PARLIAMENT

Dominion, Volume 9, Issue 2808, 28 June 1916, Page 6

PARLIAMENT

MILITARY SERVICE LAND AND INCOME TAX THE FINANCE BILL PLAIN STATEMENT BY FINANCE MINISTER. The Legislative Council met at 8.38 p.m. The Hon, A. T. MAGINNITV gave notice to ask the Leader of the Council if in the opinion of the Government the time'had not arrived for the transfer to the National War Funds Council of all war funds at present in the hands of trustees' and other persons in the Dominion for administration by such conncil; (2) if the information respecting all such funds has been duly supplied to the Minister in the terms of the Act) (3) if the respective funds have -been . audited iu tho terms of the Act, and if so will the Government lay upon the table the reports in respect of such funds. MILITARY SERVICE BILL CONSIDERED IN COMMITTEE. The Council went into Committee oo the Military Service Bill, as reported from the Statutes Revision Committee. The Hon. AY. Earnshaw objected to the minimum age of twenty, and moved that it bo altered to twenty-one,' but tho amendment was lost by 19 votes to 3. The Hon. S. Thome George objected to the inclusion of men married subsequent to May 1, 1915, in Division I; but the amendment was rejected on the voices. The Hon. G. Carson, speaking on tbe new clause empowering the Commandant to discharge from the reserve men or alien enemy origin, questioned the advisability of this power being given to the Commandant. It was a purely political question, and the power should be I held by the Minister of Defence. ' Sir j?rancis Bell defended the clause, which was agreed to. The Conscientious Objector. tin Clause 12, providing for reservists to report for enrolment, failure to do which would render them liable to prosecution for desertion.

The Hon. J. T. Paul moved to insert the further proviso: "Providing that no reservist convicted of offences for refusing to obey any instructions or commands prior to his full enrolment as a member of the Expeditionary Force shall bo ordered beyond the shores of New Zealand." Mr. Paul said he desired to secure that a civilian should be treated as a civilian. He did not desire that any man who refused service and suffered civil penalties should afterwards be blinded over to the military authorities to be made into a soldier. He had every faith, he said, in the military authorities' efforts to win the war, but he had not any faith in the administration of justice by military authorities. He could cite case after case of gross injustice on the : part of military authorities, and he therefore desired his proviso inserted to safeguard tbe interests of the civilians. They could not make a man who conscientiously defied the Act into a soldier: He believed their position would be a hundredfold strengthened if provision were made for the conscientious objector. He did not defend such men for he could not understand them, but they did exist, and it was not common-sense to try to make an unwilling man into a soldier. - Sir Francis Bell congratulated the Hon, J. T. Paul on his absolute candour, but his attitude m two words meant that this Bill, which was an act to forcu men to become soldiers, should not exercise that force. His (Mr. Paul's) contention was that a conscientious objector should bB placed on the same level as the religious objector, and exempted from service. lie could not agree lo that view, because New Zealand had decided that the manhood of' New Zealand should be at the service of the Empire, and Mr. Paul's contention went back to the position that the individual himself should decide as to whether he should go or not, and that could not be agreed

'°Tho Hon. G. Carson remarked that the proposal made meant that any man who was prepared to pay the price of imprisonment could escape service. . He did not agree with that. The Hon. Alt. Paul urged strongly that provision should be made tor tlio absolutely firm conscientious objector, who was not •covered by tlie clauss for the Teligious objector. Such a man, after serving whatever term was given him would still resist the military, and escape at every turn, and iDunjtelj more trouble than he was yrortii. It was an uneconomical proposition, iie knew of one case where a young man would sooner be shot than bear arms, and he (Mr. Paul) was quite sure that he would resist to the utmost. . The Hon. J.ißarr said he could not support Mr. Paul. He cited an experience where twelve anti-unionists became loyal unionists when their employers gave the union,a preference clause which amounted to compulsory unionism. The proviso was rejected on the voices. Final Appeal Board. Oil the clause establishing a Pinal Appeal Board Sir Francis Bell said he would like to express his indebtedness to tho Hon. J. T. Paul for the idea of this appeal board, which was a great improvement on the Bill. . The Hon. J. Barr argued against th® conditional nature of tko elause. It was "if" and "may'' all tl'e through, and in the end the end aimed at might not be secured. They should either decide definitely for or against tho Appeal Board, and not leavo it in this nebulous state. It was now left to the powers that be tc> put the. clause in operation "if" they thought fit, and he did not agree with that. Sir Francis Bell said that the mam point in the clause, was to seciirp uiiiformity in the decisions of the Military Service Boards. If djfterent d f. c, , sl ; T were l>oing given in different then the Appeal Board would bo calle into being. They wonld- have to guided by circumstances. Tho Hon. Mr. Paul said he had prorosed tho clause because' it was thought St tho time there might be some eighteen different boards and different on similar cases might be given. A fina Appeal Board would secure justice and U,! was agreed to by 18 votes *°a\i the other clauses of tlie Rill worn agreed to' except Clauses 8 which were postponed. These dealt with the exemption of tors, and the provision of altcrnatne work for'thein. . _■ Progress was reported at i 4.4n, the Inrther committal of the Bill being made an order for Wednesday. The Council then rose.

THE HOUSE

The House of Representatives met at 2.30 p.m. THE FINANCE BILL. Sir JOSEPH WARD (Minister of Finance) made u statement to tho House about the Finance Bill. Ho said that ho hoped to bo ablo to circulate the BUI, if possible, this (Wednesday) afternoon nr evening. Ho proposed to have the Bill telegraphed throughout the country to enable tho Press to publish it, iu order that the people interested might know exactly what tho Bill contained. The sccond reading of the Bill would not 1» taken until next week, probably •on tho first sitting day of nf-xt week. He wished to say to those who were naturally anxious about tho new taxation, that it is quite useless to send any communication to him asking for alterations to tho Bill. What was in tho Bill would remain in the Bill, and while th« resolutions which were being passed might bo subject matter for the House to consider, they could not be. considered by the Government. Everything about the proposals had been fully considered, and when the House and thu country got

the Bill, thy would see that there was provision to meet varying conditions. He would impress once rnoro on tho people and on the Houso that the ne important thing was that the Government must have tho amount of money asked for, and nobody could, have relief by reductions or concessions. Replying to a question by - Mr. Witty, ho said that ho would accept any good suggestions from tho House about the Bill, provided they did not inwlve loss of revenue. He believed that at this time the proposals of tho Government would bo accepted by the country in tho spirit in which tho Government submitted them. It was extremely neoessary. that the Dominion should be kept in a good tinnnoial position. Mr. W. NOSWORTHY (Ashburton) gave notice to ask tho Minister of finance whether ho would provido in tha Finance Bill for a tax on amusements, such as was in force in England. . QUESTIONS. Mr.. NOSWORTHY gave notice to ask the Government whether thoy would consider the advisability of amending the Legislature Act, to provide that the lifo of the Houso of Representatives should bo five years, such amendment to tako effect after tho expiry of' the present House. (Laughter.) Dr. H. T. J. THACKER (Christoliurch East)-drew tho attention of the' Minister of Defonce to the leaky condition, of somo of tho now. hutments at Foathorston. . The Hon. J. ALLEN said that soma of tho roofing of some of (the huts had been fixed with green- timber, and, the timber had shrank. This was now being put right, and ho hoped that it was already put right.. . LAND AND INCOME TAX. A CONSOLIDATING' BILL. The Land and Income Tax Bill was introduced by' ' Governor's Message. Urgency was claimed for tho Bill, and the second reading was taken forthwith. SIR JOSEPH WARD (Minister of finance), moving the second reading, uaid that the Bill consisted of 160 clauses, but it was largely a consolidating measure. The new clauses were, howover, few in number. Ono of the new clauses gave the Commissioner power to amend assessment on objection, obviating tho necessity in certain cases of appeal to a "Magistrate. ■ Tho most important clause in the Bill was that abolishing tho mortgage tax. Another new clause provided that notice must.'be given to tho Commissioner of change of ownership of land. Exemption was given to tho income of a New Zealand company solely or principally engaged in goldmining. Under, the old | system goldmining companies "were - being taxed' to tho extent of half of their dividends, and . the change was made-with the distinct object of frying to promote gold-mining in this country. He hoped that. the offset of the exemption/'would lx) to encourage investment in gold-mining. As the mortgage tax was abolished, a clause was put .in the Bill making tho. interest from a mortgage assessable for' incomo tax. Now. only the equity owned by a man in land was subjeot to assessment. A clause had been put in tho Bill to exempt from income tax all income received hero from abroad if that income paid- incomo tax-in' any other ..part of the British Dominions. ';■■ This .would not apply to trading , concerns carrying on business in New Zealand exporting New Zealand produce.. Theso concerns would pay incomo tax here, because: this was tho country from which their produce originated, and . they would pay . even altjjough the British -. Government required them to pay. incomo tax in -Eng. land. The. estimated amount, of this concession was .£4OOO. Tho Act . of last session, had provided ..for the exemption from incomo. tax of -, bonds or debentures issued by tha*. Government at H per cent. " Tha ' Government was. being advised not to"make, this, ex- ■ omption, but it was very necessary at present that tho exemption should remain if the rate of interest were not to rise. A change was proposed in the methods of assessing life insurance companies. The new clause provided that tho taxable income of any foreign company. carrying;. on;', .the" J)usiness . of- : life insurance -should bo deemed to bo a sum equal to its .total- income-from investments of any kind in. New.. Zealand. Provision was made for tie prevention of evasion of tho tax by the formation of dummy Companies..' Alterations : were "made regarding tho time of graco allowed. Taxes unpaid at tho. expiration of 21 days after due date were subject to 10 per cent, surcharge, after three months 12} per cent.,' and ' after six months 15 per cent. Tho Commissioner also was given power to charge treble tax in a case • of evasion without tho necessity of first securing a conviction, leaving it to the taxpayer to object. This was the mode of procedure-in England. These, he said, were all tho important changes in the law, proposed 1 -by-the Bill.Protest Against Haste./ ' Mr. T. M.- WILFORD (Hutt) said that the course taken, by the Government in taking the second reading of the. Bill no'w would enable it perhaps to get it'passed quickly, but it was difficult to discuss the provisions of the Bill in a detailed manner. It was jiuito impossible to discuss tho- measure intelligently at such, short notice. He had prepared a speech on the general subject of .taxation, but he would reserve it until the Finance Bill was discussed. Ho protested against this method of passing Bills before members were l'ully seized of their contents. ' ' Mr. G. PEARCE (Patea) also - protested against the second reading of a Bill of 169 clauses being taken as soon as it was introduced. In regard to the present Bill he asked whethor any provision was being mado for sucli cases as that of a farmer whom he knew w;ho last year had to pay income tax despite the fact that ho was. losing at the rate of ,£7OO- a year. He would be ruined this year if additional taxation were placed upon him. ■ Mr. C. A. Wilkinson (Eginont): Perhaps he paid too much for his Jaiid. Mr. Pearce said this might be so, but there was every inducement for a man to pay high .prices when he was allowed to leave the greater part of it on mortgage. He referral to the graduated land tax, 'and urged that provision should be made for affording fail: exemption, for those who had largo mortgages • oil-.their properties. This tax was supposed to bo only for the purpose of bursting - up largo estates, but a war 'tax should bo regarded as a different thing, and it

certainly should not bo levied on a man's debts. Ho referred to tho criticism of tho provision to exempt from incomo tax Government or local body debentures. Ho did not think that money would bo obtainable at 41 per cent, unless tho debentures were exempted from taxation. Ho suggested that the Government should offer a higher rate of interest. Mr. G. WITTY (Riccarton) protasted against the discussion on tho Bill being taken immediately after its introduction. Mr. J, M'COMBS (Lyttolton) criticised 6ome of tho provisions in rogard to exemptions from incomo tax. The policy of tho Nationnl Government appeared to bo to conscrvo the interests of tho people with the largest incomes. Ho thought further discussion of the Bill should bo postponed until members had' had an opportunity of studying its provisions. Plea for Delay, . Dr, A. K. NEWMAN (Wollington East) asked tho Finance Minister to postpone further disoussion of tho Bill. He approved of a great deal that was in the Bill, but he did not think they should be asked to vote upon it before tho Finance Bill came down. They were i interwoven to a great extent. The question of double taxation was ono that would have to bo faced perhaps even to.a greater extent tluiu 1 tflo Minister was now facing it. Ho referred to the taxation on such large mining companies as the Waihi, and said that if they were not relieved from tho burden of tho tax now placed on them at Homo they would probably transfer their headquarters to New Zealand. Ho also referred to tho income tax as it affected shareholders of companies. Mi-. G. W. FORBES (Hurumii), in referring to tho graduated land tax, said that there was no desire to tax a man on a reasonable area of land, bu.t he should bo taxed on what he held in excess of a reasonable extent. This principlo would be even more necessary in the future than iu tho past in view of the neoessity of finding land for returned soldiers. It was necessary to have a tax sufficient to induce men with large estates to place their land on the market. There lhad been a great deal of dissatisfaction regarding the valuation of land. There was no one at present on tho Assessment Courts to represent the taxpayer with a grievance. Objectors should ihavo representation on the Courts. Tho Hon. A. T. NGATA referred to the definitions of "Native" and "halfcaste" as set out iu tho Bill. The effect of these definitions, ho said, would be to make the son of-a half-caste, even by a Maori woman of tho full blood, a European within the meaning of the Act. One effect of this would ho that a great deal of Native land would ba subject to the graduated, land tax. A Danaer Threatentfig, Mr. E. NEWMAN (Rangitikei) approved strongly of the abolition of the mortgage tax. He was of opinion, ho said, that the. exemption from income tax of interest on New Zealand bonds must be continued. If. the investment of money in New Zealand was not made attractive, there was a real danger that much of the return obtained for our produce in London would be invested there, for it was possible to . get perfectly good securities returning more than 5 per cent, in London to-day,. The Hon. D. BUDDO (Kaiapoi) said that one of the anomalies in our system of taxation was perpe'.uated in tho Bill. This was the system of double taxation. Companies' incomes were taxed, and so also were tho incomes tho shareholders drew as dividends. Even tho investments of small shareholders, with no other ■source of income, 'had'to pay toll to tho Government, through tho company's incomo tax. .' This was specially provided against in England, and we should mnko the same concession here. Mr. J. ANSTEY (Waitaki) said that, in 'his opinioii tho graduated laud tax was riot effective for tlio purpose for which it was imposed. Ho suggested tliat it should be increased, and that it should Ve imposed on the 1 occupier of land and i*jt on the owner. This would meet tho case of thoso persons who held largo ar&asof land under lease. Mr: J; PAYNE (Grey Lynn) suggested that tho punishment for evasion of income tax should be imprisonment. A Surprise. .Mr. J. A. .YOUNG (YVaikato) said it seemed to him that there was no exemption of mortgages from ordinary land 'tax. ;This was such a serious matter that he' thought it. must have got into tli© Bill through inadvertence. Mr. W. T. JENNINGS (Taumarunui) pleaded for consideration for the--small investor.', "Mr. D. H. GUTHRIE (Oroua) expressed doubt as to whether the chango made in the law relating to exemption from land tax of mortgages would bo good for the farmers". 'Mr. W. NOSWORTHY (Ashburton) spoke on the same topic, saying that, it appeared that a grave mistake had been made. , • A Flaw in tha Act. SIR JOSEPH WARD (Minister of Finance) replied with unusual heat to the criticisms of those honourable members who had found fault with him for not bringing down advanced reforms in taxation. The measure was, ho said, only a consolidating measure. With regard to the clause to which the member for Waikato had referred, it had been pointed out to him early iu tho evening that there was a flaw in this clause. He deprecated the manner in which ;the criticism had been raised. He had been 100 long in the business not to know how these things occurred. "And," he said, with some heat, "I -am not going to have back stabs ripped into mo without defending myself." He promised that the clause would be looked into very carefully. There had been no intention to put more taxation on small farmers, but lie -believed, as tho result of his own cursory examination, that the mortgage taxwould have to be restored. It was manifestly impossible for tho Government to give, as had been suggested, exemptions on account of contributions to tho patriotic funds. This would amount to two millions, and it -would mean that instead of taking two millions fropi war profits, the Government would have to tako. four millions. It was not practicable. Nor did he think it was proper. It was no credit to those who had contributed to the funds—and ho claimed to have done his part along with many other citizens—to claim that they ouglit to be reimbursed indirectly by exemption from taxation. The second rending was agreed to on tho voices, and the Houso rose at 11.45 p.in.