Pyramiding Costs

Hawke's Bay Herald-Tribune, Volume 81, Issue 17, 13 October 1937, Page 3

Pyramiding Costs

— Press Associatlon.)

WHY NO RELIEF? Minister Challenges Charge oi Wastage AMENDMENT LOST

(By

Teleeraph

WELLINGTON, Last Night. When the Land and Ineome Tax (annual) Bill was introduced in. the House to-day for the second reading urgency was granted the measure on the motion of the Prime Ministef. The Minister of Finance (Hon. Waiter Nash), moving the second reading, said the Bill re-enacted the provisions of the Act passed last year and the rates of taxation wonld be the same. The Government recognised that the hardship provisions in the existing taxation laws were not suf&cient to allow fnll consideration to be given to deserving cases and it was proposed to bring down a special Bill giving wider powerk to deal with cases of hardship in payment of land tax. Other taxing legislation would be submitted to the House during the present session and it would be designed to remove existing anomalies and bring the law infco line with modern principles in taxation. The leader of the Opposition (Hon. A. Hamilton) said he would remlnd the House that it was passing a Bill authorising some £8,500,000 in taxation comprising £1,000,000 land tax and £7,500,000 income tax. The incfdence of land and income tax was always a debateable point, in the present case especially so as it appeared that the burden of taxation was beeoming heavier and heavier. The present measure made provision for £3,500,000 more land, and income tax than two years ago. He proceeded to compare the taxation returns to-day with 'those of two years ago before the present Government came into office, stating that although the increases were not all due to the taxation initiated by the present Government a good deal of it was. He thought the taxpayer would be justifled to-day in view of the general prosperity in looking for some relief in taxation. The total revenue received by ihe Government, said Mr. Hamilton, was £40,000,000 and the total taxation £35,500,000. He criticised the Government 's reimposition of the graduate.d land tax, stating that the fact that the Government had Teceived £250,000 less than budgeted for last year showed ,t"hat this tax was unsuccessful. He asked if the Minister of Finance would consider embodying in the Bill the same hardship clause as was contained in the 1929 Act, and continued that the graduated land tax could not be justilied until lands were classified. Labour he said, had always contended thai ability to pay was the main foundatior on which taxation should be based. Speaking of the income tax, Mr. Hamilton compared the returns undei this heading to-day with those of two years ago, stating that there had beeo an increase of 81 per cent. in the case of the taxpayer earning £500 a year, while for the taxpayer earning £900 it was only 5 per cent. He thought it would be wise for the Minister of Finance to inquire into the problem of the tax on unearned income, pointing out that there were quite a large number of people living on their savings. That was their form of superannuation, but it was classed as unearned income. Mr. Nash: They get exemption on £211. ! Mr. Hamilton: Well, if they get that they are n$>t so badly off. Mr. Hamilton continued that the bulk of the income tax was paid by .companies and he said lt was not always so easy to adjust the incidence of income taxation as it appeared. The Government had stated they could spend the taxpayers' money better than the jtaxpayers themselves, but he wished to cross swords with the Government on .that point and contended that it was wise to leave as much with the taxpayer as.possible. The taxpayer, he said, was the most disappointed section of this community. In the Government 's administration he had. been con-' fidently looking fonwrd to a reduction in taxation and had not received it. H« reiterated a remark made in his Budgel speech that it was dangerous to keej up a high incidence of taxation "nliei revenue was high. "VVhat would happen he asked, when revenue fell. It wai ! easy to make adjustmenta when you fciad the money but not so easy when the revenue was not there. He thought we might be undermining our whole financial system if we did not watch out. Hon. P. Fraser's Challenge. o The Minister of Education (Hon. P. Fraser) said Mr. Hamilton 's contention that the Labour Government claimed it : could spend the taxpayers' money better than the taxpayer could himself was new to him. No Government could justify taxes that were not required and could not profitably be expended, 1 but he challenged the Opposition to state what taxes the Government was levying could be cut out. He was certain the Opposition would not be willing. to cut payments on social services. health, education or public facilities. If they wanted them and were not Willing to pay for them then they came very close to insincerity. Could the Opposition show them* where expenditure could be legitimately reduced. If they could point out one item where money was being wasted he would undertake to see that the waste was stopped. The Government, he said, did not want to levy more taxation than was required, * but it would continue to levy taxation for social services and public services. Generally the Government beliaved it» present jsolhsjr. wa# th# eeweefr osa

and wonld lessen' any international catastrophe. Mr. H, S. S. Kyle stated that although the amonnt of taxation had shown a marked increase it did not appear that any more was being spent on social services than last year. ' '• Mt, S. G. Holland said the Goveracment was apparently not prepared to !show its hand and state what it wonld do if the country 's revenue fell to any appreciable extent. The country as a , whdle was anxious to get a repiy to 'that question. He chaUenged the vote .of £150,000 for wheatgrowers, stating :the Government bought the wheat at 5s |a bushel and sold it to the millers at [ ;4s 9d, a transaction which cost the ' 'country £150,000. This was not to prolect the wheatgrower, but was to cover up the Government "s own loss. i The Minister of ilndustries and Commerce, Hon. D, G. Sullivan, said if that £150,000 were taken from the pockets of the wheatgrowers — men who had served the country faithfully and well and deserved the fr.uitg of their labonrs — and it was passed on to the public it would cost the country the sum of £300,000, that was because the price: of the 21b. loaf would have to be in-i creased a halfpenny which was the' smallest coin we had in our currency.! He also stated that the cost of living to-day was lower than during the 1920-' 80 period. The Government intended' to reduce taxation when possible. Mr. W. J. Broadfoot urged the lifting of the gold tax to enable the develop- ' ment of the gold resources of the country on a fair basis. The Government, he thought, was endeavouring to' hamstring private enterprise by high taxation and was using it as a new method of punishing thrift and enter- - prise.. Instead of attempting to def end the (Government's taxing policy, said Mr, W. A. Bodkin, the Minister of Education had raised a smoke screen by talking about social services. The civil servants had had their cuts xestored but their increases had been swallowed up by higher costs and they were actu4 ally worse off than under the previous Government. Taxation was in the . main, he said, paid by trade and industry, It would expand under freo trade or protection but not under uncertainty. The 'graduated land tax was a penal tax and he knew of cases where, properties that could not be subdividedl were bearing a far too heavy burden.! Where the farmer could show he waal suffering hardship and his propertyj could not be subdivided, relief should j be given. . Mr. W. P. Endean also criticised the! gold tax which, he said, must tend to discourage mining enterprise, and he' stated that he hoped the Minister' would soon have placed on the Statute1 Book a hardship clause which would] ! give real relief to the overburdenedt taxpayer. The cost of living had in-j creased enormously and the increases in old age pensions had all been swallowed up by higher costs. Our taxation per capita was staggering when compared with that of other countries. In conclusion, he said he thought the Minister should make provision for in- i creased family allowances. ; Why the Hurry? j Rt. Hon. J. G. Coates said he was! imazed at the Government's evident' desire to hurry the present measure through the House. Members of the Government had evidently received instructions not to speak on the measure and were obeying their orders implicitIy. He thought the reason why there" should be all this hurry was because the Prime Minister and the Minister of Finance felt guilty. (Laughter.) He went on to state that the Prime Minister before last election had promised to adjust taxation. What must the public think of the leader of a large party who had pibmised to adjust taxation and had not done so? It seemed to him that the Government had done nothing else than scheme out how they could increase taxation and the people wanted to know how far the Prime Minister would go with it. Mr. Coates said he had been flatly contradicted when' ha stated in the House a little time ago that share prices had fallen. They had fallen, he said. A great block of industriai shares had fallen on the New Zealand markete. High taxation was bearing down harshly on people with small incomes and he asked if it were the Government's desire to drive out or drive to other means of living people ( who depended on sonall incomes from their savings. ' There was nothing to be gained, he said, from the argument that we were going to have good times always. Slumps must come. We can't help it. Just get the idea moving that things were not stable and it would gpread through the country. The Opposition Government had had that experience during the last slump when the money on which they were depending for employment had closed up. " He arged the Government to allow industry to build up reserves sufficient to garry them through the diffieult periods ihead and stated that New Zealand geemed to be the highest taxed country in the Empire. It was certainly taxed on a higher rate than the United States where taxation was comparatively low. The debate was' interrupted by the adjournment at 5.30. Mr Coates, continuing his speech when the Housaf resumed, said the cost of administration was pyramiding taxation to a veryjconsiderable height. The Prime Ministerf had said that New Zealand led the World. She did, said Mr Coates, in respect of taxation. ,The graduated land tax, he contended, was a eapital levy which made it impossible for the landowner profitably to cary on his farm. Ability to Pay. Mr W. J. Polson said the taxpayer had every right to feel troubled about the present position. The worst feature of the Bill was that young men were not being encouraged to take up land, and ability to pay should be the basis of taxation. Mr C. A, Wilkinson said tho'company taxation was. ao heavy that more wu being pai4 in taaatiort than in divi--

dends, and to that extent the coBt or commodities was being kept high. Many companies had. been losing money for years and the first year they made a profit the money was taken in taxation whieh should have been used in making up the losses. The Government should keep taxation down to the lowest posBible extent. Mr J. G. Cobbe stated that all this expenditure meant piling up a debt for the future. Under the present system of taxation, said Mr Cobbe, the people" were not being encouraged to invest their money in a'new industryj in fact, it was placing the imposition on the enterprising man and bringing all industry down to the same level. How wae tne Government gomg to meet aii its heavy expenditure programme if 'oversea prices of our commodities fell, .'he asked. Mr S. G. Smith asked if the Bill could be taken back to Cabinet and revised to see if any relief could be given the taxpayer. . . The Labour Party was on the Treasury benches to-day because it had promised to reduce taxation. Mr T, D. Burnett said the graduated land taxation gravely affected stud farms. He moved an amendment to the effect that the Bill be not proceeded with. The debate was interrupted by the supper adjournment before the amendment could be put to the 'House. The " text of Mr. .Burnett 's amendment was; That the Bill should not be proceeded with until the following means of meeting the Doruinion's financial and economic difficulties and placing the national finances on a sound basis was considered by the House: (1) That a full enquixy be first instituted into the effect of the proposed, taxes, (a) on induetry, (b) on primary production, (c) on fixed incomes, (d) on the salary class, and finally on the employment of labour. The motion was seconded by Mr. K J. Holyoake, who said the Opposition knew that the GoVernraent was per ■ turbed about taxation and shoul.! welcome the amendment as ,the tinu had come for competent investigatioi into the taxation in this country. This was definitfely a time when the Goveriv ment should be reducing taxation, leaving money ifi the pockets of* the people and also with industry to enable it to build up reserves to meet the diffieult times in future. The amendment was put to a dijision and defeated, the voting being on pifrely party lines, 42 against and 14 for. • On the motion of Mr. Mclveen. the debate wa3 adjourhed at 11,20 until ip-ave>'iow, avtiiing*