NEW WAR TAXATION.

Taihape Daily Times, Volume 7, Issue 280, 27 August 1915, Page 4

NEW WAR TAXATION.

THE COMPLETE PROPOSALS-

EVERYBODY TO CONTRIBUTE

INCREASES IN PUBLIC SERVICES

STAMP DUTIES RAISED.

NON-ALCOHOLIC DRINK TAXED,

LAND AND IJNCOME INCREASES

The National Government’s proposals lor War Taxation, contained in th e Budget, and submitted to the House by Sir Joseph Ward,, ahe as follows: It is necessary, when estimating the arncunt which will have to be obtained by fresh taxation, to consider, as well ag ws are able, the ultimate annual amount to which the country will be committed‘in connection with war expenditure and other special demands in order that sutiable provision may be made to meet th e burden. It is impossible for any one to say with any degree of certainty what amount the Dominion will have to find to cover war pensions, but the best estimates which hav,e been provided place the amount at approximately, £1,000,000 per annum, on the assumption that the walr will last another year. The annual interest and sinking fund payable on war loans of, say. £12,000,000 will amount to, roughly, £700,000. The whole of these amounts will not fall to this year’s finance, but in addition to the deficiency shown for th e current year of £827,941 we must provide for, say, £150,000 for supplementary estimates, £34,000 additional fob Superannuation Fund, and a considerable proportion cf the pension and interest I have referred to.

COUNTRY’S FINANCIAL DUTY. There must h e neither delay nor uncertainty in the country doing its financial duty to- thos e who have its fered the if lives for the protection of every man, woman, and child in the Dominion, and who hav e - assisted in the preservation of the British Empire. It is next to impossible to forecast with any approach to exactness of what the position will be, even approximately, at th e end of the war. Iha ye endeavoured to the best of my ability to keep on the safe side, but much depends on circumstances beyond the control of the Govcjrnment or the people. PROPOSED INCREASES OF REVENUE. Though the demands are large it is well within the capacity of the country to provide the necessary ways and means to meet them, and it must not

b e . forgotten that every country engaged in the present war has to face huge deficits and to shoulder burdens of an unprecedented nature. In this respect New Zealand is in a similar position to other parts of the British Empire. With the object of providing for th e . deficit, and for the interest and the sinking fund required for the.final payment cf all war expenditure, it is necessary that some adjustments in taxation and in rates for public services should b e authorised by Parliament. Tbe financial position created by me war i ; s one calling fcr prudent and

vigorous treatment, and must be faced liv the Gov'Srment and the people with indexible courage. I cannot too strongly imp-ess ripen every section of the community the necessity „ for care and economy, especially in the matter of luxuries, until the (great war now rag- • : is over. I do not wish to suggest Mmt the v e should be a diminution in employment. On the contrary .both Government md private individuals can mater OF v li r ln the country in coming successfully through the present crisis nv-’int' ining emphrynerd a* its tW'T-

j mal maximum and at the same time j doing everything possible to prevent wast e and extravagance. As a producing countly we possess, enormous advantages in comparison with most other countries, but we must not rely upon the present high prices for our principal products being maintained after the war is ovar. The huge and unequalled war expenditure of th,e older

countries must enormously limit the purchasing power of their peoples until sufficient time has elapsed to enable the nation to take stock of the altered conditions and to adjust their taxation and finance to meet the requirements of the new order of things. We shall require to : do likewise and it is our duty to take all reasonable precautions now to prepare for the exacting task that lies before us. If we are to recover quickly the loskes we are suffer-

ing in the struggle in which we are engaged, there must be cordial cc-oper-ation and ready Sjelf-sacrifice Uronr every one. THE FUTURE’S CALLS. The future calls for self-sacrifice from every one in the Dominion, and I confidently appeal to those affected by the proposals I am now submitting to face the position with broad-minded and undaunted determination. In a,ll probability on the conclusion of the weir it will be practicable to make very ccsiderable reductions in taxation, and it is merely necessary to say that the Government will have very great plea-

sure in doing so. It would not, in my opinion, be prudent at present to base the extra amount required at a lower sum than £2,000,000 per annum, and it will depentf entirely upon the duration of the war whether even this large sum will not in ihe future require to be increased. I am hopeful that it will not, but this cannot be definitely determined at present. We may hope that in a yerlr from now the war will be over, and that the circumstances then will neahle us to make a considerable reduction in taxation. In any event, though the burden is heavy the people can be trusted to bear with equanimity whatever is necessary as N.*w Zealand's share in maintaining the high traditions and priceless freedom of the Fritish Empire. DISTRIBUTION OF TAXATION.

As it is essential to distribute the incidence cf th e increased taxation over widest area possible in -order that its direct effect may be least oppressive I will submit a number of important alterations to th e House wffiich I hope will commend themselves to honourable member's. The increased taxation is proposed chiefly on account of the war and partly owing to the general expenditure increasing out of proportion to th e increase of revenue.

LAND AND INCOME TAX

I estimate the receipts for 1915-16 as follows: land-tax, £886,000; income-tax £1,090,000.

It is proposed to increase the landtax by the addition of 50 per cent, to the present rates of graduated tax on country lands.

The increase in the income-tax will be obtained by an extension of the existing schedule of graduated rates from 1/4 to 2/ which rate will be reached at £5,600, and the imposition of a super-tax of 33 1-3 per cent, to the schedule rates. This will give a rate varying from 8d on the lower tax. able incomes to 2/8 on the higher ones. In view pf the fact.that many business people whose incomes sire taxed are also paying land-tax, and in many esses graduated land-tax, this is conside red to be a high enough rat© to j impose, as in many instances the combined taxes will b e equivalent to a tax of over 5/ in the £1 of income. REDUCTION OF EXEMPTION! It is not considered advisable to attempt to obtain any increased revenue by lowering the exemption, as in addition to th-3 fact that the addicnal expenditure that would be incurred would not be warranted by the result, the class that would be affected by such a change is already paying its taxation through the Customs, and is sufficiently burdened by that and by the increased cost of living. It is not proposed.to increase the fax on mortgages.

BENEFITTED BY WAR. It is generally irecognised that those who have been making large profits due to the war should 'give an additional amount towards the financial requirements of the country. I shall not he contradicted when I say that large profits have been derived from the sale of wool, meat, and daiky-pro-dues. To provide for a reasonable contribution to defray a portion of the cost

of the war I propose that the incometax shall apply to income derived from land. Five per cent, of the capital value of the land will be deducted from the ’ assessment of the income, and the exemption of £3OO will also be allowed. I estimate that £250,000 will b e obtained by thin alteration, and ccnsru-•d-rng the high prices that have been realised fcr sheep, wool, meat, am dairy produce, it is not a large contrr- , those affected. The total but ion from those a* , tax proposed will increase of income lun . r? -ri RfiO and will reach amount, to £osl,bW, * tbo-m ’wbc-s, additional profits have been due largely No fbe war INCT?F*ST.'S ISND ALTERATIONS <).

I DUTY. To make up the shortage of revenue due to war conditions, uua to ten our finances, it win be xieccosaiy* to impose duties upon some articles wi u . moaly regarded as luxuries. An allrouiid duty of 10 per cent, ad vaioreai on motor cars, and 50 cent, additional on cars made in countries which ar e now or may be 'enemy countries. Bicycles which have hitherto be me a duty of 20 per cent, if British, and 30 per cent, if foreign, will be deduced to the samg as motor cars, with the sam e ;a's J-gardjj enemy j countries.

A duty of 4d per gallon will be placed on motor-spirits, and kerosene.

I do not think any exception can be taken to the proposal for increasing the duty on petrol, etc., for motor cars. Kerosene, which formerly had a duty of 6d a gallon, is also Included. Petrol cannot be taxed to produce the revenue necessary unlless this is‘ done. Tyres are to remain free from British and Keutral countries, with 50 per cent, ad valorem tax on tyres from enemy countries.

Excise beefr, which has hitherto paid 3d per gallon by means of stamps attached to the casks upon delivery from the brewery, will be taxed by an entirely new method.

The Govrenment’s proposal in regard to the beer-tax is one that should commend itself to the House. It alters the system chiefly to ensure that lighter ales- —that is, ales with less alcohol in them —should be manufactured in this country. I am satisfied as the result of close investigation by the Customs Department that the full revenue I indicat e under these alterations will be obtained.

The duty will be assessed on the quantity and with' respect to th e specific gravity of the worts pitched for fermentation.

Th e wckts of low gravity will pay a minimum duty, which will increase with each unit of rise in gravity.

Spirits will be increased from 16/ per gallon to 17/ per proof gallon

The total increased revenue flrom the foregoing adjustments is estimated at £340,800, of which sum £55,000 is represented by increased beer revenue. ALL CLASSES’ TO PAY. 1 As all classes of the; community Will, I am sure, desire to join in the necessary sacrifices to help the country at this juncture, I would ask those who use non-alcoholic beverages to join in providing a part of the extra revenue necessary. 1 propose that an excise dutyof Id per gallon be put on all nonalcoholic beverages to b e defined. It is difficult to estimate what the revenue from this will be, but I put it down, in round figures, at £20,000. We shall, how'evek, not be able to ascertain definitely what i s to be expected from this until it has had a full year s trial The full benefit to the revenue of the increased duties on spirits will no, accru e for many months, as merchants anticipating changes in the tariff, have cleared from bond all available stocks of these articles. The amount of inflation of revenue during the last two months due to this cause has been about £130,000.

It should also be remembered that the new duties will be in force for seven months of the 3 r ear only, that there are large stocks of motor-spirits and kerosene at present stored m the Dominion, and that the consumption of most articles will be reduced on account of war conditions, the absence of many of our men on active serv ice, and other causes. Taking all these facts into consideration, I do not think the increases for the present financial year due to the new duties can be safely estimated at'more than £120,000. In these proposals I have elected to touch a few special articles, and not to increase the duties cn the necessaries of life. The resolutions to impose the additional duties will be brought down tonight.

STAMP DEPARTMENT INCREASES

I propose air increase cn lire duties on conveyances, transfers, leases, settlements, cc mm on deeds, and other assessable instruments mentioned yr the Second Schedule of the Stamp Dudes. Act. 1908, by 25 per cent. The amount of duty realised from this source during the last year was £175,000. After making allowance for a shrinkage inland transactions, it is estimated that th e increased tax will yield £40.000 ner annum.

' Bank-notes Duty.— The duty at present is 15s per cent, and realises £?60.000 annually. I propose to increase tins tax to £1 per cent. I estimate that thi 3 increase will produce £20,000 per annum. Bank Cheques.—The duty is at present Id. I propose to increase th e duty to- 2d. This increase is estimated to produce £50,000 annually. There are large numbers of: blank cheques stamped with Id in circulation, and these xnay he used with an additional adhesive stamp for a period of one year. 411 unused cheques stamped with Id wiT be called in and an allowance made for them. Receipts.—The duty at present is Id on every receipt for £2 and upwards, it is proposed to increase this duty to 2d. It is difficult to estimate the amount iTb t nt-pl np ve"’ fvCHX till? SOUTCG, but after a careful eo"'. Aeration of all

* available data I have put it dewn at J £40,000. I Death Duties. —There is not much room for increase in these duties, nor I is it desirable to increase the duty on j small estates, although they liberal treatment under the present law. There is one class of beneficiaries, however, which escapes very lightly in. the matter of succession duty. I refer to the children of wealthy persons. At present such children do not pay succession duly on a less sum than £20,GOO each, which for all practical purposes exempts them from duty. It is proposed to reduce this exemption to £5,000 for each child and to impose a duty of 2 per cent, on successions over this amount. I estimate that this duty will realise £30',000 per annum. Mortgages of Land or any Interest

[ therein. —It is proposed to impose a stamp duty of 5s per cent on mortgages. This tax is estimated to produce £'40.000. On release, reconveyance, cr discharge cf mortgage a fixed duty of 10s. This tax is estimated to produce £B,OOO. In the United Kingdom an ad valorem duty lias been imnosed on; mortgages for many years. This duty is not a recurring one, and should not cause any hardship in its incidence. Sub-sales of Property.—A new stamp duty is to lie imposed on all sub-sales of property at the sam ? mres as if the purchaser toeTc a transfer dr conveyance of the property. This duty is estimated to produce £IO,OOO per annum. It will fall almost entirely on the land speculator. Totalisator Dividend’s. —I propose as a war-tax to impose a duty on totalisatcr dividends of 21 per cent. This is estimated to produce £75,000.

POST AND TELE GITA PH CHARGES.

I propose to make some small additions to the charges' leviable for postages and telegrams; and, although it is anticipated that the amount realisable will amount to £380,000; yet, owing to the vast number of pieces cf mailmatter and telegrams handled, it is estimated a very small increase in the minimum charges to which they are subject will yield' the sum indicated. I propose that" the 1 initial rate on telegrams be increased by 2d., that 2d. be added to the- inland charge for cablegrams, that the initial charge for bureau communications within a radius of 25 miles be Gd. for both subscribers and non-subscribers, instead of as at present 3d. for subscribers and Od. for non-subscribers, and' that a special war-tax of -Id. be- levied/ on all articles posted except newspapers. The amount realisable under each heading is estimated as follows a—- £ Telegram and cable messages: Increase of initial rate of 2d 50,000 Bureau messages: Initial rate made Gd to all .... 20.000 Postage war-tax of I'd on all articles except posted newspapers 310.000 *‘ ' ' £380,000 RAILWAY' INCREASES. The railway passenger and goods, rates will be increased to the extent of £360,000 per annum. This becomes a necessity from causes due chiefly to the war and' it is impossible for the Railway Department to provide sufficient ways and'means under conditions now existing. Prices of materials required for the maintenance and extension of the services have risen enor- | mously. T may give a few instances: 1 The cost of canvas has increased 100

per cent.; rails, 12' per cent.; fastenings, !) per cent.; steamer freight on raiite, 102 per cent.. Girders, ironwork, and' general materials have also increased greatly in price. In the locomotive Branch an average increase of 40 per cent, has taken place in respect to materials used in building and re-

pairing engines-, cars, and waggons. In view of the foregoing and the fact that indications point to still further advances, it: is evident that the Dopartmeu cannot satisfactorily carry on its

operations and provide 31 per cent, on the capital invested unless the rates r are raised' to meet the emergent condi- f tions arising out the war, and after earoflillv looking- into the whole posi--lion it is proposed that passenger rates; be raised by S 1-3 per cent., and goods; (excepting timber) by 10 per cent. As--siunihg- that effect is given ro this proposal,, the- rates operating for conveyance of dairy and other farm produce and live-stock will be loss than those

ruling in 1804, when the industries were either languishing or in the it infa nev. while the proposed advance s so infiinitesimal as to be negligible as-fat as the' increase of prices over the counter are concerned. THE EFFECT OF INCREASE. The effect of the- proposed increase i in rates would be a? follows: Butter, St per £IOO of value: cheese, 1/ pe? £IOO cf value; wool, 1/S per £IOO of value; frozen meat, 2/S per £IOO of value; sheep, 4/8 per £IOO of value; cattle, 3/0 per £IOO of value. I omit timber for the reason that the increase would bo on white-pine £1 14/5 per £IOO of value, and on red-pine £1 5/5 per £IOO of value. Timber u.4ptl more or less by all classes of the community, and the general increase pro- - posed to be put on other goods if ap* plied to timber would injure the indusL try, which, is at the moment prejndi*.

cially affected by the war. Discrimination in tliis article is a necessity. In regard to passenger fares, the 8 1-3 per cent, proposed ■works out at a penny in the shilling, and this would be applied in all cases excepting workers' tickets. An adjustment of excursion rates also will be submitted. I estimate these changes will produce £350.000 per annum. My colleague the Minister of Railways will furnish full details later on. The alternative to the increase of rates would be a drastic curtailment of the train-mileage run. Necessarily this would involve greatly diminished train services and the dismissal of a very large number of employees. Such an undesirable course can be avoided by the adjustment I have suggested. SUMMARY OF PROPOSALS.

The whole of the taxing proposals and increases in the rates of the various public services will be revised with a view' to remissions and reductions when these are made possible by improved conditions. In adjusting the taxation and the rates for various public services my object has been to do so without imposing additional charges on the cost of living. I have refrained from reducing the exemption for income-tax, which still remains at £3OO, and no tax is payable upon earnings of the people Lelo-w that amount per annum. On the other hand, I propose to after the in-■come-tax and other taxes so that those who have been making large profits due chiefly to the conditions produced "by the war shall pay a considerable portion of their earnings to the country, and this they should not grudge, as the heavy borrowings incurred for war charges have secured them in their possession, and is the inestimable blessing they enjoy as members of the British race. For the sake or convenience I summarise the proposed increases in taxation and rates as follows: £ Land and Income Tax .. 619,600 Post and Telegraph 380,000 Railways 360,000 Customs 285,000 Totalisator dividends .... 75,000 Boer duty 55,000 Bank-cheques 50,000 Land-mortgages 48,000 Receipts 40,000 Conveyances, transfers, etc 40,000 Succession duties 30,000 Non-alcoholic beverages .. 20,000 Bank-notes 20,000 Sub-sales cf land 10,000 £2,032,600 TEE TOTAL REQUIREMENTS. T am, as I have indicated, estimating the total requirements at £2,000,000. A revival of inward trade,, which there is good reason to hope will be the case, would be favourably reflected upon the principal Departments now' adverselyaffected and an early termination of the war w'ould materially reduce the prospective liabilities. We are reasonably entitled to take both these as probabilities, and are justified in basing our responsibilities on the basis of £2.000,000. It must not be forgotten that the full amount of taxation and other increases of revenue will not come into the Treasury during tliis year. I estimate that we will receive by the 31st March next not more than £1.000,000 from the increases now proposed. It is impossible to give a fairly reliable approximate estimate of the financial position of the Consolidated Fund at 31st March next. It may bo that there will be a deficit, as the whole operation of the increased rates and taxes cannot operate fully until the following year. I feel it to be ray duty to point this out now'. There need be no misgivings on this account, as what I am now' proposing should, when the changes are in full sway, more than balance the revenue and expenditure.

Tariff. —While I realise that a necessity exists for revising the Customs tariff generally in regard to certain matters, the subject is one of such importance and difficulty that it cannot be dealt with at present. Xo doubt the question of encouraging new industries may become more pressing when the war is over. We must tike steps to pie\ent 2s eu Zealand being made the dumping-ground of foreign goods to the serious injury of our industries manufacturers, producers, and workmen. There is no doubt that the facilities offered to the German manufacturer and merchant in gaining access to British and ’ Colonial markets have helped our enemy to buiM up her ' large commercial and industrial establishments and to increase their export manufactures, thereby amassing great wealth from British countries, which has helped to supply her with the sinews of war. One way of preventing

'Germany again becoming a groat commercial and industrial nation with the assistance of British countries is to prohibit German-made goods being imported into New Zealand and other British countries. One of our supreme duties for the future will be to make our people, as far as practicable, a self-reiliant and self-contained nation. The House will be asked to place a duty of 50 per cent, on all importations from countries that are now or may be enemies of the British Empire, excepting such goods as may be ex-

empted from time to time by Ofdcr-in-Council. COST OF LIVING. The steadily increasing cost of living’ is causing a great deal of anxiety. It has become a matter not only of national but of world-wide concern. In New' Zealand a Royal Commission which w'as set up to inquire into the question and make recommendations for the consideration of the Government, furnished a valuable repoft. While it is exceedingly difficult to deal effectively with the causes which tend to increase the cost of living, it is the intention of the Government to take measures to remove any abuses that may now' exist, and to prevent any person taking advantage of the conditions associated with w T ar to trade on the necessities of the people. The object will be to ensure that the, cost of the food, clothing, and shelter of the people is in no way unduly or artificially inero.ased. Our desire should be that no part of the field of business opportunity may be restricted by monopoly or combination, and that the right of every man to acquire commodities .and particularly the necessaries of life, in an open market, uninfluenced by the manipulation of trust or combination, may be preserved, and the people not exploited. In this connection, with a view of increasing the powers of municipal corporations and avoiding the expense incidental to special legislation at the instance of those bodies, it is proposed to amend the Municipal Corporations Act, giving powers somewhat similar to those given to the Cities of Wellington and Christchurch in the year 1914, under local Acts, relating to the inspection, sale,- and control of the local 'milk supply; the establishment and maintenance of milk stations; the establishment, equipment, and maintenance of markets, refrigerating chambers, and chambers for the cool storage of meat and other articles intended- for human food; and also to establish, equip, and maintain local municipal bread-supply services. loans for Public works. The Government has very carefully considered the best method of providng moneys for carrying on public works, and, in view of the groat difficulties in the way of borrowing in th Home market except for war purposes, it has been decided to raise money by issuing debentures in the Dominion. It is proposed to issue free of income-tax, debentures for the sum of £5, or multiples of £5 .at 41 per cent., and the period will vary according to the desire of the subscriber but will in no case exceed 25 years. It is the intention of the Government to accept deposits on account of the loan through the post-offices in the Dominion, and through recognised brokers at a commissiono of 5/ for every £IOO contributed through them. The total amount to be raised will be limited to £2,000,000, and in this sum is included £500,000 for additions to open lines. The minimum value of a debenture has been fixed at a. very low figure in order that all classes of the community may be able to assist the Government, and I make this appeal to the people of the Dominion feeling confident that they will be glad of a further opportunity to express their patriotism. It may not be out of place if I here quote from a speech made by Chancellor of the. Exchequer in the House of Commons in June last, when explaining the details of the recent great war loan raised with such conspicuous success from all classes of the community at Home. Mr. McKenna says, “He who subscribes to the country’s need at the present is in truth doing an act of mercy and his act benefits both him and the country to which he gives. He who subscribes now, and saves in order to subscribe, will be able to bear the strain when the war is over. He wid he thankful for the efforts ho has made in the struggle to keep himself, but still dearer to him must be the knowledge that every aid ho gives to himself he is multiplying for his country, and that his country will bless him for his providence and for his

generosity. ” LOCAL BODY EESTEICTIONS,

I am hopeful that ,in addition to moneys for. public works, sufficient funds will be available to meet the reasonable requirements of settlers, workers, and local bodies from the deposits in the Post Office Savings-Bank, and every effort will be made to do so. Local bodies must restrict their applications to necessitous works, as it is not possible during these times to consider demands for conveniences that can be deferred until after the war is over. I take this opportunity of appealing to honourable members not to press for or expect the Government to meet demands for buildings on a large scale. They must give precedence to other more pressing matters, CONCLUSION. There is no portion of the civilised world which is not, to a greater or less extent, feeling the effects of the war. The people of this Dominion, in common with their fellow-countrymen in. other parts of the Empire, are offering their sons, ungrudgingly in order that the Empire cause V*v be mcCjulioued g )