THE HOUSE

Dominion, Volume 12, Issue 304, 19 September 1919, Page 8

THE HOUSE

The House of Representatives mot at 2.30 p.m.. GREYTOWN BOROUGH LOAN. Mr. J. T. M. Hornsby (Wairarapa) gave notice to introduce the Greytown Borough Loan Empowering BJffi, 1319- ■'"■ LEAVE OF ABSENCE. The Hon. W. D. S. Mac Donald (Bay of Plenty) was granted seven v days' leave of absence on account of illness. FIRST READINGS. The Manawatu Gorge Road and Bridge Bill (Sir William Fraser) and tho Sttmo Quarries Amendment Bill (Sir William Fra=er) wero introduced and read a iirst time. The latter Bill was read a second, time pro forma, and referred to the trolcl Fields and Mines Committee. The Auckfand University College bitsBill was introduced by Governor = Message, and read a first time. GOVERNMBNT_BUSINESS THE SESSION ANDTHE ELECTIONS. The Right Hon. W. V. MASSEY (Prime Minister) moved: That on and after Thursday, September 18, and for the remainder of the session, Government busi- ' ncss take precedence on Wednesday, ana after local Bills on Thursdays. SIR JOSEPH WARD (Awarua) asked tho Government In advise private members as to when their Bills would have a chanco. Ho hoped tho Prime Minister would tell tho Houso when the Financial Statement would be brought down. Mr. Massey: The Financial Statement wi>.l como down on Tuesday. . Sir Joseph Ward said that this was. satisfactory. He hoped the Prime Minister would now tell tho .House the dato of the general election. Mr. Massey: I hope tho honourable gentleman will not waste the time of tho House. Sir Joseph, Ward still pressed for this information. Mr. Massey sai,d he could give hiß opinion as to when the election would be held, but he could not give the exact date. . . Sir Joseph Ward pressed for this indication. Mr. Massey, replying, said that the first Monday to bo taken would be given to private members' Bißs. He said that there wag an immense amount of business, to bo done and the Government must make full uso of tho time to get its legislation through. He detailed a long list of Bills, the subject matter-of which had been previously mentioned in the House, which the Government hoped to get through. He-hoped that members would assist on getting the legislation through, because it was urgently required by the country. He-hoped that the Financial Statement. would not be' discussed at length, seeing:/.that members had inado good uso of opportunities for talk already. His own opinion was that the elections would be held in tho first or sec-, ond week in December. Sir Joseph Ward asked for an assurance that the elections would not lie held before the first week in December. Mr. Massev said that lie could give no suqh undertaking, nor could he Rive any more information. Ho thought that tho House would have to sit until about November 1, ,of perhaps a:day or two later, and that there ought to bo an interval of fivo weeks at least between the rising of the House and election day. Sir Joscuh Ward said that ho thought the Houso might get through its business bv the middlo of October. Mr. Massev said that this was quite imnossible. He assured Sir Joseph Ward and tho House that he could civp no more information, because lie had none to give. Ho had given moro information than had ever in his experience been, given by a Prime M.lmstev in such circumstances. Ho was anxious to givo the Houso such information as ho ■ could: indeed there was nothing to be mined bv the withholding of information.

ANNUAL TAXING BILL LAND VALUATIONS. SIR .TAJIKS ALLEN (Minister of VinaiiceJ moved tho second reading ol llin Land and Income Tax Bill, lie said that.'lire Hill required ,'no explanation. It. was merely the annual taxing Bill, i it was exactly the same as last year's Bm - - . -, „ L ;vlr. 1?. M'CALLTJM (Wwrau) said that tlie Government ought to give more nttenlion to keeping tho valuations of land in tho Dominion up to date. Many own-

ors of land escaped much taxation because! their valuations were too low, on account of the Department not having made revaluation for some time. Those delays in valuation were one of the causes of the profiteering in land. The lion. D. HUDDO (Kaiapoi) drew attention to the inequity of the method of collecting income tax from, comnanics. The grievance was worse as applying to co-operative companies, the shareholders ot which were rarely income tax payers. He supported the remarks of the member for Wairau regardins deferred valuations of laud.

Mr. 11. G. ]')Lr, (Christchurch South) said that the Government had been wise in not making a reduction in taxation. He had nrotestcd at the time against the abolition of the mortgage tax, and he still thought that it had been a blunder. The removal of the tax had not benefited the borrower.

Mr. G. V. PJ3AKCK (Patea) said that the present system of taxation on mortgages was much' fairer than under the old method. Ho thought it unfair, however, that landowners should have to pay land taxes in respect of interests in .land covered by mortgage. There was dual taxation. The owner of the money was heavily faxed in respect of his income from the mortgage, and the owner of the land had also to pay tax—a tax on his debts. He realised that the revenue must, be obtained, but it should bo obtained' in a fair way. The Minister of Finance had not had time to recast the svstem,, but it was to bo hoped that he would do so next year. In his opinion the ordinary land tax should be abolished. There should be a graduated tax. with heavy increases in the higher grades, to break up large estates, and that in lieu of ordinary land tax the farmers should bo required to pay' income tax.

Mr. J. M'COMBS (Lyttelton) accused the Government of perpetuating war evils. Excess profits were still being made. Ho thought there should be a distinction between earned and unearned incomes.

Mr. J. PAYNE (Grey Lynn) said the House had known well that the system of taxation was inequitable. But members did not dare to apply pressuro to the Government. The Allies had carried on a war costing on a bale of paper and a printing press, and nothing else, yet the Government had not learned the lesson. A State hank would solve the country's financial troubles.

Mr. Payne, speaking after the dinner adjournment, urged that traders and manufacturers' profits should bo limited rigidly to tender cent. The Dominion could then give increased protection to industry, and at the snmo time secure reduced prices. Sound Taxation, SIR JOHN FINDLAY (HawkVs Bay) said the test of ,the soundness of any system of taxation should bo equality of sacrifice. Attempt at unfair taxation had always brought trouble and misery. A great authority had laid it down that tho fairest tax was a tax on tho unimproved valuo of laud, since it did not touch the value created by the effort of tho individual. Tho next tax in order of fairness was the tax' on inheritance. The New Zealand 6ystem had some important defects. It did not distinguish between earned and unearned incomes. Progressive countries recognised the distinction between the inconio earned by personal effort and dependent on tho continuation of that effort, ar.d tho income drawn from accumulated wealth. Then tho Government taxed incomes on actual returns, but taxed land on valuations that were known by all to bo far below actual values. The payers of Customs duties were taxed on full war prices. Why should not the landowner pay on the real valuo of the land? '

The Hon. W. Nosworthy (Ashburton): The landowner pays an income tax as well as a land tax.

"Wo should bo fair," said Sir John Fiudlay. "We don't want to provoke the resentment of a class that feels it is being overburdened while another class is allowed to escape. If you want to induce a wider and still wider spirit of social harmony, improve your fiscal system. Try to place it beyond criticism bv showing that it is deep based in the principle of equality of sacrifice." A "Dud" Amendment. The Hon. G. W.' RUSSELL (Avon)-re-minded tho House that during the war tho Government had accumulated a surnlus of .£15.000,000. Tho war scale of taxation was being continued by the present Bill, and ho had some doubt as to the right of a government to tax tho people beyond the actual financial renuireinents of the year. The Minister of J?inanee m'esnmably would explain in ihe Budget what was proposed to be done with the money in hand. The Dominion a' present, said Mr, Rusfell, was engaged in an orgy of limit speculation. Land values weio soaring to absurd heights. One remedy would be to check inflation of land values by means of taxation. The land fax revenue, as a matter of fact, had advanced very little during the last five years as compared with Ihe Customs revenue. Yet tho Customs taxation fell on the mass of the people, while the land tax was paid by the people who 'had received over ,£100,000,noi) of .increased land value in recent Years.

Members: Doesn't the farmer pay income tax? And Customs taxationH Iff. Russell demanded-that "the heavy, burden should be carried by the strong horse." He moved as an amendment: "That, tho debate bo adjourned to enable the Government to reconsider the taxation policy of the country on tho following line's:— ■' '» ,"(1) Tho restoration of the graduated land tax on estates exceeding .£IO,OOO in value. (2) Tho establishment of a sharp graduated tax on incomes of over .G2500. rising to 40 per cent, on private incomes of over ,£20,000 a year. (3) The rend: ustmentoi' luxation on incomes of comnanies in order to allow small investors to receive 10 per cent, on their investments, (i) Tho limitation of tho dividends and profits by joint stock companies lia 10 per cent. (5) Tho restoration of the tax on mortgages, making the lax payablo by tho mortgagee." The amendment lapsed for lack of a s n conder.

About "Labour." , Mr. n. HOLLAND (Grey) stated toot whon he spoke of "labour" lie meant all labour of hand and brain,.not workers of any particular class; but all men and womenjwho rendered social service. No person in New Zealand, said Mr. Holland-, earned mfjre than .£IOOO a year. Tho official statistics proved that (act. Hut some people received more than .CIOOO a year. No man could live and maintain a family under decent conditions in Now Zealand to-day on an income of less than JJI- a day. Mr. Holland quoted figures to show that the majority of New Zealand breadwinners failed to qualify to pay. income tax by earning more than JC3OO a year. The under-valuation «" land for taxation purposes was notorious. Labour members would not second the amendment moved by Mr. Russell, since they regarded it as being "merely a quarrel betwee.i two sections of the' opponents of Labour." The war policy of tho Government had beer, a wrong, policy, and the people who had profited from it ought to ca:ry the burden now. Both the old parties represented class interests. Tho Liberals represented class interests. Members: All interests.

Mr. Holland: You would -.tpresent any interests that would gvd yuu on the Treasury bencha, Mr. J. ANSTBY (Waivaki) protest**, against the conl.imunw.o of what he regarded as a grossly unjust system *f taxation. Tho incidence ot tho land tax was most inequitable, while tho income tux distinguished iv favour of the ■unearned income. The man who earned money by direct effort paid tho tax, while mortgagees, investors in public companies, and investors in tax frco loans escaped taxation. The land tax should be payablo on a ll.it rate by the actual owner, tho freeholder and tho mortgagee paying cm their resiicclivo shares. The graduated land tax should 1« placed on occupiers, and it Should not produce revenue, since it <ui"lit to bo high enough to force subdivision. Tho worst cases of aggregation were found among the leaseholders.

Tho Married Men. Dr. A. K. NEWMAN (Wellington East) said tho Bill would disappoint many people, since it provided for no reduction in taxation. Tho Government must havo money, but he would strongly urge the Government to differentiate between earned and unearned incomes. The British Government had recogaised

this principle for years. There could bo no question about the justice of putting more taxation on the unearned incomes than the earned incomes. Members on tooth sides of tho House were at a disadvantage in that nothing they could say seemed to impress the Ministers. Mr. K. Semplo (Wellington South): Why support them? Dr. Newman •. I am very much like you, sir, bound by pnrty ties, I am quite sure that if you got on the Treasury benches, Iho condition of this country would be very much worse than ever. 'There would be no property left for anyone to tax. Dr. Newman added that the married men ought to receive relief. The heads of families were suffering severely from the high cost of living, and their position was made worse by every additional child. The Government should \ try v this session to lift, .some of the burden . from these people. The whole business community was against tho present unfair system of taxation of companies. The Customs tariff was antiquated and was hampering the trade of tho country as well as sending' up the cost of living. An anti-dumping law was required for the protection of local industries.

The Minister of Financ;. The Minister of Finance, in reply, said he did not pretend that the taxation system was perfect. Hut a great deal was done to relievo hardship. For, example, deduction of .C2OOO was allowed on land values in casss of hardship or incapacity. A deduction of £3M was . allowed . a widow or orphans in case •of hardship. A deduction from income of .£25 per child was allowed income tax payers. Tho Commissioner of Taxes had power to give relief in cases of hardship. Itc admit-, ted there was some hardship with respecb to tho taxation of companies. But money had to l)e provided for public purposes, and even with regard to companies provision had heon made to deal with cases of hardship. Special relief was afforded shareholders whose total income did not exceed .£IOO. The member for Grey had misrepresented the position deliberately. Tho taxation was already placed on those" best ablo to bear it. It. fell chiefly on people with large incomes wid liroad acres. The total amount paid inj income tax last year had been over .£6,200,000. The land tax. which, like the income tax, was graduated, had produced over The burden of taxation was exceedingly heavy. Tho Customs taxation produced about half as much as tho income tax, and the income tax payers helped to pay it. lie 'was sorry that the Government could not reduce the taxation this year, but when members heard the Financial Statement they would understand why that was not possible. Ho realised some land valuations were too low. He would be glad to know, as Minister of Finance, that all the land in the country would be revalued to-morrow. But that was not possible. Ho hoped the new. valuations vT'iild to nushed ahead as rapidly as pospilSle. Ho believed the removal of the morte-age tax had been a mistake, but no change in that respect, or in taxation generally, was possible this session. He had scarcely had time to po into tho general nnestion at all. He hoped that next vcar when conditions had becomo more 'near'v normal, the Government would lie able to reduce taxation. The Bill was nut through all its stages and passed. The Honso adjourned at 9.50 p.m. until 2.30 p.m. to-day. (