TAXES.

Taranaki Daily News, 6 October 1920, Page 5

TAXES.

PROPOSALS IN NEW BILL. LAND MUST PRODUCE MORE. ' PVENUE POSITION BOUND. The new taxation proposals occupied the attention of the House of Representatives last night. Points in the Premier's speech are:— Revenue is keeping up, but we might meet more adverse times. Local bodies' debentures will pay a flat rate of 2s 6d in the £. Company debentures will pay 3s in the £. No land must remain unproductive. Taxation will be increased 50 pei* cent, if land is still unproductive in 1923. No great increase in land tax until £15,000 value is reached. On an income, of £IOOO, £9O will be collected, and on .£40,000, the tas will be £17,600. £20,000,000 may be wiped off the war debt at the end of the financial year. He hoped a reduction in taxation would not be long delayed. By Telejriifo.—Presfiijioclatlon. Wellington) Last Night. A number of amendments to the Land and Income Tax Amendment Bill were brown clown by Governor's Message in the House of Representatives to-day. Mr. T. M- Wilford (Leader of the Opposition) protested against the Premier bringing in & number of important and ..omplicatod amendments just prior to the second reading of the Bill. Members had studied the Bill as printed, and now, at the last moment, tney found a whole series of clauses changed, by amendments, the wording or effect of which they have no opportunity of understanding. He asked the Premier to defer the second reading till members had a chance of looking' over the amendments.

Tho Premier thought Mr. Wilford was unduly alarmed. The amendments were not complicated, but explained themselves. He could not defer the second reading.

PREMIER'S WARNING. In the evening, Mr. Massey moved the second reading oi the Bill. In doing so he said many people always thought they were paying too much taxation, and that moro should be put on the shoulders of their neighbours. His opinion was that every member of the community should pay in proportion to his means and the requirements of the State. No great change in principle was involved iii the Bill, and it had not been subjected to much adverse criticism during the time people had an opportunity of considering it. He did not wish unduly to iucrease taxation; he would he very glad if he was able to reduce it, but he must keep the finances of the Dominion sound, and therefore he must get the revenue required. The Premier said he did not wish to cause alarm, but he could not help thinking that we might yet meet more adverse times, and he must be prepared to meet those times if they came. So far the revenue was keeping up, and the position up to the present was hopeful. He first wanted to make clear the position of local bodies. Under the Bill it was proposed ■to tax a local body's debentures and a local body was asked to collect the tax, because it was impossible for the department to follow the debentures of a local body. The debentures would pay a fiat rate of 2s Cd in the £ on the income derived from them, and company debentures would pay 3s in the £. The Department had been asking for this system for a long time, and ho felt bound to say that he sympathised with the request, bcoause it did what all political economists recommended, namely, taking income at its source.

J NEED OF PRODUCTION. As showing how popular companies were as a means of investment, ho said that during the last sia months 254 companies were registered with a capital of £5,599,985. There was no harsh intent on the part of the Government, and he believed the proposals would work out well. Three shillings in" the £ was not an excessive amount to ask companies to pay, and he believed local bodies would be assisted by the proposals in the Bill. The position of mortgages was next explained, the concession to mortgages being outlined. Clauses 4 and 5 were hardship clauses, giving relief to widows in connection with land tax. Clause 0 was a new departure, and was i intended to bring unimproved land into use, the taxation being increased by 60 I per cent, if the land wasi still unproductive on April 1, 1023. Time was thus given to land owners to bring their land into productivity, but something must be done, because the country had reached that stage, with our enormous debt, and the need for large sums of money every month, that no land must remain unproductive. Section 11 was another exemption clause in favor of the family man, and this principle, he thought, might yet have, to be further extended Sections 12 and 13 were also exemption clauses. Clause 15 made an important distinction, for tho first time, between earned and unearned increment. The Bill did away with the distinction between ordinary taxation and war. taxation. He was not sure this was a good thing, because it might lead people to suppose that there was no prospect of taxation being reduced. That was not so, for he was hopeful that position would not be long delayed; LAND AND INCOMES.

Clause 20 was designed t* circumvent a procedure by which the department was losing a good deal of money, through large companies apparently dividing themselves, and then coming under a lower rate of taxation. This was one of tho most important clauses in the Bill. Clause 27 dealt with racing clubs, which were getting tho benefit of a compromise, it being provided that while the department could not collect certain disputed areas of inuome taxation, they must pay an increased rate for the future. So far as the land tax was concerned, there was no gr at,increase until tho taxable value reached £16,000. On audi an amount the present tax was '£l3l 15s 2d, and the proposed tax was £l4l 13s 4d. On a taxable value of '£138.000, the present tax was and the proposed tax was £6OIB 6s Bd. Discussing income tax, he proceeded to give a comparison between income tax proposed to be paid under this Bill and that paid in Britain (given in parenthesis). On a taxable income of £IOOO it was proposed under the Bill to collect £OO l>v war of taxation; in Britain th« **M ii»«te'i wetild skf Ml Aft kt>

come of "£2OOO would pay "£9lfr (£525); £3OOO, £570 ( £9s) ,* '£•&», ,' £2040 (£233ti); £7OOO, ££sß6 ' (£2837); £BOOO, £3120 (£3388) I £40,000, £17,000 (£21,712).

Figures were then quoted to show ihafc the Dominion had done a good deal tor wards a reduction of the war debt, bufc moi'o information was promised ffia this when the Loan Bill was before tilt House. Provided there vera no ■', ceßsive demands modo upon,the Oojuofif dated Fund, and the expenditure «fi < kept down to reasonable limits, at tne" end of the financial year ho believed ha could show that no less than £80,000,000 will be placed as on asset against the war debt After that ha hoped to be able to devote his energies to. 4 reduction of taxation. THti DEBATE. Mr. T. M. Wilford (Leader of thaggj position) said the real scheme of the But „ was to take taxation off higher Isemi [■•,, and make it up out of companies and , local bodies, in its treatment; of loeal bodies, the Bill was disastrous, forwhile it may be said it was only intended to tax: trading concerns of Steal bodies, tho fact was that the whole of, the income of local bodies, with but a* Bmall exemption, was taxable. Mr. Massey said the Bill, was only to- . tended to tax trading concerns of local bodies, and jf it was not clear he would be prepared to moke it so. ; Mr. Wilford said that might be so, but' did it only do that! Ho thought net. The proposals in the Bill with regard to tho taxation of debentures already i*-. sued were u, broach of faith. Mr. Massey: There- is no breach] of faith in the Bill. Mr. Wilford: That is my interpret* tion of it. Mr. Massey: Then your iuterpretatW is wrong. Mr. W. D. Lysnar (Gisborne) th'o«|M the. Bill should pass. He did not egtfca with Mr. Wilford that tl"» graduations . on higher incomes wero steep enough; they were too steep. If our products . were properly handled there would ba no fear of a slump, and next year, or th» year after, the Government should fc» a.ble to reduce taxation all round. Mr. J. P. Luke (Wellington North) felt sure the proposals in the Bill would detrimentally affect the raising of loan* by local bodies, as. lenders would naturally prefer Government loans to those of local bodies, which were, pabjecft t» a tax of 2a fid in the £. The debate was continued t>y Several members, and after Mr. Massey had replied the Bill was read a eecond time.