THE DEATH DUTIES

Dominion, Volume 14, Issue 18, 16 October 1920, Page 8

THE DEATH DUTIES

STRENGTHENING THE PUBLIC FINANCE

MR. MASSEY EXPLAINS THE POSITION

DIFFICULT TIMES AHEAD

"Circumstances have arisen during the last month or six weeks that have made it necessary for us to strengthen the finances of the country," said the Prime Minister in moving the second reading of tha Deatli Untie; Amendment Bill in the House of ltepresentativea last night. The increased scale of duties embodied in the Bill, ho said, had beeis prepared somo time ago, in case it was required, 'and it had been fully considered by the I'inance Committee of tho House. In referring to tho financial situation lie was not thinking particularly of the Increased butter subsidy.

The Prime Minister, continuing, said that ho had made an announcement to tho House on the preceding day regarding wcol. Ho did not flunk tliat. there need bo any alarm about the situation, but undoubtedly thero was likely to bo a drop in tho price of New Zealand's principal export. If the difficulty was handled successfully New r Zealand would get oyer it without trouble. But the financial side of the operations would rcquiro to be very carefully handled. Many members would recollect what had ta«ea place about twelve years ago, when tho price of wool fell from about lid. to between sd. and fld. per pound. He was not speaking in an alarmist spirij, but that drop of about sd, per pound had forced tho Government to dismiss about 200 persons from the Public- Service in Wellington. The Government had felt that there was no alternative, The drop had caused unemployment all over New Zealand. He did not want that to happen again, and he did not bolieve that it would happen if there was careful management.

j' The fall in the price of wool, added tho Prime Minister, was likely to be Wanned to some extent by tho very strong demand'at high prices for dairy produceThese high prices caused- inconvenience to the local consumers, but'on tho. other hand a very much larger sum of money than had been received for dairy pro-' duce, in past years would bo recoived during the next year or two, and ho thought that the decline in the valuo of wool would be mndo .up to a large extent by tho increase in the value of butter and cheese. Thero was going to be a drop in tho price of meat, as far as it was possible to judge. But it would not bo a serious drop. The price of lamb wuhlikely to bo maintained, and the declint. in the case of beef probably would not be largo. He would have liked the prices of the last fivo years to have been maintained all round, and if that had been possible the Dominion would havo had no difficulties during tho reconstruction period. duty ns Minister of Pinaucs was to provide against the possibilities of the future. That was why lie was asking the House to agreo to the increased death duties proposed 'in the Bill. Ho wished to add that while he was callin; attention to tho somewhat serious position into which tho Bominion was getting in regard to expurts, ho had not altogether abandoned bopo of being able to mako « start with the .reduction of taxation next' year. The Government was paying- out roughly a'year in subsidies nt present—l'lflO.OOO .to keep down tho prico «f flour, and ,£600,000 under tho new scheme to keep down the price of butter. Tho timo would oome, although ho could not say how soon, when tho prices of theso commodities would got back to normal. When that time came, it would bo possible- for the Treasurer to reduco taxation by a million a year, since the subsidies would no longer bo required.

Mr. Massey added that he would like to bo able to meet all tho demands mado upon tho Treasury for extra salaries and wages, pensions, and so forth. But that was quito impossible. Ho could tell tho House, however, that he had earmarked a sum of ,£IOO,OOO to bo used for helping tho superannuated public servants. His proposal was to assist up to a minimum payment of £W6 a year. Persons receiving under ,£IOO a year would receive assistance. Ho was not going as far as he would like to go or as far as ho had been asked to go, but ho thought members would agree that he was going as far as was possible in tho circumstances. The assistance* would extend to many widows who were receiving very small payments "from tho superannuation funds.

Mr. Massey explained tho provisions of tho Bill, and emphasised that the additional burden was being placed on the largo estates. It was truo that the duties on tho largest estates wero much larger in Britain thnn in New Zealand. The British maximum was JMO nor cent, on estates over .£200,000. The Bill proposed' a maximum of 20 per cent, on estates over .5100,000. But the largest British estates ran ino millions, and New Zealand had no such estates to deal with. He wn.s informed bv the liPad of tho Donartmenfc that the Bill would propose about £300,000'0f additional revenue. Mr. Massey added-that lw proposed to move a new clause providing that money given by any persons or firm to a fund intended to provide superannuation allowances for employees should not he liable to gift duty.

Tho Leader of the Opposition (Mr. Wilford) said he could not fail to support tho Bill, since he had been urging the Government for .many years to do what it was now proposing. Tlio scheme of duties embodied in the Bill was practically identical with a scheme that had been prepared by ' the Commissioner eight years, ago. If the Bill had been introduced in 19H instead of in 1920, the Treasury would have had tho benefit of at least .£300.000 additional revenue per year since that time. A good feature of the Bill was the raising of tion on small estates from £500 to £1000. 11l was inclined to believo that in view of tlio increased .value of homes tho exemption could bo more fairly placed at .£2OOO. The payment of death duty on small estates was often a serious matter to widows and other dependants, while at the same time tho amount of revenue received by the Department from such estates was inconsiderable. He agreed heartily with tho principle embodied in the Bill that the death duties should bo much larger in the case of persons unrelated to tho deceased than in the caso of relatives. The proposed maximum estate duty of 20 per cent, left room for a further riso when tho Government required .increased revenue. New Zealand did not need at present to go as far as Britain had gone. Mr. Wilford expressed the opinion that .the Government, had established a had precedent in taking money from the Consolidated Fund, for tlio stabilisation of prices. Ho suggested that the Prime Minister should add to the Bill a clause providing for a'refund of duty on i;he estate of the late A. H. Turnbull, who left his valuable library to the nation. Mr. Massey: That matter is coming bcforo Cabinet within the next fow days. The Minister of Justice (tho lion. E. P. Lee), by way of showing how the charges upon big estates had been increased,! naid that the highest fco for tho sealing of probate on any estate during the past 12 months was .£3. Now there was a scale making the fees much higher, and applied to the largest estate passed for probate duty last year it would have produced ".£4OO for the sealing, as aguinst tho former maximum of £3. Thero wero numbers of young people brought up as members of particular families though they wero not formally adopted into those families. Such people, he thought, wero something more than mere "strangers in blood" in the usual acceptance of the term.

Air. it. M'Callum (Wnirau) complimented tho Government upon the Bill. Ho did not regard it ns a party measure. Tho Government-had had tho unanimous support of tho members of the committee that considero'l the Bill. The committeo felt that tho Government had gono as far as it could. The extra charge for succession duty in the. cn.se of an riheenteo, he thought, ought to bo ten per cent, on tho value of the estate, and not on the amount cf the duly.

Mr, D. Jones (Kainpoi) thought thero was a danger of the Government's falling into tho belief that it could "create wealth by taxation" Now Zealand was going to be the-most expensive country in the woild to die in. Ho would prefer io eeo the duty on medium-sized estates

3 I cased somewhat, and a scalo extending beyond 20 per cent, provided for estates of over ,£90,000. To pay somo of the rates of duty set fortli in the schedule, many ncoplo would havo to keep a largo amount of capital liquid. This wxmld unfavourably affect the development of the country. The llun. J. A. Hanan (luvercargill) supported the Bill. He believed it would mako for a moro equitable- distribution of wealth. This cunntry did not want an "idle rich" class, piling up capital ut •the c-xpenso of tho general well-being. .Mr. W. D. Stewart (chairman of tho Public Accounts Committee) replied to tho arguments used by Mr. Jones. Ho suid that if any mistake- had been made it had been made in imposing such steep taxation as had been imposed in the Land and lucoino Tax Bill. At a time when production was not increasing as it should do, tho accumulation of capital, so essential to increased production, might bo impaired by tho high rato of income tax that Parliament had imposed. Production was by no means so likely to bo affected by tho in«roased death duties. Tho man on whoso estato death duties wero paid was hardly concerned about, tho'steepness of the duties. Authorities agreed that men did not accumulate great wealth in wder to leavo i,t to their successors, but in order to enjoy the eonse of power that it gave them during their lifetime Mr. C. E. Stathara (Dunedin Central) doubted tho wisdom of piliiig taxation on to tlio peoplo who possessed money. The tendency of the new death duties, he thought, would be to induce peoplo who had wealth to go to other countries, where the taxation was not so heavy. Mr. Masseyi What countries? Mr. Statham replied that there were iountrics with lighter'taxation. People coidd not lie expected to promote business enterprises in New Zealand when they had to pay up to &s. 9d. in tho pound as income tax. .The real trouble was that tho Government had not done enough during the war in tho payment of war costs from war, profits. Mr. O. J. Hawken (Egmont) endorsed Mr. Jones's view that tho porceutago of duties should havo gone beyond twenty per cont. in tho case* of estates larger than dCM,OOOi in order that tho rote-in the case of tho medium estates should be lowered. ■ The Hon. E. P. Leo said thero were not enough estates- over to provide the money that would have to bo found under such a rearrangement as tho member proposed. Mr. Hawken thought that the duties' had been raised to make a pure gift to the people. Tho Government should be careful in its taxation, lest it killed the goose that laid the golden egg. Tho giving away of money as a subsidy on wheat, flour, or butter had to be vory carefully 'watched. Tho Bill was read a second time and committed fwfhwith. Clause 8 Bill as introduced provided that an addition of 10 per cent, of tho succession duty should be made to the succession duty payable in the cnR6 of .heirs domiciled out of New Zealand, not being the wifo or husband or relative within the third degree of consanguinity of the deceased. Tho Prime Minister moved nn amendment providiiiß that (lie special 10' por cent, should be calculated on the whole 'amount of the legacy in excess of JiIOOO, instead of on the succession duly. Tho amendment w«i adopted. Progress was -reported whou. the sc'hcdule was reached. When Mr. M'Callum suggested that tho Bill should be p«t right through that night. Mr. Ilassoy said ho did not consider that courso -would bo fair to the House, considering that the Bill had ton so recently introduced. TEMPORARY CLERKS IN PUBLIC SERVICE COST OP LIVING'-BONUS. A petition praying ' that temporary public.' servants snoiud bo paid tho cost ol living bonus at the same rate as permanent public servants was yesterday reported upon by the A to L Petitions Committee, whicli recommended it to the favourable consideration of tho Government.

Dr.- Newman (AVellington East) urged the Government to give attention to tho claims of the temporary clerks. These men had been assured that they would get tho full bonus, but in fact somo temporary clerks with ten years', service had been paid only £32 instead of the full ,£SO. Tho temporary clerks wero widely scattered over tho Depo.ru monts, and it appeared that tha increases had ■ not been allotted in a systematic way. Somo men had got tho full increase, wlvilo others working bosidri them; had not got it. The status of the temporary clerks ought to bo improved, and in the meantime a vote should be placed on the Supplementary Estimates to cover their just claims. At present temporary clorks with twenty years' service wero liablo to, summary dismissal. The member quoted somo cases of hardship. '

Mr. G. Mitchell (Wellington South) and Mr. J. P. Luke (Wellington North) supported tho claims of tho temporary clerks. i

Mr. J. A. Hanan (Invercargill) suggested that tho employment of temporary clerks and casual hands defeated to somo extent the intention of the Public Service Act. People were brought into the publio. servico by a back door, as temporary hands, and then a demand was made that they should be given the status of permanent hands.

"Temporary or permanent, all persons in Government employment should have enough to live upon," said "Mr. W. H. Field (Otnk-i). Ho quoted tho case of a. woman with a completely dependant sister. Tho women received £2 ss. a week in a Government Department.

Mr. T. M. Wilford (Hutt) .reminded the Houso that lie had raised this question many times during the session. It \yas now "up to the Government." The petition was referred to the Government for favourablo consideration. RETIREMENTIT~SS YEARS "OF AGE OTAGO WOMEN TEACHERS PROTEST. The following three requests were made in a petition presented to the House by If. L. Dillon and 29 others :-ta) That in view of the high cost of living, tho rate, of superannuation for superannuated women teachers should bo increased." (b) That legislation should be passed to prevent compulsory retirement at the age of .15 years, (b) That receipts for superannuation allowances should be exompt from, stamp duty. Tho Education Committee yesterday reported to tho House upon tho petition. With regard to (a) the committee had no recommendation to make, as tho matter was one of policy. The protest against compulsory retirement at tho age of 55 it proposed to refer to the Government for favourable consideration. "The committed finds," the cliloirman stated, "that tho notion of boards' is not uniform." In tho Otago district, said Mr. GV 13. Statham, the board required tho retirement of women teachers at .tho age of 55. Two womvn teachers had come before, the committee and they had bliowii that notwithstanding their onforced rutirenient that were re-employed as relieviii" teaclwrs. He hoped that the Government would alter the Education Act. to Rtifc teachers -a right of appeal n.gaiii6t retirement before the age of GO. Those who wero retired at the age of 55 hoi only lost the salary they would hiave received up to tho ago c- 00, but also received a lower rato of superannuation. Tho payment of superannuation should 'be placed on tho same footing ns tho payment of salary or wages, and the receipts exempted from liability to stamp duty. Several members supported Mr. Slatham's contentions. - The pl'tilion was roferred to the bovernment for favourablo consideration. SOLDIER-FARMERS" AND BUTTER SUBSIDY Mr Field (Otaki) is asking the Prime Minister wlwthor returned soTdiors and other dairy farmers who, through lack of butter 'factories in their districts io which to solid their butter-fat, are matin* their own butter for supply *o wooers and for town consumption will participate in tho allowance to be made bv the Government out of tho Consolidated Fund to equalise local with oxport prices.