AN UNUSUAL MOTION

Dominion, Volume 9, Issue 2803, 22 June 1916, Page 6

AN UNUSUAL MOTION

BUDGET TO BE DEBATED MR. PEARCE SPRINGS A SURPRISE. When the question that Mr. " Speaker ■ do leave the chair in order that the 1 House go into Committee of Supply (to 1 discuss the Estimates) was put in. the ! House of yesterday after- ' noon, - * : Mr. G. WITTY (Riccarton) asked the Prime Minister to give some indication 1 of the Government's policy in relation > to alleviating the cost of living. Some ' restrictions should- be imposed upon the ; importation of ! luxuries such as motorL cars,, cigarettes, silks, sivtins and furs. It ; was the duty of the Government to bring ' in a tax which would affect these tliing3 ' and so enforce economy and at the jame : time yield some extra revenue. Picture shows should also be taxed, as well- as •' theatres and other forms of amusement. ; It had been stated before that-the collection of the tax would be impossible, : but the Government could print the tickets in rolls, and each ticket should • bear a stamp or imprint and be "nipped" as. used, so that collection would be easy. The Government should most certainly deal with, the cost of living, as many unscrupulous dealers were securing' an undue profit from tli£ people. The Prime Minister and others must admit that some things, such as drugs , unu I chemicals, had gone up tremendously,. 1 and these .increases, altnough difficult to - get at, should be looked after by the L Government. Then the Budget proposed, to give allowances , to. married Civil Ser-' vants, but why should not a similar allowance be given to married women .who were Civil Servants. There should not be this undue discrimination. He proceeded to refer to a return which had been given showing the travelling allowances and travelling lexpenses of the Judges of the country, and inquired there was such a disproportion in the amounts charged. Touching on. pensions and allowances, lie pointed out the' difference between 7s. Cd. per week for illegitimate children and ss. per week for legitimate children. The Government should give a definite answer to this point before the Estimates were proceeded with, as later on the question could not be properly ventilated. It was' the of the Government further to nationalise various industries which, were affected, by the rise in prices. At this point the Hon. W. -H. Herries rose to a point of order, and inquired whether, upon the second occasion of going into Committee of Suppljt, the discussion could cover the! whole Financial Statement or only those matters directly referred to in the Estimates. The Speaker said that he iook it that tho discussion must refer to something or othei; affected' by the Estimates. ■■ Mr. WITTY: The Estimates touch on a reat many things, and the cost of living is raised by the payments that will have to be made. If necessary we could put it there, but we don't want to do that — we only want ,to discuss the matter fairly and practically. The Producing Interests. Mr. G. V. PEARCE (Patea) sprang.a surprise on the House by moving to strike out all the words after "that" with a view: to inserting felie twords "in the opinion of this House many of the proposals contained in the Budget are opposed to the best interests of the country, especially tho producing interests of the country." This was greeted with laughter, and the interjection:. "A no-confidence .motion." "Oh, no!" said 'Mr. Pearce, "it is not that at all. I don't wan* to bring it even to a vote—l simply want a discussion." Sir. Pearce w/int on to say .that, he had arrived at the House half an hour late on the previous evening, and found the whole debate over, although ho had been assured it would last eight or nine days. Mr. M'Calluni: And a good thing, too. -Mr. Pearce: I don't think so. There aro'a lot of things in that Budget that should be discussed. Mr. PEARCE said that the letting of the Budget go without a word of Criticism was not a credit to the New Zealand Parliament. It was a most important- Budget, containing very important taxation proposals. The only criticism of Government financo that had been heard this session had come from three or four irresponsible members, who had talked "war profits" continually for a month. One would suppose from hear- , ing their talk that the farmer was swimming in war profits. He approved' of the tax on war profits, but he maintained that the prosperity of the farmers was due to increased production brought about by inorcased energy and capital invested. The proposal for tho assessment of war profits by comparison of present inconie with the average income

earned in the three years before the war was almost childish. Very few farmers kept a balance-sheet, and any estimates they gavo. would be mere guesses. The farmer had put increased energy into : his business, and had increased production. Consequently any war profits tax assessed in the manner proposed would bring about injustice, because the tax would be levied on that added income due not to the v;ar but to the opening up of the country, the expenditure of capital, and the industry of the iarmer. In suoh a product as wool, there had been an increase of sd. a lb., due to the wax. But as against this, the cost oi getting the wool to Loudon liad increased from Id. to 35d. per lb., taking ■ just half of the entire profit. Tile alleged profit of the farmer was going in fact to the middleman. He would suggest to Sir Joseph AVard that he luiglit get his revenue more easily and more 1 H ev - v ' u " ftn export tax. He asked tile House to consider also what it was costing the farmer now to run his iarni. A lew days ago ho had paid ,£34 133. per ton for wire that he .previously bought for .613 10s. He had" also paid ~ S £- i ' or imported clover seed which before the war cost about Is. 1 here were other taxes which - should have been in the Budget. He ' would Jia"\o liked to see .taxation imposed which would check the extravagance of the people. (Hear, hear.) There was a great deal of extravagance. .Farmer* were spending too much money on American motor-cars, and in. the" towns the people spent too much on theatres and picture shows. He would urge that a heavier duty be levied on American motor-cars, and that a tax be levied,on amusements. He did not suggest that the married working man could afford to pay taxes, and he would op. pose any taxation that would' press hardly-on such men. But amusements w«re luxuries' that any man couid do without. He complimented the Minisler of Finance on. his decision to abolish the iniquitous and unfair mortgage tax. lflst of 'nil, lie said that the farmer had to pay very heavy taxation already— land tax, graduated land tax, supertax on ETie graduated tax income tax, and alSo the greater part of the Customs duties levied.' Otir Flocks and Herds. Mr. H. J. H. OJCEY (Taranaki) said he would second the motion, nlthough he did not believe in the export.tax proposal put forward by the mover. To impose an export tax would put the bfirßen on the shoulders of a lot of poor' men, who would not be able to bear it. Ho approved of the taxation of war profits, but he suggested that, some account should Ue> taken of the very generx>u6_ donations made by some farmers fc} the patriotic funds out of their war profits. He disagreed strongly with the freely-expressed opinion that the farmers were the only people in the country luatfng big profits, and contended that the farmers .were not by any means making more money ihan some other classes in the community. .He warned tho Minister of Agriculture that there wan of oi>r Hocks and herds 'being depleted owing to the heavy slaughter of oattle brought ibout by the present export' prices, and he advised the Minister to tako steps to collect complete npd accurate utock returns. This was very necessary because the country would be in a very bad way if' When wo had to accept reduced prices our production should, also be reduced. • Mr., J, PAYNE (Grey Lynn) spoke about bwikinif. wonoy, transports, Germans,'and other familiar topics. , Tax Upon Incomes. Mr. KOSWOBTHT (Ashburton) said that he agreed with the member for Grey Lynn when he said~that the principle of taxation of the people on t"he land should be taxanon upon their Income. He was satisfied that taxation upon the income of farmers was the prouor thing, and what they wanted. He and to'find fault with the present incidence of taxation, and he would ask the Minister'-of Finance, now that we had become involved in a tremendous scheme of taxation, to investigate the taxation scheme, and secure more equity of sacrifice. Mr. Mr Noswoiihy quoted figures to ah on that the man on the land was bearing mora than hi" fair share of taxation. A. man -with .£IOOO invested in land paid 18s. id-.in taxes. A man with JEIOOO 'invested '.ai* 5 per cent, paid nothing. A man with .£200(1 invested in land paid -£S IBs. Sd. in taxes; the man with the same amount invested otherwise paid nothing. Tho other figufes were as follow i— a . Taxes' on / ■ Taxeson other inCapital. J,and-vestments, £ . £ e. A. £ 3,000 "la 0 Nil. 5,000 81 11 8 Nil. 10,000 53 3 4 8 15,000 93 I 5 0 J® 20 000 ; I'H ® ® IS : , 19G 78 4 33 30.000 203 *10 0 - SO " 4. ; 134 r to 000 . 72216 8 189 So 1524». 0. Kb looiooo 2618 I 3 4 567 Honourable members could not say that the farmers on the land were not doing ' their dutv. He did not say that the Budget. emphasised and made greater the difference between the classes, but it did not reduce them, The man on the land ' was paying land tax. graduated land super tax, income tax, with the five per cent surcharge, and now the 4o per cent. ■ war profits tax, of which he approved. Hut lie strongly of « e . scheme by which snoh.ineqmtabte taMS were levied oil a man 3 debts. He would ask the Minister of Finance he did. not think that it was time that the incidence of taxation was moMed; He was not trying to evade his proper share of taxation, nor were other men 011 the land vtho were honest. He real* isod! however, that there were men the land, as 'there were in other walks of life, who were greedy and selfish and no good to this country. After the war there would be no war profits, and this he commended for t-he consideration of those who talked so much about conscription of wealth.

A Blot on the Budget. * The greatest blot on the Budget, in his opinion, was that it did not prowle for the taxation of. amusements. The tax might not realise much, but « would have a moral cffect nn the community which would to undoubtedly good. He thought also! that there ought to have, been a reduction in the income tax exemption, for this war was not a struggle tne whole cost ■of which ought to be borne by one or two classes in the community. Nor (lid he believe that there were any classes who wished to avoid taxation. Also, lie asked the House to remember that a iertuction ot the income tax exemption would lut the farmer just as it would hit other.people. . Fanners did not object to taxation; they objected only to inequitable taxation. He thought the voting 01 ,£400,000 to the Civil Servants was a very, very liberal measure, and. a mea» sure that, I think, may have to be reversed before we see the end of tins war." There might be retrenchment as there had been in the past, and the time might come when the Government would have to take from these people what they had now given. However, the responsibility for all this was on the National Government. But he warm the Government that any attempt to impose ou the primary producers a heav : burden of inequitable taxation, would be so strongly opposed that the Government would hav* t® give op the at. tempt. Members; Oh, don't threaten.

Mr. Nosivorthy: I am not threatening. I aw merely stating a fact. Mr. J. ANSTEY (Waitaki) said he ffavo the Government credit for many proposals in tho Budget, but lie noticed some • omissions. He agreed that more Rhould be done iu tho way of taxing sports and amusements of all kinds.

The Suggested Amusements Tax. ' SIR JOSEPH WARD (Minister of I Finance) said lie had noticed a tendency on tho part of some honourable members to'tako exception to tho collapse of the Budget debate. This collapse was not the fault of the Government, and ■ it wUs not tho outcome of any arrangement, .made by or on behalf of the Government. Rather, he thought it would have been of to tho Government to have heard tho views of honourable members <111 the proposals tho Budget contains. He could assure honourable members, however, that every one of the sngsestions made concerning neiv taxation had been already fully considered by the Government. Ho ilci:recate<] verv tnrch

the on; -raised for'mora and more taxation. The Government was asked to tax racing, amusements, kinemas, and othei thingß, arid the example had been quoted that, in England the tax on .amusements was estimated to produce-five millions. Did honourable members: realiso what five millions in England would mean in New Zealand proportionately to population?. On'the same basis the tax would produce .0111,000.

An lion, member: The -prices* are .double here.. • ■ -. ■ : 1

Sir Joseph Ward said that the amount paid by people for admision to races in the year .was .£3200, ah amount toosraall for consideration. As for the taxing of kinemas, the people who: went to theso shows. were not rich, but poor people, men and women- who went occasionally with tTieir families; the sort 1 of people who eoiild ill-afford to pay taxes.

Mr. Noswortliy: Don't electioneer now! ; Sir Joseph Ward: Who said "electioneer"?

Mr. Nosworthy: It's everybody's war. Letfs all pay for it. ■_ 1 Sir Joseph Ward went on to say that the Budget proposed to secure revenue from fSfc proprietors or owners of places of; amusement—upon their incomes' and extra profits. He believed h th'ey would obtain more this way; than by shifting the; tax on to; the people,: as suggested by some : members. The tax suggested wouTtT riot in any case defer people from having their amusements. /■'••' . No Class Division. It was'not fair to say.that tho Government was imposing more taxation upon >the farmer than upon any.other section of the community. To endeavour to create'any such impression in war tirtie was most unfair.._ ;• •. ■Mr. Pearce: It is correct. Sir Joseph Ward: Pardon mo',: it is not; as any member, who chooses to look nt the figures in the Tear Book of the total amount paid in land, tax by some .44,000 taxpayers will see. That amount Is only a little ; over ,£7000; more thnn theincome tax iiiErease imposed by last year's Budget, which yielded over '•£BOO,OOO. Of that .£BOO,OOO .increase tho farmers paid -US-10.000. with '.£29,000 still to be paid. Thus there was a difference nf» some ,£560.000, whinh was not collected from 'the farmers/ but was secured from' the town. . ;'■*■ He would further like to put on-record a statement prepared for hinv by tho .Commissioner, of Taxes" on ApriJ 6 last. In his request to the. Commissioner lie Tiad asked him to give' the benefit 'in every case to . the country when a man resided in tho town arifl : secured -the 'nost of his money from the country.

For the purnosec of this" comparison lin would exclude ts*r g'raiMStod land tax, V (is th.it had been imposed with : th« primary object of bursting up: estates ■ to' facilitate settlement, Hid'/'so; Ittnst lie eliminated in any'' conip"risori beth'n taxation oft^n-antl

The Commissioner of Taxes'' replied itn

iiim that in .income tax'the town paid •£1,029.983. and the . counts'..iTW,B2"). . T n land tax the. town rvnid /C4P f) .G72: anil -t,h<i - mitrh'V i£55f1.9i!1. The toHls -under..both headings were: Town. .492.55*; 'cowitry. vT.93R.756: orjnn exress for the town of Th</'Co!"nii«sioror said that, in taking out thee 'figures he liad been, 'guided by tho addresses'of taxpayers- ox. ' oept in'cases where taxes' were -naid "by agents,/'and then he examined thf> i)cfounts "flnd al'otted them--in tl"vdivision : from which the .majority-.of.- the'money came. -Freezing companies, dairy - asso- " ciatiqnn. n'ininz associations. etc.; were treated ns ■beinn in tlie country; p lrrnn? thing i n -n- a r time.'declared Sir Joseph Wer'd: to Convey j>»y. iiKm«wutu : that the Budget "proposals would ~-bear more lieavi'r upon the cnuntrv than upon the town, iw.juse it was not in accord-, ance with fact. I War. Profits. . .' Sir, .Tosonh -Wtird said -he wished to say 'to'-.those who ur?»d the taking of , 75 per .cent, qf war profits instead of 45 / per.cent, that it was unfair to make any cn'miwvison between +h<> Old Conntrv and . New' Zealand. In Britain many houses had lieen accumulating monev for -many hundreds of years, th'ey hod been able - to secure their money-at 35 or '4 per cent., and they paid 'smaller wages than d'd employers diere; so 'that fr. -comnara ■ the two positions was impossible. Pro,;.',yisiou .would have tn tr>ade to !nrevent'.any injustice 'I>eing done indi. . riduals; . He 'kueiir of one' case where a . firm, hod'made losses'for two;years before 'the war,.and.nn Hie WW/ .vcar.'wado '■ lo*« than .'CIOOO, Since tlie war it had made inst sufficient to pay' off tlie overdraft, and with a view, to, - laying .'up 'for the future, w.as jiow' rnnninpr such a -"'sk , tW if. tlie war ended within' twelve months tliev would be minM by the 45 ™>r cent, war profit. The Taxation Bill would hi"-e to make provision for such ■ cases. - He. had already forwarded com.mnnicptions .to the Commi'sioner of Taxes from big bonnes in WeMi'.'gfeu, which would be «o heayi]y hit under these proposals that Unless nrnvision was made they wonld bo committing' an ' injustice unon these firms and also upon the country.' Well-considered Measures. There were strong: reasons , for every. proposal contained in the 'Budget. He . -recognised that members' would have -their own ..views, but he would like to eaythatto secure big sums it was no good tinkering with, small things. In.! regard to the cry for taxation upon American motor-cars, they had' to 16ok ■ at the question from'all.sides. It was only a few years since our primary products? were first allowed into the United States free of duty. Now the •importation of motor-cars from England was. restricted because of the war, and..the only thing America could give, us in exchange for our, nroducts was motorcars, -which could not now be secured from Britain. Motor-cars were now necessaries of life, as they were used in business, and imt'luxuries' as' many peoole held. When the. balance of trade was; in thin- state we could, not, for the sake of ,£5 per motor-car, or, say, a year* run the/risk of liavinii our products excluded from- the .United States at. the next revision of their tariff. Any such step would be merely cutting olf oiir noso to spite our face. : The Cost of Living, f It was also incorrect to say.'that the Government had not considered the'fiost of living. From his own investigations he had come to the conclusionthat-con- . ditions, beyond New Zealand were r.uch that we were powerless to'da ahv good, and would Tw powerless until tlie war was over. The ereat trouble was with ' the freiffhtaee of the world. Those -who cried out about the high' cost of-living demanded that the farmers should bo . comwlled to accept less than the nrevailing market rates for their nroduce, .. and in the same breath demanded that the Government should take 75 per cent, of their war profits to carrv on the war. It was suggested that we should commandeer everything in the countrywool. butter, meat, cheese'. honey, "gum —everything. But no right-thinking man could advocate taking by the might of . the country a: man's property which ho was entitled to 'hold, except at the' fair value. To ,ln s° would be dishonest. But he .would iro so far as to say that •the man who, forced ud prices by unlawful combination ought to bo punished severely. Ho would even be prepared to say that this should bo regarded as a penal offence. Meantime' the Government had brought down proposals which would provide adequately foi- the'country's renuirements. He could assiire the Wouss that if the war went on. for another year those who had anything to rivo would be required to give a great deal more than they liad yet been asked to give. It could never be wise, however. to impose minor taxes of a pinprinking natnre.' whils we were obtaining a • considerable revenue by. other tli° sn'ivp.os, ..^ r - V., BROWN (Napier) said that the, rloit>e ouqht not to consider it piracy or injustice lo tak? from any man tiro profit he had made from the war. Othsr Avenues of Taxation. ?f r - A- WILKINSON (Es'mont) said that ho could' ]iot support tho omendment of tho member for Patea, nor could he support his contention for an export tax. If wo levied on war profits we would take our revenue' from too wealthiest classes in the community, but an export tax would press upon the very poorest of the producers of the community. Further, the Government's proposal was to collect a tax on tho war profits made in tlie year ended. March 31, whereas an export tax would begin to levy upon tliem from dow inwards. He congratulated the Viflanco Minister on the very pleasant

tula he had told on Friday evening of the buoyant state of iue country's finances. Whan he (Mr. Wilkinson) spoke on tho Government's proposals last year he had no liopo that there would bo a surplus this year. The new taxes would impose 6uch a burden on the people as would bring to peoplo a realisation of the intensity of tho struggle in which they were engaged. One danger likely to follow upon tho imposition of extra income tax was that the tax would be passed on. The farmer, however, could not pass his tax on, and ho would commend this fact to tho Government for consideration. Ho did not agree that tho proposed method of assessment of war profits was a fair one, ' and ho would suggest that there should be established a Board of Appeal, to which any peron aggrieved might apply.

Sir Joseph Ward interjected that there would bs no Board of Appeal, but persons not satisfied with their assessment. could apply to the Magistrate. Mr. Wilkinson said he was very glad to'hear this; He suggested that -the Government mijjht .Consider ways of getting revenue in the times when there ivould not be big incomes-to tax. In England the duty on tea was Is. per .lb.; hero it was free, and there might be a duty of, say, 3d. per lb. imposed here. So, also, there could be imposed a. duty of }d. or Id. per lb. on sugar without hurting anybody. There was also a very great waflte'to the country in tho collection of hotel license fees. For the very small sum of ,£42,000 per annum the Government gave hotelkeepers in this country tho sole monopoly of the retail sale of.liquor. This money went to, the local bodies. But it would pay-the Government better to give the local bod-, ies <£50,000 and take over tho collection of the fees. By this means at least a .quarter of a.million could be obtained. Mr. Forbes: What about early closing?

: Mr. Wilkinson: Yes, I admit that is a phaso of the question which requires consideration. lie want on to say that in his opinion wine and spirits were undertaxed, and that the-railways, if the tariff were revised, ought to be able to produce additional revenue. Ho did hot . altogether approve of the abolition of th» mortgage tax, because it made a free gift by remission-of taxation to a man drawing income from mortgages of all ho drew up to the income tax exemption limit of .£3OO. He offered the suggestion that there, should be no exemption limit for incomes derived from investments. For the safety of tho country the utmost economy onght to be exercised by the •Government, because it must, be remembered that the coiintry had not ability to find money without limit.

Too Heavy Taxes. Dr. A'. K. NEWMAN (Wellington East) said'that the Budget established a' record in New Zealand for taxation, an amount which utterly appalled him. He did not see any reason why the taxation should be so heavy. 'Last year extra taxes were imposed, and wo had a surplus ot two millions. Now, a surplus of two millions suffering from .most was the cost ot and it was bad. statesmanship to take so much ■ money needlessly from the people at- a time when they ivere oppressed' by ■ . the high cost . of living.: ,The one .thing the people wero in war time .was a very serious thing, living, and in order to minimise this the,country had a right to economy from the Government. Hie Government was going to levy three millions ot extra taxation, and there would be a ,'jingo surplus next year.'- It all, 'the canons-of political economy. . Above all the Government ought to economise, but the Estimates were more? inflated than .ever, 'l'he.Budgct was largely a Budget of taxation on thrift.- The people ■'wanted taxation on waste and extravagance.' .. Last year the Government had, through the Minister of Customs, introduced the country to a new system of taxation of beeiy a tax on worts. The old system, had worked very well, and it was the system in force in England. ' .; Mr. Herries-. This is the English system which lie has introduced.

Dr. Newman: Nonsense. Worts is a purely German word; The worts tax has •been in existence in Austria for very ,many years. It was promised for this tax, he continued, that it' would produce very much more revenue, but ; the . increase, . was. so small. as to .be hardly noticeable. , He was strongly onnosed to the imposition' of' the. extra Income' tax, and he hoped it would be opposed and rejected, by. the House.. The shilling in-:the pound .extra tax, an increase of ; 150', per . cent, on /last year, ■ and y an in- , crease of about 230 per cent, on the rate for . the preceding year, would press hard on people'of modest incomes. The Government coukl not possibly need the money, seeing that, it had so much stored up in England. He hoped the Government-would; stay its hind in the imposition of -taxation, because there could be no doubt that hard times would follow upon the. war, and the degression would be. made, worse if the burden of taxation were made heavier. Whose the Fault? . ' 'Mr. J. M'COMBS (Ly.tteltou) occupied his half-hour with a treatment of the cost-of-living problem, and charged the ■ Government with neglect to remedy the position. He also endeavoured to establish a. connection between the Governments'of the Liberal Party, the .Reform Party, and the. National' Government, and the increase in their respective terms of the cost of living. According to his figures, the cost of living on the sovereign increased B}d. under the Jlassey Government, and IOJd. under the National Government. . Mr. A'. HARRIS (Waitemata) said that 'the brewing trade should .have been called upon to contribute more to the necessary additional' taxation. It might be said, that it would contribute more under the 'increased income tax, but there should have, been an increased beer duty. Tlie trade was a huge monopoly, making large profits, , and it was the duty of the Government to .make it contribute a larger share to the increased taxation. He thought that the Government had done the right thing in proposing to pay a war bonus to civil■ servants, but he thought it should not be paid on incomes of over JE2oo.'a year. . Mr. R. A. Wright moved the adjournment of the debate at 0.20 a.m., and the House rose.