasedP Mr. Ell: I don't want it reduced. Mr. Allen: Do you want it increased? That's a fair question. Mr. Ell: Ye?, 1 do.

Mr! Allen: Very well. Tell that to the small farmer. Mr. Ell went on to say that if the Government wanted to. reduce taxation they should have reduced the Customs duties first. Ho would vote for the Bill, liecause the Bill liy itself would increase the .eradunted land tax, but token in conjunction- with another Bill it would reduce land taxation. Mr. Allen: Vote against the other Bill, then. An lion, .member: Vote against them both. Mr. Ell said he would move to amend them in committee. Ho believed in a land tax, but he was not a siugle-taxor. He would reduce the burden on ■ the email farmer, but he would do it by a reduction of Customs duties. There ought to be an increment tax, so that when lands in towns were sold at very largely increased community-created values, a great portion of tho increase ought to go to the State. He taunted 'tho Leader of the Government with not having always been in favour of the graduated land tax. "Liberal" Failures. Tlie Hon. F. 51. B. FISHER (Minister for Marine) ;said that tho member for Christchurch South had accused Mr. Massey of having turned a somersault, biit Mr. Ell hatl himself turned tho most complete somersault on record. Ho had taid onco in tho House: "I would sweep away the land tax, and I.' would institute a progressive stamp duty upon cheques." Mr. J[a«-:ey: Who said that? Mr. Ell: That was in 1900, I think. Mr. Fisher: Tt was in 11)03, not -very far from tho date of the speech of tho Prime Minister's which you quoted. Mr. Mnsscy: That's a dreadfui somersault. Mr. Ell was now poring over n'volume of Hansard, and he said more than onco that he had never made the statement.

Mr. Fisher: Then tho honourable gentleman has allowed it to go on record in Hansard that he did make that statement. Ho added that Mr. Massey had in 1000, in the' very next sentence to the passage which Mr. Ell had quoted, suggested that the. graduated land tiix might be tried as an expedient; to burst up large estates. The Opposition party claimed to ho radical, and to-be allied with tho Labour party, but after they had been in power for 21 years with a colossal majority, there were in New Zealand 200 estates of over .£IO,OOO in value. If ever there was a party that protected monopoly it was the party, the remnants of which were sitting opposite. If tho lato Government had besn in power for 42 years they would not have wiped out the large estates at the rato they were going. "With your colossal majority," he said, "and your huge party, with complete control of both Houses, you failed to carry -out your responsibilities to the people of this couutiry, and if we fail as you fail, we d«eenre to ba where you are.now, aud Jtu won't deserve to be anywhere. . . . l'ou fay this Bill is a fake, a fraud, and a sham.

Opposition members: Yes; Yes. Mr. Fisher: Then I hope we will call for a division, and make you vote for a fake, a fraud, and a sham. Then you will be fakes, and frauds, and shams yourselves." If honourable members of the Opposition, he continued, wero going ■to voto for the Bill in order to c-mbarass the Government, then they wero politicians of the worst form the State could know. He quoted from tlio-schedule of tho Bill to show that, the gradations of land tax would result in very considerable increases of taxation. An Unfortunate Omission. Mr. Ell rose (o make a personal explanntion. He said that the word "exemption" had been omitted after "land tax" in the passage quoted from his speech. Ho had spoken the word, but it had been omitted. Mr. Fisher read the paragraph in Hansard, and pointed out that unfortunately tho word exemption had been omitted twice. Ministers Attacked, Mr. G. WITTY (Riccarton) said that tho Minister for Marine had made an unwarranted attack on tho member for Christchurch North, but if there was a member of the House who had established a reputation as a political acrobat it was the Honourable the Minister for Marine. Ho had crawled into position in a freehold Government, though he had said that as a. leaseholder ho would not do .so. He would do tiny mortal thing to get a portion. But now he was a member if a party which had coino into power on tho votes of "rats." Mr. Witty challenged the Postmaster-General to say that he, bad on any previous occasion voted in favour of increasing the graduated i.md tax.

Mr. J. ROBERTSON (Olaki), referring in n statement by Mr. G. \V. Russell, said that Hie Labour parly maintained mi absolute independence in this country und in Hie House. As n Labour representative he regretted that lie had not been able on. mora occasions to follow the Government parly into the lobby, because there hud been a. singular de-irlh cf legislation brought down by thq Government to benefit the working masses cf Uiis country. Mr. Itnberison entered into a detailed discussion of tlio principles of taxation maintaining that socially created values should bo taxed. Mr. R. M'CALLUM (Wairau) said that he had waited in vain to hoar a word snoken in favour of large landowners. In his opinion owners of large areas of .high country such as existed in Marlboroiigh were entitled to exemption from increased taxation. MINISTER 'lN REPLY. THE HYDRA-HEADED OPPOSITION. The Hon. Jus. ALLEN, speaking in reply, said that much- time had been wasted by the Opposition. Owing to the nature of the organisation of the Opposition there was likely to bo a repetition of the extreme waste of time which had been experienced on several occasions. The Opposition had an hydra-headed leadership. Mr. Italian: You had it at one time! Mr. Allen said (hat they till competed for the leadership. Mr. Hunan: You competed at one time! Mr. Allen said that «s a result of the competition the other side were nil ,it loggerheads. He hopcil that this would very soon be cured. He wanted to remove one imnrfeMon from the minds of ifco JsmLw of Uu .other si.do, £jr.J_osjph_

Ward had said that the only increase in taxation under tlio Bill was thnt due to bringing down' the twenty-five per cent, increase from estates of .£-40,000 to tbuso oi : A'uO.CJUi Tlio member for Awaruu knew, or should know, that there was also an increase owing to the rate, and that tlio Bill imposed a double increaso of taxation. He wanted to answer an accutalion thnt this was all bluff and noifconsL', and that the Bill made no real increase in taxation. The hydra-headed Opposition had had their opportunity of framing a Bill on this very question of land and income assessment and had done. so. Tlio Bill they had funned was in his hands. Ho was not sure whether they had agreed to it in Cabinet or not. One of their leaders hud informed him that they did approve it in Cabinet. He would give one examplo to show how their Bill compared with tlio Bill before tho House. On estates valued at ,£200,000 their increase would have been .£711). The increaso on such an cstato under tho Bill before the House was XIOCI. Ho would lcavo that one fact to the public and to these men's consciences, and nsk them whether they could repeat that there was no increase in the graduated tax under the Government's Bill. Mr. Russell: How many of theso estates are there? 31 r. Allen: Don't waslo my time. The increase occurs all the way down to .£-10,000. Thero is a bigger iucroaEC in our Bill than yours. Thot was tho Bill that they were going to introduce. Air. llunau: It is not. Mt. Allen: Ask the member sitting beside you. ' ■ Mr. Russell: Are you.referring to mo? Mr. Allen: Yes, 1 am. He added that Mr. Russell had given him an answer on the floor of the House, some- time ago, that the Bill mentioned had been considered in Cabinet. j\lr. Kussell denied that be had made an;- such statement. Sir. Allen said .that much had been made of the effect that the Valuation of Land Bill would have in modifying tbe increased taxation under Bill. There would be no such effect to any material extent. He predicted that thero would be no decrease in the amount ol graduated tax collected, save from the cutting up of estates, which was a principal object of graduated taxation. Mr. linnnn said that estates would not be cut up. Mr. Allen said that this was one of the part} , cries uttered on the other side of the House,, and was absolutely contrary to fact. The graduated tax had already compelled owners to cut up estates, and this would be done more rapidly as a result of the latest increase. Exemption of Improvements, i Somebody had said that the Liberal party had originally , introduced exemption of improvements. It was not until ISO;) that full exemption of improvements was granted. Kir Joseph.Ward: I introduced it. Mr. AJlcn: That is so, but he had a good deal of pressure from our side of the House to induce him to do it. Did I not urge him to do it? Tho Minister quoted from his own recorded utterances in tho House in 1893 to show that ho had supported exemption of improvements. Ho asked members of tho Opposition what position their late leader hadtaken regarding exemption of improvements, . Mr. Russell: You havo settled him as High Commissioner!

Mr. Allen said that it was a good job to get him out of tho ivay if he wanted to tax improvements. Mr. Russoll stated in personal explanation that he did not know whether the Bill mentioned by Mr. Allen had been before tho (Mackenzie) Cabinet or not. Mr. Allen repeated that the lion, gentleman had informed him on tho floor of {ho House that tho Bill had. been beforo Cabinet. Mr. G. Witty gave a most emphatic denial to tho statement that the leadeiss of tho Opposition were at loggerheads. Iney were working in perfect unity, and intended to turn the other sido out, Tho Bill was read a second time on the voices. PUBLIC TRUST. , AMENDING THE CONSTITUTION. The 'Hoii; A. L. HERDMAN (AttorneyGeneral) moved the second reading of tho Public Trust Office Amendment Bill. Ho explained that tho Bill was being introduced to facilitate the working of tho Public Trust Office. In order to relievo the Trustee from the burden of his less important duties, it was proposed to ap-, point four deputy-trustees in Auckland, Christchurch, and Dmiedin, and in somo town to bo specified in tho provinco of Wellington. It was proposed also that in order that tho common fund might le more clossly invested, the trustee could borrow money when he required it from tho treasury or from tho Stato Advances Department. Ho explained the Bill in detail.

Sir JOSEPH WAKD (Awarua) said ho approved, of tho Bill, believing that it .would be in tho interests of tho people whoso business-was transacted in tho ofh'co as well us of the Public Trustee. Ho asked whether the Bill had been referred to the Public Trustee. Mr. Herdman: Oh, yes, it is at his request. ' ' ■ ■ Mr. G. Witty (Riccarton) approved of the. Bill. The second reading was carried on the voices. HAURAKI PLAJNS. MORE MONEY FOR DRAINAGE. Tho Hon. W. P. MASSEY (Prime Minister) moved the second reading of tho Hauraki Plains Amendment Bill. Ho explained that the purpose of the Bill was to empower tho Government to proceed further with tho drainage operations at Hauraki Plains, which had up till the present been fairly satisfactory, Tho additional sum required was .E'ij.OOO. Tho second part of the Bill was to extend tho special rating area constituted under tho Act, to provide funds to maintain the drains now being constructed.

Mr. H. POLAND (Ohiiiemuri) said ho had no fault to find with the Bii), but ho drew tho Minister's attention to the fact that tho annual charge for drainage works was rapidly increasing, whereas the amount of land being thrown- open annually was yearly growing smaller. Tho principal work being done was tho main canal, and last year it was pushed on for only 47 miles. At this rate of progress it would be completed in about twenty-four years. Ho pleaded for roads for the settlers now on the Plains. Ho hoped the Minister would include in tho special rating area all Crown and jriviito land outside the Plains which would be benefited by the drainage operations. Mr. Massey: It will all bo brought in. Mr. .1. A. YOUNG (Waikato) said tbo work being dono on the Hauraki plains was a very valuable work for tho country. He hoped the Minister would consider tho advisability of draining the Eotoronci or Moana Vnlo Swamp. Mr. T. W. RHODES (Thames) supported the Bill. The Bill was read a second timo on tho voices. The House rose at 0.i5 a.m.