TARIFF RATES AMENDED

Sun (Auckland), Volume IV, Issue 1049, 13 August 1930, Page 9

TARIFF RATES AMENDED

TOBACCO GROWERS ASSISTED PROTECTION FOR TIMBER TRADE THE SC.Y'S Parliamentary Reporter PARLIAMENT BLDGS., Tuesday. MORE fa vourable treatment of New Zealand industries than was planned before will be given if several alterations to the tariff proposals which were placed before the House this evening by the Minister of Customs, the Hon. G. W. Forbes, are brought into effect. The alterations include more favourable treatment for the tobacco-growing and manufacturing industries, the restoration of the allowance on underproof spirits, but an increase in the all-round rate on spirits from 36s to 40s a gallon, more consideration for local manufacturers of bottles and jars, a reduction in the duty on foreign watches imported of from 45 per cent to 35 per cent, and big increases in the duties on imported timber all round. There is no reduction in the petrol-tax and the trade agreement with Australia still holds good.

Outlining his proposals, the Prime Minister said: “Since the resolutions amending the tariff WcU'Q passed on July 22, 1930, very many representations have been made to the Government concerning the proposals. These representations have been very carefully considered, and where it has been shown that any hardship might be inflicted on any section of the community or that any industry or trade might be prejudiced by the new duties, relief has been given in so far as the objects which the Government has in view would allow. As I have already said, these objects were to obtain increased revenue, to afford further protection to certain primary and secondary industries in New Zealand, to grant increased preference to British Empire products, to abolish the duty on barley to bo used for stock food, and to obtain increased revenue from petrol for tho Highways Account. “It will bo noticed that the first item in the resolutions now before the I-louse deals with tho question of the duty on tobacco leaf. There has been a great deal of misunderstanding with respect to the previous proposals made by the Government. It is alleged, for example, that the effect of the alteration previously made was to encourage the manufacture in New Zealand of tobacoc made wholly from imported leaf. To view the matter properly, it must not be overlooked that before such manufactured tobacco can be delivered from the control of the customs two duties must be paid, an import duty on the imported leaf and | an excise duty on the tobacco manui factured in the Dominion. RATES ON IMPORTED LEAF “For example, tinder the law in force before July 22 last, the import duty on the leaf was 2s a lb., and the excise duty on the manufactured cut tobacco was Is 8d a lb., a total of 3s Sd a lb. Under the resolutions of July 22 the import duty was Is a lb., and the excise duty 2s Sd a lb., a total of 8s 8d a lb. It will be seen, therefore, that so far as tobacco made wholly from imported leaf was concerned, n.> difference whatever was made in the position, and there was no foundation for the allegation that the proposals would result only in the use of imported leaf. Since the alteration was made, however, the Government has decided to set up a Parliamentary Committee to inquire into and report upon the Dominion tobacco growing and manufacturing industries in all their phases. In the meantime it is proposed to revert to tlie excise rates in forae before the resolutions came down. One of the objects of the alteration was to stop the drain which the old system was making upon the revenues of the country, and for this purpose it is proposed to increase the duty on leaf tobacco to 3s a lb. This cannot prejudice local tobacco growers. A clause has been inserted in the Customs Bill to authorise the alteration of these duties if such action is considered necessary after the report of the committee is received. AGGREGATE DUTIES “The two further points arise out of changes now proposed. The first is that the aggregate of the import duty on leaf and the excise duty on tobacco made in New Zealand wholly from imported leaf is in general greater than the duty payable on the manufactured article imported into New Zealand. Local manufacturers have always received protection on tobacco made in New Zealand from imported leaf, and it is not proposed to interfere with this aspect of the matter. Take as an example the case of the manufactured cut tobacco. “Under the resolutions now before the House, if some special provision were not made the total of import and excise duties would be 4s Sd, whereas the Customs duty payable on imported manufactured cut tobacco is 4s 2d. There has for many years past been a protection of 6d a lb on tobacco made locally from imported leal’. This is being retained and provision has therefore been made in the resolutions that the aggregate Customs and excise duties on such locally manufactured tobacco shall not exceed the figures sot out in the resolutions. In the case of manufactured cut tobacco the total of duties payable is 3s Sd. This was the amount both before and after the introduction of the first proposals. “The other point previously referred to is that a considerable quantity of imported leaf tobacco has been cleared at a rate of Is a lb. It would give an unfair advantage in such cases if the tobacco made from such leaf could be entered for excise duty at the rate now -proposed. A proviso has therefore been added by which any tobacco made from leaf which has been entered at Is a lb shall, in effect, be liable to excise duty at the rate in force when the shilling rate applied to the leaf. CIGARS AND SNUFF “Mention should be made of the rate of excise duty on cigars and snuff. There is only one manufacturer of these goods in New Zealand, and after hearing his representations it is considered that if the rate set out in the first resolutions is maintained it will prejudice him in his business. The total duty payable by him on his leaf tobacco (I understand that only imported leaf has so far been used) and on manufactured cigars, has for some years past been half of the duty payable on imported cigars, and it is now proposed that the total duty payable by him should be 7s 6d a lb, that is, one-half of the import rate of 15s a lb. Provision was made previously by which the output at this reduced rate could be limited and similar provision will be made in the Customs Bill. “With respect to the duty on spirits the main object was to obtain increased revenue during the current financial year. It is fouhd, however, that the abolition of the allowance for underproof spirits will disorganise the trade. This is undesirable, especially at the present time. “It is true that the proposals which were previously made might have led to the bottling in bond of spirits in New Zealand, but it must be remembered that to the extent that bottling took place in the Dominion, the revenue would have suffered, and I am advised that bottling would not in general have taken place here unless the Government had made special provision in law which would have necessitated a loss of revenue. It must be remembered that in New Zealand spirit duties are revenue duties only and for this reason it has

been decided to restore the allowance for underproof spirits,’ but to increase the all-round rate on spirits from 36s to 40s a gallon. It is considered that during the present year the result will be to obtain r- slightly greater revenue than would have been obtained by the other proposals. It should also provide a permanent addition to the total revenue to be obtained from spirits. WINES AND ESSENCES “It is essential that all spirit duties should be at the same rate, hence the duty on wine containing over 40 per cent, of proof spirit and on spirituous, culinary and flavouring essences lias also been raised to 40s a gallon. In this connection I might mention that under the Customs Act provision is made for the manufacture in bond in New Zealand of certain alcoholic preparations at the rates of duty on tlie alcohol used, based upon the rates on corresponding imported goods. As tlie rate on imported spirituous toilet preparations and culinary and flavouring essences has been raised by 4s a gallon, it is considered that the rate on alcohol used in manufacturing similar preparations in the Dominion should bo increased by the same figure. “Protection has already been given by Parliament to establish the manufacture of glass bottles and jars in New Zealand. This is an industry which utilises local raw materials, practically the only imported ingredients being soda ash and a few chemicals. I am advised that the company now 7 closes for from 12 to 13 weeks every year. It is considered that if the orders which are now placed outside New Zealand could be executed from bottles and. jars made in the Dominion it would considerably reduce the time during which the factory must close. I am advised also that since the duties were increased in 1927 the freight on bottles and jars to New Zealand has been reduced. This, of course, acts as a set-off to the further protection then accorded. PRICE SAFEGUARDING “As I have already said, it is pj*oposed to include a clause in the Customs Bill to grant authority to reduce duties if local producers or manufacturers, as a result of increased protection, raise their prices to the con- j sumer. On previous occasions when I it was proposed to grant assistance | through the tariff to this industry strong objection was raised by users of bottles and jars on the ground that the increased prices would be charged. The clause to which I have referred should meet this objection and remove any* ground for criticism. The present rates for British-made bottles are 15 per cent, for large-sized bottles and jars and 20 per cent, for bottles and jars between one ounce and eight ounces in capacity. It is now* proposed to raise the rate on all bottles and jars to one uniform rate of 25 per cent, ad valorem. This rate will, of course, be subject to surtax. The duty on foreign articles is now fixed at 50 per cent, plus surtax. In view of the increased duty expected to be received by the new* proposals respecting spirits it is possible to reduce the rate of duty payable on watches of foreign origin, and the rate has now* been fixed at 35 per cent, in lieu of 45 per cent, as previously decided upon. Opportunity has been taken to increase the rate of duty under the general tariff on mineral lubricating oils and mixtures of mineral and other oils if imported in vessels of under one gallon capacity. The effect of this will be to give the same extent of preference whether such oils arc imported in large or small containers. IMPORTED TIMBER RATES “It will be seen that the resolutions provide for increased rates of duty on imported timber. As I stated previously the increased protection afforded to the local industry in 1927 did not have the desired effect of encouraging the use of local timber rather than imported timber. At the present time the local industry is suffering from severe depression and it is necessary that every reasonable assistance should be given so that as little hardship as possible may be felt by the industry and the men engaged therein. Since the first resolutions were brought down on July 22 it has been pointed out that during the past year reductions in export prices to the extent of about 2s a 100 superficial feet have been made on some of the main kinds of rough-sawn timber shipped to New* Zealand. This means that even with the added protection accorded under the old resolutions the local industry is practically not in a much better position to meet competition from imported timber than it was, say, a year ago. “It has accordingly been decided to increase the duty on rough-sawn timber to the extent of 2s a 100 superficial feet, and it will be noticed that the duty is now fixed at 9s 6d a 100 superficial feet on such timber in small sizes and at 7s 6d on balk timber. It has been pointed out that under the previous resolutions it was possible that it might be more profitable to import dressed timber than rough - sawn timber. The duty on sawn dressed timber has now been fixed at 19s a 100 superficial feet, most of the dressed timbers being imported in the form of lining or ceiling. The result of the duty now proposed should be that if timber is imported it should come into the country in the rough and that any dressing should be done locally. “Provision has been made for a duty of 25s a 100 cubic feet to be imposed on unworked logs and for hewn timber to be placed on the same footing as rough-sawn timber. If this were not done it is possible that large quantities of timber in the form of logs or hewn timber might be imported. It must be remembered that the object of the tariff on timber is not to protect the sawing and dressing of imported timber, but to encourage the New Zealand timber industry and the sawing and dressing of local timber. The duty on laths and shingles has been increased from 10 per cent, to 20 per cent, in conformity with the alterations made in the duties on the other kinds of tinir ber already referred to. “No alteration is proposed in the petrol duty. The Government regrets having to increase customs duties at the present time, but the alterations have been so made as not to place any undue hardship on any section of the community.”