TAXATION.

Hokitika Guardian, 19 January 1921, Page 4

TAXATION.

PRIME MINISTER REPLIES TO CRITICISMS.

[BY TEI.EGUAI’II —PER PRESS ASSOCIATION]

WELLINGTON, Jan. 15.

Mr Massey was asked by representatives of (be Press if lie had anything to say in reply to criticisms which have appeared in some newspapers recently in regard to the legislation of Lust session providing for increased taxation. The Prime Minister stated that he had no doubt a good deal could bo said in this connexion, but lie would take tho opportunity to deal with just one or two of the points raised. It seemed, for instance, to be imagined by the critics referred lo that once the war had ceased, all expenditure in connexion with it nvoulcl at once cease, but as a matter of fact there were enormous liabilities left after the war had come to an end. For instance interest and sink, ing funds on war loans, war pensions, and increased salaries and bonuses caused by -the high cost of living amounted to many millions per annum additional, as compared with tli pre-war period, and there “was only one way in which these liabilities (otild be met, namely, by taxation.

The statement that the Government and Parliament committed an error last session by increasing taxation without making the slightest attempt to oheck the growth of expenditure was quite contrary to fact. The Government had been engaged ever since the elections in one continuous struggle against demands from all over the Dominion for increased expnditure, and also in endeavouring to reduce the expenses of administration. With regard to the latter, he expected later to be able to show that during the present half year the burden upon the taxpayer had been reduced by several hundreds of thousands of pounds per annum. Withiregard to the.section of the Act passed last session, which provided for the next collection of land and income tax, it was necessary to hear in mind that the increase in the total .maximum rate 'from 7s (id to 8s 9d was not so heavy as would appear from a superficial comparison of rates, and this increase, if it was required, would not come into operation until, in the case of land tax, November of this year, and in the ease of income tax, February of next year, just about the time when according to present appearances, increased revenue might be Urgently required. The existing taxation was (is in the £, ordinary income rate, levied on taxable income, and 4s (id in the £, levied on assessable income; that was, income before exemptions bad been deducted (the proposed 8s 9d was on assessable income only). The tax was admittedly heavy, but be thought that the probable effect bad been greatly exaggerated. Certainly the rates in New Zealand were much less than in England. The statement that taxation on the scale now proposed would have the effect of checking enterprise was contradicted by the fact that there bad been a very large increase in the number of companies registered during last year, ‘accompanied by an urgent demand for capital for the extension of business, over 500 new companies being registered during the year, iwith a capital of nine and a half millions, lint, as usual with adverse criticism, the other side of the ledger was conveniently ignored. For instance, important alterations were made by way of exempting smaller | mortgages from land tax up to the ■ amount of their mortgages. There was 1 better provision for the exemption of widows with children, exemption from income tax in respect of dependent children, and also in respect of insurance premiums. There was slso dis-

crimination 'between earned and unearned income and exemption in respect of income tax on property held by trustees for the maintenance and education of children.

As a (matter of fact there were so many exemptions that doubt had been expressed as to whether the increases would be equal to them. It was necessary to remember, too. that the taxes to which objection had been taken would not be collected until after tiie passing .of the Land and Income lax Bill of next session, by which time he would have a very rmuch better idea of the amount of money required than was possible at (present. He need scarcely add that he would have much more pleasure in substantially reducing taxation than in maintaining the present rates or increasing them, but the country’s obligations must he met.