TAXATION PROPOSALS
FORTY-FIVE PER CENT. TAX s ON WAR PROFITS
SPECIAL INCOME-TAX
"I propose to effect some important changes 111 taxation. The ordinary-land tax ,011 mortgages will bo repealed,. and an income tax substituted on the income derived from the mortgages.' This change, while giving relief to the owners of small Bums invested on 'mortgage, will.impose a. heavier tax on income of those having large investments. 1 will ask the House to mate provision for'exempting^'rom'assessment of income tax m A'ew Zealand any income earned, elsewhere and \vTiich. has already been taxed in the United Kingdom or any British Dominion, with the view (if avoidirtg as far as we oan the duplicate taxation of income within the Umpire. There is no'loom., to doubt . that the "present system is unjust, and acts as a constant barrier to the full and free development =of commerce wfthiJi tho British 'Umpire. Amendmejite of the Land and Income Assessment Act to give effect to the alterations w&i be submitted for consideration. \ ' THE MONEY MARKET., During the year the financial'condition of the country • has -been. a. singularly peculiar one. Aloney has been'plentiful, but~the u'liccrtaiifty • of the future in* made : tho fortunate owners of sums in excess of their own requirements exceedingly cautious; the result has beKi a marked indisposition to invest in "existing industries or in new undertakings. The fact that nil ono can, with any degree or accuracy, gaugo what Conditions will prevail after the war makes the-position anything but easy to forecast, it, however, apjjears certain that-after* the war the whole worul will find a new and, in!?w' j.i an 1 lm P r ocedented situation,' and that the change in the economic, indusvn ■ ■ social, a . u d financial condition must necessarily bring about changed- methods of finance. All, industries, whether trade or primary, to a large extent aro dependent .on the stability of the country's finance. I am convinced:tha; it is a-wise 92HS® t° keep the- year's surplus in a liquid form, and 1 decided some months ago-mot to--use the-.'surplus for oiufnary governmental recinirements.ib'TC to invest it Hi liquid securities, and part of this A2,(100,000 has since the elose of tho T J 61 . 1 ' keen. invested in Imperial Ireasury bills, and the remainder ivill be- similarly invested at an early dale. I have from the first recognised that it is our duty'to "aid 'the Motherland'dririiiK t.hra great war to oiir utmost capacity. -1' had previously invested'a; sum 0f'.£1,325,Ow in Imperial' Treasury bills', arid vith .«»» t " rt , hel ' -£2,000,000 a total of .£3,325,000 will be provided as-a reserve. 1 think lnveß 'mcnt in Imperial Treasury bills way be regarded as a partial set-oil by_pieiy. - Zealand against the war funds so generously advanced by tho Motherland.. 1. hope during the-current year to further: increase this reseryo,'' ,; r. JAXING WAR PROFITS. : . lUfoncy::for'"thß conduct of the war ui^sr bena'd, and there is no valid reason; why_ those who have surplus moneys, largely due to war conditions, should'iiot .bo callei upon to provide a portion of tlm capital required. Those who have made extra profits during the war.' etcher from business or directly .from primary products,., cannot object to provide out of a. share of the finance n©c€B- - I will-ask tlie House to give -autftorwy to take, by way of taxation 45 per cent. of . tlie excess profits earned .during the last year. .These will l>e ascertained by taking the average-profits realised for each of the three years previous to the war .«id comparing this average with the returns made since the war commenced 1 estimate to-receive -£2 i 000,000 from rliis :'.The <late of payment will • pro. baply be about the end of the current financial, year.. - : - 'special 1 income tax. hose taxpayers who , derive - their intomes from other sources than 'war profits should-likewise at this juncture be JttiuijgdTto-'- contribute '-'something - furVier' than' tliey are at preseiit callcd'upon 10 ipay.' and. l propose to ask for.authority to levy/a; special tax of 5 percent. ' upon incomes earned last year 'irom all sources, exclusivo of war profits whicn lave .already been dealt- with. This tax jvih be collected in March next. I calculate that .£750,000 will be realised' under this heading. -;-f- 'iircct -attention to the minimum upbn_ which income; tax is charged in this Botainion.So far as I caii ascertain tho amount at which wo start to levy income tax is tho highest in the worldly, that I mean we exclude from the payment of any tax all those who receive .wages' or salaries not exceeding ..£3OO per. annum. Nothing is proposed in the direction-of increasing tho incomo tax revenue by reducing the minimum upon which income tax is leviable, but it will beconio n - question for serious .considera* tion.if the war continues beyond tho end,: of '. next' year, whether-, this should mfc-be done. It is only right that those who are well-to 7 do or possessors of wealth 6hould contribute tlie greater proportion of-tho cost of £liis war, the successful winning of which means such enormous advantages to; them as 1 welPas .to every other section of tho community. Even the humblest in the land would probably take' exception . to..being .altogether excluded - under " le from mating some Blight. eont'ributiou • towards helping to win...tlie. war and towards assisting .to maintairi.'a-pensions "scheme, for the. benefit ipf the widows ..and dependants of those, who are,'-on behalf'of every class, great or sniall, throughout the Dominion,; fighting lor the freedom of this country. WAR BONDS. "I will also ask the .House to provide for a system of war. bonds to bn issued in New Zealand, with a "currency' of tiventy.-fi.ve .years, bearing interest at'-li per. cent, free of income tax. This will enable those desirous of helping war finance to do so. The financial requirements during the year will be obtained ■partly from the Old Country and partly 'from New Zealand, and will, of course, "be limited to the Dominion's-needs. * "The course' I aril' suggesting will givo 'those desirous- of- helping the Mother'land'the . opportunity of doing so. Our war" expenditure is now reaching very large- figures, .but the proposals 1 I am' "submitting, will, ..in my opinion, supply 'the' "means for providing everything thai 'is necessary/ for tho pensions, equipment transport, and pay'of our soldiers, and' "this.must lie the'first duty 'of the country <luring the crisis through which the "Empire is now passing. . I hope not only jo supply the necessary means for curVent requirements, but eventually to pro-' Vide for-the full repayment of tlie loans recaive-1 from the Imperial Government for .war purposes. It would, of conreo, }w impossible at present to continue the jivar expenditure without assistance from "thn Honibland. .l'or the'months of May •and June-it hW been- found possible to
reduce the usual Imperial contribution by more thau half, owing to tlio assistauoe derived from local investments, ami it will be my endea-vour in- the future to voutiniio to relieve tho Imperial Government to the fullest extont possible How far this can ba accomplished will largely- depend upon the total amount wo obtain' from tax on war profits and from the special income tax, but I fee) justified in saying that the amount -will bo considerable.
"I wish to point out that no additional taxation •is being suggested, except to provide for war expenditure, and though the extra tax may 1m soverely felt' by some of thoso ivho will bo called' upon to respond to the needs of the country during tho war, thoy will, I am sure, cheerfully accept tho additional burdwis which are essential to achieve the iinal victory iuvthis great conflict, It may bo necassarj as soon as I know definitely what amount is required for authorisation son the supplementary estimates -to ask the House to provide for an increase of taxation .to further strengthen the consolidated revenue. 1 shall inform tho House when I am in a position to do so.
MONEY IN THE DOMINION. "It is, in my opinion, the duty of those who own or control money made in this country to utilise it in the Dominion as much as possible during the currency of the war, in order to help to maintain the stability of the trade and ''.oiumerce of the country. I propose to ask; . the- House lor authority to ensure that this will be done until twolve months after peace has been declarfed. This will also apply to deposits in banking or other institutions in so; far as they represent money in New, Zealand, but will not affect remittances rot legitimate, trade or other, purposes. Authority will tTe asted to have suitable provision made by regulations to enable this proposal to be carried out. RATES OF INTEREST. "Last year the House gave authority to control the laising of public loans by local' bodies, and this provision has worked well.- I :liave not given authority for.any local public body throughout the country to raise loan, money at a higher rate than 5i per cent. In a number cf instances • 1 was asked to do so, but refused, and the fact that the money has been obtained within the maximum rate fixed shows that had this provision not been made the rate of interest throughout tho Dominion would in all probability have been, materially increased. As already mentioned, the Government rate.for tho State Advances Local Bodies Branch has been kept at 45 per cent. Under the abnormal conditions 'at present ruling an inflated interest rate would be highly undesirable. I propose, in order to prevent the pos--sibility of a general increase in the' rates o? interest, to apply a similar restriction to the rates to be allowed in respect of deposits,- and to .fix a rate appllcaole to all financial- institutions, whether banking, companies, or private firms, so that no; institution can take advantage of another of the same class by offering higher rates for deposits. GOLD EXPORT.. '"i'he exigencies of the ■ war have caused the Imperial. Government" to stop tlio exportation of gold from the British Isles, and this course has been-followed by Australia. . The stoppage of gold export from these countries necessarily interferes with trade finance, and the banks find it somewhat difficult to provide a sufficiency of gold within the Dominion for trading purposes, while at tSo same time they must of necessity maintain their requisite proportion of gold reserve. • ' v • "I propose 'to submit legislation to meet .this difficulty, which I will explain fully when bringing down the necessary measure. I may add that there is not tne slightest,cause for any uneasiness; on the contrary, the trade and commerce of the country have been carried on throughout the war uncom-; mciily well in .the face of many cedented difficulties. CONCLUSION. "It how only remains for me to sa>. SKI.;!' fully realise' the . tremendous growth of the public' debt, due chiefly to the great war; but, although our responsibilities are increasing-enormously, there is no. need for misgivings as to the future.New I, Zealand has wonderful natural advantages, and owing 'to this fact and'the'patriotism of the peo-' pie, we are in the fortunate position of heing" at>le to meet all demands upon our finances. Individual.sacrifices, no, doubt, have"'to Tie made; this .'is- iinseparable from,'the' ; conditions' that "now exist, but tho resources of the country a« a-whole are more than sufficient to bear the increased strain. -1 remind the country tffat there is a sinking fund for the repayment of all loans, including those raised' and. to be raised for war. pur-, poses, The renewal and conversion of loans completed during the.year for. some years to come will greatly help in providing further financial requirements. The future financial outlook may be viewed, with confidence.
"It is not at .any time a pleasant task to submit to the country proposals for increased taxation, but, in view of the justice of the cause for winch tho Motherland, with-her .Allies, is now fighting, I do so in full confidence that the people of this Dominion will be in the future, ;w they have evor been in the past, ready and 'willing .to shoulder the additional burdens wilh unflinching courage. I feel sure that-they will shrink from no sacrifice which will-help in . the overthrow of an unscrupulous enemy who has forced an uniust war npon the British Empire and those great'. countries associated with her."
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Dominion, Volume 9, Issue 2799, 17 June 1916, Page 14
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2,040TAXATION PROPOSALS Dominion, Volume 9, Issue 2799, 17 June 1916, Page 14
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