INCIDENCE OF TAXATION.

Manawatu Herald, Volume XLII, Issue 2186, 7 October 1920, Page 3

INCIDENCE OF TAXATION.

BILL PASSES SECOND READING. 01’J’OSiTION LF. AI)ER S ( I!!TiCISM. WELLINGTON. October 5. In the House of Representatives to-night Mr Massev moved (he second leading of the Land'and .Income lax Amendment Bill. In doing so. he said no great change in principle was involved in the Bill. He did nob wish to unduly increase taxation— In 1 Would be very glad if lie was able to reduce it —but, lie must, keep the finances oi the Dominion sound, and. therefore, he must get the revenue required. He did not wish to ciiii.-o alarm, but he could not help thinking we might yet, meet, more adverse times, and we must he j in-pared to meet those times if they came. >Sn lar, the revenue was keeping up and the position up to tin? present was hopeful. He lirsl wanted to make clear the position of local bodies under the Bill. It, was proposed to tax local body delimit .tires, mu! a local body was asked to'collect, the tax because it was impossible for the Department to follow the debentures. Local body _ debentures would pav a liar, rate of 2s 6ti in the £ on the income derived from them, and company debentures would pay 5s in the £. The Department hat) been asking for this system for a long time, and he tell: bound to sav lie sympathised with the request because it did -.vliar all political economists recommended, namely, taxing income at the source. Clause 6 was a new departure ami was intended to bring improved hind into use, the luxation being increased by 50 per cent, if the land was still unproductive on April Ist, 1023. Section 11 was another exemption clause in favour of the family man and this principle, lie thought, might yet: have to be further extended. Clause 15 made an important distinction for the Hist time between earned and unearned income. The Bill did away with the distinction between ordinary taxation and war taxation, but he was not sure whether this was a. good thing, because it might, lead people to sui-pose there was no prospect oi taxation being reduced. That, was not so for lie was hopeful (hat the position would not. be long delayed. ClanijO. 20 was designed to circumvent, the procedure bv which the Department was 10.-ing a good deal of money'through large companies apparently dividing themselves and then coining under the lower rati 1 ol taxation. So far as land (ax was coneerned. there was no "real- increase until the laxable value had‘’reached £1.5,000. <>n Midi an amount the present tax wu< £134 15s 2d and the proposed tax £l4l 13s 4il. Du* a. taxable •vuhic of £138,000. the present tax was £4555 and the proposed tax was £6OIB 6sod. Discussing income fax he proceeded to show (he comparison heiween the income lux proposal! l<> Ik l ptiiil uiidi'r flu 1 l>ill that, paid in Britain. On a taxable income of £IOOO ir was proposed under the Bill to collect £9O by way of taxation, in Britain the same income would pay £187; on an income of £2OOO the figures were £2co in tho Dominion and £525 in Britain; income of £3OOO £570 and £987; ineome_ oi £6OOO £2040 and £2356: income ol £7OOO £2535 and £2857; income of £BOOO £312-' and £3362; income "f £40,000 £17,600 and £21.7.12. The ligiin s were then quoted tn show that the Dominion had done r. good deal towards the reduction of her war debt, but more information was promised on tins point when (he Loan Bill came h"fore the Ilou.-e. Provided there were no excessive demands made upon the Consolidated Fund and expenditure was kept down to reasonable limits, al Ihe end oi the linancia! vear he believed he could,show that no less than £20,000.000 will he placed a* an asset against, our war dehi. After that In 1 hoped to he able to devote hi-- enciguv 1 1 1 the reduction of taxation. Mr Wilford said that the real scheme ot the Bill was to take taxation off the higher incomes and make it tip out ot companies ami local bodies. Clauses 4 and 5 mighi have been made imu-h more Imeral lor t.i, number of persons to be benefited was not ncarlv so large as was generally supposed. (Clause 6 was defective since there was no appeal from the Commissioner s decr-ion. There should be a belter definition of unimproved land ami town districts were omitted from its provision-. lie Cjun-pl,-lined that clause 13 was so draltcd that it did not convev what was meant, or it it meant what, it said then ir deeveused instead of im roaseil graduations on InglitMClauso 10. ln> nmintaim'd, abolished tho id>--entee tax which, he declared, .was wrong in principle. Regarding the treatment ol local bodies he maintained that (he whole of the income of local bodies with but a small exemption was taxable. Mr Massey said the Bill was omv inn-noee to tax trading concerns of local boi.ics and if it was_ not dear he would he prepared to make- it so. . . , , ■ . Mr Wilford said that migli! ue so. In., did it only do that'; He thought noi. Ih" proposals in the Bill with regard o the taxation of debentures already i.-mM were a breach of faith. , , . . Mr Massey: There is no breach m tin,i? in the Bill. Mr Wilford: That: is my mrerpre-anon Massey: Then your inlerprclat ion L Continuing. Mr Milford -aid that tie 1 <litempt, to define “earned” income m elan-' 15 was futile. It was much easier to ddme “unearned income’ ami let ah o.he, muni go as “earned." . , , ~ , ... ’ The debate was continued by Messrs I ostia r, I,uke. Wright, Bicksou (( Iralmer:-,. Hainan, and after midnight by Hc-.m ■' Jones. Holland and Hamilton (U alia. f). after which the Premier bneliy replied. The Bill was read a sefomi turn- mi We voices, and the House ro-e al 1 a.m.