TAXATION ACTS

Rotorua Morning Post, Volume 1, Issue 45, 15 October 1931, Page 3

TAXATION ACTS

("Post" Special Commissioner).

SECOND READING

MINISTER EXPLAINS EFFECT OF GOVERNMENT PROPOSALS LABOUR WANTS LAND TAXED

WELLINGTON, Wed. The two taxing Bills (Income Tax and Land Tax) came before the House of Representatives to-day. Moving the second reading, the Minister of Finance, the Hon. W. Downie Stewart, first referred to the debate which had taken place on the introduction of the Bills on the previous day. The main question which had given rise to discussion, he said, had been the abolition of the graduated land tax and reference had been made by the leader of of the Opposition to a. statement which he (Mr. Stewart) had made in the Budget of 1928. Mr Holland had indicated that there had been a change of view on the part of the Minister of Fnance, saying it was quite obvious from the 1928 Budget that his mind was moving then towards reconsideration of the problem. "It should be remembered by the House," said Mr. Stewart, " that when the graduated land tax was hnposed there was no tax imposed on incomes from the land. The farmer was now complaining that he secured no relief in bad times owing to the necessity for paying land tax, whether he made apj-ofit on the year's working or not. As a matter of principle and equity, the true basis of taxation should be the capacity and ability of the man to pay according to his income." Details Of Bill The Minister referred in detail to the various clauses of the Bills. Referring to the lowering of the exemption to £260, he said it was still high compared with most countries and pointed out that the exemption would now disappear at £800 instead of £900 as formerly. In referring to the provision which brings into assessable income taxat-ion-free debentures, Mr. Stewart remarked that this was being done so that the rate at which a man should pay could be fixed. Representations had been made to him from various quarters throughout New Zealand to impose a direct tax on tax-free bonds but he held the view that the State had contracted not to tax these bonds and it would be a breach of contract if direct income tax were imposed on them. At any rate, he could see no answer to a charge of breach of .contract. Instancing the case of a taxpayer with a salary of £560, Mr Stewart said that after the statutory exemption had been made, he would pay tax on £400. If he had £500 in dividends from tax-free bonds, the inclusion of these would bring his income up to £1060 and he would be taxed on £400 at the £1060 rate. Mr Stewart went on to give speeific instance of the way in which various incomes would be affected by the alterations in Bills. Taking the man whose assessable income was £1000 and who had an exemption for children of £100 and for life insurance of £50, he said the taxable income would be £850. The tax payable in 1930 was £44 5s 5d. With the addition tjiis year of 30 per cent., or £13 5s 7d, the total would be brought to £57 11s Od. In addition to this, there was a special tax of foprpence in the £1 on £500, bringing the total taxation up to £65 17s 8d. The same man in England, according to the conclusions of the taxation Department, would pay £111 17s 6d. If the income was unearned, the tax in New Zealand would be £85, while in England it would be £161. Instances Quoted In the case of the man with an income (earned) of £2000, the taxin New Zealand would be £241 and in England £336. On an unearned income of the same amount the tax in New Zealand would be £313 and in England £411. The Minister quoted figures showing how much in the £1 would would be paid by various classes of taxpayer s(in each case without children). These figures were as follows: £300, 1.6d; £400, 2.5d; £500, 2.87d; £600 4.6d; £700, 6.4d; £800, 7.5d; £1000, 8.5d; £2000, lOd; £3000, lld; £5000, ls 1.9d. In conclusion, Mr Stewart said he had endeavoured to distribute the burden of taxation in the directions in which it could be most reasonably borne. He knew some members held a very strong view in regard to the graduated land tax, but he thought the repeal of the tax was reasonable and just. Mr M. J. Savage (Labour, Auckland West), said there was a definite object in view when the graduated land tax was placed on the Statute Book, namely, to prevent land aggregation and land monopoly. The Prime Minister had told the House that the proposed abolition of the graduated tax

was for the purpose of assisting the large land owners. What were members to take from that. Surely it meant that the small land owner was not going to be assisted. Some years ago they had been told that taxation was being reduced so as to help industry. Now, at a time when there were bankruptcies on all sides, an increase in taxation was proposed. That was a combination of the wisdom of the Reform and ynited Parties. The principle of affording assistance to the working farmers had applied for years, but to-day, by a combination of the Reform and United Parties, it was going to be abolished. The bigger unimproved holdings would get a greater share of the benefit that was being conferred under the present legislation.

Explanation Wanted "I want the Minister to defend that," Mr. Savage said. "If there is any explanation, we ought to have it." Mr Savage argued that Mr Stewart had discussed the income tax and had evaded reference to the graduated land tax. Mr Stewart: It is too obvious to need it. Mr Savage: Too obvious I agree. The least said the easiest mended. That is another way of putting it. The Prime Minister himself is certainly not prepared to deny that it is going to help the big man and not the small man,"