THE Temuka Leader. SATURDAY, DECEMBER 5, 1891. MR RHODES ON FOREIGN DEBENTURES.

Temuka Leader, Issue 2289, 5 December 1891, Page 2

THE Temuka Leader. SATURDAY, DECEMBER 5, 1891. MR RHODES ON FOREIGN DEBENTURES.

When Mr Rhodes made his speech in Temuka, he laid it down as a positive fact that foreign debentures are liable to double taxation under the Land and Income Tax. On this theory he built up a splendid superstructure to show that money-lenders would be ruined, and that capital would fly from the colony like a hunted deer. When Mr Twomey asked him a question on the subject Mr Rhodes became angry, and did not scruple to make use of a private conversation to make it appear that Mr Twomey knew nothing at all about it. Passing over the bad taste of repeating on a public platform the subject matter of a private conversation, it would appear that Mr Twomey knew just enough to make him feel doubtfnl of the accuracy of Mr Rhodes’s statement, as the following communications will show : To the Hon. John Ballance, Premier and Colonial Treasurer, Wellington,

Sir, —I enclose herewith an extract from Mr Rhode’s speech to his constituents. From that you will see that he asserted that money borrowed on debentures in England and lent on mortgage in this colony by loan companies, is, under the Land and Income Tax Act, subject to double taxation. First, the loan company must pay the mortgage tax on it, as if it were part of its own capital. Second, after having thus paid the mortgage tax on it the loan company must pay what Mr Rhodes calls the Debenture Tax under clause 2, schedule C of the Land and Income Tax. This clause of course gives the loan company power to deduct from the interest payable on the debenture the amount of the tax, but Mr Rhodes says our laws are not recognised in England, and that consequently the loan company would have to pay the two taxes. Now, my object in writing to you is to ascertain whether this is correct. In glancing through the Act I have noticed that it provides against. duplicating taxation on any species of property except of course properties affected by the graduated and absentee ' taxes. I see that a farmer who pays a Land Tax is not bound to pay an Income Tax. A shareholder in any institution which has paid taxation already will not have to pay Income Tax. on that portion of his income derived from such shares, and so on. In consequence of thus noticing that care has been taken that no class of property shall have to pay double taxation, doubt has arisen in my mind as regards the accuracy of the statement made by Mr Raodes, and I have therefore decided to ask you to kindly answer the following questions :—First: Is it true that money borrowed on debentures iff England and lent on mortgage in this cobny by locally-regis-tered loan companies is subject to double taxation; that is, a mortgage tax, as if the money were a portion of the company’s own share capital, and a debenture tax under clause 2, schedule C of the Land aad Income Tax ? Second : Is the debenture tax a special impost placed on debentures for some special reason, and what reason ? ; I may tell you my object is to publish your reply. I have spoken to several persons on the matter, and no one seems to understand it, and hence my action in writing to you.—Yours truly, J. M. Twomey.

The honorable the Premier sent the following talegram in reply to the above letter last Thursday : “ There is some doubt as to the meaning of the foreign debenture-holders clause. The intention, however, was that there should be no duplicate taxation, that the same money should not be taxed twice over, and this will be made clear before any tax is collected. If you look into the Act y°u will see that there is a reference to duplicate taxation, and the meaning cari be deduced from these words. John - Ballance.”

So that settles Mr Rhodes’s theory. His whole argument falls to the ground like a house of cards. He spoke with great contempt of “ A country, newspaper, which had said that there was no graduated tax on money. What does he think of the “country newspaper” now? On this mere doubt Mr Rhodes built up his grand argument, but ignored the clause which shows plainly that he was altogether wrong. Clause 10, section 5, says—“ Provided that for avoiding duplicate taxation in any case where it 'shall appear that any mortgage and income derived therefrom have been assessed for tax, which has been paid in respect of the same year or period, the commissioner may make such allowance or refund as he shall deem just, and in such manner as shall be prescribed.” Now, is not this quite plain ? Does it not give power to the Commissioner to return the money even if it had been collected, if it can be shown that a double tax has been paid on any kind of property. For instance, supposing the companies paid a double tax the Commissioner would be bound to refund the amount overcharged. Mr Ballance is determined to make the matter clearer, as the Act gives power to make regulations but really we think this is clear enough. At any rate it was never the intention of the legisla-

lature to duplicate the tax| and Mr Rhodes knew it/for an attempt could not have 1 been made to double the tax on money without his knowledge. He knew that it was not the intention ot Parliament to inflict a double tax ; he knew that even if a mistake had been made the Commissioner was bound to refund the money, yet he did not scruple to state the contrary without the slightest reservation. He evidently acted on the principle that “ one fopl makes many.” We do not wish it to be inferred that we set down Mr Rhodes as a fool. Far from it. What we mean is that he acted the part of a fool in the hope of befooling others. He wanted to frighten farmers into believing that capital wonld leave the country, and that consequently the rate of interest would go up. The honest truth is that money-lenders will be better off under the Land Tax than the Property Tax, aud Mr Rhodes had to resort to this paltry quibble to try to support his contention. The bubble is burst now, so we can all go to bed comfortably and feel happy in the knowledge that there is no intention to ruin moneylenders.

SCARCELY TRUE

Mu Rhodes made one statement in his speech which ought not to pass unchallenged. In speaking of the expenses of -Ministers he said they spent a good deal in helping Liberal candidates at by-elections. Now Mr Rhodes knows full well that this is not true. Four elections have taken place since the general election. The first was the election] of Mr Maguire for Egmont. It is true that the Minister of Lands and the Minister of Mines made a speech each in that constituency during the election. They were passing through, on official business, and asked to speak, and they did so, but let us say they went up purposely to assist Mr Maguire. What does that amount to ? Ministers are allowed £1 10s a day travelling expenses, and as each of them spent only one day in the place, all they could have spent on the election therefore was £3, and if they spent six days there they could only spend £lB, Mr Rhodes knows this well. Ministers cannot spend more than what the law allows them, unless they put a hand in their own private purses, and if they do, it is their own business and no one has any right to complain. The next election was that of Colonel Fraser for Te Aroha. That took place while Parliament was in session, and Ministers could not have assisted him as they had enough to do to defend themselves in Parliament against the calumnies of Mr Scobie Mackenzie and Mr Richardson. They could not possibly have spent a penny there. The next election was that of Mr Lake for Waikato, and they did not even go to the trouble of putting up a candidate of their own there. The next election was that of Mr Sandford for Christchurch, but not a single Minister made his appearance in Canterbury until it was all over. We defy Mr Rhodes to prove that this is not true, and we should advise him to be more careful in future about his facts, as other people are watching politics as closely as he is. The only candidate the Ministry assisted was Mr Maguire, and all the money they could have spent on him was £3. Very possibly the reason the Ministry helped Mr Maguire was because Mr John Bryce went up there, and Mr Harkness came all the way from Nelson to help Mr Bruce. Honestly now had not Ministers of .the Crown a better right to lay their policy before the people than outsiders like Messrs Bryce and Harkness had to go there to poison the minds of the electors against Mr Maguire. Let us have both sides of the story, but let us have the truth at any cost.