PARLIAMENT.

Manawatu Standard, Volume XLIX, Issue 256, 27 September 1929, Page 4

PARLIAMENT.

LAND AND INCOME TAX BILL.

MORE OPPOSITION SHOWN.

The Land and Income Tax Amendment Bill was farther dismissed by the House of Representatives yesterday, but the debate on the second reading was not concluded. Opposition to the measure in its present form was expressed by Mr C. A. Wilkinson (Independent) and Mr H. M. Rushworth (Country Party).

HOUSE OF REPRESENTATIVES. REPLIES TO QUESTIONS. Per Press Association. WELLINGTON, Sept. 26. The House of Representatives met at 2.30 to-day. Hon. W. A. Yeitcli gave notice to move that the following be appointed a select committee to which representations on the Transport, Law Amendment Bill should be referred: Messrs Broadfoot, Clinkard, Healy, Murdoch, Ansell, Harris, Williams, Parry, Sullivan and the mover. Mr A. M. Samuel asked the Prime Minister whether he had seen a statement in the Thames Star, indicating that it had authoritative information that the Paeroa-Pokeno railway would not be constructed, at least for a number of years and, if so, was the statement correct. , Sir Joseph Ward replied: The matter line not yet received the consideration of the Government. Replying to Mr P Fraser, Hon. H. Atmore stated ho would make an announcement on the subject of the favourable recommendation of the Education Department of the House for 1928 in regard to the women teachers petition for equality of pay, responsibility and general status after the matter had been considered by Cabinet. The Minister of Labour (Hon, \V. A. Veitch) replying to Mr Fraser ; said that it was not his intention to introduce this session the Painters and Decorators Health Protection Bill, which, lie had promoted for many years past. LAND AND INCOME TAX. The adjourned debate on the second reading of the Land and Income Tax Amendment Bill was resumed by Mr A. W. Hall, who claimed that, the Government’s proposals would amount in some cases to taxing a man on Ins debts. The super-tax was designed to break up large estates, but he. considered that the Government should concentrate on the settlement of unoccupied Crown Lands before paying higher prices for land that at the present time was producing practically as much as it would if sub-divided. He thought income tax would be much fairer than super-tax. If, however, the Government was determined to apply the super-tax, it’ should first classify the land into three divisions, viz., (1) land suitable and immediately required for sub-division; (2) land suitable but not immediately required for sub-division; and (3) land not suitable for sub-division. Mr W. A. Bodkin said that tho Reform members had made much of

the unsuitability of certain lands for sub-division and reference had been made in this connection to mountainous country in Central Otago. He agreed that there were areas on which stock could be grazed for only a few months in the yoar because they were above the snow line, and that in such cases there had to be a sufficient area of low country grouped with the high country in order that stock might be carried through a severe winter. Experience had shown that the greatest loss of stock occurred where the areas were unduly large. He favoured limited sub-division into reasonably large areas and this, lie contended, would be responsible for a large decrease in the deatli rate in consequence of the greater degree of care which it would be possible to exercise. DISASTROUS EFFECT.

Mr H. M. Campbell said he was afraid that the result of the proposed legislation would be to hinder the development of the land and hundreds of thousands of acres would lie idle. The bill would have a disastrous effect on land values and farmers would have great difficulty in securing renewals of mortgages. That was not going to affect the rich man, who could afford to' laugh at mortgages, hut it was going to hurt the small, struggling farmer, who was carrying a big mortgage. He predicted that the increased taxation would have a very serious effect on the workers and would add to the army of unemployed. He anticipated one of the worst winters the country had ever had, and the Prime Minister would have it on his own shoulders. Mr Campbell described the bill as a most masterly effort of inequity. Mr C. A. Wilkinson took exception to both the super-tax and the mortgage exemption proposals and appealed for .the support of the Labour Party in this matter. If that party wished to become the Government of tills country one day, it would have to learn to conciliate the small farmers at least. There would be no loss of dignity to the Government if it dropped its super-tax and mortgage exemption proposals and relied on producing extra revenue by means of income tax. Mr D. G. Sullivan challenged the statement that the Labour Party had no consideration for the man on the land. He said it was fully alive to tho interests and welfare of the small farmers and had never proposed to increase taxation on that class of the community. It had never supported any such proposals. The present bill was designed to tax the large land-

owners and there was a clause to meet cases of hardship. Dissatisfaction had been expressed with that clause, but he imagined that if the need for its alteration were urgent, it could be accomplished during the committee stage of the bill. He added that if the bill would increase land settlement without imposing any undue hardship, lie would be in favour of tho proposals. “GET OUT” BUDGET. Mr F. Waite stated that if the bill were passed it would damage conlidenco in rural securities and would drive capital out of the country. He agreed with the view that it was the poorer farmer carrying the heavy mortgage who would be injured by tho bill. He said that the motto of tlie Government seemed to be: “It’s a virtue to get on to the land, but it’s a crime to succeed there.” The. Budget had been described as a “get out” Budget. It enabled the Prime Minister to get out of his election pledges and it forced the farmer to get out of his holding.

Mr C. MacMillan said that the United Party members had complained of alleged government by heads of departments during the Reform Administration, but now the filial judge of the fairness of the taxation proposals seemed to be the head of that department. He could not see how the proposals of the Government could possibly assist in the settlement of land and ho supported the statement that there would bo a drop in confidence in rural securities. Mr MacMillan said that the Prime Minister could not escape the fact that there was a feeling of alarm in the country in consequence of the proposals and lie trusted that the Government would be reasonable in its consideration of the objections when the committee stage was reached. He was satisfied in his own mind that our credit on the London money market would suffer if the hill were passed. In his opinion, exemption should be allowed for all mortgages, as interest rates were fixed with knowledge of the fact that income tax on the money would have to be paid by the mortgagee. LEADER OF LABOUR PARTY. The House adjourned at 5.30 p.m. and resumed at 7.30 p.m. The first speaker in tho evening was Mr H. E. Holland, who stated that the financial position to-day was largely due to the removal of the income tax on farmers at the end of the war and that fact had to be taken into consideration in relation to the present proposals. He stated that the Government had been faced with two alternatives—to cut down expenditure or to increase taxation. The former course would have necessitated a reduction in expenditure ou social services and the only quarter in which this would have been possible, without imposing some hardship on the general community, would have been on defence. But when the Labour Party had sought a reduction in this vote, the Reform and United members had gone into the same lobby to uphold the estimate. Tho position, then, called for extra taxation, and in this respect the only course open (to use a somewhat worn out phrase) was to place the burden on the shoulders of those best able to bear it. Mr Holland said he was not going to say that taxation should be withhold for a number of years to enable land classification to be carried out, hut lie did think if the system outlined in the bill was to function satisfactorily, that task would have to be taken in hand.

Hon. W. Downie Stewart had stated that the farmers had been passing through hard times, but that argument was not borne out by the export figures, which showed that the volume and value of production had increased enormously. The Labour party was prepared to "join with other members in an endeavour t 6 devise a satisfactory method of meeting cases of hardship. He contended that all incomes, from whatever source, should be taxed equally. It would, however, he impossible to achieve one of the principal aims of the Bill—to break up the large estates —by a tax on incomes alone. The Prime Minister had stated that he could not lend money more cheaply, but Mr Holland said that he Had in his hand an advertisement from a Southland newspaper in which a reputable logal firm offered to lend money on freehold security at 5i per cent, and

there were other instances of money being available at 41. 4-1 and 5 per cent. Why could not the Government lend money at the same rates? He believed it would pay the country to suffer a loss in making money cheaper. The speaker attacked tho statement that high prices of land indicated a prosperous community. He said that there had been many instances of an artificial increase in the price of land as a result of frequent changes of ownership, and in such cases prices by no means repre.sented values. Such a state was a bad thing for the man on the land and a bad thing for the community consuming tho produce from the land. In conclusion, the leader of tho Labour party stated that, inasmuch as the bill represented a step in the right direction, it had his support. He hoped that modifications in certain respects would be made during the committee stage. UNDESIRABLE FEATURE OF BILL Mr 11. M. Rusiiworth stated that the increase in the land tax had the effect of being a capital levy and one result would be that land prices would go down. He had no objection to a capital levy when it was necessary, but lie did object to it being made on only one section of the community. He further said that the bill departed from the principle of ability to pay because it provided that, where the income was small, a man was called upon to pay an' arbitrary land tax and was therefore taxed in excess of his ability to pay. Mr Rushworth said that there was another feature to which he wished to draw attention. When a man in the city was called upon to pay extra taxation, he was able to pass the increase on to the consumers, but the farmers, who had to sell their produce in competitive markets overseas, could not pass on this added charge. He could not support the Bill as it stood and he hoped that it would be amended. THOUSANDS OF FARMERS AFFECTED. Mr D. Jones stated ho intended to prove that the bill would affect thous>ands of farmers throughout the country. It was going to bring down laud values and in doing so it was going to destroy the equity of the farmer—the trait of his life savings. This would be the lot of farmers throughout tho Dominion and many worthy men would be driven into the Bankruptcy Court. He contended that responsible Government had ceased to exist in New Zealand. We were drifting along without a rudder or a course. That was the explanation of the present bill. It had been stated that the man who received exemption for his mortgages was pot paying his share of taxation. He pointed' out that a large proportion of income tax was collected from income earned from mortgages lent to farmers. The farmer was paying income tax through his mortgagee. Mr Jones claimed that the New Zealand farmers compared unfavourably with the Australian farmers in relation to land taxation. PROSPERITY PREDICTED. Hon. E. A. Ransom said that the statement that farmers had to pay income tax through mortgages was one of the finest arguments he had ever heard in favour of tho £60,000,000 loan for State advances. It went to show that the time had arrived for the Stato to obtain money to lend to the farmers at a lower rate of interest than the moneylenders were charging. Personally, he had no anxiety that there would be a surplus of properties coming on to the markets as a result of the proposed legislation. He could forsoe for this country an era of great prosperity, in which unemployment would vanish as a result of the steady development of land settlement! He did not think that land values would be seriously affected, but even if there were a slight drop in prices, jt would be more to the advantage of the country tlran the boom created by the Reform Government. People wVio were complaining of the precarious position to-day were largely those who had bought laud at inflated prices during the boom. Mr H. S. Kyle stated that tlie farmers’ organisation of Canterbury which liad placed proposals before the Prime Minister was not asking for exemption from taxation. It was not asking for mercy, but for justice. He claimed that the taxation proposals would injure middle-class farmers and

it was for them, as well as for the small farmers, that the Reform Party sought justice. If the object of the proposals was to bring about subdivision, he suggested that the farmers should be given an opportunity to place tire land on the market before the super-tax was imposed. It might not then be necessary to impose a burden which would break many farmers whose land was not suitable for sub-division. Hon. W. A. Veitcli stated that the taxation proposals contained in the bill were intended to meet a grave national need. At this stage (10.15 p.m.) Sir Josepli Ward rose to a point of order to move that urgency be accorded the debate, as ho desired that the second reading should bo completed to-night. Mr Speaker stated that such a motion could only be moved prior to the order of the day. The debate could not he interrupted to move for urgency. Sir Joseph Ward: How can I get out of the difficulty? (Laughter.) Mr Speaker said he could only suggest tliat lie should take the pleasure of the House. Sir Joseph Ward agreed to this course, but as some members raised an objection, the debate was not accorded urgency. Mr Veitcli then continued and stated land aggregation, as it existed to-day, was hindering production, hindering a solution of the unemployment problem, and generally standing in the way of the welfare of the community. Aggregators were now standing behind genuine farmers to protest against the bill. The debate was adjourned and the House roso at 10.30 p.m.