WAR TAXATION.

Taranaki Daily News, 27 August 1915, Page 6

WAR TAXATION.

£2,000,000 TO BE IMPOSED. LAND OWNERS TO PAY INCOME TAX «~ ——— RAILWAY AND TELEGRAPH CHARGES INCREASED. PROHIBITORY TAXES ON ENEMY GOODS. By Telegraph.—Press Association.

Wellington, Last Night. In the House of Representatives tonight the Minister for Finance (Sir Joseph Ward) made the following statement in regard to proposed war taxation:—lt 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 have been provided place the amount at approximately £1,000,000 per annum, on the assumption that the war 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. There must be neither delay nor uncertainty in the country doing its financial duty to those who have offered their lives for the protection of every man, woman, and child in> the dominion, and who have assisted in the preservation of the British Empire. PROPOSED INCREASES OF REVENUE. Though the demands are large, it is well within the capacity of the country to provido the necessary ways and means to meet them, and it must not be forgotten that every country engaged in the present war has to face huge de- j ficita and to shoulder burdens of an un-1 precedented nature. In this respect New Zealand is in a similar position to other parts of the British Empire. The financial position created by the war is one calling for prudent and vigorous treatment, and must be faced by the Government and the people with inflexible courage. I cannot too strongly impress upon every section of the community the necessity for care and economy, especially in the matter of luxuries, until the great war now raging is over. I do not wish to suggest that there should be a diminution in employment. On the contrary, both Government and private individuals can materially '">lp the country in coining successfully irough the present crisis by maintaining employment at its normal maximum and at the same time doing everything possible to prevent waste and extravagance. As a producing country, we possess enormous advantages in comparison with most other countries, hut we must not rely upon the present high prices for our principal product? V>ing maintained after the war is over. Tlip huge and unequalled war ovneiidit'-re of the older countries mi'tl enormously limit the purchasing rower i.f their peoples until suffieient time liiv- clapped to enable the nation to tnk ■ tee!,- of the altered conditions and to .'i'!J!i:! their taxation and finance to meet tin- requirements of the new order of thin"-. 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 losses we are suffering in the struggle in which we are engaged, there must be cordial co-operation and ready self-sacri-fice from everyone. The future calls for self-sacrifice from everyone in the dominion. In all probability on the conclusion of the war it will be practicable to make very considerable reductions in taxation.

of wool, meat, and dairy-produce. To provide for a reasonable contribution to defray a portion of the eost of the war, I propose that the income tax 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 be obtained by this alteration, and, considering the high prices that have been realised for sheep, wool, meat, and dairy-produce, it' is not a large contribution from those affected. The total increase of income tax proposed will amount to £551,660, and will reach those whose additional profits have been due largely to the war. INCREASES AND ALTERATIONS OF DUTY. An all-round duty of 10 per cent, ad valorem on motor-car 3, and 60 per cent, additional on cars wade in countries which are now or may be enemy countries. Bicycles, which have hitherto borne a duty of 20 per cent, if British, and 80 per cent, if foreign, will be reduced to the same rate as motor-cara, with tie same conditions as regards enemy countries. A duty of 4d per gallon will be placed on motor-spirits and kerosene. Kerosene, which formerly had a duty of 6d a gallon, is included. Petrol cannot be taxed to produce the revenue necessary unless this is done. Tyres are to remain free from British and neutral countries, with a 50 per cent, ad valorem tax on tyres from enemy countries. Excise: Beer will be taxed by an entirely new method. The Government'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. The duty will bo assessed on the quantity and with respect to the specific gravity of the worts pitched for fermentation. The worts of low gravity will pay a minimum duty, which will increase with each unit of rise in gravity. Spirits will be increased from 16s per proof gallon to 17s per proof gallon. The total increased revenue from the foregoing adjustments is estimated at £340,800, of which sum £55,000 is represented by increased beer revenue. I propose that an excise duty of Id per gallon be put on all non-alcoholic beverages to be defined, I do not think that 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 increase the duties on the necessaries of life.

STAMP DEPARTMENT INCREASES. I propose an increase on the duties on conveyances, transfers, leases, settlements, common deeds, and other assessable instruments mentioned in the second schedule of the Stamp "Duties Act, 1908, by 25 per cent. The amount of duty realised from this source during the last year was £175,000. It is estimated the increased tax will yield £40,000 per annum. Bank notes duty: The duty at present is 15s per cent., and realises £OO,OOO annually. I propose to increase this tax to £1 per cent-. This increase will produce £20,000 per annum. Rank cheques: The duty is at present Id. I propose to increase the duty to 2d, This increase is estimated to produce £50,000 annually. Receipts: The duty at present is Id on every receipt for £2 and upwards. It is proposed to increase this duty to 2d. Estimated increase, £40,000. Death duties: There is one class of beneficiaries 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 duty on a less sum than £20,000 each, which for all practical purposes exempts them from duty. It is proposed to reduce this exemption to £5,000 for cadi child, and to impose a duty of 2 per cent, on successions over this amount. Estimated increase, £30,000 per annum. Mortgages of land or aiiy 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, or discharge of mortgage a fixed duty of 10s. This tax is estimated to produce £B,OOO. Sub-sales of property: A new stamp duty is to be imposed on all sub-sales of property at the same rate as if the purchaser took a transfer or conveyance of the property. This duty is estimated to produce £IO,OOO per annum. It will fall almost entirely on the land speculator. Totalisator dividends: I propose as a war tax to impose a duty on totalisator dividends of 21 per cent, Estimated increase, £75,000, POST AND TELEGRAPH CHARGES. I propose to make some small additions to the charges leviable for postages and telegrams. Telegram and cable messages: increase in initial rate of £2, £50,000; bureau messages: Initial rate made Od to all, £20,000; postage war tax of Jd on all articles posted except newspapers, £310,000; total, £380,000. RAILWAY INCREASES. The railway passenger and goods rates will be increased to the extent «i £360,000 per annum. Prices of materials required for the maintenance and extension of the services have rises enormously.

It would not. in my opinion, be prudent at present to base the extra amount required at a lower sum than £2.0(10.000 per annum, and it will depend entirely upon the duration of (lie war whether e\>£n this larce sum v ill not in future require to boMivrcns"d. ft is essential to distribute the incidence of the increased (axation over the Widest possible area in order that its direct effect may be least oppressive. LAND AND INCOME-TAX. I estimate the receipts for 1915-16 as follows: Land-tax,'£Bß6,ooo; income-tax, £1,090,000. It is proposed to increase the land-tax 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 la 4d to 2s, 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 taxable incomes to 2s Sd on the higher one 3. In view of the fact that many business people whose incomes are taxed are also paying land-tax, and in many cases graduated land-tax, this is considered to be a high enough rate to impose, as in nivny instances the combined taxes will be equivalent to a tax of over 5s in the £1 a£ income. Reduction of exemption: It is not considered advisable to attempt to obtain any increased revenue by lowering the exemption. It is not proposed to increase the tax on mortgages. The comparison between the estimated tax for the current year and the tax for lasst year is as follows: Estimated Present Tax. Tax. Ordinary fax • 307,000 307,000 Mortgage tax .... 240,000 2-10.300 Graduated tax .... 686,340 818,400 Income tax , 1,090,060 539,000 Totals .1,977,000 1,357,400 Increase £619,600 It is generally recognised 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 be contradicted when I say that large profits have been derived from the sale

After carefully looking into the whole position, it is proposed that passenger rates be raised 8 1-3 per cent., and goods (excepting timber) by 10 per cent. AsBurning t&at effect is.given to this proposal, the rates operating for conveyance of dairy and other farm produce and live-stock will be less than those ruling in 1894, when the industries were either languishing or in their infancy, while the proposed advance is so infinitesimal as to be negligible as far as the increase of prices over the counter are concerned. The effect of the proposed increase in rates would be as follows—Butter, BJd per £IOO of value; cheese, la per £IOO of value; wool, Is 8d per £IOO of value; frozen meat, 2a 8d per £IOO of value; sheep, 4s 8d per £IOO of value; cattle, 3s 9d per !£IOO of value. I| omit timber for the reason that the increase would be on white-pine £ 1 14s 5d per £IOO of value, and on red-pine £2l 5s 5d per £IOO of value. 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. 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. In adjusting the taxation and the rates for various public services my object has been to do so without imposing "dditional 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 below that amount per. annum. . -. For the sakV of convenience, I summarise the proposed increases in taxation and rates as follows : '£ Land and income tax . rj-sr;.;-. •■ 619,600 Post and Telegraph cr>.. 380.000 Railways ..^..v*-.-.-.-«.-,..« 300,000 Customs ..r«-.«r,'iv.si.« 285,000 Totalisator divi(V~-*> ,rt*s-w»!» 75,000 Beer duty .•....»..-.nw» 55.000 Bank cheques . ,v. .-.t.-.-.v 50,000 Land mortgages ...... .v. 48,000 Receipts 40,000 Conveyances, transfers, etc., .. 40,000 Succession duties 30,000 Non-alcoholie beverages ...... 20,000 Bank notes 20,000 Sub-sales of land ...........v.. 10,000 Total £2,032,600 I am 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 favorably reflected upon the principal departments now adversely affected, and an early termination of the war would materially reduce the prospective liabilities. I estimate that we will receive by March "1 next not more than £1,000,000 from the increases now proposed. Tariff: The subject of revising the Customs tariff is one of such importance and difficulty that it cannot be dealt with at present. No doubt the question of encouraging new industries may become more pressing when the war is over. We must take steps to prevent New Zealand being made the dumping-ground of foreign countries' goods to the seriou3 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 build up her large commercial and industrial establishments, and to increase thoir 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 great 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-reliant 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. Cost of living: It is the intention of the Government to take measures to remove any abuses that may exist, and to prevent any person taking advantage of the conditions associated with the war to trade upon the necessities of the people. The object will be to ensure that the cost of food, clothing, and shelter of the people is in no way unduly or artificially increased. "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 Christchnrch in the year 1914, under local Acts, relating to the inspection, sale, and control of the local milk supply; ihe 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. MAN FOR PUBLIC WORKS.

It lias boon 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 4J per cent, and the period will vary according to the desire of the subscriber, but will in no case exceed twenty-five 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 commission of 5s for exay £IOO contributed through them. The total amount to be raised will be limited to ,C 2,000,001), and in this sum is included £500,000 for additions to open lines. 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 necessary 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 the opportunity of appealing to honorable 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.