from Wilhelmina Tilbury, whose late husband was a postal clerk, for a pension.

moved, as an unopposed motion, that Order No. 16, adjourned debate on motion for appointment of Commission on Post Office Grievances, set down for to-day, be discharged.

The motion was agreed to. WORKMEN’S COMPENSATION BILL.

brought up the report of the Select Committee on the Workmen’s Compensation Bill.

The Bill was set down for Committee stage on Monday next.

laid on the Table a statement showing results of working of the S.A. Railways and Harbours for the year ended March 31, 1914, and also the supplementary Estimates of Revenue and Expenditure of Railways and Harbours for year ending March 31, 1915.

said he would like to ask the Minister about the position of these officers, the Commissioner of Taxes and the Deputy-Commissioner. The Minister seemed to have followed the sections of the Cape Act of 1904, but he did not appear to have incorporated the section dealing with this matter, which provided that these officers should be Civil Servants.

said that these officers would rank as members of the Civil Service. It was not necessary to provide for that in the Bill. The only alteration was in regard to the appointment of clerks and similar officers. They ipso facto fell under the Civil Service regulations.

said he supposed that this department, when it was created, would be manned from the Service, and that it was not intended to employ a large number of extra hands. In his opinion, the Service was ample enough to supply all the requirements for manning this department.

said that this simply became a department under the Public Service Act. It might be that certain of the people to be appointed would be temporary men, but the real staff would be in the Public Service.

Will they be taken from the Service as it exists now?

That is, of course, a question for the Public Service Commission to settle. The staff of this department will be appointed by the Public Service Commission. If there is a man in the Service, they will take him from the Service.

said he would like to ask the Minister whether the Government in this matter were entirely in the hands of the Public Service Commission? Surely, the Minister could say that this was an ordinary department, and that he would man it from the Service. If he let the Public Service Commission have control, the control would be in the hands of an irresponsible body over whom Parliament had no control. The Minister was the only one over whom they had control. He did not think it ought to be left in the hands of the Public Service Commission.

said he did not see why the clause which appeared in the Cape Act of 1904 should not appear in the present Bill in reference to this matter.

said that any man appointed to a permanent post would fall under the Public Service Act. Wherever there was a suitable person in the public service whose services could be utilised he would be appointed.

said he did not know why the Minister did not insert the clause about Civil Servants which appeared in the Cape Act.

said the Civil Service was overstaffed, and the House wanted to be very careful that no more men were taken into the Service.

said it might be necessary to appoint new members to the Service. Why should they deal with the Income Tax Department on a different basis to any other department? (Hear, hear.) If hon. members did not trust the Public Service Commission, let them abolish that body.

said did the Minister wish them to understand that out of a service of 20,000 persons it would be impossible to find suitable clerks. In the last seven or eight years very important posts had been filled by outsiders, greatly to the detriment of capable men who had been years, and years in the Service. There were many men who had been retrenched who should be given an opportunity of filling the new positions. He moved the addition of the following: “Every person appointed to any office under this Act shall be a person who is a member of the Public Service of the Union, or who, having been in the Public Service, is in receipt of a pension.”

suggested the insertion of the word “permanent” before “office,” and the addition of the words “or in the service of the Railways and Harbours Administration.”

said this was not a permanent Bill, and under the circumstances it would be inadvisable to insert the word “permanent,” but he accepted the other suggestion. What made him think there was an intention to appoint outsiders was that power was given in the Bill to the Minister to dismiss any of the income tax officials.

said very often they could riot get a suitable man in the Service or on pension. They wanted clerks at the bottom of the list and should Government find it difficult to get them there must be an opportunity of making the appointments from outside the Service. They could not expect an old man to start at a commencing salary of £100 a year. Continuing, he said the position simply would not work. They would tie themselves up hopelessly if they laid it down that nobody but a member of the Public Service should be appointed. This only showed that people brought up amendments on the spur of the moment without considering what effect they would have. The Bill was to run for a year, and yet amendments talked of permanent positions.

said the Minister knew very well that this form of taxation was going to stay. (Ministerial cries of “No.”) The hon. member for Oudtshoorn would pay this tax for many years—(Opposition “Hear, hears”)—and, judging by his prosperous condition, he would pay on a high basis. The fact that the Act was to only run for a year was merely to enable it to be levelled up or levelled down. The Minister said that wherever possible he would appoint Civil Servants, but they preferred to carry out clause 17 of the Civil Service Act. He knew during the last few years people outside had been appointed to the Public Service, greatly to the detriment of the chances of promotion for ordinary members of the service.

said he did not see the difficulties proposed by the Minister. The Service to-day was overstaffed and they wanted to take precautions that no additions were made to that Service.

said he would not press the word permanent, though he did not agree with the Minister.

The amendment of the hon. member for Uitenhage to the amendment of the hon. member for Fort Beaufort was agreed to.

The amendment of the hon. member for Fort Beaufort was put and declared negatived.

called for a division, which was taken, with the following result:

Ayes—44.

Andrews, William Henry

Baxter, William Duncan

Berry, William Bisset

Blaine, George

Boydell, Thomas

Brown, Daniel Maclaren

Creswell, Frederic Hugh Page

Duncan, Patrick

Fawcus, Alfred

Fichardt, Charles Gustav

Fremantle, Henry Eardley Stephen

Grobler, Evert Nicolaas

Haggar, Charles Henry

Henderson, James

Henwood Charlie

Jagger, John William

Keyter, Jan Gerhard

King, John Gavin

Macaulay, Donald

MacNeillie, James Campbell

Madeley, Walter Bayley

Maginess, Thomas

Merriman, John Xavier

Oliver, Henry Alfred

Quinn, John William

Runciman, William

Sampson, Henry William

Schreiner, Theophilus Lyndall

Searle, James

Serfontein, Hendrik Philippus

Serfontein, Nicolaas Wilhelmus

Smartt, Thomas William

Struben, Charles Frederick William

Van der Riet, Frederick John Werndley

Van Niekerk, Christian Andries

Walton, Edgar Harris

Watkins, Arnold Hirst

Wessels, Daniel Hendrik Willem

Wessels, Johannes Hendricus Brand

Whitaker, George

Wilcocks, Carl Theodorus Muller

Woolls-Sampson, Aubrey

Emile Nathan and J. Hewat, tellers.

Noes—49.

Alberts, Johannes Joachim

Bezuidenhout, Willem Wouter Jacobus J.

Bosman, Hendrik Johannes

Botha, Louis

Burton, Henry

Clayton, Walter Frederick

Cullinan, Thomas Major

Currey, Henry Latham

De Beer, Michiel Johannes

De Jager, Andries Lourens

De Waal, Hendrik

Du Toit, Gert Johan Wilhelm

Geldenhuys, Lourens

Griffin, William Henry

Grobler, Pieter Gert Wessel

Heatlie, Charles Beeton

Joubert, Christiaan Johannes Jacobus.

Krige, Christman Joel

Lemmer, Lodewyk Arnoldus Slabbert

Leuchars, George

Louw, George Albertyn

Malan, Francois Stephanus

Marais, Johannes Henoch

Marais, Pieter Gerhardus

Meyer, Izaak Johannes

Myburgh, Marthinus Wilhelmus

Neethling, Andrew Murray

Nicholson, Richard Granville

Oosthuisen, Ockert Almero

Orr, Thomas

Rademeyer, Jacobus Michael

Schoeman, Johannes Hendrik

Smuts, Jan Christiaan

Smuts, Tobias

Steyl, Johannes Petrus Gerhardus

Steytler, George Louis

Theron, Hendrik Schalk

Theron, Petrus Jacobus George

Van der Merwe, Johannes Adolph P.

Van der Walt, Jacobus

Van Eeden, Jacobus Willem

Van Heerden, Hercules Christian

Venter, Jan Abraham

Vermaas, Hendrik Cornelius Wilhelmus

Vintcent, Alwyn Ignatius

Watermeyer, Egidius Benedictus

Watt, Thomas

H. C. Becker and F. R. Cronje, tellers.

The amendment, as amended, was accordingly negatived.

Clause 1 as printed was agreed to.

On clause 3, “Observation of Secrecy.”

suggested that they should take the subsections seriatim. He hoped the Minister would agree to that course, and moved accordingly.

It was agreed to take the sub-sections seriatim.

On sub-section (2),

said it was difficult to follow the amendments on the Order Paper.

moved in line 42 to omit “other.”

Agreed to.

moved an amendment to the effect that persons being sworn to secrecy under the Bill should be so sworn by magistrates, and not by Justices of the Peace. He said that in an important matter like that the oath ought to be taken in as formal a way as possible. He therefore moved the deletion of the words “or Justice of the Peace.”

asked the Minister what would be the relation of that Bill to the Bill which they had been passing with regard to Justices of the Peace and Commissioners of Oaths. Was it the desire of the Minister that Justices of the Peace should carry out that important procedure?

said he hoped the member for Durban, Berea would not press the amendment. The magistrate himself would be a Commissioner under the Act.

said he did not think the number of officials required under the Act would be very numerous. He intended to press the amendment.

asked why all that secrecy was necessary. What was the need for secrecy? Were people who got £1,000 a year ashamed of it? He was prepared to agree that they ought to be. (Laughter.)

said the clause had been worded in the usual form. He did not think the hon. member for George Town would care to let everybody know the details of his income. Generally people liked to keep their private affairs private.

The amendment of Mr. J. Henderson (Durban, Berea), was negatived.

suggested that a provision be included in the Bill to the effect that the papers be sent to the Commissioner of Taxes.

said that the papers would be sent, and he did not think it necessary to include the words suggested.

Sub-section 2 was agreed to.

On sub-section (3),

moved that the penalties be raised from £100 fine or one year to £200 of two years, and to add after “fine” in line 53, “or to both such fine and such imprisonment.”

suggested that the punishment should be dismissal from the service.

said that under the Public Services Act dismissal from the Service would follow conviction. He had no objection to the amendment of the hon. member for Uitenhage. An infringement of the provisions of the Act would be a very serious offence.

said the old Cape Act was more simply and better worded than the present one. In the old Act there was no option of a fine. The New South Wales Act laid down that the punishment should be two years’ imprisonment with or without hard labour. It was a most serious crime. A person might go and wreck a firm or company by revealing secrets from the income tax returns. He would move to omit sub-section (3) for the purpose of substituting the following: “Every person who in contravention of the true intent of the oath of secrecy taken by him and without lawful excuse reveals any matter or thing which has come to his knowledge in his official capacity shall be liable on conviction to imprisonment for any term not exceeding two years, with or without hard labour.”

said he desired to move a further amendment. He took rather a different view of this matter from the one which had just been pressed upon the House. The breaking of an oath was a serious matter, but it was a matter more between a man and his own conscience. He was looking at it rather from that aspect. They on the cross-benches were rather interested in this question. He would like to know what it meant. Did it mean that income taxpayers were to render all their returns in such secrecy that, if they chose to do a little bit of verneukerij, there should be the least possible chance of their being exposed? When it was a Trade Union Bill, and it was a question of whether Trade Union funds were to be devoted to political purposes or not, he had never heard it suggested in this House whether there should be an oath of secrecy or not Why should there be all this nonsense about the exact income tax returns of those who got more than £1,000 a year? He was going to move in a totally contrary sense to what had already been moved. He moved in line 51 to delete “one hundred pounds ” and substitute “five pounds,” and in line 52 to insert “imprisonment not exceeding 14 days,” and to delete “or to such imprisonment without the option of a fine.”

said he would suggest to the Minister that he should accept the amendment of the right hon. member for Victoria West. He pointed out that when the census returns were taken provision was supposed to be made for secrecy, but that provision, so far as secrecy was concerned, was scarcely worth the paper it was printed on. It was a matter of considerable public importance that there should be secrecy in regard to these income tax returns.

said he would like the hon. member who had just spoken to enlighten the House as to the desperate straits that persons might be put in whose incomes amounted to between, say, £1,500 and £15,000 a year, if their income returns were disclosed?

said that, to his mind, the effect of making the income tax returns secret would be very largely to the detriment of the amount which the Minister was going to receive.

said he hoped the right hon. gentleman would not press his amendment. He thought it would be a great pity to deprive the Court before whom a case of this kind might come of the discretion to impose a fine or imprisonment. With regard to the amendment of the hon. member for Jeppe, he hardly thought the mover could be serious. If the hon. gentleman had moved to delete the clause altogether, that he could have understood, but if this matter were going to be a secret at all, it ought to be kept a secret by strong penalties.

said that this was opening the door to bribery, because many a man would give £100 to know the business of some of their friends in the House. (Laughter.) The clause he had proposed was the usual one. It was the universal practice to have offences of this kind seriously punished. He wished it to be emphasised that the offence was a serious one, and that offenders could not get off by paying a fine. He thought there was too much leniency to offenders in this respect.

said that the hon. member for Fordsburg and the right hon. gentleman had rather convinced him that the hon. member for Jeppe had not gone far enough, and for that reason he would move out this penalty clause altogether. There was no reason that he knew of why men who had incomes of over £1,000 should be afraid of disclosing the fact. It would be a useful guide to have information of this kind. They were particularly anxious to know how much of these incomes was unearned.

moved to insert in line 53, after the word “to.” the word “both,” and after “such” to insert “fine and,” and to delete the words “without the option of a fine.” The mover explained that in a trifling case a judge would inflict a small fine, but if it wore a fairly serious case the court might send the offender to prison, and it could also inflict both a fine and imprisonment.

in support of the right hon. member for Victoria West, said that a breach of secrecy should be punished with the utmost rigour In New Zealand, in 1912, when a Labour Government was in power, the Income Tax Law provided that the person who revealed information should be liable to three years’ imprisonment, with or without hard labour. The New Zealand Government had a due sense of responsibility, which was lacking in hon. members on the cross-benches.

presumed that hon. members on the cross benches were allowed to think for themselves. The country had a right to know what incomes it had the right to tax.

hoped the Committee would not waste any further time on this clause. (Cheers.) He would accept the amendment of the hon. member for Victoria West.

said the amendment of the hon. member for Victoria West actually worked in the Cape Colony for six years; there was never the slightest difficulty with it, and he did not remember a single complaint regarding a violation of secrecy. (Hear, hear.)

moved to insert in the amendment of the hon. member for Victoria West the words “fidelity or” before “secrecy.”

withdrew his amendment.

Does the hon. member for Jeppe press his amendment.

I don’t know. (Laughter.)

Mr. Nathan’s amendment was negatived, and that of Mr. Merriman, as amended by the Minister of Finance, was adopted.

Mr. Creswell’s amendment was withdrawn.

The sub-section, as amended, was agreed to.

The clause as amended was agreed to.

On clause 4, Levy of income tax and the rate thereof,

moved that the sub-section be taken seriatim.

Agreed to.

On sub-section (1),

moved the deletion of the words “from and after the 1st day of July, 1914.”

The amendment was agreed to.

suggested the insertion after “there shall be charged, levied and collected throughout the Union for the benefit of the Consolidated Revenue Fund,” the words “and for the services of the year ending March 51, 1915.”

We can’t admit those words.

Why?

Suppose an amount of income tax happens not to be collected in the financial year, and it goes over to next year, it could not be collected at all. The effect would be that if a man avoided payment during the financial year he would escape payment altogether. Therefore the words proposed by the hon. member would not do.

I will tell you what will do. After “revenue fund” insert the words “in respect of the year ending March 51, 1915.”

That will be found in the next sub-section.

said he did not want to labour the point, but he wished to make it clear.

said that if they confined it to the period mentioned by the right hon. gentleman the, would get themselves into a mess.

said that in other cases a good deal of revenue was collected after a period was credited to that period.

Sub-section (1), as amended, was agreed to.

On sub-section 2,

said he would like to point out that the words he had mentioned were used in the Act that was passed in the unfortunate Cape Colony.

said that sub-section (I) was agreed to.

Well, I will move an amendment. (Laughter.) Continuing, he said that the whole object of moving these words was that when they wanted to reimpose this objectionable impost they would have to come to the House. It was the best safeguard they had It was the best thing they could have about the income tax which was a disgusting impost.

said it was quite true that these words were in the Cape Act.

I suppose they are legally wrong.

That is so. That would have been found out if a person had consulted a competent lawyer. The officials were always in fear of this loop-hole being discovered.

We have lawyers enough in the Cape. It is not an absolutely barbarous part of the country. (Laughter.) I would rather take the words supported by people who had had to do with income tax all over the world. Besides, I would rather trust myself in the hands of a lawyer than in the hands of a Government. (Laughter.)

The sub-section was agreed to.

On sub-section (5),

moved that the following words be added to the end of the sub-section: “Provided that from the ‘taxable amount,’ of the taxable income, of any married person, not being a widower or a widow, there shall be deducted a sum of £100, and for each child under the age of 16 years of any married person an additional sum of £100.”

said he did not understand the amendment. Supposing a person had an income of £1,001, the taxable amount would be £1. How did the hon. member propose to take £100 from £1.

He would not pay the tax at all.

said he would like to know the opinion of the Government. People with heavy burdens should not be treated in the same way as those who did not carry these burdens.

said it was a mere matter of laying down a principle, and really did not affect the matter at all.

supported the amendment, and held that it was only fair to make an allowance to people with children, so as to enable these people to provide for the proper education of such children.

said he was surprised at the Minister not taking any notice of this amendment, which was of great importance. He was surprised, too, that he had received no support from the Labour benches, but he supposed they would start the talk when the tax was levelled down to £500 or £500. He thought it was important that they should lay down the principle, because they should only tax people according to their ability to bear taxation.

said he could not agree with the amendment, and said there were people who had no children but had other large responsibilities. If the limit was £200, he would have been in favour of the amendment. The exemption was already too high.

said that the Labour members agreed entirely with the principle that had been enunciated by the hon. member for Newlands (Mr. Struben), but after the hon. member had put his point of view they had not thought it necessary to say anything on the matter. They were entirely in favour of the principle, and he would have thought that the hon. members would have known it. Certainly a man with £1,000 could afford to keep any number of children, but the point was that they wanted to lay down the principle.

said he could not understand why the age had been fixed at 16 years, because children were more expensive after that age.

said it was not possible for the Government to accept the amendment. The exemption which was given was a very high one, and the principle would only become urgent or desirable after they had brought the exemption down to a much lower figure.

said it was only reasonable that some allowance should be made for the man with the large family. He would vote for the amendment.

said the allowance would only amount to 50s. a year. He had much pleasure in supporting the amendment.

The amendment was negatived and the sub-section agreed to.

On sub-section (5),

In sub-section (5), to add at the end of the sub-section: “but income shall not be deemed to have accrued by reason of increase of live stock or agricultural produce not disposed of nor by reason of live stock disposed of for the purpose of acquiring new stock.” The mover said that that was a matter which had been found to be unjust to farmers in the working of the old Cape Act. The question was a simple one—Was it income or was it not income? Why should people not be exempted if they did not make application for exemption? If it was not income when they did make application it could not be income when they did not make application. It seemed to him to be a very great injustice, and he hoped the Minister would meet him on that point. A man might want to alter the nature of his farming in one way or another and might dispose of his stock in order to buy more. That would amount to income under the Act, and he thought the Commissioner of Taxes would claim that it was income. If a farmer sold his stock and got the money for it, how were they going to say it was for the purpose of altering the nature of the farming operations? There was nothing in the Bill to provide for that point at present. He thought the two points were very important.

asked how was it possible when a farmer was disposing of his stock to say what he was doing it for? He supposed that about the most truthful class of people in this country were the farmers, but at the same time there would be a great temptation to overstep the proper bounds. He thought the hon. member (Mr. Fremantle) was endangering his amendment by moving it in its present form.

said that if the hon. member for Uitenhage (Mr. Fremantle) had known what the experience had been he would not have brought that amendment in He quoted from a report of the Commissioner of Taxes in New Zealand on the point. He thought the fairest way was the old Cape way and not the way suggested by the amendment at all.

said that the clause as it stood left a free choice to the farmer, who could pay more tax either on what he sold or on the stock he had at the beginning or the end of the year. The hon. member for Uitenhage had not quite understood the position. He had said that income tax would not be paid on a reduction of stock. What did that mean? Under sub-section (6) it was laid down that where farmers did not wish to pay income tax in the principle laid down in this section they could give notice of such. Naturally if a number of sheep died during a year, and on the other hand the farmer’s flock was added to, both circumstances would have to be considered. As to the valuation, he could assure the House that the valuation would take place on an equitable basis.

said the old Cape system had given rise to many difficulties. But if a farmer in view of impending drought sold a thousand sheep, was he then to be taxed on these thousand sheep, which were really part, not of his income, but of his stock? There was no income unless, having sold, he bought again.

supported the amendment of the hon. member for Uitenhage, and said it was much simpler if a farmer at the end of the season could tell the Commissioner what his sales amounted to. His income could be calculated on that.

asked what the position would be if a farmer sold his whole stock?

Of course, in that case he goes scot free.

said that he could not see that sub-section (5) had anything to do with livestock at all.

Oh, yes.

Then I hope the Minister will be able to show us what it has to do with livestock. Continuing, Mr. Duncan said there was nothing in the section referring to livestock. He could not see What relation sub-section (6) had to subsection (5) at all.

said he could not understand the meaning of sub-sections 5 and 6, and he doubted whether the farmers would be able to understand them. He quite agreed with the suggestion that the sub-sections should stand over, and also with the amendment that an increase in cattle or stock should not be reckoned as income. If increase of stock were calculated, they would perhaps pay on 500 lambs, of which only 250 would survive. Then when the sheep were sold, he would pay the tax again.

said he could not understand the clause at all after the Minister’s explanation. He urged that a farmer should only be made to pay income tax on the profit he got from the sale of his stock. He understood the Minister to say that the farmer would have to pay on his capital.

said that the farmer would be treated on exactly the same basis as the ordinary trader, and would pay on the difference between the purchase and the selling price. Under the alternative proposal he need only state what” his profit was But, of course; once a farmer had chosen to fall under one of the two systems, he had to stick to that system, and he could not, if after a certain number of years he started selling his stock, choose to change the principle under which he was taxed.

said that under the Income Tax Act of the Cape, farmers had to send in returns showing their receipts and expenditure. On the receipt side they stated the gross amount received for livestock sold, the sale of produce, land let for grazing, etc., also the estimated value of the produce used for home consumption. On the other side had to be set out the amounts expended for rent, interest, rates and taxes, livestock bought, wages and servants’ rations. At the bottom of the return was set out the value of the stock at the beginning of the year and also at the end of the year, and if there was an increase in the value of the stock, that was reckoned as part of the farmer’s income. Under clause 5 they could take into account any decrease of stock during the year.

wanted information. Supposing, he said, a farmer on the 1st of July, 1913, had 10,000 sheep, 6,000 mules, and 500 calves, and by the 30th of June, 1914, his stock was increased by, say, 4,000 lambs and 50 cows; he took it that they would catch him in the following year when he made a sale. But supposing he did not sell anything, although his increased stock amounted to thousands of pounds in value, would not that farmer go absolutely free, supposing there was no income tax the next year?

said it was best to allow the farmer to make his returns like the ordinary business man, namely, by giving an account of his cattle at the beginning of the year, and also at the end of the year. Once they departed from this principle they got into great difficulties. Under the other proposal, a farmer might sell twenty cows, but, on the other hand, he might have lost fifty oxen through gallamziekte. The farmer should be placed on the same basis as the ordinary tradesman. As a rule, a farmer could not make his own returns, but had to go to an attorney. After all, the old system of Mr. Merriman of taxing the land had been the best.

said he considered they were facing one of the greatest difficulties in the whole collection of income tax difficulties everywhere. He was not acquainted with America in that respect, but in all the British countries that had income tax; in all the Australian Colonies they invariably collected from people who got their income from the land, by means of a small land tax. There were a larger number of farmers in this country who had paid more in the past under the land tax system than under the schedule system, but the latter had been adopted to catch the ostrich farmers, and there was a small increase there, for they had not learned how to make up their schedules. The great difficulty was to get the farmers to frame the schedules, and it was an intolerable burden on the farmers to get their schedules made up by agents.

Proceeding, he said that he held with the principle put forward by the hon. member for Uitenhage that the increase of a man’s stock was not income at all. Certainly it was a means of making income later on, but the income of a farmer was what he sold and the money he received. Why should they not make it equal for everybody and then everybody would know how to make a schedule of the outgo and income. He did not like certain parts of the proposals of the hon. member for Uitenhage, but he liked still less the idea of taxing farmers upon the increase of their stock. That, he thought, was a faulty principle, and he did not think it should be carried out for one moment. He thought the hon. Minister should allow that clause to stand over so that they could go more thoroughly into it. He adhered to his belief that the tax should be as it was in every other country, upon the value of the land, but at the same time that was out of the question, as they had not got the Bill framed upon that basis. But if they did not have that matter settled properly there would be endless trouble in the country, and it would make the income tax more unpopular, if that was possible, than otherwise it would be.

said he had never been able to understand the two sub-sections (5) and (6), although he had consulted with other hon. members on the Opposition benches. If after a joint consultation they could not be clear he thought it would be well to make it clear. Sub-section (5) seemed to deal with money so far as one could understand it, the next sub-section dealt with the return from the sale of goods, and the third with income received as a reward for services rendered. They could not understand what the value of livestock and agricultural produce had to do with all those things. How did that fit in with sub-section (5). It would be well for the Minister to reconsider that section.

said that the clauses were in the old Cape Acts from 1904 onwards, and they were just as clear now as they were ten years ago.

said that was not the whole case. The two sub-sections were not in the Cape clause, and all sorts of things took place which were not intended. Subsection 5 referred to increases in livestock and agricultural produce, but the Cape Act did not deal with either of those matters. Therefore the hon. Minister was not quite right in saying that what was good enough in the old Cape Act should be good enough now.

wanted to know who should decide when doctors differed. (Hon. Members, “You.”) If a man bought stocks and shares and they increased in value, surely the Minister did not claim to collect income tax on the increased value. They might fall during the next few months. The value of snares went up and down just as stock went up and down in value. The Government wanted money, and the farmer had no security that some of his stock might not be dead next week. The farmer in most instances could not keep his accounts like a business man. He might know all about farming, but he might not be able to write. Why should he keep these books? His business was to do his farming properly and not keep books. He considered this was altogether a wrong basis of taxation on farmers. This taxation of stock was an absurdity, and he hoped the House would not accept it.

said that in spite of what had been stated he thought the section was alright. The system was perfectly correct. The farmer would make up his schedule, and would take the number of stock he had at the beginning of June last.

He can’t.

said that when he came to the end of the year then he made up another return of what he had at that time, and the balance between the two was the income on his stock. He had had to do with hundreds, and he had never experienced any difficulty in working out these schedules.

said it seemed to him reading the definition of income that the increase of livestock was clearly included. It was again accruing. Supposing a farmer, having this gain accruing at present, before the 30th June, reinvested most of the gain in largely adding to his livestock, and he claimed exemption under this. Was he going to get off scot free?

For one year.

That shows the effect of making this an annual tax. You are holding out to the farmer the chance of getting off next year. Continuing, he said the hon. member for Caledon had said he had experienced no difficulty about getting at the value of the stock. He (Mr. Creswell) assumed that that was when the tax was in force for some time. Many farmers in that country would not be able to say what amount of stock they had on 30th June last. He protested against the exemption of livestock. If a foal died it was bad luck. What about the merchants whose stock was destroyed by fire?

He can insure.

So can the farmer.

made an interjection which was inaudible in the Press gallery.

Do you mean to say that because the merchant insures his stock it is income, but because the farmer doesn’t insure his stock it is not income? In conclusion, Mr. Creswell said they now knew who were the ultra-privileged people of this country—the poor farmers.

said he would like the Minister to answer this question: What is the difference whether your income consists of rents or interest on investments or the progeny of stock? He took it that the object of the Bill was to tax everybody fairly, but he would like to know what would be done in the case of a man who had invested his capital in property and selling it made a loss of £500. How was he going to recover that?

Why, deduct it.

The hon. member for Cape Town, Central, says “deduct it,” but does the Minister of Finance?

said that the Act of 1904 which had been referred to did not attempt to define the fine points which had been raised that afternoon in the House. It, however, served its purpose in 1904, and served it, he thought, to the satisfaction of most people in assessing the incomes both of merchants, private individuals, and farmers, and therefore why not follow the same practice now?

It is merely a matter of choice.

said he was going to move as an amendment to omit all the words after “and income” in line 40 to the end of sub-section 5. That would make it read exactly the same as the Act of 1904. He would also move that sub-section be omitted altogether. In the old Act, if a farmer had an increase of stock at the end of the year which he did not dispose of, he simply returned his schedule to that effect, and he was not charged income tax on it. But it was carried over to the next year, and if then he sold that stock he was charged the income tax upon it. He did not know how the clause was going to affect the farmer in the second year, and whether the amount of his stock or produce was carried over, and so appeared in next year’s account, but under the old clause it was included. He moved accordingly.

said he could not understand the criticism which had been offered to the Bill from members opposite. Farmers were simply asked whether they would have their income assessed upon the increase of their stock or upon the amount of their incomings, and after they had elected either one or the other the system decided upon had to be adhered to.

said he did not agree with the previous speaker. The trouble was that a few months after a farmer had paid income tax on his cattle all his cattle might die. In the circumstances he hoped the clause would be left over, so that it might be made quite clear.

said he was inclined to favour the amendment of the hon. member for Port Elizabeth, Central (Sir E. H. Walton). He (Dr. Watkins) confessed that he was unable to understand the clause. It was not workable, and he thought it should go back and be redrafted. It was laid down that any money which accrued for services rendered, whether paid or not, was to be taken as a part of a man’s income, but who was to say how much of that amount, as in the case of a doctor, was good and how much bad. The hon. member for Cape Town, Central (Mr. Jagger), would probably be surprised to learn that the loss might be something like 30 per cent. of the whole amount. It was not impossible for any Commissioner to come forward and say that such or such an amount was reasonable.

A doctor was in this position—that it was his duty to give credit to any extent— whether he got paid or not depended on all sorts of things. He might have a Bill for £30 or £40 against a man who was not worth a brass cent. Under the old Cape Law the tax was calculated on their cash takings for the year. When a doctor took over a practice he was not supplied with a list of the debts which were outstanding. He only asked what the cash takings were. The Minister had laid down that the Commissioner could not do that. He thought it was a point which ought to be considered by the Minister and that the clause should be redrafted.

said there had been a lot of discussion as to the difficulty of valuing stock. The Bill gave the option to take the value not of the stock but only of the sales. It was pointed out in the report of the Commissioner of Taxes that the farmers should have the option of valuing their stock at the end of the year. What had been done under the Act was very simple indeed, and he did not see why there should be any difficulty. When a farmer made a choice as to the value of his stock he must remain by that choice, but if a man did not want to value his stock he need not do so. He thought the amendment of the hon. member for Port Elizabeth (Sir E. H. Walton) made the position worse, because it took away the choice from the farmer.

said there was only one decent exemption as far as the farmers were concerned, and that was the exemption that had been made under the Natal income tax. Under that tax there had been a total exemption as far as the farmers were concerned, but there was a proviso that incomes should only be exempt when the amount payable as land tax exceeded the amount that would have been paid as income tax. It was quite impossible to deal with those two matters separately. One of the greatest grievances of the farmers was that they had to make up such complicated schedules that they could not do it themselves, but would have to employ lawyers. That meant that that would mean an additional tax on the farmers. He thought it would be better to simplify the matter. There were a lot of farmers who would not be able to say what stock they had had last year. It was not only the doctors who made bad debts; even the lawyers did so.

said that after a period of three months a farmer’s stock might all be dead. He did not understand the two sub-sections at all, and he moved that the clause stand over.

said that they had had a multitude of counsellors that afternoon, but whether they had had the wisdom which was expected to come from such a gathering he would not like to say. If the Minister of Finance had accepted the proposal made some two hours ago by the hon. member for Fordsburg, they would have avoided all this discussion, and they might have been able to arrive at a solution whereby everybody would have known what was the intention of the Bill in relation to this matter. He did not see how the farmer came in in the manner indicated by the hon. member for Cape Town, Central He thought this clause could stand over until something was put before the Committee of such a concrete character that everybody would understand it.

said he could not agree to the motion. They had spent most of the afternoon in discussing this clause. The clause was perfectly simple. (Laughter.) It had been discussed at great length and he thought they should now come to a vote.

said that in the Cape they formerly had a difficulty of the same kind. What they did was to let the Bill stand over, and the Commissioner of Taxes saw the difficulty, and they managed to get a solution. Personally, he believed he differed from that official, but at the same time he thought it was the proper way of dealing with the matter. It would give more satisfaction to the people. Nothing would get it out of his mind that the increase of a farmer’s stock was increase of capital. It only became income when he sold it.

urged the Minister to allow the clause to stand over, as its provisions were too vague. He supported the amendment of the hon. member for Port Elizabeth, Central.

said the reason why farmers were so quiet on this matter was because they did not understand the clause. It would, however, be wrong to make farmers pay on the increase of their cattle before they had sold them, as they might all die. Therefore, he hoped the clause would be allowed to stand over.

said he could not for the life of him understand the right hon. gentleman in regard to this question of the increase of stock. He had stated that increase of stock was not profit, but increase of capital. How, Mr. Quinn asked, was capital usually increased? Surely capital was usually increased by the addition of profits. If the right hon. gentleman’s idea were right, a farmer could go on increasing his stock year after year and become enormously rich, and yet pay no income tax at all.

said that suppose his hon. friend got 10,000 laags of flour into his store, would that be regarded as part of his income?

said he was surprised at the discussion which had taken place. To him the Bill was as clear as daylight. There were two sections, under either of which farmers could elect to be taxed.

said the question was whether or not the clause should stand over.

said he hoped that the Government would accept this motion. Several members had the greatest difficulty in understanding the meaning of these two clauses. The Commissioner-to-be, he had no doubt, had had the advantage of listening to the debate, and he thought the Minister would be well advised if he consulted that officer, with a view of seeing whether the clause could not be re-drafted.

said that, in view of the feeling on both sides of the House, he would agree to the clause standing over. (Hear, hear.)

Mr. Watermeyer’s motion was agreed to, and the clause ordered to stand over.

On clause 5, Incomes, etc., which are exempt from the tax,

moved that the paragraphs be taken seriatim.

The motion was agreed to.

On paragraph (a),

moved to omit paragraph (a), and to substitute the following new paragraph: (a) The revenues derived from any “public moneys” (as defined in Act No. 21 of 1911, or any amendment thereof), the revenues of the Railways and Harbours Administration, and the revenues of any Provincial Administration.

said there was nothing to prevent the Minister charging income tax against the Railways. The railway rates had been very considerably reduced, but the people had not derived any benefit there from, and here was an opportunity of getting a good deal of revenue without anyone feeling it very much.

said Act 29 of 1911, clause 3, stated that public moneys included (a) all revenue, (b) all other moneys whatsoever received or held by or on account of the Government of the Union. The section further stated that revenue meant all taxes, levies, imposts, and duties over which Parliament had the powers of appropriation.

The amendment was adopted.

On paragraph (c), The revenues of building and friendly societies,

said building societies’ revenues were exempt under (c), but its investments could be taxed under (d). He moved to insert after “revenues” the words“ including the income from investments.”

said the revenues of building societies would not be taxed. No one taxed investments, but they did tax revenue.

said that was exactly the argument used in the Cape, but the Commissioner of Income Tax took exactly the opposite view. If section (c) stood alone the Minister would be right, but as it was he had taken over the Cape law of 1904 but not the amendments of 1908.

maintained that the income of insurance societies should be exempt, for if they were touched it would be a tax on the thrift of the people.

suggested the addition of the words “other than building and friendly societies” at the end of paragraph (c). That would meet the case raised by the hon. member for Cape Town, Castle.

said there would be no difficulty about the matter. The incomes from investments of building societies must be part of the revenue of the societies, and there was absolute exemption for the revenues of building societies.

Business was suspended at 6 p.m.

said he did hope the Minister would give this amendment favourable consideration. When they took sub-section (d), he was really introducing building and friendly societies again. Every friendly society came under that definition. He would point out that friendly societies only existed for sick and funeral purposes, and did not carry on for profit and gain. There was no tax on these societies in 1904, and it was only in 1808 that the idea arose to tax the income derived by these societies on investments. If the Minister did not accept the amendment it as open for the Commissioner to say that the ordinary revenue should not pay income tax, but that the income on investments must pay. Surely it was better to make this perfectly clear.

suggested that a means by which they could all agree on this point if the Minister did not want to tax the income from investments of these societies would be to add to the end of the sub-section the following words, “other than building and friendly societies.” That would make it perfectly clear.

To my mind it is perfectly clear.

said that the Minister before dinner indicated that the revenue from investments of these societies would be exempt. The right place to put in an amendment was in the sub-section in which they dealt with these societies. He failed to see why the Minister should be so obstinate.

said he thought that this was the right place to introduce the amendment, and make the point perfectly clear.

said that in view of the assurance of the Minister he would withdraw.

Sub-section (c) was agreed to.

New sub-section (d).

moved a new sub-section (d), to follow sub-section (c), in the following terms: “The revenues of mutual life assurance societies, including the income from investments of such societies.” Continuing, he said it seemed to him that mutual life assurance societies stood in a special place. They were doing a national work in encouraging people to save up money against the future, both for themselves and for their families. These societies worked for no profit. Any surplus which accrued to them ultimately went back to the policyholders themselves. If the House was going to make these companies pay a tax on the interest they received from their investments it would come out of the pocket of the policyholders. It seemed to him the House ought to encourage organisations whose object was to encourage a policy of thrift. They should be exempt for the simple reason that they were doing a national work. If people did not lay up sufficient for their old age or for their relatives after death, sooner or later the State would have to undertake the liability. He said that the House ought to exempt these organisations. In addition it was going to come hard on those societies, which were South African societies in every sense of the word, in competition with companies that came from oversea. The investments of the South African companies were made in South Africa, and they would have to pay 1s. 6d. if this went through, and their foreign competitors would gain an advantage, as their investments were usually oversea. It seemed a pity that they were going to handicap those institutions which were essentially South African in character.

He did remind the House that one of the things they wanted was the investment of more money in this country. They wanted more capital. This sort of thing would have a bad effect on the investments made by insurance companies in South Africa. Besides, in the long run it would be men with incomes under £1,000 a year that would have to pay this tax, and they would be taking it out of the pockets of the people least able to bear the tax. He thought that if the Minister accepted the amendment he would be supported by members on every side of the House.

said that while he was in entire sympathy with the remarks of the hon. member for Cape Town, Gardens, he would like that hon. member to explain why he put this amendment on the paper. He (Mr. Fremantle) had also drafted an amendment, and the difference between his amendment and the amendment of the hon. member for Cape Town, Gardens, was in the provision for dealing with section (d) of the Minister. The Minister in subsection (d) also referred to societies not carrying on business for profit and gain. What did the hon. member intend to do with the Minister’s sub-section (d)? If the tax was on the revenue derived from the accumulated funds of the insurance companies, these companies would not be able to pay bonuses. They had a return laid before them some time ago as to the insurance companies. In 1912 the accumulated funds of the S.A. companies amounted to close on fourteen and a half million. All this mass of money was invested in South Africa, and was of enormous importance in developing the agricultural and industrial wealth of the country. Besides they did not want to penalise the South African companies as against the foreign companies whose investments were usually oversea. This would give encouragement to foreign, companies as against local societies and retard the agricultural and industrial development of the country. By the Minister’s proposal they were taking a course that was contrary to the interests of the South African borrower.

Here they were dealing with cases of thrift that did not occur in the case of banks. It might be said that ten years ago this was done. But ten years ago the Cape Colony was in the greatest difficulty. Nobody could pretend that they were in such straits now that they were compelled to come on the thrift of the people and threaten the small amount of capital available for the people of South Africa and drive it oversea. He hoped the Minister would not tax these mutual companies on their incomes. He hoped the Minister would accept the amendment, and, in the interests of the country as a whole and in the interests of the agricultural and industrial communities who needed capital, that he would not tax these incomes.

said he appealed on behalf of hon. members on the cross-benches for the acceptance by the Minister of the amendment of the hon. member for Cape Town, Gardens. He did claim that this case in particular was one of very special consideration. The Minister admitted in clause (c) that revenues derived from building and friendly societies should be exempt from taxation, and then in clause (d) he confirmed that principle. Later on, however, he became very inconsistent when he put in the little proviso. If it was a sound principle for friendly and building societies, it was equally sound for mutual insurance companies. There was no difference in the income derived from premiums and the money derived from investments. He pointed out to the Minister that these funds had got to be invested with a margin of safety in excess of what was actually needed for possible contingencies. This would get at the man who ought really to be exempt under the Bill, and it got at the man in a most unfair manner, because if a man earned up to £1,000 a year and wasted it, he did not pay. If a man earned £200 a year and put £15 away for his widow and orphans he was taxed on the £15 which he put away.

That was the injustice of it. It would amount to 4s. per £100 per annum. If these men were scared away from saving up their money in this way it would mean that in the end the State would have to come in and make provision for these people. It was a tax on a tax—a State tax on a private tax. A man privately taxed himself, and because he did so the State came along and wanted to put a tax on his own private tax. He would point out that as Minister of Finance the Minister had to look after the finances of the country, but as Minister of the Interior he had to look after the interests of the people of South Africa. He hoped that the Minister would not impose this additional burden when, as many had pointed out, there was no necessity for him to do so.

said he would like to bring to the notice of the Committee another possibility. The insurance companies invested a considerable amount of money in this country. It was very carefully lent to farmers, and the result was that they had not to call up these bonds like other investors. The premium income was released from taxation, but if they invested money that would be taxed. The foreign companies would collect their income in this country free and invest that money elsewhere. He thought it was necessary to call attention to this point because it might be lost sight of.

said he would like to associate himself with the remarks that had fallen from the hon. member for Cape Town, Gardens, and he appealed to the Minister to accept the amendment which exempted from taxation the income from investments of these life assurance companies. As the hon. member for Uitenhage had pointed out, they had had this system for six years in the Cape, but as had been pointed out, the position of the Cape at that time was very different from the position of the Union at the present time, and he thought that point ought to be borne in mind by the Minister of Finance in dealing with this question. It would be an injustice on the South African companies as against foreign companies.

The South African companies would have to pay income tax on their entire revenue from investments because all these moneys were invested in South Africa. The foreign company had only got to pay on that part of its income which was derived from South Africa under clause 10 as it stood at present. So that South African companies would pay on the whole of their income while the foreign companies would simply pay on a portion. This would considerably handicap the South African companies and would enable the others to undercut the South African company. They talked about the encouragement of South African industries. Here was a South African industry of the first importance, and he considered that it should not be penalised. If this clause was carried the result would be that the policy holder would be taxed 4s. per annum on his bonuses in respect of every hundred pounds for which he was insured. Taking the triennial bonuses, it would mean 12s. in respect of every £100. Taking the figures of the largest South African company, the average man among the 40,000 or 45,000 shareholders was insured for only £400 with the bonuses which such a policy earned. If that policy was taxed to the extent of 4s. per £100 these policy-holders would suffer very greatly.

said he quite agreed with what had been said by previous speakers. He was informed that at least 90 per cent. of the policyholders in these companies were people with small salaries. He was told that if these people instead of saving their money with the insurance companies placed it in banks and on mortgage, they would be able to receive their profits without paying any income tax. He thought it was in the interests of the State to get these people to put their money into places from which they could not hurriedly take it out and spend it. Dealing with the case of endowment policies, he wanted to know if a man received an amount of £2,000 in this way whether he would have to pay income tax.

said an exemption was granted on that point.

went on to say that if this proposal went through it would mean the withdrawal of a good deal of capital from this country.

That is the old story—we have heard it before.

I think it is possible.

asked whether the Minister intended this to apply to foreign as well as South African companies? So far the argument had been that it would only apply to South African companies. He thought the Minister should settle that point first.

said the effect of this clause would be that people with small salaries would be taxed in their insurance policies. These people did not insure their lives for their own benefit, but for the benefit of their descendants, and for that reason he hoped the mutual companies would be exempted. The incidence of the tax was totally unfair,

was understood to say that the amendment referred to all companies.

said that under sub-section (d) the tax would fall on the poorest of the poor. Widows, especially here in the Cape Province, gave their small capital to the mutual companies for investment, and now it was proposed to tax these investments. This matter had been raised by his constituents, who had instructed him to vote against the clause unless it was altered.

who rose in support of the amendment of the hon. member for Cape Town, Gardens, said that legislation of that kind was inconsistent. The Minister, in the first place, said that the incomes of those societies should be exempt, and then he added, except in regard to investments. That was an inconsistency, as the income and investments went together. Unless the Government realised that people did not pay the full amount it would be serious. Their surplus was not profit. A number of people clubbed together, and then by investment some of them would get some of their money back again, but the companies could not pay £100 to a man who had only paid in £77 unless they were going to be able to make investments. He wanted to point out that these companies were already heavily taxed, for they paid thousands of pounds a year in stamp duties, as well as £500 a year each in licence dues. Now they were to be heavily taxed in regard to their investments. In America, not long ago, a similar proposal was brought forward, and the Government there took the view that was taken here, that huge profits were made, but it was pointed out that these surplusses were not profits, and the proposal was dropped. By judicious investments a certain amount of money was earned and distributed among the policyholders. It was shown that during the 50 years before that legislation came in, in the State of. New York alone, the insurance companies had paid 200 million pounds more in insurance than the U.S.A. Government had paid in pensions for 135 years. Those companies, in his opinion, did a most important work. They were rich and powerful because they were composed of so many millions of people, who bound themselves together for the purpose of thrift. They were co-operative societies, and for the most part made up of poor men. He was told that the Government were doing a great deal to encourage Civil Servants to become insurers. He was told there was an arrangement in the railway department to deduct a certain amount from the men’s pay sheets if they wanted to insure. But they were encouraging thrift on the one hand and discouraging it on the other, because if they taxed investments they would make it impossible for the insurance companies to continue, they must make per cent. interest on their premiums before they could meet their obligations. Previously when these societies were taxed in the Cape only it was comparatively easy for them, because the expenditure was spread over the whole of the country, but now they were under Union it would be much harder than it was in the old Cape days. Those mutual companies were free in England, where they did not carry on business for gain, and the fact that their revenue amounted to a little more than their expenditure did not make them taxable. If there was a country which deserved encouragement in this matter it was South Africa. He was of opinion that the Minister would get his revenue in another way through the members being more prosperous, but if he crippled those companies he was going to lose revenue, in stamps, and other directions.

said he would not repeat the arguments against taxing mutual life assurance societies by many previous speakers, but was convinced from his study of the question that in most other countries mutual insurance life societies were not considered suitable subjects for that taxation. The hon. member for Uitenhage had asked why that amendment should be brought forward at that stage, and not left until section (d) was dealt with, but the section before the House dealt with mutual insurance societies and not with all life societies. Mutual societies should be decided on their own merits. Some hon. members in the House were in a peculiar position. Some who filled high positions in Government in the past would feel they had their hands tied owing to their attitude in 1904 and 1908, but the financial condition of the Cape then were very different, and the very gentlemen who introduced that legislation in 1904 and 1908 would not introduce it at the present day under Union.

To tax those mutual life insurance societies would be to damage the good work they had been doing in the past. He could understand the matter if the exemption was not so high as £1,000. In 1908 they taxed incomes down to £50, and then, of course, it was a different matter. When the exemption was fixed as high as £1,000 they must consider the people who had incomes of less than £1,000. and many of those people would have to bear the brunt of the tax. He hoped the Minister of Finance would accept the amendment of the hon. member for Cape Town, Gardens. Perhaps the country was not so badly off as the Minister of Finance had suggested. And perhaps they could well afford to let those companies go free without having a deficit at the end of the year, and if they did so he thought they would congratulate themselves in the future. The proposal meant taxing the thrift of the people and those who wore, many of them, least able to afford it.

asked whether there was one argument in favour of exempting those companies which did not apply to every other company as well. The vast bulk of shareholders of every company drew less than £1,000 a year and the average income paid out to each shareholder wa3 under £100, and the company would have to pay 1s. 2½d. per £. The argument about taxing small incomes applied to everybody, even to the shareholders of the Standard Bank and the National Bank. Did not the banks invest in South Africa—did they not help to develop the country as well as the companies which had been referred to? Clause 10 laid down that each company should furnish a return showing its investments inside and outside the country, and the companies would have to pay a tax on money invested in England as well as in South Africa. He thought the only argument that could be used was that it would be a tax on thrift. All taxes were a tax on thrift. Where the injustice came in was in connection with the high exemption. A man might be getting only £300 a year and that might be all that he had got, and yet they made him pay on the high scale. Where was the justice there? What he thought the Minister should have done was to adopt the American income tax law passed recently. They started with what they might call a basis tax of 1 per cent., which applied all round, and then they put on the additional taxes. He thought that would have been a better way, and then they would not have had that injustice. That was the only fair way to got out of it, to his mind. It had been done in America and he thought it could be done here.

said surely there was an essential difference between an insurance company and other companies. The Minister said that he could not afford to let go of that amount of revenue. He (Mr. Creswell) did not pretend to be learned on the subject of the income tax. The Minister was going to tax the men who got £20 a year from a mutual insurance company and exempt those who got £1,000 or £1,500 so far as it was drawn from municipal bonds, etc. Surely the Minister would see how wholly unjust it was for the Government to insist on its pound of flesh out of the mutual companies and let go all revenue which might be derived from municipal bonds, Government stock, and so on.

said if there was one matter which usually met with sympathy it was that of protecting South African industries. He therefore thought it Would be unwise to penalise South African companies as against foreign companies. For that reason he would move to add at the end of sub-clause (d) the words “whose head offices are not in South Africa.”

pointed out that this sub-clause was not under consideration now.

said the only ground on which they could say that there was reason for exemption was that the tax undoubtedly fell upon small people who were free from income tax as a rule. There was no way provided as in the English tax, by which they could give a refund of the amount. That was the only reason he could see for any exemption. When he had first introduced his Bill in 1899 he had exempted mutual societies altogether. There was that precedent for the exemption of those companies, but the present proposal was forced upon him by the Parliament of those days. In New South Wales they had a similar clause, excepting as regarded mortgages on land. As he understood it, the mortgage was taxed on a different basis—it was taxed as land. It was very difficult to know exactly how to meet the case. It was a very difficult question and one that was open to a great deal of doubt from both sides. If the Minister wanted to do an easy and popular thing, he would exempt insurance societies altogether. Members of Parliament could exempt themselves, and that, he thought, would be a very popular exemption. (Laughter.)

said he would have to harden his heart. The mutual societies had put up a tremendous fight, almost as big a fight as the bioscopes. If they were exempted, however, it would mean the loss of a good deal of revenue which would have to be made up in some other way. He admitted that the taxation would fall on the hard working-man. (Labour cheers.) What the hon. member for Victoria West had said was true, and the exemption of mutual life insurance companies would be most popular, but he must protect the House against a generous feeling towards these societies. He knew that a tremendous attack had been made on the feelings of hon. members, and he thought he was doing the country a service by standing firm. (Hear, hear.) It had been argued that they were handicapping the South African societies against their foreign competitors, but that argument was not correct. As far as South African operations were concerned, they were all on the same footing. Of course, if a South African company had operations abroad. Parliament could not help it, and good luck to it. A high exemption had been fixed, added General Smuts, but it might not always be so high.

said the moment he heard the speech of the hon. member for Cape Town, Central, he knew the Minister would hang his hat on that peg, and he would advise the hon. member for Cape Town, Central, to keep out of town to-morrow if he wished to save his life from the infuriated policy-holders. (Laughter.) It was true that in America there was a tax of 1 per cent. on insurance companies, but there were such enormous exemptions that the tax was hardly felt. But ours was a 7½ per cent. tax on people who put away something for the benefit of their family or as provision for their old age. Why should building and friendly societies be exempted and not insurance societies? The Government’s proposal was unjust and unfair, for life insurance prevented pauperism and should be encouraged by the State. He hoped the hon. member for Cape Town, Central, would admit that his theories were entirely wrong and were unjust to the widows and orphans.

said that one of the minor insurance companies in Cape Town received no less than £400 a month in small premiums from Civil Servants and railwaymen. The Minister of Finance had rather jeered at the income tax in the Cape, which had been imposed even on people who earned only £50 a year, but he himself did not exempt these people when they were members of insurance societies. The tax would amount to 20 per cent. of the amount of the bonuses, and the Minister might consider remitting it, and if he had to raise additional taxation he might make a charge on the receipts of the railways, and thus spread the burden over the whole of the community, instead of placing it only on the thrifty ones

said that Daniel Webster defined life insurance as a tax voluntarily paid by the policyholder to the end that those dependent on him might not become a public charge after his death. (Cheers.) Continuing, Mr. Brown suggested that the cash value only of the bonuses should be taxed as an alternative to the Minister’s suggestion. He was not afraid that foreign companies would withdraw their capital, for they could get 1½ per cent, more here on their money than they could in Europe.

said the taxation which it was to provide for the high expenditure fell upon every class of the community, even upon the widows and orphans. That was part of the way they were finding the money. He wanted to point out to hon. members opposite that when they went back to their constituents they should tell them that they would all have to pay to provide for that high expenditure.

said there was no necessity for those poor people to pay if the Committee would be just in the matter. Those who supported the Minister would support the Minister’s perspective. He noticed in another paragraph that shareholders of such an important company as the Premier Diamond Mining Co., which was not paying a penny in taxation to-day, by virtue of its being in partnership with the Government, was going to be protected, but the man who was paying £20 a year against a rainy day was going to be taxed. If hon. members were going to vote for the Minister in that case they must be prepared to justify their stand point to the country.

said while he thought the Government was proposing to commit a rank injustice, he was going to say so. It had become necessary to raise money because of the ineptitude and extravagance of the Government.An individual who misappropriated money was dishonest, and it was just as dishonest for the State to lay hands on trust funds. The Minister was going out of his way to tax the hard-working people when it was unnecessary to do so. Why did he exempt savings banks and friendly societies, and leave that matter in the condition he did? The hon. member for Jeppe had argued that the State should take over insurance, but he did not say how the money should he built up. He was perfectly certain that the men who out of their own thrift put money aside for insurance were much better men than the men who would be provided for by the Government. He would urge upon hon. members to realise that when they were taxing immense sums in sight they were also taxing the small sums of individuals.

said the last speaker had suggested that the hon. member for Jeppe (Mr. Creswell) had implied that they should tax the rich in order to provide for the poor. If it was not for the poor there would be no rich. If it had been left to the hon. member’s thrift and ability he might now have been on the street looking for a job. (Cries of “Order.”)

asked whether the hon. member was in order in making that remark.

Surely it is a matter of opinion.

said the Minister of Finance had referred to the fact that the thrifty men always paid the taxes. The object of the Bill was to exempt the thrifty man up to £1,000 a year, but the poor man would be taxed through the insurance companies. He hoped the Minister would see his way clear to admit the injustice of that imposition on the poor man and would amend the Bill accordingly.

said he did not think the Bill protected the Superannuation Fund. It was an important matter that ought to be borne in mind. The Superannuation Fund was a fund which was taken charge of by the Public Debt Commissioners on behalf of the Public Servants. The holdings of the companies were much larger than the figures he had quoted earlier. As far as the tax was concerned, it penalised their local companies as against the foreign companies. The Minister had said that with high exemption it was not necessary to deal with all those questions. The high exemption made it necessary to deal with exemptions of that kind, because they were dealing with the taxation of very poor people who were contributing to the insurance companies. It did not seem to him to be a matter of justice, and it could not be regarded as a final solution.

supported the amendment, which he considered was most fair. The money was invested on behalf of poor persons, for it was the poor man who had to provide for his family in this manner. The rich man could do it himself. It was a wrong principle to tax, and so discourage thrift.

put the amendment of Mr. Baxter, and declared that the “Noes ” had it.

moved to add at the end of the paragraph the words “as are not included in sub-section (c).”

thought the amendment went further than the hon. member intended, and he suggested, after the words “except as regards the income of such societies and companies,” to add “other than friendly or building societies. ”

adopted the suggestion of the Minister of Finance, and the amendment was carried.

moved in line 8 after “and” to insert “the incomes.”

Agreed to.

said all insurance companies had to provide for 3½ per cent. profit, at least, on their money in order to enable them to carry out their liabilities to the policy holders. He wished to exempt so much of the income from investments as was to be divided amongst or credited to the members of insurance companies.

suggested that the simplest form for the hon. member for Newlands to put his amendment would be to insert the words “in excess of 3½ per cent.”

thought that the words “provided that so much of the income from investments of assurance societies as is required to meet the liabilities in regard to policies shall be exempt” would meet the case. He moved that.

said that that was not practicable. Investments were required for paying bonuses. He had torn up an amendment of that kind because it was not practicable. He did not know a single case to which the amendment would apply. That referred also to the amendment of the hon. member for Newlands.

ruled that as the subject matter of this amendment was covered by new paragraph (d), already considered, he was unable to accept the same.

said he thought the Chairman was being a little misled on this point. The hon. member for Uitenhage said the money was only required to pay out bonuses, but he was wrong there. If the premiums were not invested and brought in no income, the societies could not pay out what they contracted to pay. Bonuses were an entirely different thing.

said the amendment was out of order. It would be covered by the word “revenue.”

asked what was the definition of revenue.

said he must keep to his ruling.

The paragraph as amended was agreed to.

On paragraph (e),

wanted to know if provision was made for Civil Service Pension and Superannuation Funds. He did not see that they were covered by the amendment moved by the Minister.

was understood to say that he was under the impression that they were covered, but if not he would inquire into the matter.

moved in line 15, after the word “public,” to add “or private,” so that private schools would be exempt.

That is a waste of time.

said that was an uncalled for remark; he thought it was a sensible suggestion.

How many make £1,000 a year?

If there were none why should they not put in the amendment?

proposed to omit the words “of a public character” and substitute “not carried on for purposes of gain,” and moved accordingly.

asked the hon. members not to press the amendments. He had taken his wording from the Cape Act.

was understood to say they had no revenue for six years.

said he did not think They should waste the time of the House on that. He was sorry his hon. friend had taken his words amiss. The hon. member’s fine mind should not be engaged on matters such as that. (Laughter.)

said as he understood it had brought in no revenue for six years he would withdraw.

said that the Minister of Finance had admitted that there might be institutions of that kind which, although not public, might be held to be of a public character. He referred to the case of a girls’ school in Maritzburg, and wanted to know if that would be exempt.

said it was provided for. The case the hon. member had referred to would be covered.

The amendment of the hon. member for Von Brandis was withdrawn.

The amendment of the hon. member for Uitenhage was negatived.

Paragraph (e) as printed was agreed to.

New paragraph (f),

moved as a new sub-section (f) the words “the revenues of Trade Unions.” He said that Trade Unions’ funds were devoted to sick benefit, unemployment benefits, and so on, and he thought those societies should be exempted. He believed under another Bill that it was stated that the unions should not be treated as friendly societies. He thought it was necessary to safeguard the funds of one or two large societies in the country.

said there had been no intention of taxing the revenues of Trade Unions, and he thought they were safeguarded by the words “not carrying on business for profit or gain.” He was sure no good purpose would be served by the amendment.

withdrew his amendment.

said he did not think the amendment should be withdrawn. In the old Cape Act there had been no mention of Trade Unions, but at that time there were no Trade Unions of any magnitude. The New South Wales Act specially referred to Trade Unions.

quoted from a New South Wales Act from the operation of which Trade Unions were specially exempted.

said he thought Trade Unions came under the exemption mentioned by the Minister —“not carrying on business for the purpose of profit or gain.” It appeared to him to be quite clear that Trade Unions came under that definition. Would the Minister take the advice of his legal advisers on the matter?

said he would like to be quite clear on the point, and he would take advice on the matter.

asked the Minister whether there was an exemption for the Natal Native Trust and other public trusts?

Yes, the exemption is made.

On paragraph (f),

moved to insert the words “not resident in the Union ” in the paragraph reading: “Income received by or accruing to or in favour of any person … from Treasury bills, stocks or securities issued by the Government of the Union,” etc.

asked whether this amendment was in order, as it would have the effect of increasing taxation.

said that in Committee of Ways and Means it was decided that that taxation should be levied under such circumstances as the House should decide.

said if the amendment was agreed to a lot of people would have to pay taxation who were not included under the present proposals.

said that in Committee of Ways and Means they had passed a resolution laying down that conditions and exemptions should be decided by the House later on.

ruled that the amendment was in order.

moved that Mr. Speaker’s ruling be taken on the point.

said that while he differed from the hon. member on the point, he would support the motion for Mr. Speaker’s ruling. At the same time he suggested that Mr. Speaker be asked to rule as to whether it was competent to move the deletion of clause 4 or clause 5 or any sub-section. The clause provided that there should be certain exemptions, and to delete any portion of it would have the effect of increasing taxation.

said the Committee of Ways and Means had decided that the tax should be imposed under such conditions and exemptions as might be provided by law during the present session.

said that while no member was entitled to propose an increase of taxation, he was entitled to move a reduction of it.

said the clause contained certain exemptions, and it must be open to the Committee to delete any sub-clause, the Committee having decided to take the clauses seriatim.

referred to Standing Order No. 94, under which a proposal for increased taxation must be made by the Government.

The hon. member forgets the condition on which the Committee adopted the scheme. The Bill is based on a scheme of taxation adopted by the Committee of Ways and Means, which was subject to such conditions and exemptions as the House should adopt. The scheme is now before the House, which can say “no” to it.

That may be very good reasoning, but it is not in accordance with Rule 94.

The motion of Mr. Baxter to report progress for the purpose of obtaining Mr. Speaker’s ruling was negatived.

In reply to Mr. F. H. P. CRESWELL (Jeppe),

said that non-residents in the Union did not escape taxation. If they lived in the Mother Country they were taxed more heavily than they were here. They wanted to see people who drew their dividends from this country taxed in the same way as everybody else. In the Cape Act, which was regarded as a sort of Magna Charta, it was laid down that residents who drew interest from the Cape should pay income tax on it.

said that for a considerable time past South African municipalities had been raising loans in this country, but it would be impossible for them to continue to do that, as under the Bill their loans instead of yielding 4 per cent. would yield only £3 16s. per cent. This simply meant that in future, municipalities would have to borrow in England.

said he could not see that there was anything in the Bill which would make a man living outside the Union liable to pay income tax on his holdings of South African stock.

hoped the Minister would not accept the amendment. Municipalities had taken no action to put their case before the Minister.

said it was not proposed that the income tax collector should be a municipality. There might be force in the amendment of the hon. member for Cape Town, Gardens, if it were proposed to tax only municipal loans, but every other enterprise would have to pay income tax.

said one would have to have an income of £1,000 a year before one’s interest from municipal stock could be touched. It would be grossly unjust to exempt municipal stock.

said that under the proposal municipal stocks had a considerable advantage.

The amendment of Mr. Fremantle was carried.

Paragraph (f), as amended, was adopted.

Paragraph (g) to (i) were agreed to without discussion, and at this stage

moved that progress be reported.

Agreed to.

Progress was reported and leave granted to sit again to-morrow.

announced that a Bill to make further provision for securing payment of workmen’s wages had been transmitted from the Senate, with one small amendment for the insertion in clause 1 of the word “contractors.”

moved that the amendment be now considered.

objected.

It was agreed to consider the amendment to-morrow.