BUTTER-FAT TAX

Taranaki Daily News, 28 October 1916, Page 5

BUTTER-FAT TAX

TESTING VALIDITY OF OF.DF.R-IN-COUNCIL. By Te'egraph.—Press Association. Wellington, Last Nislit Before the Full Court to-day a case was brought, by way of a summons, under the Declaratory Act to test the validity of the Order-in-Council made under Section 4 ot the Customs Act, 14)13, and Section 24 of the Regulation of Trade and Commerce Act, purporting to prohibit the. export of butter and cheese. Plaifitiffs were the Taratalii "Dairy Co., Ltd., of Carterton, the Man(?oroi Co-operative Dairy Factory Co., Ltd., New Plymouth. The defendant was the 'Xttorney-General.

Chief Justice (Sir Robert Stout), justices Edwards and Chapman were on the bench; Mr. il. Myers rppeared for plaintiffs, and the Solicitor-General, "Mr. J. W. Salmond, for the defendant. In outlining the object of the proceedings, Mr. Myers said that the Order-in-Couneil did not impose prohibition in the largest sense, but did impose a number of restrictions, the principal of which was that no butter or cheese could be exported unless the exporter paid a charge or tax of :i 4d per lb. on butter-fat used in the fuetoiy. Ic did not matter whether butter or cheese so made from the butte<-fat was exported or consumed in New Zealand, and. the manufacturer might have two or three factories, some engaged in making butter or cheese for export, and some for purely home consumption, yet lie had to pay the tax just t'io same Justice Edwards: "He gets it back again." Mi. Myers: ''No, Sir; That is really just what be does not do." Continuing, counsel said that it was not necessary for a person or company, although holding an export license, to export an ounce of butter. One person might manufacture for home consumption, and share in the distribution, and a man who manufactured for ->xport might not {.et back one sixpence of the distribution that was made amongst those seliing butter in New Zealand. '"he Chief Justice:—"Who is the licensing authority?" Mr. Myers:—''Mr, Robert I'l'iggs, one ot the Public Service Commissioners.'The Chief .Justice: "And who owns the li'oney? It seems-to me that it becomes Crown money." Mr. Myers contended that if the money wilt to the Consolidated .Fund it could not be paid out in the way in which it was. Continuing, Mr. Myers pointed out that *ome manufacturers sold only in New Zealand and some exported all their nutpiit. Tile first man made a loss, Ik-

c;u"o the maximum price was fixed in Jffiw The Chief Justice:—"Hardly a loss', ['rrhans lie docs not got an extra gain " Mr. Myers: "He sots liis lose from the ether man who sells not an ounce in New Zealand. He gets back not only his own |d, but possibly something more, and people who export get nothing at all."

Justice Chapman; '■! suppose we may

like it that it was an assumption of the Government that unless bome such' reguhtion were made manufacturers f mild semi it home,"

.'■l;. Myers: "I suppose so, Sir, but it if quite fallacious."

The Chief Justice: "lien wlio partially export and partially sell locally get Lack a proportion of the charge impoi* ed."

Mr. Myers cited the case of a, manufacturer who might export' nine-tenths of his output and sell one-tentli locally. The Chief .Justice:—"He may be the gainer by the extra price obtained ior exported butter." Mr. Myers said that only a very small proportion of the butter made in New; Zutic.ml was consumed iu the country. The exporter might get- mbre for hit butter than lie would in New Zealand, but he. might get legs, as the export market was a fluctuating one. Theevporter took the risk, The Chief .Justice: '1 do not think v.'e are to go into the ethics of tbe matter. The whole question seema to b:, is the Order-in-Council authorised by liny statute in New Zealand?" I'r. Myers: "If there is power to lm« p'.t.e a charge or tax, not for the chaxgN of Government, but to take the money) out of the pockets of A and put it inkj the pockets of B,"

.Tustico Chapman: "Can you "flit iianse fee a tax?" 1

>lr. Myers: "I do not think this is t licent.e fee." Mr. Myers suggested that what might have been done was that * certain proportion of the output fron each factory might have been kept is New Zealand. He went on to refer to the fact that the tax was also imposed 011 p. manufacturer of cheese who did not get anything back, but who still had to pay his 2d per lb. v '.the Chief Justice: "If there ia proved to be power to make a levy, is there power to distribute money which deems to ivn-. to be Crown funds J"

Mr. Myers referred to tho expressed de-;i" some little time ago of tlie manu* farmers of butter for local consumption to increase the price, as they found thsy were making less profit than the axpuiiti Then followed the Boarcf of Trade report and the fixing of a maximum price. The Governor-in-Couocil, be contended, bad no power to fix a limit to the prices obtained by the exporter, but only to fix the maximum price for local consumption. The charge, he added, was both an export duty and excise duty, and the Governor wh3 really limiting 'thai maximum price the exporter waa gefci ting.

Tie Chief Justice: "He is only saying, 'lf you export, you must pay; j4 per lb."'

Mr. Myers quoted authorities in sup* port ct the contention that tho charge wa» a tax, arid that the Governor-in-Council had no power to impose taxation nliiH; could not be imposed without the •fxprtss direction of the Legislature, II the Urder-in-Council were held, to valid, where, he asked, was the matter to end; If the charge could be levied, there was 110 limit to what might he dene. Exporters of meat, wool, and lump might be .told "You must pay so much per bale or per carcase to go into the fi nd to be paid to the manufacturers of butter who are selling it locally, and who «re not getting the greater gain of ihe exporter." For the Crown, Air. Salmond called attention to the immense powers which had been entrusted to the Executive Government during the present national emergency. These powers were con-fen-ed partly by common law, bat been largely added to by special legislat tion. At the present time the situa< (ion was simply thajt we wera practH callv living under a despotic ment. Statutes passed during war tim< were to be treated as emergencj statutes, and must be viewed in 8 broad judicial spirit, having in view tin welfare of tho State. It would S(4 be a service to the State to restrict, the 'unctions of the Government in such a time as the present. Tho restrictions should not be read into a statute fol which there was 110 substantial founda> tion. The extraordinary powers oi Government/ were now being exerciser in all parts of the Empire. The Government was in a position dot only to tax goods, but commandeer them. It could, if it liked, take all tbe bntte) and cheese for nothing. The Chief Justice: That is Do| taxing.' 1 Mr. Salmond: "It is worse than ta» ing." The British Government in thl exercise of its common law prorcgativi had taken possession oi an aeroplane and when the owner did not accept the compensation offered, the Cour| found that he was entitled to nothing while the -Royal prerogative lasted Surely the Governor could go ths lengN of levying a charge on the butter trade

The Chief Justice: The Governor doet not hold a Royal prerogative; that i| held in England. Counsel quoted numerous cases il which the Royal prerogative bad beel exercised, and quoted from ji'.ugmentl to show that ordinary methods could under tile war regubu tioiii override auy Act on the Statute Book.

The Chief Justies: Surely you don'! suggest that." Mr. Salmond: "Certainly."'

The Chief Justice: ''Can the G6vert\ ment override a Constitutional Act?" ■ill-. Salmond: "I mean within tht scope of regulating powers set fort\l fot the purposes of war. Most cxteosivi powers had been exercised by the Atton ney-Gcneral, and tho Government hat been accorded uncontrolled use of mill lions of money ia connection with th( war.''

The Chief Justice: "Section 54 of thi Constitutional Act is still lav/, an( there is no power in the Parliament ol New Zealand to cancel it."

The Chief Justice pointed out that there was a deiegation of the Governor's authority to an outside body which decided what the particular .Tiarge should be. Such delegation had not hitherto been Upheld. Mr. Salmond contended that no tax was levied. The essence of a lax was an obligation. This was not an Obligation, it was a condition pure and simple. No one could be sv.sd for the iharge. It vtas no tooro a tax than a, charge made by a shop-keeper of his goods. It was a price to be paid for a license. It was true that the condition. \vas such as was provided' by tht Act. One condition of a ta:: was that it must go into the public revenue, hut this money was not treated as revenue; it went into a special trust fund.

The Chief Justice: . ".1t... is Crown money ami part of it can bo taken for payment of Crown officers."

:,lr. Salmond said only the expenses of administration of that trust were to lie taken. The essence of the natter was not Ciovernment control of the fund, but a sensiblo device to equalise the profits of all concerned. It was simply a regulation' of trade and com 1 merce, having regard to conditions created by the war. ' ' Further argument w*» ' Dostoonod k until to-morrow,