THE TAXING BILLS

Evening Star, Issue 22457, 30 September 1936, Page 6

THE TAXING BILLS

MAIN LIE OF OPPOSITION ATTACK 60 PER CENT. ADDED ON SMALL INCOMES 7 PER CENT. TO 15 PER CENT. OH LARGER [P*« United Press Association.! WELLINGTON, September 29. The House met at 2.30 p.m. Mr Herring gave notice of his intention to introduce the Ashburton County River District Bill. Mr Sexton was granted four days’ leave of absence on account ofi illness, and Messrs Bodkin and Hargest were each granted two days’ leave on account of urgent public business. The, second reading debate on the Land and Income Tax (Annual) Bill and the Land and Income Tax Amendment Bill was resumed. CUTTING ARTERIES OF INDUSTRY. Mr Broadfoot said it seemed to him that they had proof positive that there was an earnest desire on the part ofthe Government to cut the arteries of industry and bleed them to death, no matter what type or what kind that industry was. In his opinion it was just one more method of eliminating the private element in industry, and making way entirely for State control. The 40-hour week, higher wages, the increase in ordinary taxation, and the graduated land tax -were factors which in his opinion would gradually put industry where it would be impossible for it t 6 make that profit which was the essential inducing factor for men to step out and create industry, and make a profit, not only providing for themselves, but providing- jobs for other people. He quoted figures to show that the bulk of the increased taxation was being carried by the smaller incomes, by the small businessman, the Civil servant, and the shopkeeper. Mr Broadfoot said it was nothing more nor less than a deliberate effort to make it impossible for the small business man and the man of medium income to carry on effectively. Mr C. H. (Burnett said thousands of young men were looking for land, but there was none available. He thought there should be a stocktaking of the land of the Dominion to see if it was suitable for closer settlement. He agreed with the Prime Minister that the measure was one of urgency. He believed, too, that if the present system were to continue there should be classification of land, because pressing taxation on land that was not really suitable for subdivision was inequitable. He would like to see a flat, tax on the unimproved value of land with exemption of £SOO, and also a graduated income tax. He suggested that _ the Government should set up a committee during the life of the present Parliament to investigate properly systems of taxation, to see that taxation was placed as equitably_ as possible on the people of the Dominion. He thought the graduated land tax was a fair one, and meant that those who were in a position to pay, paid. Mr Dickie claimed that no land tax was just or equitable. He said all land taxes should be wiped out and substituted by income tax. Where land was used for building, the tax could be passed on, but where it was used for farming in many cases it could not be passed on. If largo estates were to be cut up the best way would be for the Government to take them compulsorily. Legislation to do that was already on the Statute Book, and it was the quickest way to do it. The graduated land tax would not result m the cutting up of estates, and had proved a failure in the past. • He thought the present method of levying income tax was clearer and better than the intricate system of the past, but it fell heavily on small incomes. Those with incomes between £SOO and £6OO were harder hit than those with more than £I,OOO. . Mr Coates asked if the graduated land tax was based on the principle of capacity to pay. He said the Government, by its action in emphasising and reintroducing the graduated land tax, was perpetuating the principle that was definitely unsound and unfair to every man, woman, or beneficiary who came within the category where capacity to pay did not exist. The Prim© Minister had spoken of altering the present system of taxation, and Mr Coates wondered if that was wise. EXCHANGE CANARD ALLEGED. He thought the Prime Minister should not talk of reducing exchange, as it unsettled the minds of the business community. Mr Barclay said the Government then in power told only its friends about the raising -of the exchange. That, Mr Coates thought, was a proper subject for inquiry by a Royal Commission, and he asked the Prime Minister to take note of what had been said. He could imagine no more serious charge being made against anybody, and thought the Government should set up a Royal Commission to investigate the matter. He said it was not fair that a man who had served many years in Parliament should be -subjected to remarks of that kind. Mr Coates then referred to income tax. He said the average increase on incomes between £3OO and £6OO a year was 60 per cent., but on incomes between £7OO and £I.OOO the average Increase was only 15 per cent. The increase on unearned incomes between £7OO and £I,OOO was only 7 per cent. The Government had professed all along the line that ability to pay should bo the basis on which taxation should be levied, and they found at the present stage that the Government was increasing the tax on smaller incomes by 60 per cent, and on higher incomes by from 7 to 15. Mr Lyon said the Government had been twitted with not keeping its election promises,.but he reminded the Opposition that the Government had been in office less than 12 months and had two years yet to go in which to keep its promises; and he said thev would be kept. Ho submitted thar matters raised by the Opposition were arguments not so much against the Bills, but were merely arguments to discredit the Government, if the Opposition were sincere they would move an amendment in committee to increase the tax on higher incomes. Mr Coates: The Standing Orders will not allow it. Mr Lyon. “ Is that not a beautiful let out.” He suggested then that the Opposition should move a reduction, and ask the Minister to make the increase.

Mr Holyoake said the last Government had mads some reductions in taxation, and if it had been returned

would have made more. The Opposition contended that the anticipated increase in revenue was enough to pay for extra social services. The Government had found, in spite of all it had said, that when it wanted money it had to go to the rank and file, and, the great bulk of the present taxation would come from the rank and file. The second reading of both Bills was carried, and the House went into committee to consider the clauses. THE COMMITTEE STAGE MINISTER GIVES THE SCALE The discussion on the Short Title of the Annual Taxing Bill Was continued. The Minister of Finance, replying to points raised, said there had been some criticism by Opposition speakers that the increases in the higher salaries were not in the same proportion as the increases in salaries between £3OO and £6OO. Exemption was granted for each child under 18 years of ago to the extent of £SO, and there was also a £SO exemption for a wife. The exemption for the wife previously disappeared between £6OO and £BOO. There was nonabsolute exemption for everybody of £lO, and in addition to that there was an allowance of £SO for a wife or housekeeper. Mr Kyle: How many housekeepers are you allowed ? Mr Nash: Only one. The Minister went on to explain that a married man with a wife and two children, with an income of £3OO, paid no tax; with an income of £4OO, such a man previously paid £2 13s lOd, and now he would pay £3 Bs, an increase of 14s' 2d, and the Minister did not think that would worry him when ho remembered that old-age pensioners would receive £1 a week and later 22s Cd.' With an income of £SOO, he would pay £4 17s 6d more than last year, and with £6OO he would pay £6 16s 3d more. “ The point, however, is not what a man pays, hut what he has left after he has paid his tax,” said the Minister. He pointed out that the man with an assessable income of £3OO paid no tax, the man with an assessable income of £4OO, after paying tax, had £396 12s left; and with an income of £6OO he had £577 12s left. The man with an income of £BOO would have £755 5s 4d left; with £I,OOO he would have £929 12s left; and with £5,000 he would have £3,970 left—so he had nothing to worry about. The man with an income of £5,000 paid £214 more than he paid last year, so he would not say his tax had not been raised; and with an income of £IO,OOO he would pay practically £I,OOO more, but would still have more than £6,000 left; and the average man could manage on that. CONFISCATION. Mr Wilkinson said if a man had £IO,OOO invested at 4 per cent, he would have to pay £4 8s in income tax; but if he put the same amount in land he would have to pay nearly £4OO. The Minister: He would not have to pay £4OO. Mr Wilkinson: Yes ho would./ Ho would have to pay land tax of £l4O, and taxes to a local body as well. The taxing proposals would drive the money to investments.

Mr Coates said the graduated land tax was nothing more nor loss than confiscation. At 10 o’clock the Prime -Minister moved the closure, and this was carried by 36 votes to 10. The Short Title was also challenged, but was passed by 36 votes to 10. Progress was reported and the House rose at 10.30 p.m.