I move—

Mr. HEYNS seconded.

I would suggest that this matter be referred to the Public Account Committee, which deals with these matters of money. Up to last year, it has been usual to refer it to the Public Accounts Committee, and I think from a monetary point of view, that Committee would be better able to deal with this matter than the Crown Lands Committee.

I cannot do that. Besides, I do not think the Public Accounts Committee is the right Committee to refer these papers to. Primarily, it is a matter of the value of land and not of finance. The Crown Lands Committee was appointed—

These papers first have to go through the boards to my department, I scrutinize them, then hand them to my hon. friend the Minister of Finance, and now I propose to refer them to the Crown Lands Committee, and later on they will come before the House.

All I can say is that I do not think this matter is at all suitable to be referred to the Crown Lands Committee, and I shall have something to say about it at a later stage.

I support the hon. member for Cape Town (Central) (Mr. Jagger). I think that it is something which should be considered by the Public Accounts Committee. We have previously had the position that the Public Accounts Committee heard evidence and that thereafter the matter was referred to another committee which heard entirely different evidence without knowing that the Public Accounts Committee had already taken evidence. The other committee then passed a resolution the very opposite of that which the Public Accounts Committee had taken. As it is a question of reduction of money I think this is a matter which should go to the Public Accounts Committee.

Motion put and agreed to.

With the leave of the House I would like to give a short statement in regard to the currency question. When the Union Government recently decided to revert to the gold standard, there were good reasons for allowing this object to be achieved by the expiration on the 30th June of the section of the Banking and Currency Act under which gold certificates were declared inconvertible. This course of action was contemplated by the Currency Commissioners. Recently, however, the position has changed. At the end of last month Great Britain decided to return to a modified form of the gold standard, and other dominions, as well as Holland, immediately followed suit. The result has been an appreciation of British currency, practically to parity with gold and with Union currency. In these circumstances there is no reason for delaying the resumption of specie payments by the Union, and after making enquiries in appropriate quarters, the Union Government has decided to rescind the proclamation declaring gold certificates to be inconvertible forthwith, instead of waiting until that proclamation lapses on the expiration of the governing law on the 30th of next month. This does not mean that gold will immediately be available in all parts of the country for those who wish to use gold in place of notes. The stock of gold coin has been concentrated for the purpose of sorting and reconditioning it and it will naturally take some time for this gold and newly minted coin to pass into general circulation throughout the Union. Disregarding silver and copper coins, which are legal tender only to a very limited extent, there are at present three forms of legal tender—gold coins, gold certificates and Reserve Bank notes. There are, at present, comparatively few gold coins in circulation and practically all the gold certificates issued are in the hands of the Reserve Bank. Any holder of Reserve Bank notes may demand payment in gold certificates at the bank, but this right has never been exercised, probably, because the certificates were inconvertible. The effective legal tender during the last few years has, therefore, been the Reserve Bank note. We now intend to abandon the gold certificate. The Reserve Bank will exchange its holding of certificates with the Treasury for the gold held against them, and for the future our legal tender will be gold coins and Reserve Bank notes which will be convertible into gold at the Reserve Bank. In one important respect our policy differs from that of Great britain. The Bank of England need not redeem its notes or Treasury notes except in gold bars of a value of about £1,700, and the old law by which any holder of gold bullion could demand sovereigns from the mint has been altered, the sole right of requiring the mint to coin gold being given to the Bank of England. In Great Britain, therefore, gold is available for export but not for internal circulation, here it will be available for both purposes. I may say that South Africa was the first among the British commonwealth of nations, and almost the first country in the world to decide to revert to the gold standard. Then followed the action of Great Britain, the other dominions, and Holland. In taking the present step, South Africa, as the leading gold producing country in the world, once more resumes the vanguard position in the gold question, which she previously occupied.

Hon. members will be interested to know that, as a result of negotiations which have been proceeding between the Government and the New Cape Central Railway Company through the High Commissioner in London, for the purchase of the New Cape Central Railway, a satisfactory issue has now been reached. Cabled advice has been received to the effect that the chairman and directors of the company have accepted the offer of the Government to acquire the whole of the company’s assets as they existed on March 10 last for the lump sum of £1,100,000. This acceptance of the directors only awaits the confirmation of the shareholders of the company to make the transaction complete and binding upon the company. Of course, the agreement for the purchase, which is being drawn up in London and confirmed from here, is subject to ratification by this House, for which purpose a maximum period of two months is allowed. That is a condition precedent to the successful termination of the negotiations. I have, therefore, thought it advisable to acquaint hon. members with the position as it exists to-day. For the information of hon. members I might also add that it has been provided that within 30 days of ratification by Parliament delivery of the railway and the whole of the company’s assets will be accepted, and within 30 days after that again payment in cash in London will be made. The purchase price of £1,100,000 includes all assets of the company, the only exceptions being cash in hand, money invested in shares in other companies, and the London office furniture of the company. The price, therefore, includes the value of stores on hand and all rolling stock and similar movable property as at March 10, 1925. I do not propose at this stage to burden the House with any of the details of the provisions which have been made to safeguard the interests of the Railway Administration, but it may be of interest to know that prior to taking delivery the line will be inspected to see that it is in safe running condition, and that it has been satisfactorily maintained, failing which the company will be asked to bear the expense of rectifying any shortcomings in this respect. As a safeguard against this and until the Administration is satisfied that the railway is in good orde one per cent. of the purchase price will be retained. The certificate as to the condition of the railway will be given by an engineer appointed by the company and the Chief Civil Engineer of the Administration, acting conjointly. In due course I will submit the agreement to the House for its approval.

Arising out of the Minister’s statement.

The hon. member cannot discuss the statement.

I move—

Mr. VERMOOTEN seconded.

The Order, dated 13th May, that the House at its rising on Wednesday, 20th May, adjourn until Friday, 22nd May, was read by the Clerk.

Motion proposed by the Prime Minister put and agreed to.

I move—

Mr. MOSTERT seconded.

Agreed to.

I move—

Mr. ROUX seconded.

Agreed to.

I wish to say, in regard to Clause 1, that the Government has not given any indication in the Bill as to the constitution of the board and we can only gather it from what the Minister has told us. It seems to me to be the duty of those who have any information on the point to bring it before the House and the Minister should see that, in the constitution of this board, he does not in any way interfere with the rights of any large section concerned.

The hon. member can only discuss the amendment brought forward by the Senate.

That is what I want to do. The Senate has gone into the powers of this board, and before agreeing they have altered the word “shipping” to “export” which will now mean the control of the fruit not from the moment it goes over the ship’s side, but from the moment it reaches the railways. The reason why I want to get the Minister’s declaration is that this is our only opportunity, and I hope the Minister will give some consideration to this point. I want to see this Bill go through. I think everybody is in favour of the control of fruit and of co-operation being encouraged in every possible way, but the Minister must realize that he must be fair in this matter of constituting this board, and he must not be rushed into doing anything which may be an injustice to a large number of people: When he gave us the information on which he acted, he said that 70 per cent., in the case of the citrus growers, belonged to the Exchange, and 90 per cent., in the case of the deciduous growers. I suppose he was referring to those who were exporting. If so, then I must say he has not got the correct information. I want to give this information; because, however much we may be in favour of control and of dealing with this shipping impasse that arose recently, we should not do an injustice to a very large section, and, if my information is correct, to a large majority of the fruit exporters. I have the figures up-to-date; but the figures I have for 1924 were for citrus and these figures have been obtained from the chief Government fruit inspector’s list and the registrar of co-operative societies list, and handed to me as having been obtained from those sources. You know, of course, that every citrus exporter has to register. The figures are as follows. Registered in their own names, 134. Certain five companies export in the names of the societies, so you have to add the names of every one of their members. If you add to the 134 the numbers of these companies, 236, you get 370. I am told, as a matter of fact, that many members of these societies do not themselves export and that you would be safe in taking it that only half of them export. But for the purpose of showing the disparity, I am taking the whole of the 370 as exporters belonging to the exchange, and on the fruit inspectors’ list, for 1924, of the citrus exporters registered, there are 638 non-affiliated and non-co-operative shippers. That is to say, there are 370 belonging to the body that the Minister is giving these powers to, as against 638. That is a very serious position. According to information from Pretoria up to date, the total number of registered fruit exporters is 1,387, but only 584 of these belong to the fruit exchange, leaving 803 exporters who are not members of exchanges. When the Minister addressed the House the other day we were left under the impression that only a very small minority of fruit growers were outside the exchange, as a matter of fact, the majority are outside the exchange, although I would like to see them all members. When the Minister is considering the question of constituting the board I would urge him to re-consider the whole position, and if he finds that the exchange represents less than the majority of the exporters it would be wrong to carry out his original intention to have a board of five, with only one representative of non-members of the fruit exchange. In view of the position, would it not be better to have a board composed entirely of Government officials or of undoubtedly impartial members? The very least you can do is to give half the representation to the members of the fruit exchange and the other half to non-co-operative members, and to have an impartial chairman to see that justice is done. A few days ago I had a telegram from Johannesburg stating that at a meeting of the National Fruit Growers’ Protection Association, representing over £3,000,000 of invested capital and growers who last season exported approximately 200,000 cases of oranges and large quantities of deciduous fruit, it was unanimously decided to protest against the contemplated constitution of the board, the meeting being strongly of opinion that the board should be entirely independent, and preferably composed of gentlemen with shipping experience. The meeting cordially supported the Bill if an independent board be appointed. I have not the least desire in the world to hold up the measure or to do anything hostile to it, but if you are going to debar the majority of the members of the industry from having any particular influence on the board, Government should reconsider the position. If that is not done you will make a wreck of what ought to be one of the most prosperous and flourishing industries of the country.

I wish to support the remarks of the hon. member for Cape Town (Hanover Street) (Mr. Alexander). A large amount of nervousness exists in connection with this Bill, especially amongst the younger fruit growers. Rumours go through the country, at any rate in the Western Province, that the fruit exchange will get an overwhelming influence on the board, and a certain amount of suspicion exists that they are not sufficiently considered in the alleged constitution of the board. The feeling that now exists is that if these extended powers are put in the hands of the fruit exchange and the exchange gets overwhelming influence that those who remain outside of the exchange cannot then expect proper treatment. In the last few years there has been much development, and millions of trees have been planted, and although the inland market has been much extended, yet the attention of the growers to-day is chiefly directed to the export market. Possibly wrongly, but this, any how, is the case. Therefore it will be a good thing if the hon. Minister can remove the restlessness and insecurity, and that he should state that the young growers who for the most part remain outside the exchange will be treated just as fairly as those who are members of the fruit exchange. I hope that the hon. Minister will give the assurance to the country that the younger exporters who remain outside will enjoy the same advantages as the established exporters. This will be an encouragement to our young growers and bring about a certain measure of security and give courage for the development of our industry.

I rise to support the appeal which was made by the hon. member for Hanover Street (Mr. Alexander), I have received several telegrams from my constituents who are fruit growers in the north, and this cardinal fact emerges that while only 584 exporters are members of the fruit exchange, 803 growers do not belong to the exchange. All these latter want is a fair and square deal, with Government departmental control or a purely impartial control. This is so reasonable a request that the Minister, should not, for a moment, hesitate to concede to it. The fruit growers have gone to much expense and a great deal of trouble in planting orchards, and are looking forward to the time when they will be able to reap their reward. They are entitled to expect that Government will see that they are fairly and properly treated, and the only way in which that can be done is to have a fair and impartial board, which is not susceptible to the influence of the fruitgrowers’ exchange.

I cannot do otherwise than approve the remarks of the hon. member for Hospital (Mr. Papenfus). We cannot argue it away that the fruit growers are frightened to hand over the whole fruit industry to the control of the board. If the Government appoints an impartial board the Government will be responsible. I want to make it clear that many people feel afraid about it and it is not right to give all the control to the board because there are a number of people outside the exchange. I am afraid of this kind of board which subsequently becomes a Government within a Government. We must remain in the position that we hold the Government responsible.

Who will pay?

The fruit growers. They are willing to pay for it. It is easy for the Government to shuffle off the work on to such bodies and I take it that it is intended in the best interests of the fruit farmers but where the growers can be knee-haltered by the exchange we should take that fear away.

The Bill as it now stands is a very good measure and a very heavy duty devolves on the Government, and especially upon my friend, the hon. Minister of Railways and Harbours, who had charge, in the appointment of this board. The Bill is a good one and I am sorry there has been a great deal of feeling stirred up in various parts of the country, not only in reference to the Bill, but in reference to the future board. The Bill, as it emerges from the two Houses, will, in my opinion, be a real sheet anchor for the fruit industry in the future. All depends on the board, and the hon. Minister will have noticed from what has been going on, not only in the other House, but in various parts of the country, that there is a good deal of feeling in regard to the matter. Some people say the fruit exchange is not sufficiently representative of the fruit industry, and other statements of a similar character are made. I would ask the Government, before they come to a final decision in regard to the appointment of the board, to give a hearing to the various parties. There is no doubt that if the Government could succeed in securing the good-will of the various interests and the various sections of growers, complete success could be made of the working of this Bill, to the great benefit of the industry, which in my opinion is going to be one of the great industries of the country in the future. It is essential to secure the goodwill of the parties concerned, and I ask my hon. friend before discharging finally this onerous duty of appointing a board, which will be the hinge on which everything will turn, that he should give a hearing and consideration to the claims of all those parties interested in the fruit industry. I see in the last few weeks a society has been formed in the Transvaal called the National Fruitgrowers’ Association. It is evidently a big society, but whether it is under the fruitgrowers’ exchange or not, I am not certain.

It is a protection society.

I am not quite sure what the relation is, but I ask the Minister to give fair consideration to the claims of these various sections, and constitute the board in a way that will, as far as possible, bring about co-operation among the fruit growers and make them pull together in an industry which is, and should be, a national industry. I am sure that is the desire of the Minister and to see this Act work smoothly and that is the best way to get smooth working, to consult with these interests before the final appointment is made.

I also wish to say a few words in connection with the appointment of the board. It is not only that we want to see the Bill go through (perhaps in an amended form), but we also wish that the operation of the law should give satisfaction, because what is the good of passing an Act and then find out that 50 per cent. of the people who come under it are dissatisfied? Until such time as the figures given by the hon. member for Cape Town (Hanover Street) (Mr. Alexander) are refuted I do not see how the hon. Minister can do otherwise than comply with the request. Let us for arguments sake say that the figures are a little exaggerated and that, e.g., 50 per cent. of the exporters are members of the fruit exchange and 50 per cent. not, then still the representation of non-affiliated members of one out of five on the board would be unfair. That will give them a representation of 20 per cent. against 80 per cent. of the members of the fruit exchange. I speak as a member of the exchange and as a supporter of it, but I think that it will meet our purpose that we should gradually include all fruit growers, and if we want to attain that end when we must, in the first instance, win the confidence of the growers who are non-members; and to attain that we now have a splendid opportunity to give the people proper representation on the board of control. We must not forget that the success of the board also depends on their co-operation. I say this particularly because a certain amount of unrest exists about sub-section 5 of the new section 4, which provides that an appeal only lies to the board. If we therefore have a board on which the fruit exchange has the overwhelming representation, then it means that a person who appeals to the board goes from the devil to Satan, because both bodies practically are composed of the same people. What guarantee then is the board, even for the members of the fruit exchange? If the Bill passes, then we must also be assured that it will have a beneficial operation. I have here, i.a., a telegram from the chairman of the farmers’ co-operative association of Koster, and he asks for an impartial board who will also look after the interests of those outside the exchange. That is, a body which is entirely outside the exchange. I have here also another telegram from growers who are not affiliated, and I hope that the Minister will see that the members who are not affiliated are also properly represented on the board of control. I agree with the hon. member for Standerton (Gen. Smuts) that count should be taken of all sections of the growers.

It is a great pity that hon. members opposite are only just waking up. When we, at the second reading and the committee stage, pointed out the dangers that existed, when there was still an opportunity of making the alterations, those hon. members remained quiet and did not support us. Now, they come when the fat is in the fire.

Do you not trust your own Government?

This Bill has nothing to do with party politics, and, in the first place, we are representatives of the people and not of a particular section. The thing that actually matters is as stated here in a telegram which I have received from my constituency, namely, that the people want—

I leave it with the fullest confidence to the Minister to decide who should serve thereon. Impartially, however, embraces that the large majority of the fruit growers who are not organized—and I understand that that is the position—will have people on the board in whom they have full confidence, whether such people are members of the fruit exchange or not. I can well imagine that a member of the exchange may be appointed and that he will still be a good representative of the non-members and who will look after their interests and enjoy their confidence. I am in favour of organization, but the great point is this—and I hope that the Minister will never lose sight of it—that as soon as you want to force a man to cooperate then you will make him jib. I therefore think that this Bill will do much good if the hon. Minister takes care that there shall be an impartial body.

I want to support the suggestion thrown out by the member for Standerton (Gen. Smuts) that, before appointing this board, all interests shall be consulted, and, in consulting those interests, may I suggest to the Minister that he should consult also the shipping interests of the various ports, who are responsible in many cases for advancing money against their shipments to the small growers, and who are, therefore, interested in those shipments? I think they should be represented on that board.

At the second reading of this Bill I called the attention of the Minister to the same point. The hon. member for Fort Beaufort (Sir Thomas Smartt) actually talked on behalf of the fruit exchange, and he practically requested the Minister to promise that the fruit exchange would have a majority on the board, and on that occasion he received very strenuous support. I myself also felt that I had no sufficient ground under my feet to protest against the statement of the hon. member for Fort Beaufort that 85 per cent. of the fruit growers belonged to the fruit exchange. That knocked us a bit silly, but now that the position is different I think the hon. member for Fort Beaufort should see that the request made by the growers, who are not affiliated for a better representation on the board of control than one in five, is reasonable. I agree with the hon. member for Standerton (Gen. Smuts) that the fruit industry in our country is going ahead with tremendous strides, and we are yet only in the beginning of the development of the fruit industry, especially with reference to citrus fruits. It would be a great pity if this Bill should come into operation and sow dissension amongst the exporters of fruit. I think that if the hon. Minister can meet the people who are outside the exchange a little the matter will subsequently solve itself, and if the hon. Minister cannot alter his point of view, then a possible solution will be to appoint the members of the board for not longer than a year so that Parliament and the people can see how the constitution of the board works. If it works well, it can remain so. In the opposite case a change in the constitution can be made. This is possibly a way out, although I hope that the Minister will increase the representation of non-members of the fruit exchange on the board.

I want to support what has been said by the hon. member for Cape Town (Hanover Street) (Mr. Alexander). I was privileged, as other members were, to listen to the rather startling array of figures that he quoted of those who are opposed to the interpretation that has been placed upon the composition of the board. It is true that we do not know what the composition is, but it has been indicated, and it certainly gives one who desires to assist the export of fruit cause to think. It must be apparent to everybody that it is most desirable, when you are going to control by the State the export of fruit, to have a State board to do it. That seems to me not only desirable, but essential, because we have heard of experiences of various people, letters in the papers, fulminations by various people concerned, as to the policy of those who had charge of operations before, and we are alarmed to find that one association is likely to control the whole question. I desire, in support of the contention of the hon. member for Cape Town (Hanover Street), to advance the fact that the small man who has no influence in an organization of this description—and there are a large number of small men, and their number is increasing every day, I am happy to say—is likely to be swamped by reason of the very fact that he has not got that influence. One does not want to generalize, but it might be argued in other agricultural pursuits besides fruit growing and export. I want to urge upon the House that it is well in considering this question, in its unanimous desire to make it a success, that the whole control of this question should be in the hands of a board appointed by the Minister of people who are not concerned in the industry at all. That is my view. It should be either a purely State board or a board composed of independent persons. What I do not like is that you should set up a board of the various interests concerned, because the small man is almost inevitably bound to suffer, and it is on behalf of the small man that I am expressing myself. I hope the Minister will agree that the board shall be a State board.

If the hon. member who has just spoken (Mr. Madeley) is out for the protection of the small man he will follow the advice given by the Minister and he will speak to the Bill as amended; if he is in favour of a system of trusts and combinations to control the fruit industry of this country, then he will follow the advice of some hon. gentlemen over there. The Minister was extremely clear when the Bill was under discussion, when he said he would see that all interests were represented on this board, but as the majority of fruit farmers in this country, especially growers, are members of the fruit exchange, he would see that the fruit exchange had a majority on that board. It is an extraordinary thing that during the last week or so hon. members have been deluged with circulars and telegrams. It would be interesting to know where the funds came from to provide that information that was supplied in the interests of the fruit industry to members in this House. I have my own idea where it has come from, and I had experience of the same kind of position in connection with the Co-operative Bill three years ago. At that time there was exactly the same desire for a cooperation, certainly not in the interests of producers of this country, but in the interests of the kind of co-operation which I should have thought my hon. friend would have been the first to be against. We have heard it stated here and in another place that the fruit-growers who are members of the fruit exchange do not represent the majority of fruit farmers in this country. The Minister said that over 90 per cent. of the deciduous growers and 70 per cent. of the citrus growers were members of the fruit exchange, or, in other words, the fruit exchange roughly represents 80 per cent. of the fruitgrowers in this country, and the majority of these are small men. As I pointed out, there has been an enormous effort to break up the fruit exchange since the articles of association were altered from a form that really meant that power would be taken out of the hands of the growers themselves. We have many sorts of trusts in this country, bioscope trusts and theatre trusts, and the last thing I desire to see, and I hope hon. members over there desire to see, is a fruit trust in this country as well.

You are not opposing the Bill?

My hon. friend, as I have always acknowledged, is perfectly honest in his views, but perhaps he and others have unknowingly failed to realize that the difficulties brought before them were not in the interests of fruit growers. May I point out how seriously they are taking the position in Australia. Growers in New South Wales are alarmed at the prices they have been receiving; they are afraid of the industry getting into the hands of trusts and corporations. I should like to read a letter in the “Fruit World of Australasia,” which points out the serious position of the fruit trade. Mr. A. J. Arnot of Sydney went to London, the same as we have sent Mr. Taylor, to follow up the fruit from Covent Garden to the retailer. This is what he reports—

I can well understand that there may be combinations in this country who desire to get control of the commission work and agency for disposing of our fruit, and I can also well understand that they are not at all in favour of a farmers’ or growers’ organization like the fruit exchange. We are to give the fruit growers in this country who are so ill-advised as not to be members of the fruit exchange a representation on the board through appointment made by the Minister. The Minister has promised that to the House and has promised it in another place. All we ask is that the majority on this board shall consist of members of the fruit exchange, who are fruit growers themselves and have no other interest in the production of fruit except to get a fair and legitimate price for it and to place it before the consumers of the world with as few intermediary people coming in as possible. We hear a great deal about large interests going in for fruit development in this country. I recognize it, but the Minister will note that these interests are disposing of their holdings to other people, and though it may be advisable for these interests to be able to control the sale and distribution of this fruit, I am not at all certain that it is in the interests of the small growers that they should not have an organization representing the growers themselves. There is no intention. I am perfectly certain, in the minds of the Minister or of those who take a deep interest in the prosperity of the fruit exchange, to penalize anybody, but we want to be certain that the arrangements by the board will be made in the direction of all fruit growers in this country, so that the small man can get a square deal. I hope the Minister, who has shown not only a great deal of interest in the ject, but a great deal of knowledge of the conditions of the fruit industry in this country, will use his influence to see that there is no further change in the amendments sent from another place. I am convinced that in this country we will have a great fight to maintain the fruit exchange, just in the same way as the cotton growers of Oklahoma, in the Southern States of America, had, when thousands of pounds were spent to try to break up their co-operation, and if we are not careful to strengthen the fruit exchange, you will find all the good work that has been done in the interests of every grower will be undermined. Under the circumstances, I hope the House is not going to depart from the amendments sent to us from another place.

I am not a fruit grower, but the greatest portion of my electors are, and they have prospects of producing a great deal. I feel that it is my duty to stand up for them. The organization of Koster have requested me by telegram to do my best to have the Bill amended so that the non-members of the exchange can get more representatives on the board in order to make it a more impartial body. I think it is no more than fair and right. I see no chance of voting for the present constitution of the board.

I am glad that the discussion this afternoon has disclosed that there is no disparity of feeling in regard to the two main principles of having a board of control and of encouraging co-operation, because it seems to me that if these two principles were attacked, I might as well scrap the Bill; that is to say, if that were the general feeling of the House. I think the whole question resolves itself into how this board of control should be constituted. I do not think any good purpose will be served by again discussing the merits of a State board, and by giving the reasons why the Government decided not to establish a State board. But much has been made of this question of partiality. It has been said that you must have an impartial board; but surely the fruit-growers themselves are the best judges of that. The fruit belongs to them, and what the Government is doing is to establish a board of growers themselves; so I cannot see where the difficulty is, and where all this talk of impartiality comes in. If this board, constituted, as I propose it should be, does not make a success of the whole undertaking, as regards shipping, whose loss will it be? It will not be the loss of the Government, or of anybody else, but the fruitgrowers themselves. So I cannot see why this feeling should be introduced, and that it should be suggested that this board will not represent the real interests of the whole industry. A big agitation has been aroused in the whole of the country, and telegrams have been sent, but on what does it all rest? I won’t say it rests on any particular organization, but we must either accept this principle of control, and then give the fruit exchange, who, according to my information—I am sorry my information does not agree with that of the hon. member for Cape Town (Hanover Street) (Mr. Alexander), and the information given by me to the House, has been given me by the Agricultural Department—

My information has come from Pretoria.

As regards this question of fruit, I have not dealt with it personally, but the Agricultural Department has supplied the information, and I have no reason to believe that it is incorrect. It is possible that the manner of calculating the membership may have caused a variation from the basis adopted by my hon. friend, but the fact is that the fruit exchange is the largest co-operative body in existence at present. I want to repeat the statement which I made in another place, that I propose to give the fruit exchange majority control in this board, and I hope hon. members will realize that that is in the interests of the whole industry. If this board does not do its duty by the whole industry, it stands to reason that neither this Government nor any other Government will be able to defend its actions, and will be bound to come to the House again to ask the House to deal with the whole position, and in order to assist hon. members who have difficulty, I want to say that it is not the intention of the Government to make the appointments for a long period. The first board will be appointed for a limited period, so that they will have an opportunity of proving their bona tides and business capacity towards the whole industry. I have heard in another place, and I have also heard the suggestion this afternoon, that this board will do something besides controlling shipping. It will not have anything to do with the disposal of fruit. Individual shippers will appoint their own shipping agents, and will be able to deal with their fruit as they please. The only power given in this Bill is for the board to control shipping. I do not want to go into the whole question. I think it must be clear to all hon. members who take an interest in the matter, that unless you establish some central body to control shipping, the whole fruit industry will suffer as in the past. I notice the hon. member for Benoni (Mr. Madeley) is not in the House, or I should have dealt with the argument in regard to the small man, although the hon. member for Fort Beaufort (Sir Thomas Smartt) has dealt with it. The small man will get protection. We do not want to exclude the large grower, either company or individual. They are going to be protected under this Bill, but we certainly want to protect the small producer, who has put his money into fruit growing. We do not want him to be at the mercy of the big man.

*I do not know whether the Dutch speaking members of the House want me to repeat the remarks which I have made in English.

It is not necessary, but for how long will the board be appointed?

That I cannot definitely say yet. I will consider it later, but in any event not for a very long time. I only just wish to say a few words with reference to the speech of the hon. member for Standerton (Gen. Smuts). I fully appreciate the justice of what he has said about the constitution of the board of control and that it would be a great mistake to act without consulting the interests concerned. Therefore, I will naturally consult the fruit exchange and also the interests outside the fruit exchange about the majority control of the fruit exchange on the board. It is not a matter of party or individual interests but a matter which concerns the whole fruit industry, and we are all, independently of parties, in favour of action being taken in the best interests of the industry, and that the interests of the people who are not affiliated should also be looked after. I hope, therefore, that hon. members will give us an opportunity of constituting the board. It is indeed high time that we take that step. The citrus fruits are upon us and the sooner the board is established the better.

The amendments were put and agreed to.

The amendments in Clause 2 (Dutch). 3, and the new Clause 4, were put and agreed to.

On Clause 4, the Minister of Railways and Harbours moved an amendment in the Dutch version which did not affect the English version.

Agreed to.

With reference to sub-section 3 it deals with the right of appeal from the exchange to the board. In connection with that I must again ask if no alteration can be made. If an appeal is noted against the decision of the exchange, and the board gives a judgment dismissing the appeal the decision of the board will be laid before Parliament within a week after the commencement of the following session. The difficulty is that a co-operative association may be affiliated which notes an appeal against the decision of the exchange, and that the board then gives a judgment which entirely confirms that of the exchange. It can happen, e.g., that a co-operation in the eastern Transvaal is so treated in connection with the export through Delagoa Bay, and where shall we then be if the board also declines? According to this section the decision of the board is final. The object is to create confidence in those who are not members of the exchange and to retain the confidence of the members, and this provision will not assist that.

I am sorry that I cannot accept the proposal of the hon. member for Barberton (Mr. Rood) and I will give the reason. I hope the hon. member and all hon. members in the House will agree that the fruit exchange and the board of control will act bona fide, and if he accepts that then I ask the hon. member in what position he will place the Government and the Minister if his proposals were accepted. Difference may arise between different exporters. There may be some producers who will say that special measures should be taken because an extraordinarily large citrus crop is expected and that provision for shipping space for the expected crop should be made months beforehand, because they expect a good harvest, while there will be other exporters who are not so progressive and enterprising, who take account of the eventual drought, sickness and other calamities and who are opposed to making provision so many months ahead. Now the hon. member wants the Minister in such a case to intervene. The Minister has not got the information and it would be very wrong for him to put in his oar. Any Government would, in that way, get into great difficulties. If the harvest turns out well the reproach would be that the Government has not made sufficient provision, but in the opposite event they would be reproached for having made superfluous provision. I do not think the hon. member wants the Government to bear the responsibility in those cases. The taxpayers will not approve of it. It is a matter for the fruit farmers and they must be responsible. And the people on the board will, in any case, be people to use their brains and not take a decision one day and run away from it the next. They will be responsible people. They form a public body and if they do not look after the interests of the exporters then the public will criticize very strongly. I hope, therefore that the hon. member for Barberton (Mr. Rood) will see that the matter must remain in the hands of the fruit farmers and that the Government should not poke its nose into it.

The remaining amendments in old Clause 4, the amendments in old Clauses 6 (Dutch), 8 and 9 and the new Clause 11 were put and agreed to.

I move—

The various clauses of this Bill refer to taxes, or the sources of taxation, and I am very much afraid, if we deal with the Bill first we shall be debarred afterwards from dealing with the schedule, therefore I propose that we begin with the schedule and work back to the clauses.

I have no objection. That may be more convenient.

Agreed to.

On the First Schedule,

I move—

Items 1 to 5 put and agreed to.

On item 6,

I see it is proposed to include in this schedule auction dues. I do not know what taxes exist in the other three provinces in regard to sales by auction, but we have a vexatious tax on auction dues in the Transvaal, and it is very much resented by the urban population of the Transvaal. It is an unconscionable burden upon the urban portion of the population; I speak for them alone. It certainly does cramp the field of activity of sales by auction, and our commercial life in the Transvaal and South Africa generally depends a great deal upon sales by auction being unrestricted. I hope the Minister will consider whether it is necessary to include this particular item in this schedule. I don’t know if the other provinces have it, but this tax is not one to be commended. Perhaps the Minister will give us some details of the incidence of the tax in the Transvaal, and the amount to be derived from it.

The question which at once arises in the framing of a schedule like this is whether we shall adopt the principle of saying whether this particular tax should be levied in one province and not in another. If not, I must have a general schedule and take into account the position in the various provinces as you find it. In the Free State you have that tax assigned in the original Bill of the hon. member for Standerton (Gen. Smuts) in 1913. The Free State had an old auction dues tax under the old Government, and it has been retained. In Natal it is a tax levied now, and also in the Transvaal. In any case, as far as the Free State are concerned, they could not for a moment think of surrendering the revenue which they at present derive from that tax. It is a tax which, of course, is principally paid by the rural population there and, as most taxes are, objectionable certainly, but we must take the position as we find it. I am afraid it would be impossible to omit this item from the schedule to the Bill.

I can gather from the Minister’s attitude on this question that he personally does not view with any particular favour this class of legislation.

But, of course, that is not the question.

The Minister is bound to agree that this is a particularly obnoxious form of tax. I see that in paragraph 442 of the Baxter report they specifically advise that this tax be not continued, in other words, that the power to impose this tax be not in future given to the provincial councils. The commission states that the tax is unsound. I consider it is a bad tax, and I recognize the difficulty in which the Minister finds himself, but I feel that we should enter a protest in this House as far as we can against that particular form of taxation.

I cannot refrain from objecting to this tax. I cannot understand how members for the Cape Province who allege that they represent farmers such as the hon. member for Graaff-Reinet (Mr. I. P. van Heerden), can be satisfied with this. They permit the farmers to be taxed by the Transvaal. I hope that the hon. member for Pretoria (North) (Mr. Oost) will make it clear why this tax was imposed.

To get money.

Yes, directly from the farmer. He has to pay on every basket of fruit, sheep, and head of cattle.

It must be above £5.

Yes, but it must indeed be a poor farmer who sends less than £5 worth of produce to the market. I am against this tax because it is one of the old methods of drawing rings by the one province round the other. I agree with the Minister that it is very difficult to take this away, but as the provincial councils are being treated so well, I thought that the Government would do something in the interests of the farmer to protect him when he tries to sell his produce in a good market. We say every day that the producer and the consumer must be brought together so that the cost of living may be reduced. This tax, however, does not go in that direction. The Ordinance was passed to assist the Labour party in taxing the farmers. It came from the “Pact,” and perhaps the South African party assisted, because politics was entirely mixed up there in order to have the taxes passed. The market prices in the Transvaal for cattle, etc., are already poor, and then the farmer has further to pay a tax on the sale of his produce and stock. I will vote against it on the principle that the one province should not tax the other. The Transvaal says that it requires the money, but we have entered into a Union and we want to protect the farmers. If we give ourselves out as protectors of the farmers, then we must fulfil the part. I know very well that the farmers have to pay the tax.

You are wrong.

No, I can assure the House that it is so, and therefore we must take it off if it is possible. It is not such a big tax, and why should we kill the market for the farmers?

I remember that a few years ago great dissatisfaction prevailed in the Transvaal about the tax on wool sold in Natal. When a farmer received back his wool account then an amount of ½ per cent. was taken off for tax. He could not understand that. He thought that Natal was taking up a hostile attitude against the farmers of the Transvaal, and so great dissatisfaction arose about the tax. It was regarded as a hostile attitude on the part of Natal, because the tax did not exist in the Transvaal. Then it appeared that on a certain number of articles under which wool was included that were sold by auction in Durban, a per cent. tax had to be paid. In other provinces the tax was possibly different, but it was ½ per cent. on wool which was sold in Natal. On the other hand, if a farmer sent his wool to Port Elizabeth, then he need not pay the tax. As the hon. member for Pretoria (North) (Mr. Oost) has rightly said, the tax was raised to get money. But I do not think it assists in getting money into the chest of the Transvaal Provincial Council, but rather took it out of the purse of the inhabitants. I think that a great deal—I have got the figures of the auctions tax here—comes into the provincial revenue out of the pockets of the farmers of Natal, the Free State and the Cape Colony, while the tax on wool levied in Natal is also to a large extent paid by the farmers of the Transvaal. I believe that it is in the interests of the farmers not to impose the auctioneers’ tax, because it is they who take most of the articles to the market.

It was a considerable time ago that we levied this tax and my memory is perhaps wrong about it. I shall, however, try to mention the facts in connection with the matter to put at rest the hon. members for Johannesburg (North) (Mr. Geldenhuys) and Lydenburg (Mr. Nieuwenhuize). The facts of the Transvaal are as follows: The former Government robbed the Transvaal of £750,000 by taking away the right of taxation. Something had to be done to keep the children at school and not to chase them into the veld. This tax was therefore imposed. Those hon. members do not want it any longer. What are they going to put in its place? The hon. member for Johannesburg (North) is in favour of a poll tax. There again I differ from him. At the time when this tax was removed there was also an idea to stop the importation of cattle from Rhodesia a little. The then Prime Minister said that no prohibition would be made. Then we said we would just try to get a little bit with this tax. It is wrong to say that it is a tax on farmers. He must know that there is an auctioneers’ tax on proceeds of sales over £5, namely, one per cent.

It is 2 per cent.

It may have become two per cent.

No, it is still one per cent.

My friend says that it is still one per cent.; but where he is wrong is this, he forgets that he who lives in the town pays an auction tax of 2½ per cent. from the first penny. The amount which is paid by the farmer in this tax is about one-tenth of the whole amount. Nine-tenths is paid by non-farmers. I admit that one of the reasons why the tax was imposed is what has been mentioned by the hon. member for Lydenburg, viz., that our wool farmers bad to pay a tax of ½ per cent. on the sale of wool in Durban. The Transvaal then said if Natal can go to that length let us also put a tax of one per cent. on the small things that they sell here in the Transvaal. It has a flair of provincialism, but we must remember that the shirt is closer than the coat. All our large markets are unfortunately in the Transvaal. We have all the trouble of it there. If the hon. member for Johannesburg (North) can suggest anything else in its place I advise him most strongly to do so. When the tax was proposed I also considered it unfortunate. I tried to get something better in its place but I could not succeed.

That is what the Pact has done.

It does not come from the Pact because the Pact did not then yet exist. The tax first came after the former Government had so robbed the provinces that they were forced to such action. The Government of the hon. member for Johannesburg (North) is therefore to blame for it.

The hon. member for Pretoria (North) (Mr. Oost) has said that the tax was not introduced by the farmers. He has said that he has not got the figures there. I must admit that I have not got the figures available either, but I think that it will not only be one-tenth. I believe that it will be a good deal more. The hon. member for Pretoria (North) (Mr. Oost) has said that the Transvaal wanted money to educate its children. The education of children is a good thing, and the farmers who have children must also contribute their share. We know that in the Transvaal there are large cattle markets, and everyone that sends his stock there knows that the auctioneers’ tax is not paid by the auctioneers but by the farmers. The great cattle market is Johannesburg, and the farmers from the other provinces have to pay the tax.

The farmers need not send the cattle.

Yes, Johannesburg is a large cattle market and we must send our cattle there, but we get mealies from the Transvaal and we can also tax that just as Natal can tax wool. It is a principle which has existed for a long time, and from the beginning of the Union difficulties have arisen; but it is not a nice principle to tax other people’s produce. It is not friendly and nice. The hon. member for Pretoria (North) has made no secret of it. It is a tax which is felt in the other provinces. The other provinces must pay for the expenditure on education in the Transvaal. I think it will be a very good thing if other means can be found and if this tax were abolished.

Although the hon. member for Pretoria (North) (Mr. Oost) has tried to prove that this is not a tax on the farmer, that is nevertheless the case. It practically amounts to a double tax on the farmer. The farmers sell theirs stock in Johannesburg. On his receipts he has to pay an auction tax and then again the income tax. If we bear in mind what the farmer has to pay in commission and railway rates what remains over for him after paying this tax? I am sorry that the Minister of Finance has allowed this tax to remain.

What are you going to substitute for it?

It is not my duty, but rather the duty of the Minister, to put something else in the place of a wrong tax.

The hon. member for Waterberg (Mr. van Niekerk) wants the House to understand that this tax is not paid by the farmer but by the auctioneer, that is absolutely wrong. This tax was also formerly in force in the Cape Province, namely, one per cent. on the sale of immovable property and two per cent. on the sale of movable. The auctioneer demands six per cent. commission and over and above that the two per cent. which he pays to the State, that makes eight per cent. in all in the case of movables. The hon. member has said that it is paid by the auctioneer. The auctioneer is a business man and he, naturally, passes it on to the seller. Does the hon. member think that the auctioneer will take less than six per cent. for the risk he takes on a sale, because in the Cape Province he is responsible to the seller and he has, consequently, to protect himself. If the auctioneer had to pay the tax himself then we should not find many people in the Cape Province to be auctioneers at sales. My complaint is that the Minister removes the taxes with one hand and then puts them on with the other.

No, I do not do that.

The Minister now puts this tax on the Cape Province and it is, of course, a tax which will have to be paid by the sellers. It is our duty, on the contrary, to clip the taxing wings of the provincial council where it is possible. The Government which is so often blamed in connection with this matter tried to do that. The Minister under this Bill gives a millon to the provincial council in the form of a subsidy but he does not sufficiently clip the wings of the councils. We cannot stand the taxation any longer. The provincial expenditure runs into ten millions and I say, deliberately, that we are going to bring the country into an impossible position unless we put bounds to, and reduce, it. The Minister says that it is for the education of the children. There is no one more in favour of the education of children than I, but I say that if we go further along this road we will make education unpopular with the people. I protest against these powers that are given to the provincial councils to levy an auctioneers’ tax, which will press heavily upon the farmers.

Hon. members are now arguing about this thing as if it were samething new. It is something which was passed three or four years ago by the provincial council of the Transvaal when the South African party was in a majority. There is a large cattle market in my constituency and auctioneers approached me about the matter at the time. It is precisely as the hon. member for Waterberg (Mr. van Niekerk) has said, viz., that the one per cent. is not only paid by the farmers. It is a general tax. Anything which is, e.g., sold by auctioneers in the large towns is taxed with one per cent. and much money is raised in this way. It is not at all a one-sided tax. Hon. members must also remember that in the Transvaal the large markets must be maintained. The hon. member for Caledon (Mr. Krige) has said that we spend £10,000,000 on education.

I did not say that.

If we only look at Europe a bit. I think that England alone spends £130,000,000 on education. We cannot spend too much on the education of our children. The child must have education and it must be paid for and the tax must be paid by the people. If the Union Government takes over education then the Union must tax the people for it just as the provincial councils do now. The provincial councils must have their revenue to be able to maintain schools and hospitals. There are other taxes that I don’t approve of and which are much more unpopular than this tax. Under the former Government the grants were refused and the provincial councils had either to close down the schools or levy a tax to keep the schools in existence. I hope that we are now done with the great difficulties and that the taxation in the provinces will be less in future, but I am in favour of education being maintained at any price.

In answer to the hon. member for Caledon (Mr. Krige) I want to say clearly that we do not give more power to the provincial councils. He speaks of limiting the powers of the provincial councils. He is a member of a party that was long in power and they never did it excepting in one respect when the Transvaal raised the tax from the mines. They then said that the provincial council could not tax the mining profits, but they did not say that an auction duty could not be levied. They allowed the provincial councils to retain the general power of levying direct taxation. The Minister now limits that general power, but he permits that tax because it exists in one of the provinces. He does not say, however, to the provinces, to the Cape Province, that it should also levy the tax. The Cape Province has always had the right to levy that tax and the Minister does really not take it away because it exists in the Transvaal. Now the Opposition are trying here to make capital out of the matter. I make bold to say that the provincial council of the Cape Province will levy no auction tax because the Nationalist and the Labour party are in the majority there. In the Free State it has already existed from the time before the second war of independence. I cannot understand why such a tremendous noise is now being made about the matter if it is not to mislead the unfortunate public.

The hon. members for Fordsburg (Mr. J. S. F. Pretorius) and Ceres (Mr. Roux) are trying to misrepresent things to the public. The hon. member for Fordsburg said that the tax was imposed when the South African party had a majority in the Transvaal provincial council. I admit that the auctioneers’ tax has existed some time, but the auctioneers’ tax on farmers’ produce was imposed by the provincial council of the Transvaal by the Pact party. The Labour party helped the Nationalists because the one cannot do it without the help of the other. The hon. member for Pretoria (North) was frank enough to say that the tax was imposed to get money. I do not wish to attack the hon. Minister because it is not his fault. I think that the danger of putting one province against the other by means of these taxes should be taken away. It is not right that the Cape Province should nay the tax in the Transvaal on produce which is sent to the Transvaal markets. Hon. members always refer to the matter of education. I hope that will now stop. The hon. Minister has come with a proposal to pay a certain sum to the provinces and hon. members must no longer come along with a story that our party wants to limit education. We are just as much in favour of extension of education and as to what the hon. member for Waterberg (Mr. van Niekerk) has said about the auctioneers’ tax I do not agree that the farmers who send the cattle have not to pay the tax. I have proof of it that the farmers of Cape Town or Natal who send their cattle to the Johannesburg market very substantially pay the tax.

The hon. member for Johannesburg (North) (Mr. Geldenhuys) now pretends that we are egging on one province against the other. The tax is also laid on the inhabitants of the Transvaal, and how can he say then that we make up the one province against the other? If the other provinces want to come and sell their produce in the Transvaal, then they must be prepared to pay the taxes of the Transvaal Provincial Council. But the hon. member must remember the happenings and the circumstances that drove us to that. When we were sitting in Opposition the South African party Government suddenly took away £750,000 from us, being the tax on the mines and on the natives, with the result that the Transvaal for a time could not pay its teachers. It was in that difficult time that this tax was levied. Members from the Cape Province are concerned about the tax, but the Minister does not propose that it must be imposed here. He simply gives us the right of retaining the powers which we have always enjoyed in the Transvaal. It is true that taxation is unpopular with the public, but we must not forget that we have to pay the teachers. I send my produce to Johannesburg and I willingly pay the tax for the education of the youth, because if the auctioneers’ tax were not there some other would come in its place. Why should hon. members from outside now object to it? The hon. member for Johannesburg (North) lives in the town, and he denies that only one-tenth is paid by the farmer. I say that it is much less still, because just look how many bankrupt sales there are in the towns and villages, nor do the farmers send all their things to the Transvaal. The speculators come and buy them up and then sell them in Johannesburg. It is useless for the hon. member to try and frighten us with that tax. The Transvaal has not a good market for wool. It has to send it to Durban and is there taxed ½ per cent. If the other provinces, therefore, want to send their stuff to a good market in the Transvaal, then they must permit us to levy a tax on it, seeing that our own people have to pay one. It is no good standing here and sparring about the tax, because the hon. members cannot suggest another which the hon. Minister can put in its place. The taxes on gold and natives have been taken away, and I am glad that the Minister has gone so far as to fix a list of taxes. The former Government said that anything could be taxed, but excepted gold and natives. The Baxter report only left the land tax. Is the hon. member in favour of that?

Yes, I am in favour of it.

Our farmers would rather have an auction tax. We are thankful that the Minister has had the courage to fix a list of taxes and that he gives the same rights to the various provinces.

When the Bill was passed in the Transvaal that the hon. member for Johannesburg (North) (Mr. Geldenhuys) is screaming about, namely, the auctioneers’ ordinance, I was one of the persons to help to put the Ordinance through. I will just give the reasons for this Bill. The provincial councils of the Transvaal spend a large sum of money in native education. The provincial council then raised a tax by which we should get an amount from the natives to meet the expense thereof. But the former Government deprived us of that, and the provincial council was even compelled to pay back taxes which had already been collected under the Ordinance. Then we raised the tax on the profits of the gold mines, but the former Government, of which the hon. member for Johannesburg (North) was a supporter, took it away, and the only thing in the circumstances was a tax on the public. Thus the best means had to be found by the provincial councils to get money, and this tax was imposed. The intention of the former Government was to push the provincial councils into such difficulties that the abolition of them could become acceptable. I should like to know from hon. members opposite why the former Government never stopped the Transvaal Provincial Council when it taxed the public. We could tax the public as much as ever we wished, but as soon as we taxed the natives, who enjoyed all the advantages of the province, together with whites, then the South African Government intervened. As soon as we wanted to tax the mines the South African party intervened and protected them.

The present Government has not yet altered that.

That will yet come to pass. As soon as we taxed the public the members of the South African party allowed us to continue and only tried to make political capital out of it and to say to the public: This is what the Transvaal Provincial Council does. In the circumstances, the auctioneers’ tax is a very good one, and the hon. member for Johannesburg (North) has not the least ground for saying that the tax in the Transvaal is unpopular. The people themselves have given the verdict and approved the tax, because just after the imposition of the tax we had the election, and the population of the Transvaal sent the Pact back with 30 out of the 50, notwithstanding the fact that the South African party used the matter as much as possible against us. The public are satisfied that no other solution is possible. I also represented a country seat in the provincial council of the Transvaal, and the farmers of my constituency approved of the tax and paid it with the greatest willingness. The tax was necessary in the Transvaal for the education of the children. I do not know whether hon. members opposite want to retard the development of the future generation by saying that money spent on education is wasted. It may perhaps be said that the system of education should be altered, that, e.g., more technical education, or more industrial education, should be given, but hon. members opposite cannot indicate how money has been wasted. Nor can they object to the salaries of the teachers. I challenge any man to point out where money has been wasted. My view is that the teachers are paid far too little. The occupation must be made attractive to obtain the best men for the education and training of young South Africa, because the education of the young is a very important matter.

Item agreed to.

On item 7,

I have a slight amendment to propose on this item, the latter portion of which deals with the control, regulation and restriction of horse and other racing, and betting and wagering, and the regulation of dissemination of information as to betting and wagering. I move—

The reason why I move this is because it has been held by our Supreme Count (Appellate Division) in many cases that the power to regulate does not involve the power to restrict or prohibit. It may very well be that a provincial council may in its wisdom decide that the dissemination of information of this sort is a thing which should be restricted, if not altogether prohibited.

This is a financial measure, a taxing measure.

No, it is more than that; it deals with the control, regulation and restriction of horse and other racing. It is an amendment of the Financial Relations Act, and it will be from the schedule that the provinces will get their power to deal with horse racing—

Not to deal with it, but to raise revenue. This section details the services in respect of which provincial councils may raise revenue.

“Together with the power to legislate in respect thereof”.

In respect of the raising of revenue. In some cases they may raise revenue, but they cannot legislate in respect thereof.

Speaking from my knowledge of many provincial council laws which have gone to the higher courts, I think I am right in saying that under this schedule the provincial council will get this right to control horse racing and betting and the dissemination of betting news. At any rate this amendment is going to do no harm, because it will give the provincial councils, if they wish, the power to restrict the dissemination of information of this sort. Standing as it does now, merely giving them power to regulate, they will have no power to restrict. The Minister may take it from me that our Appellate Court decided in regard to a Cape betting statute that mere words giving the power to regulate did not imply the power to restrict. No harm can be done by putting in these words. It would merely give the provincial councils power, if they wish to restrict the dissemination of this information, to do it. If the Minister is right then the words “and restriction of horse racing and betting” are unnecessary in the line above. I trust the Minister will accept this amendment.

I move the deletion of section 7 of this schedule.

The hon. member can vote against it.

I shall vote against this item and in doing so I am sure I shall be supported by all horse-breeders in the Union and the racing public. Recently the horse-breeders of South Africa appointed a deputation to interview the Minister of Agriculture and point out to him the danger that was occurring through this unfair taxation, and they laid before the Minister the views which I expressed to this House on the second reading of the Bill. I hope that this House will support the rejection of this clause, and allow the central Government to impose any taxation of this kind. I am sure that the horse-breeders of this country and the racing public have more confidence in the fairmindedness of this House than the way in which the provincial councils are dealing with them at present. We shall then be able to preserve our horse-breeding.

I should like to ask the Minister what are his views?

I do not think it can do any harm.

It seems to me that the object of all these clauses is to show the sources and manner by which provincial councils may raise revenue with power to legislate in respect thereof. If they are going to have the right to legislate in respect of the restriction of racing news, it appears that they will take the power to charge racing people or newspapers for permission to publish such news. It seems to me that it is a power which the provincial councils ought not to have.

I do not think the hon. member quite appreciates the point I was trying to make. This schedule gives power to legislate in regard to the matters set out in it. All I want is that the provincial councils should not only have power to regulate the dissemination of betting information, but shall have power if they so wish to restrict it. I remember that in the Transvaal some years ago we did have legislation, which restricted the publication of information with regard to betting in the papers, and I think it was very wholesome legislation. If the provincial councils wish to do that, why should they not have the power to do so? If the people of a province regard betting as such an evil that they should restrict the publication of betting information, why should they not have the power to do so? The hon. member for Durban (Central) (Mr. Robinson) says this does not come under this schedule. Well, if that is so, why does the word “restriction” appear in the line above? As the Minister says, it can do no harm, and if it is right to put it in with regard to the one thing, it is right with regard to the other.

Amendment put and agreed to.

Item as amended put and agreed to.

On item 8,

With leave of the House, I move—

My reason is that under this clause is incorporated a very pernicious principle of double taxation. This clause, if legalized, would give the right to the provincial councils to levy 20 per cent. on the amount paid by the individual in income tax and super tax. A very bad principle is incorporated here, and we should mark our disapproval of it by deleting the power sought to be given to these provincial councils in this clause. In the case of bachelors, spinsters, widows and widowers, the councils have the right to go up to 30 per cent. I am not here to protect this section of our community in particular, but I do not see why they should be specially penalized under this pernicious principle. It is argued that the councils had the power before, so why not again. The circumstances are entirely different. The Minister under this very Bill takes power to give to these councils a grant of £1,000,000 extra per annum. Unless we agree to curtail the taxing powers of these bodies I am afraid that ere long we are going to put this country in an entirely impossible position from a taxation point of view. Therefore, I say that this power should not be given to these councils. You virtually say to the councils, you are going to make good all their deficits, you are going to give them a new start with a sum of £1,000,000, and I dare say in years to come that amount will be considerably augmented; and yet at the same time you are giving them what I call very extensive taxation powers. If you think it is right to give them this enormous sum of £1,000,000, then at the same time you should curtail their taxation powers. Some hon. members blame this side of the House that the councils were not interfered with when we were in power. What we did then was to try and throw the onus of imposing taxation and of finding the money upon the councils. We forced them to economize; but here the Minister is giving them this tremendous sum of money and yet is not curtailing their taxation powers. That, to my mind, is courting them to come along and exercise more taxation powers. We should mark our strong disapproval of this and should not sanction double taxation. In the first place it is a bad principle; and, secondly, we as a committee dealing with the interests of the taxpayers should now take this definite stand that when we agree to give this sum of £1,000,000, on the other hand, in a certain measure, we should be prepared to protect the taxpayers of this country.

If there is anything that should come out of this particular item, it is the words at the beginning, “taxes on individual persons.” I take it that the hon. member, judging by his speech, is in favour of the poll tax, whether they can pay that tax or not.

No, I am against that. If you will move accordingly I will support it.

In my opinion it is needless for us to discuss the principles underlying the items contained in this schedule. These are matters for the people in the various provinces to settle for themselves. I am prepared to join in any agitation in the Transvaal against the poll tax, but if the people in the Transvaal elect a provincial council and are prepared to allow that council to inflict a poll tax upon them, that is the trouble of the people in the Transvaal. In connection with the item on which the hon. member has moved his amendment, we know that unless people are in receipt of an income which leaves them open to pay income tax to the Union Government, they are not liable to pay any tax to the province; therefore this tax, which the hon. member wishes to curtail, falls on the shoulders of those best able to bear taxation, namely, those who have an income sufficient to enable them to pay income tax. In the case of the poll tax, it is levied at so much per head on every individual, and people may not have the wherewithal to pay the tax. If you are going to remove words from the item, I suggest that the question of the poll tax be taken up. Perhaps the hon. member for Bezuidenhout (Mr. Blackwell) will move an amendment in that direction.

Why should I do your work for you?

I withdraw that suggestion, because I was giving the hon. member credit for being the real democrat he professes to be; but I withdraw the compliment. As far as I am concerned, I am prepared to leave these items to the various provinces and leave them to fight their own battles in their own way.

I would be glad if the Minister would give us some enlightenment on the point I raised on second reading, that is, with regard to income tax. You will get individuals and also companies who are trading in all the provinces of the Union. Is each provincial council to have the right to levy 20 per cent. of the amount paid to the Union in income tax? I take it that the position will be that the provincial council will only be able to levy tax on the income earned in that province. It seems to me that, under the wording of this Bill, you could get each of the four provinces levying income tax of 20 per cent., so that 80 per cent. would be levied in all.

We will discuss that when we come to the limitations.

Well, I will leave it at that.

So far as I can see, the item does not add to the powers of the provincial councils, because under section 85 of the South Africa Act, they can impose income tax, and I do not see the need to limit them as suggested by the amendment. I wish to draw attention to a very serious error in items 8, 9 and 11, which might possibly lead to none of this revenue coming in at all. I think it is a clerical error, but it appears to be deliberate, because it occurs so often: “Sub-section (4) of section 11 of this Act” is referred to, but that sub-section does not exist.

We are amending that.

But the time to amend that is now.

I intend moving an amendment.

I think that one of the chief arguments why this tax can be accepted is that advanced by the hon. member for Aliwal (Mr. Sephton), namely, that the collection of the tax is so easy. The provinces can simply levy a certain percentage of the amount which is payable to the Union Government. But I have an objection to a small part of the Dutch text, namely, the translation of the words “individual persons” by “natuurlike personen.” I admit that unnatural persons should be taxed more, and I move accordingly.

I believe that the proposal of the hon. member for Pretoria (East) (Mr. Oost) to translate the words “individual person” differently is superfluous. If I remember rightly these words were settled in Select Committee as they have been translated. I recollect, e.g., that the question came up in the Select Committee on the gold law and that a remark was made on the words “natuurlike persoon.” But it then appeared that that was the correct Dutch translation for “individual person.” That is, moreover, the opinion of the draftsman and if hon. members will read through the Dutch Acts they will find that “natuurlike persoon” is the correct translation. But what, in my opinion, is of more importance, is the difference between the Dutch text and the English text. The English text says that both can be taxed, i.e., both the person and his income, while the Dutch text says “the person or his property.” There is thus a mistake in the translation here. I say this without dealing with the principle because I agree with what the hon. member for Caledon (Mr. Krige) has said. I also think that it is a wrong principle to say that the person as well as his income can be taxed. But to obtain good editing of the text I move to amend it.

I agree with the amendment of the hon. member for Caledon (Mr. Krige). Under the schedule our farming friends are going to escape pretty well scot free, as they will be able to postpone the payment of the income tax for a considerable time or get out of paying it altogether. Thus, an additional burden will be placed on the towns as against the rural areas. I also strongly object to double taxation on the same items.

The hon. member for Berea (Mr. Henderson) says that farmers don’t pay income tax. I hope he speaks for Natal only.

I did not say that.

The farmers in Natal last year returned £300,000 in income tax, while the Free State farmers returned £1,348,000 and the Cape Province farmers £1,373,000.

The Minister the other day expressed himself very strongly against the duplication of taxation, but in my opinion it depends on the nature of the tax you propose to impose. I think we could not have a more legitimate means of taxation than the income tax and I am very far from being in agreement on this question with the hon. member for Caledon (Mr. Krige). The income tax is a fair tax because it taxes people according to their ability to pay. If farmers escape the payment of income tax then the leakages should be closed. If a company requires more funds it does not pick out a particular class of its shareholders to make up the amount, but levies equally on all, and that is what a Government should do. I asked the Minister whether the provincial councils would use the present machinery for the collection of income sax, but he did not reply. If the Government is genuinely anxious to effect an economy they can do so by collecting income tax for the provinces and handing the money over to the provinces, should the latter decide to impose an income tax. We know that money is required for educational purposes chiefly, but it is not fair that a certain class of people only should be selected (to supply the necessary funds. Under the old system in the Cape Province many well-to-do persons, such as professional men, bankers, and speculators escaped payment.

I think that we should all like to be free from taxation but we cannot, and I think that it is necessary to emphasize the fact that we must have taxation. The hon. member for Aliwal (Mr. Sephton) has made certain observations, and I can say that that is one of the reasons why we impose the tax in the Free State, that it can be collected so easily. We can use the same machinery as the Union Government. We know that a portion of each new tax goes into the pockets of the tax collector. We imposed it in connection with the education of our children because we wanted every person living in the province to contribute his share to the education of our children seeing we have free education there. If the Free State may not levy any poll tax, nor this tax, then we shall have to have recourse to a land tax and a house duty in the villages. Whether I have to pay on my ground or a double income tax makes no difference. I have to pay it all the same. We cannot only tax one class, it must be applied to all. We obtain about £88,000 from the tax in the Free State. No, as one of the provinces where it existed, the Free State is entirely satisfied with this tax. The objections are unsound, seeing that we must in any case be taxed.

The hon. member for Harrismith (Mr. Cilliers) clearly does not understand the position in the Cape Province. In the Cape Province the farmers at present pay two public taxes, namely, the education tax and the road tax on their ground, and then they pay yet a third tax, the municipal tax, as well. That is the peculiar position in the Cape Province, and now the provincial council will have the further right to tax our farmers and townspeople to the extent of 20 per cent. over and above the income tax. It is easy to say that if the land tax is imposed it will be unnecessary for the provincial council to levy the income tax. Our experience of the Cape provincial council is just the opposite. The more rights of taxation that are granted the more taxation is imposed. The position in the Cape Province will in time become impossible, and now that the hon. Minister has given the large sum to the provincial council of the Cape Province the time has come to reduce the taxing authority of the provincial council, otherwise, in my opinion, as a farmer and a man of business, the position of the taxpayer will in time become impossible.

I think that the Minister here agrees to a tax which will be identical for all the provinces. If we do not agree to it we shall have to give sources of taxation to one province that the other does not possess, because in the Free State we do not impose a land tax. The provincial council dare not do it. It is not necessary for the other provinces to impose another tax seeing they have other sources of taxation. If they do not want it they can levy a land tax, and if they impose that then they can abolish the land tax.

I want to reply to the question of the hon. member for Aliwal (Mr. Sephton). We do not propose to make any alteration in regard to the existing practice of the collection of taxes. The tax exists in the Transvaal and the Free State, and is being collected by the inland revenue authorities. It would be uneconomical if the provinces had to set up their own collecting machinery. I do not know if it is necessary to discuss generally the question again. We did that on the second reading of the Bill. We are simply giving to the provinces a certain choice as to the taxes to be imposed. Hon. members say don’t schedule the land tax; others have an opposite view. My idea is to leave it to the provinces to select their own tax. The Free State may select the income tax instead of the land tax. I understand from the member for Caledon (Mr. Krige) that in the Cape they don’t mind the land tax, but they do mind the income tax. The hon. member for Harrismith (Mr. Cilliers) is right in saying that we should give them the choice. It would be impossible to delete both taxes from the schedule. None of the provinces would be in the position to find the necessary revenue if you do not schedule one of the taxes or both, and allow the provinces to select.

They may impose both.

I can’t help that. You must leave it to the provinces if you give them popular government. If they want to be so unreasonable and impose both, it is a matter for the particular province concerned. May I move, to meet the point of the hon. member for Cape Town (Hanover Street) (Mr. Alexander), this amendment-—

In regard to the amendment of the hon. member for Pretoria District (North) (Mr. Oost), the item as printed is a translation by an officer of the department who is supposed to have gone into the matter, and we understand from the hon. member for Lydenburg (Mr. Nieuwenhuize), who is believed to be an authority on the matter, that it is a correct translation. It would be rather dangerous to depart from that.

With leave of the Committee, Mr. Oost withdrew his amendment.

Amendment, proposed by Mr. Nieuwenhuize, put and agreed to.

Amendment, proposed by Mr. Krige, put and negatived.

Before you proceed further, Mr. Chairman, I have another amendment to move. I did not wish to move my amendment until the amendment of the hon. member for Caledon (Mr. Krige) had been decided upon. Now that the House has decided not to accept his amendment, but to keep these words, I want to raise another point in connection with this item. Reading this item in conjunction with sub-section (4) of section 11, it seems to me that there is no reason why each province should not set up for itself an entirely separate and independent income tax law.

No.

Hon. members need not say no. That is the legal effect of the item as it stands now. The amendment I am going to move is with a view of making the position perfectly certain. If we give each province the right to create an independent income tax law, we might get a very curious state of affairs. One knows that these provincial councils are inclined to do curious things at times, and we might get one province passing an income tax law which differed entirely in its incidence and its general characteristics from our own Union Income Tax Act Act. We might get one province making a discrimination between “earned” and “unearned” incomes. We might get another saying that farmers’ incomes might be exempted, while in another we may have an exemption up to £1,000. If I am right in assuming that the intention of the Minister is that the provinces shall have the right merely to impose a sur-tax on the existing Union income tax, payable in exactly the same circumstances, then I am right in pointing out that that purpose is not effected by item 8 as it now stands, because it gives the power to impose a tax on individual persons and on the incomes of individuals, and the only limitation is that it may not exceed 20 per cent. of the Union income tax. To meet that position I move—

I am afraid I cannot accept the amendment. Certain of the words now proposed to be omitted remain part of the schedule according to the vote already taken.

The amendment proposed by the Minister of Finance put and agreed to.

Before you put the item, Mr. Chairman, one point I do not quite follow is this, that in answer to a question by the hon. member for Cape Town (Central) (Mr. Jagger), the Minister said the intention was that a province should not be able to levy income tax on any income other than that earned in the province. Now our Union income tax form provides that the Union income taxpayer shall declare the income which he earned within the Union, that is in all the four provinces, and the Minister told my hon. friend the member for Aliwal (Mr. Sephton) that he proposed to continue the present system as it exists in the Transvaal, namely, that you automatically pay a surtax on your Union income tax. Let us take the position in the Transvaal. If I am domiciled in Johannesburg and earn income in the Transvaal, Natal and the Cape as well, I simply make one Union income tax return, and I am assessed. I do not give details as to locality, but as to the class of income I earn. To take my own case, I might have professional work at the Cape when I am here, but I bring it up with the rest under the heading of professional income and pay Union income tax on it. When the provincial council comes along I pay my 15 per cent. on the whole of the tax I have paid to the Union income tax collector, and therefore it seems to me that the answer of the Minister is inconsistent. If the Minister tells the hon. member for Aliwal that the existing machinery is to be continued under the new arrangement, as in the Transvaal, and that you will automatically pay on the whole of your income tax payment—

That is not machinery.

Then it seems to me the whole of the machinery will have to be recast. The existing income tax form does not provide for the distributing of the income throughout the different provinces. One simply makes a Union income tax return showing the heads under which one’s income has been earned throughout the Union. Is it not the Minister’s intention that if I am domiciled in the Transvaal, and earn my income in various parts of South Africa, the Transvaal will be able to impose a surtax up to 20 per cent. on the whole tax I pay to the Union?

No.

Well then, I think appropriate words should be inserted in this item of the schedule, to indicate that a province may only tax on income earned in that province. I do not see these words here now, or anything which will restrict the provinces in that way. In the ordinary way, if I am domiciled in one country and earn income in different countries, I am liable to be taxed at my domicile on my total income. I would like the Minister to tell us how he is going to meet that particular difficulty. I give him the assurance that at this moment, in the Transvaal, we pay provincial income tax on the whole of our Union income, wherever it may be earned. No machinery exists for making such a distinction as he suggests. I pay provincial poll tax, and surtax on income tax, on the whole of my income wherever earned in South Africa

This is a very difficult question and one which was considered in Durban. We pointed out how, under the existing state of affairs, there was over lapping, and what I suggested to the hon. member for Port Elizabeth (South) (Sir William Macintosh) was that we should try, when we came to the limitations in the body of the Bill, to get something to meet that point of view. The idea is not to allow the provinces to tax income earned outside that particular province.

You can simply put in the schedule “income earned within the province.”

I am prepared to make that clear. The provinces all agreed that they would see that, so far as this tax was concerned, there would be no overlapping. We had the Case of civil servants in the Free State being taxed on income earned in the Transvaal, and the provinces promised to rectify that anomaly. I shall consider the point and we will try and see whether we cannot devise something when we come to the limitations. It is impossible in a schedule like this to deal fully with the matter. The Government will scrutinize any provincial income-tax measure, and if the provinces impose any unreasonable conditions the Government need not sanction such a measure. I do not see how we can call it a surtax, which, technically speaking, is a tax levied by the same authority that imposes the main tax. The only limitation we can lay down is as to the amount. We want to affect the rights that the provinces enjoy under the existing legislation as little as possible. If the provinces wish to exempt certain people they must have the right to do so, the only limitation we put on being as to the amount. As regards the amount of income earned in different provinces, I think the point raised by the hon. member for Bezuidenhout (Mr. Blackwell) is very reasonable, and I will assist my hon. friend to achieve that when we come to the body of the Bill.

I think the hon. member for Bezuidenhout (Mr. Blackwell) is in error in regard to provincial income-tax. I pay provincial income-tax in the Transvaal, but only on that portion of my income which is earned in the Transvaal.

I think the Minister has raised a very important matter by his reply. Apparently it is his intention that each province shall be able to pass its own separate income-tax law.

As two provinces have done already

What the Transvaal does is to say to a taxpayer, “If you pay £100 in Union income-tax you automatically pay 15 per cent. of that to us,” but the incidence of the tax is precisely the same in the Transvaal as in the Union. The Minister is going to irritate the public and to complicate this question if one has to fill up different sets of forms, while the exemptions may be entirely different, and different income-tax appeal courts may be established. To allow the provinces—and we know what curious bodies some of them are—full power in this matter is most unwise. I have heard bitter complaints from farmers in this House against the income-tax law on the ground that it is already sufficiently complicated, and yet the Government is going to allow the provinces to impose income-taxes on their own. I think we shall be wise in saying to the provinces, you can take a percentage of the income tax we collect, but it must affect the public in the same way as our income tax, otherwise you will be getting the same position as in Australia, where they have to pay a State income tax and a Commonwealth income tax, and the incidence of the two is, I think, different. I think we should consider the matter very carefully and not forget that the Minister says the Union income tax authorities are going to be the authorities vested with the collection of the tax. You may have the same officers having to administer two entirely different laws in the same province. In the Transvaal at present they are not. If we extend the power to the other provinces it should be on the same lines as the Transvaal.

Item, as amended, put and agreed to.

On item 9,

I move—

In the case of mutual insurance companies the limitation must not exceed 20 per cent. of the investment arising in the province. The other is merely to meet the point of the Transvaal where they have a minimum tax on all kinds of companies, which they wish to retain. If a company does not make a profit they are contesting the legality of it. We want to legalize the tax now in the case of other companies.

Business was suspended at 6 p.m., and resumed at 8.5 p.m.

I hope the committee will not think that one is going too much into technical detail in considering these matters, but I have to point this out to the Minister and to the committee that the actual wording of this schedule in so far as it confers enabling powers on the provincial council to pass taxation, will undoubtedly be the subject of very minute scrutiny by our courts in future. Since we passed the Financial Relations Act of 1913, and there gave the councils power of direct taxation, there have been dozens of cases deciding whether or not a tax came within the limit of authority conferred on the provincial council to impose that tax. I think we should give the very narrowest scrutiny to the actual wording of these particular enabling sections, apart altogether from the merits of the taxes which they authorize. Section 9 confers on the councils the option to impose a tax either on the income or on the profits or on the dividends of a company; that is to say, a three-fold option is given to the provincial councils. Again I plead with the Minister to consider very seriously whether there should not be uniformity between the provinces and the Union in regard to this tax on income, whether in the case of private individuals or companies. The Minister, the more he considers this matter, the more, I am sure, he will realize the difficulties that really will attend him if he is going to allow a different form of taxation of the same kind in the provinces and the Union. Take a company. If a company is told that it has got to pay Union tax and on top of that to pay a surtax on that Union tax to the provinces, it knows exactly where it stands, but if it is told that it has to pay Union tax of so much arrived at in a particular way, based on a particular form of assessment and the company is told that it has to pay a tax to the province based either on income or profits or dividends, but arrived at in a wholly different way, with different machinery, a source of endless irritation and vexation is created. The more the Minister reflects the more, I am convinced he will see that it will be almost impossible to draw a line between income earned in the province and income not earned in the province. Let me give one illustration. Where do I earn my Parliamentary salary? Is it earned in the Cape Province or in the Transvaal Province?

Is it earned at all?

I am discussing a serious question. It is a very serious difficulty. Where is a company that carries on its business with branches all over the Union earning its profits dividends? Take the Minister of Posts and Telegraphs, where does he earn his salary—in Natal, in the Transvaal or in the Cape? Is a company, in future, to open a fresh set of books and say so much income is earned in the Transvaal and so much in another province? Will the hon. member for Brakpan (Mr. Waterston) tell us whether he considers his Parliamentary income, well earned as it is, is earned in the Transvaal or in this province? The Minister of Finance has not considered this matter enough.

It is earned where you live.

On what authority does the hon. member for Christiana say that? The Minister said if you earn a portion of your income outside the Transvaal province you need not pay provincial income tax on that. I should like to give an instance from my own experience. I happen to do some legal work in the Cape Province and up to now I have been making a return on that for income tax purposes. The Minister has now told me what I did not know before, that I need not pay the Transvaal 15 per cent. on that portion of my income earned in this way in the Cape Province. I did not know that before and many other hon. members did not know it. Again and again members of the legal profession centred in one place happen to go out of the province to do work. A doctor in the Transvaal may be called out to the Free State and earn a fee there. We are faced with all sorts of difficulties. My advice to the Minister is that where a man resides and pays his Union income tax, if that province imposes a surtax let it be on the whole tax. The whole question does bristle with difficulties. I do not think it can be dismissed as lightly as the Minister did dismiss it before we adjourned.

I should like to propose an amendment, namely—

The mineral rights in the Transvaal actually belong exclusively to financial companies. It does not cost a penny to hold them and the last rests on the taxpayer. The Transvaal provincial council once appointed a commission to suggest taxation proposals and the commission unanimously recommended to levy a tax on mineral rights but the former Government prevented the provincial council from doing that.

I think that I must consider this matter but I think that I can say that mineral rights are a part of fixed property and that the rights will fall under another section where the provincial councils are given the power to tax fixed property. Minerals are reserved upon a sale and yet they are a part of the fixed property.

I do not agree with what the hon. Minister has said. By fixed property is surely understood the surface and if fixed property is taxed then the surface is understood by that term.

I would like to say something with regard to the right we are giving to the provinces to levy a tax on dividends. As I see the facts they are something as follows. At the conference to which the Minister went to meet the provincial executives he agreed to give the right to levy 20 per cent. of the taxable incomes of companies when the taxable income was 1s. 6d. in the £ and in addition he gave them the right to levy a shilling in the £ on dividends paid. Since that date he has decided to do away with the dividend tax and raise the income tax ratio to 2s. 6d. in the £ which gives them the right to levy not 20 per cent. on 1s. 6d. in the £ but the right to levy 20 per cent. on 2s. 6d. in the £. He has still left them the right to levy up to 1s. in the £ on dividends. A shilling in the £ on dividends is roughly 1s. in the £ on 60 per cent. of the income. On an average it will be found that companies—I am speaking of commercial companies—pay out over a series of years roughly 60 per cent. to 66⅔ per cent. of the profit. Therefore he has allowed the right to the provinces to tax 20 per cent. of the income and in addition the dividend tax has mulcted the companies 8d. in the £ at least on income. It seems to me most unjust. I do not see the object of this discrimination against the limited liability companies. It is not a crime to have money invested in a limited liability company. There is no reason why a man who earns his income from limited liability companies should be specially taxed, very much more heavily than a man earning his income from any other source. To me it is most unfair discrimination and I do not think the Minister appreciates what has really happened. His object, if you read the Bill, is to give the provinces the right of levying income tax up to 20 per cent. of the Union tax. If that is necessary I say by all means go ahead; but it is quite unfair to take a single class of investor and say in addition to the 20 per cent. you have to pay 1s. in the £ on 60 per cent. of your income. It seems to me a most unfair arrangement. It means that on 60 per cent. of its income a company is going to pay 3s. 6d. in the £. It is an impossible levy to make on limited liability companies and it means that private individuals, at present private firms, will be debarred from turning their companies into limited companies because of the extraordinary and unfair taxation placed on such companies. I would suggest that this clause would be very much clearer if it could be worded somewhat on the lines mentioned by the hon. member for Bezuidenhout (Mr. Blackwell) that the provinces should be allowed to levy a tax of 20 per cent. of the Union Tax on the taxable amount of the income of any individual or company; then everybody would know what was meant. I think that is what the Minister really means to do, but I am so afraid that owing to the intricacy of the wording of this clause he will find when it becomes an Act that he has done something entirely different. I should like to say one thing in regard to the remarks of the hon. member for Bezuidenhout. It is not at all clear in this Bill that each province will not be able to levy the 20 per cent. of Union Tax and 1s. in the £ dividend tax. Unless the clause is amended so that it is quite clear that the province can only levy tax on the income arising within its borders—for it is not at all clear that that restriction is put on a province—you may have a province levying tax on income accruing to a person from sources and quarters outside the particular province in which he resides. You may have one province passing an ordinance in which income is charged whether it arises in the province or outside. The next province may pass an ordinance under which tax is levied only on income earned within that province. The result would be dire confusion and some people might be charged practically double taxes. I do urge the Minister to make this clause standard with his general income tax intentions, that is, the words “or on the dividends” in line 1 of clause 9 be deleted. I would move—

The CHAIRMAN put the amendment by Mr. A. S. Naudé.

On a point of order, Mr. Chairman, that does not read sense. You cannot have dividends on mineral rights.

“On dividends of companies or mineral rights.”

May I suggest that the hon. member for Wakkerstroom (Mr. A. S. Naudé) should say “reserved mineral rights”? It is a matter which comes up frequently in the Transvaal.

The hon. member for Wakkerstroom (Mr. A. S. Naudé) wishes the words inserted “and on reserved mineral rights.” The hon. member for Newlands (Mr. Stuttaford) moves in the first line to omit the words “or on the dividends.”

I want strongly to support the amendment of the hon. member for Newlands (Mr. Stuttaford). The Minister of Finance has taken the matter of dividends out of the ordinary income-tax, because he says it is not a fair form of taxation for the central Government, and has put it on the profits of the companies. Why not apply the same principle as far as the provincial tax is concerned? The same officials would get it up. It would simplify matters and work much better, and the Minister would really make more by putting them all on the same footing.

The difficulty is that it will mean that some provinces will have to introduce new legislation—the Free State, for instance. I thought it unnecessary to disturb the existing state of affairs. If they wish to retain the status quo, why force the provinces to have uniform methods of taxing incomes? One province may not wish to avail itself to the full extent of the rights given to it under the Union income-tax legislation.

My hon. friend is not consistent. He has introduced a new system of taxing companies, because he says the present system is not equitable, as a certain amount of evasion takes place. If it is good enough for the Union Government it should be good enough for the provinces, and I think they should jump at it. If this is pointed out to the provincial councils, they would, without the slightest delay, alter the law to make it the same as we have here. Why, further, should the other provinces have to levy this tax simply because the Free State has adopted it? If you think you are getting too much money, make a lower rate. Then, furthermore, it is simpler for the taxpayer himself. Why should he pay, on his investments in companies, one rate so far as his Union tax is concerned, and pay in another way so far as the provincial tax is concerned? I think the advantages are so outstanding and consistent with the policy of the Minister that he should not hesitate and should get the Free State to alter their legislation.

The reason why they tax dividends to-day in the Free State is because it is the law to-day in the Union Parliament, and they have followed the same lines as the Union Parliament. If the Union altered its system of dealing with this income-tax, the provinces, for convenience sake, would be bound to follow the same method. It would lead to tremendous expense of administration, if every one of the provinces is going to take the dividends of all the companies trading there and tax the small portion that arose in their province; so I think the provinces will have to go back on their Ordinances and bring them into consonance with the Union Act, I would like to point out to the Minister that if he is going to do what he suggests in clause 10, he must reduce the maximum that these provinces can levy; because, take the case of a company which pays out in dividends between 60 and 66⅔ per cent. on an average in dividends. That means that the Minister of Finance has given the provinces the right to tax up to 20 per cent.—6d. in the £—on their total income. He is then going to give the provinces the right to tax a shilling in the £ on 60 per cent. of the total income, which is another 8d. on that total income. He is going to give the right to tax them 1s. 2d. to 1s. 3d. in the £—that is practically 50 per cent. of their Union income-tax. I ask the Minister what equity is there in saying, if you are a private individual, the province can tax up to 20 per cent., but if you put your money into a limited liability company, the province has the right to tax you 50 per cent. If 20 per cent. is a fair amount for the provinces to be able to tax a private individual. 20 per cent. is the only fair amount for the provinces to be allowed to tax a company. The Minister has given the right to tax a company 50 per cent. of the Union income-tax, and I say it is grossly unfair to an investor or an owner of shares in a limited liability company.

I should like to emphasize what has been said by the hon. member for Cape Town (Central) (Mr. Tagger). To allow the provinces to set up different taxation for the same purpose is bound to lead to confusion. Some time ago, I was asked to prepare for an American company a statement of what a company had to be prepared to pay in the way of taxation if they started business in any of the four provinces. If such a company had to be told that they would have to pay, first of all, a Union tax, and that if they go into province (A) an income tax, and if they go into province (B) a dividend tax, and if they go into province (C) a tax on profits, surely it will be seen that the whole matter leads to confusion, which is most undesirable. We do get back to this, that the Minister should make this tax a rateable surtax on the Union tax which should stand or fall with the Union tax. That is how it started in the Transvaal, by imposing a surtax on the income tax, and we are legalizing that now. I am not now questioning that, but we want to arrive at the most practical way of doing it. To allow a province to set up its own tax, differing from the Union tax in its machinery, is to set up a state of potential confusion which the Minister will be sorry for. The Union taxpayer pays the cost of the Inland Revenue Department, and if you have this state of affairs in the Transvaal with regard to companies, that the Union tax is on one basis and the provincial tax on another, the Union, which collects both taxes, will have to have an additional staff and to have entirely different people dealing with the collection of the Union tax and the provincial tax respectively. Once you have conceded the principle that the provincial income tax is to be automatically limited by the amount of the Union tax, as we propose to do in subsection 4 of section 11, you must concede that the two should he based on the same law and levied according to the same principle, with the same exemptions, and the principle I am urging applies both in regard to companies and in regard to private individuals. I beg the Minister not to allow the public to be irritated. We have accepted that there must be a surtax; but we do not want to pay in an entirely different manner. Does the Minister know that companies and individuals have to pay people to work out for them what they have to pay in income tax, and under this they will have to pay twice over, and this is going to lead to vexation and embarrassment. The more he and the officials look at it, the more they will see the difficulties. Under the circumstances, may I suggest that we either allow these two clauses to stand over, or report progress at this stage; because I do not think we can get further until the Minister has considered this matter with his legal and financial advisers.

It is a very difficult matter. At present the provincial councils have unlimited right to this sort of taxation, and in exercise of that right they have imposed taxes of this nature in the Transvaal and the Free State. The Transvaal derives £209,000 from companies. In the Transvaal, financial and holding companies, whose income is derived from dividends in companies which have already paid income tax, will go scot free. The Rand Mines, the Johannesburg Consolidated and the Central Mining Corporation derive their incomes from companies which have already paid income tax. Why should we force the Transvaal to forego this tax?

If you can tax a holding company on the dividend it receives from a gold mining company, I do not see the slightest difficulty in applying the principle that we now propose.

I should like to say something in connection with the amendment of the hon. member for Wakkerstroom (Mr. A. S. Naudé). He has proposed that reserved mineral rights may also be taxed. I should like to say a word in support. It will be a great benefit if the underground rights, that at the moment are lying dormant, are used, because the owner, chiefly large companies, is only waiting until prices rise to sell it or until something occurs to make the desire rise to exploit the ground. The exploitation of this ground will mean much, but I doubt if something else will not have to occur before we can suppose this. Section 3 (1) of the Act of 1921 lays down that a province cannot have the right to lay a direct tax on the produce or income of profits from mining or on the rights on or in mineral rights. It seems to me that this tax is excluded. This amendment will conflict with that Act if the last part of the section is not deleted. I am quite in favour to delete those words so that the provinces can levy the tax on profits of gold mines. I cannot see why unnatural persons and gold mines must be excluded. I support the amendment and as an adendum move—

I don’t know whether the Minister in bringing in this schedule has borne in mind what he proposes in regard to certain companies, also in favour of the provincial councils, in other directions. There is a trust company in my constituency which has five branches. It has to pay under the Minister’s licence proposals the following licences:—£75 for the head office, £50 for each branch office, six auctioneers’ licences at £15 each, six trustees’ licences £10 each, licence to sell land £50, and the manager informs me that the Minister proposes also that they take out a licence to lend money which will be another £50, so that for the privilege of carrying on business this company has to pay licence fees to the amount of £575 before we come to the ordinary income tax on the profits.

Notwithstanding, they pay 30 per cent. in profits.

That interjection is so stupid that it doesn’t require any answer. For two years during the depression that company did not pay one penny in dividends. Now the Minister comes along with a further suggestion for taxation by the provincial council. There are two trust companies in my constituency and if they have to pay all these taxes this year they will not be able to place a penny to their reserve funds, and I doubt if they will be able to pay any dividend to their shareholders. Is the Minister going to exempt companies or does he wish to kill these companies? If he wants to kill them let him tell us so outright, for the Bill will have that effect. The manager of one of these companies tells me that if this proposal goes through, two of the branches of that company will have to close down, and eight Europeans will be dismissed.

I want to support the amendment of the hon. member for Wakkerstroom (Mr. A. S. Naudé) but I wish to point out that Act 5 of 1921, prohibits the provincial councils from taxing minerals.

I hope the hon. member for Wakkerstroom (Mr. A. S. Naudé) will not press his amendment any further. Let us see what the position is. Here are the Minister of Finance and all of us engaged—and our friends opposite have been insisting on this from the very first day—in preventing the powers of taxation of the provincial councils being extended. The object of the hon. Minister and of the whole Durban agreement was to give the provincial councils so much out of the Union treasury that we could take away sources of revenue and the provincial councils agreed to that and all sources of taxation are taken away except those that are named in this schedule. Now comes my hon. friend and says that the provincial council should further have the right to tax minerals. Why? The provincial councils admit that they can manage without that tax and it is a source of taxation which at that time was reserved by our friends opposite as a source of taxation which the Union could use when the time arose. But why should we now go and give that source of taxation to the provincial council? The time may come that we may propose that tax for the Union but it serves no purpose to now declare that the provincial councils should tax minerals. They have sources of taxation sufficient now and if we further give them this source then we should perhaps give reason for the criticism which the Opposition are already trying to make, viz., that we give to the provincial council more sources of taxation than are necessary. That we cannot do. Now I just want to say something with reference to the remarks of the hon. member for Cape Town (Central) (Mr. Jagger) and other members. I just want to point out that hon. members in their criticism should not forget one thing and that is that when they complain about what is given to the provincial councils that it is precisely what they possess to-day and which they have the right to possess.

Not for the Cape Province.

They have the right to impose the taxes. The Cape has the right to do it. The hon. member for Caledon (Mr. Krige) must really not forget that the hon. Minister does not say that the subjects mentioned in the schedule must be taxed by the Cape Province. No, as for the Cape Province and the other provinces they will under this Act be precisely in the same circumstances as they are in to-day, and if they wish they can to-day even impose those taxes. In one or two provinces the tax has, I think, been already imposed, and the Cape Province can also do so. That is, I think, the whole mistake that hon. members make in their argument. The hon. Minister does not say that the tax must be imposed, but all that the Minister says is that certain sources of taxation exist and that it is left over for the provincial council to select. If they impose the income tax, then the Minister fixes certain limits. And then hon. members must not forget another thing. As the Minister has already made clear by his first speech, that is the basis of the schedule, and the Bill and the agreement were prepared on that principle. The Minister obtained the limitation with the approval of the provincial councils, and I think that it is a sound principle that he accepted, and it was approved by the provincial council, and the satisfactory result which now is before us was obtained in that manner. If, then, our friend there wants to go and further limit the provincial councils and reduce the sources of taxation which are now fixed in the schedule of the Act, then it is very clear that the provincial councils could protest against it. Take the Transvaal, which will be in the position of saying: “Look, you are going to restrict us more and fix our maximum lower as than what it is to-day. If we had known that then, we should have asked for further sources of taxation.” I do not see how the hon. Minister can accept the proposal of hon. members opposite in view of his agreement with the provincial council, and I do not see how hon. members opposite can insist upon it that he shall do so, seeing that the tax already existed there before we came into power, and seeing it will be a limitation of the rights of the provincial councils to what they have had hitherto. I hope, therefore, that hon. members will not insist upon this point any further.

What the Prime Minister has said might and would apply to some of the amendments, but it hardly seems to apply to the amendment moved by the hon. member for Newlands (Mr. Stuttaford) and also by the hon. member for Cape Town (Central) (Mr. Jagger). What they say is that a certain amount has been guaranteed to the provincial council if they wish to impose it. The income tax is not to be more than 20 per cent. of the Union income tax, and they point out there is a simpler way of levying that to prevent complication of machinery and which will bring the income tax into exact line with what the Minister is proposing to do with the Union income tax, that is, doing away with the dividend tax, and they say this section shall also do away with the dividend tax. The Minister, in replying, quoted certain companies whose income comes from dividends of certain companies, and says these companies, having already paid the dividend tax, will not be liable to be taxed by the provincial council. At the same time we are told that the tax which has been levied by the Provincial Council of the Transvaal is 15 per cent. of anything that has come under the Union tax. Under the Union income tax Act there are exempted dividends which have been taxed under this chapter. Take the Consolidated Gold Fields, the Minister said they received £209,000 from dividends which had already been taxed.

I said the Transvaal companies tax brought in that amount.

Is that a separate thing from the dividend tax?

Yes.

Then the Minister’s reply hardly applies. It seems right to give them power to levy up to a percentage of the Union tax, but not to leave them free to tax up to any amount they like. The tax on a percentage of the Union income tax seems a simple way to obviate many difficulties, and I hope the Minister will see his way to accept it.

I join in asking the Minister to reserve the clause for further consideration. If one looks at section 10. so far as companies are concerned it seems to be assumed that they can only impose the surtax on dividends distributed and taxable incomes. I assume, in using these two expressions, it is intended to make them identical with those expressions as they occur in Act No. 41 of 1917. If that is the basis on which the surtax is to be imposed, you find on the schedule that it is on a far wider footing, because it may there be on either income, profits or dividends of companies. There should be, surely, no possibility of confusion between them. If you take the tax on profits, what profits do you mean? Is it possible to argue that you mean gross profits? There is no qualification of the term. If the basis is to impose this surtax on the taxable income and the dividend distributed, then the schedule should be clear as to the one to be employed. If “dividends distributed” is allowed to remain in the Act itself, and a limit of one shilling for each £ of “dividend distributed” is fixed, a provincial council may claim a shilling in the £ on the surplus capital a company may have in liquidation after returning its capital to its shareholders.

Any amount of other points can arise in connection with the income tax, which I am not dealing with.

Surely you are not going to give the country an Act full of defects? Unless provision is made under the Act to set up special courts as under the Income Tax Act, any taxpayer dissatisfied with the tax assessed upon him must contest it in a court of law. I would bring to the Minister’s attention a further point. He does not make it clear if in a particular province this surtax, whether on an individual or a company, must be levied upon the income earned in that province. Take an individual residing in the Transvaal who earns income in two provinces of the Union. He returns his income to the receiver of revenue in the Transvaal and bases his returns on the whole of his Union income. What is to be his position if he is to be taxed in the Cape Province upon a portion of his income there? One can see that it is possible under this Act for a provincial council to lay down a certain basis. It may say that a person resident in one province shall be deemed to have earned the whole of his income in that province, although a portion of it might have been earned outside that province. I do suggest that the Minister should lay down a certain basis upon which the surtax shall be levied in a particular province. If we are going to have principles of unfairness, so in the same proportion will you have criticism levelled against the provincial councils and further unpopularity brought to bear upon them.

I am afraid if hon. members keep going on raising these bogeys they will not only frighten this side of the House, but they will succeed in frightening themselves.

Why call them bogeys?

They are bogeys.

Why call them bogeys simply because you don’t understand them?

I must bow to the superior intelligence of the hon. member for Bezuidenhout (Mr. Blackwell). The hon. member has succeeded in raising a number of bogeys. Will the hon. member say that the little scare that he raised as to where he has earned his income is no bogey?

Certainly not.

Has he succeeded in evading any income tax due from him owing to the fact that he earns part of his income in the Cape?

He has never tried to.

The hon. member knows just as well as I do that if he happens to be living and practising in Johanesburg, no matter where he conducts his cases, he will pay his income tax where he is living and conducting his business. The hon. member for Caledon (Mr. Krige) also raised a bogey. He told the House of a certain trust company conducting business in his constituency which had to pay so many hundred pounds per annum for licences, but he did not tell us that this particular company, according to what I understood—the hon. member for Bezuidenhout (Mr. Blackwell) may perhaps think my intelligence is not equal to the occasion—that, while they have to pay six auctioneer’s licences, they are not going to pay six auctioneers’ licences to conduct business in Caledon, they must have six branches in the Cape where they conduct an auctioneering business. We have heard of these bogeys before, and really I am beginning to pity hon. members on that side of the House, who are evidently deeply concerned in these trust companies, this dividend tax, and that kind of thing. One may begin to understand now why it is that no steps were taken by the hon. member for Standerton (Gen. Smuts) and his Government to release the people of South Africa, the producer and the consumer, from the grip of those hordes and hordes of middlemen. He evidently was so powerfully entrenched in that party that it was impossible for them to take any steps to deal with the middlement, who were fleecing the producer on the one hand and the consumer on the other.

What are you yourself

I know what hon. members opposite want. They want taxes that they can pass on to the working man. When they happen to get a tax which they find difficult to pass on to the other fellow they are up in arms and they try to get that tax defeated. The biggest agitators we have got in South Africa, the people who are always squealing and trying to avoid their fair share of the taxation of the country in order to keep the country going, are the business community. If they can possibly devise some means of taxation which will enable them to pass it on to the ordinary citizen, we never hear a word from that side of the House.

The hon. member for Brakpan (Mr. Waterston), in that thoroughly logical, useful and illuminating speech of his, has succeeded in saying nothing whatever about the subject under discussion. We have beard a lot of abuse; he has talked about “fleecing” and the rest of the words which are his dear old stock-in-trade and which we rejoice so heartily to welcome. The only thing he did, so far as the Bill is concerned, was to tell us that the hon. member for Bezuidenhout (Mr. Blackwell) and others had been raising bogeys about a perfectly simple question. If it was so simple then the superior courts of the country would have no work to do. The strange thing is that what the hon. member for Brakpan (Mr. Waterston), with his clear, logical and illuminating insight into things, considers is perfectly simple is admitted by the Minister of Finance to be a very difficult question indeed, and I am quite sure that the Minister himself will not agree with the hon. member that we were raising bogeys. We are trying to get at a solution of a very difficult problem. The question before us is to find the best way for provincial councils to make a fair taxation on income tax without putting an undue burden on the people. The Minister of Finance and the Prime Minister asked why we were raising so many difficulties considering the provincial councils have full power of taxation on the income tax. It seems to me that they have lost sight of the fact that while it is perfectly clear that direct taxation is within the powers of the councils, they are introducing a clause with the express purpose of doing away with what is likely to be a great danger if the provincial councils exercise their power to tax income tax. Why is the Government limiting the powers of the provincial councils to tax in regard to income tax to 20 per cent. only? It is because they recognize that it would be dangerous for them to have the possible power to tax as much as they like on income tax. The Government in putting this limitation or them should make that limitation effective. That is all we are asking for. The Minister admitted the difficulty of making it effective. I should like to support the suggestion that these two clauses stand over. I should also like to suggest to the Minister that clauses 10 and 11 be taken out of schedule 2 and put into a separate schedule of their own, and in that separate schedule you should put all the other necessary provisions to define exactly what the powers of the provincial councils are in regard to this 20 per cent. At present the clause is as vague and indefinite as it can be, and if it is left like that it will involve a vast amount of litigation in the superior courts of this country. The Minister is allowing the provinces to tax on incomes providing that tax does not exceed 20 per cent. of the amount paid to the Union Government. An alternative suggestion has been made, and it is one of great merit, I think, that the councils should be able to levy a tax on one-fifth of the amount paid to the Union Government. The difficulty, however, is in schedule 3, where you give the provincial councils power to legislate; and while you may restrict them as to the amount of tax they can impose they may yet legislate in such a way as to create legal difficulties. If the suggestion as to a tax of one-fifth were carried out people would know exactly where they were. Make it clear in your schedule that the tax they are to levy is to be a tax in regard to which they may only charge one-fifth. Another point which will have to be dealt with is the fact that it is not made clear that they can tax only in their own province. A province may say that a company pays £10,000 to the Government in income tax and that, therefore, they are entitled to levy 20 per cent. on that amount; but it may only be because that province—say the Cape—is the headquarters of the company and only a portion of the income is earned there. It is going to be very difficult. How are you going to tell? A company may have travellers going all over the place and earning income for the company in different provinces. How are you going to say how much is to be allocated, say, to the Transvaal, and how much to the Cape? At present, if the Minister will pardon my saying so, it is absolutely unworkable.

During the course of the Budget debate the Minister of Finance waxed eloquent in praise of that excellent virtue, thrift. One can only hope that that lesson would be taken to heart by the country at large. There is no manner in which it can be more laudably and unselfishly practised than in the matter of life insurance. I have here a memorandum submitted to the minister by three mutual life-insurance companies, viz., the South African Mutual Life Assurance Society, the Southern Life Assurance Company, and the Suid Afrikaansche Nationale Levensassurantie Maatschappy. This is a very illuminating and instructive memorandum. It deals with provincial taxation and also with income tax, and there is no doubt that the taxation of mutual insurance companies has risen in a very marked way. For instance, in regard to one of those companies, the South African Mutual, it is stated that although the business has increased only four times during the last twenty years, the taxation has increased forty times, in other words, the burden of taxation has been multiplied tenfold. These corporations made an appeal to the Minister, and submitted this memorandum to him, and a reply was sent to them on April 28 last. From this it appeared that it was not the Governments’ intention to increase the taxation to be paid by insurance companies. A further communication was received from the Secretary for Finance on the 8th of the current month which caused the insurance companies to have some misgivings in regard to their position; because there would appear to be some obscurity in the Bill as submitted to the House, and the companies were anxious to have the position made clear. I was not privileged to hear what the Minister’s amendments are to this particular section, but the companies would like to have an assurance from him that their representations will receive consideration and that suitable amendments will be embodied in the measure under discussion.

I have already moved the amendments and they deal with the situation as stated in the memorandum.

I am gratified to have the Minister’s assurance.

I would like to support the suggestion made that this clause and the subsequent ones should stand over. Very serious considerations have been brought forward, and should receive more consideration than has so far been given by the Government. I am keenly disappointed to hear the statement of the Prime Minister in regard to the amendment proposed by the hon. member for Wakkerstroom (Mr. A. S. Naudé). It is quite true, as the Prime Minister stated, that the law which is now to be confirmed in this Bill was passed at the instance of the late Government; but he will remember that the most strenuous opponents of that law are now on the Government benches. I was one of those who strongly opposed the law in 1921, which practically put mining companies in a privileged position, inasmuch as, whereas the provincial council could tax the profits of any other company, they could not tax the profits of a mining company. That is the law to-day; but now the Government is introducing a new law in regard to provincial relations, and I am surprised that they should confirm the law to which such strong opposition was taken at the time, and should attempt to make it the law of the land that no province will be allowed to tax any profit of mining companies, although they will be allowed to tax the profits of any other company. This Bill goes further, with the employers’ tax, which can only be levied on ordinary employers, but not on a mining employer. I maintain that the same objections which I raised in 1921 still apply in 1925, and I would like to support the amendments proposed by the hon. member for Wakkerstroom and the hon. member for Pretoria district (North), and I hope a similar amendment will be introduced when we come to deal with the employers’ tax.

May I just say a few words to the hon. member there. He is quite right that we protested strongly at that time against the limitation of the power of the provincial councils by taking from them the tax on reserved mineral rights. We took the position that the Government, while so reducing the powers of the provincial council of raising taxation, the Government went and at the same time reduced the allowances by the Union to the provinces. We then protested against it and said: But you want to kill the provincial councils, because we know that they cannot obtain sufficient money. The position now is entirely different. The Minister of Finance has, in the place of what he has taken away, he has from Union sources given so much more that the provinces said to us: You can keep those sources of revenue for the Union. We therefore stand on an entirely different footing, of this import, that the provincial councils can voluntarily say to us that we can keep them. That would actually—if we gave them to the provincial councils—justify the criticism that we give to the provincial councils the tax which threaten us with extravagance.

I would like to emphasize the point I was making just now. My difficulty is that section 11, sub-section(4), gives the provincial council the power to tax incomes up to a certain limit. The Union Act is not made applicable in any shape or form. Then comes the first schedule, which says provincial councils may raise revenue and may legislate thereon. The provincial councils will, with the utmost propriety, proceed to legislate in any way they like, to tax incomes on their own and make any exemptions they like.

That is the intention.

Surely the Government does not intend to have two entirely different taxes with different conditions and exemptions? I suggest that we should have uniformity. Under the Union Act of 1917, we have the standard method of dealing with all income tax, and all that is necessary year after year is to have an Act passed stating the rates to be paid for that year. I do hope that the income tax will be levied purely on the Union Act with all its restrictions and that all the provincial councils will be able to do will be to pass legislation for the rate to be applied. People have sufficient trouble at present, and it will lead to enormous difficulty if they have to be bothered with another set of income tax papers. Why create a fresh set of difficulties, when we have an Act which has been working for the past eight or nine years, and many of the difficulties of which have been interpreted by the courts? I appeal to the Minister not to create what will be an enormous additional trouble to the people.

With reference to the amendment of the hon. member for Newlands (Mr. Stuttaford), the Minister stated that the Transvaal derives £209,000 from the income tax levied on companies. That, however is quite a different thing altogether from a tax on dividends, to which the hon. member refers. In the Transvaal companies pay something like 2½ per cent. on their profits, which may include dividends from other sources.

He wants me to do away with the dividend tax.

This is a tax on profits.

I should like to say a few words about the amendment of the hon. member for Wakkerstroom (Mr. A. S. Naudé). The hon. Prime Minister has opposed it, but yet I think that mineral rights are one of the best sources of taxation. Hundreds of farms have been sold from which the mineral rights have been excluded. The owner has nothing of that and the company lets it lie idle. I can quite agree with it if the Government intends to tax it for the Union, but otherwise I would heartily support the amendment of the hon. member for Wakkerstroom, because if we tax these rights the sources will be exploited and worked, but to-day they lie idle. If the tax is imposed the company will work them or the company will give them up so that the owner can have a right thereto.

The Prime Minister said that if the Minister of Finance adopted the suggestions thrown out by members on this side it would be departing from the agreement made with the provinces. I would like to point out that the whole purpose of the debate is not to interfere with the sum total of what the provinces are to get, but to ensure uniformity in the collection of the taxes. If the Minister were to adopt our suggestions he would not be departing from the agreement with the provinces.

Certainly I would.

We are pleading for uniformity.

That is just what they don’t want.

Then the Minister should make it a little plainer to us why there should not be that uniformity. Supposing Natal passes an income tax in which the test of liability is residence, then a person domiciled in Natal would have to pay income tax on income wherever derived, and the Cape might base its tax on income earned only in the Cape. Supposing my income in the Transvaal is £2,000, and I earn another £700 in the Free State, and that for Union purposes I pay super-tax. Am I to pay super-tax in the Transvaal or not? If hon. members raise points such as those then the hon. member for Brakpan (Mr. Waterston)—who is the would-be eleventh member of the Cabinet—derides them. If the hon. gentleman has not sufficient energy or wit to understand the points raised he should not, in a very free and easy manner, designate them as “bogeys.” There is a great deal of substance in the point mentioned by the hon. member for Cape Town (Gardens) (Mr. Coulter). In the Bill only two classes of taxes are provided, but in the schedule there are three categories. There must be some co-ordination between section 11 4b as drafted and item 8 of the schedule as it appears now. The Minister must see there are real difficulties which could be solved if the Minister would take a little time and consult with his draughtsmen and financial advisers and report progress. We could have saved a good deal of this discussion if the Minister would have done that. We want to assist the Minister and have accepted loyally the principles of the section, but we want to make something workable out of it. I can see, in spite of the coarse jeers of the hon. member for Brakpan (Mr. Waterston) against my profession, I can see a great deal of trouble, as a lawyer, sticking out in these clauses as they stand.

The hon. member says they have accepted the principle. That is the trouble because they insist, on that side, that there should be a uniform tax. The provinces do not want it. Why should there be uniformity?

Not if there is a limit?

Let us pass this thing where we lay down what shall be taxed and then when we come to the body of the Bill we can see how far we can improve it there. You must leave it to the provinces to levy their income-tax in a common-sense way and if they don’t do that the Union Government can veto it. They have a right to levy the tax and there is no limitation at present.

Any responsible Government would soon stop it.

That is the only remedy you have. If any of the provinces pass an income tax Bill with unreasonable anomalies overlapping, then the Union Government would veto it.

You want to give a rebate if you find there is double taxation in two provinces.

There was a case in point of a Government official who paid an income tax in the Free State and then went to the Transvaal and had again to pay an income tax. We have threshed that out and I have appealed to them to remove this point of overlapping and they have agreed to cooperate in that regard. When we come to the limitation clauses in the body of the bill we can see what we can do. It will be difficult unless we reframe income-tax legislation. I cannot suggest there should be a uniform tax because that is the important problem. One province may want a tax that the others do not want. Why should there be this uniformity? Leave it to the provinces to tax as they like and if they are unreasonable the Union Government can exercise the right of veto. With regard to the point of the hon. member for Newlands (Mr. Stuttaford) I don’t know whether he suggests that this tax would be levied on the income and the profits because that is not the intention. I am prepared to move an amendment—

It is not the intention to tax two or three of them in combination and I will move the amendment as I say.

Might I suggest one other thing to the Minister, that is if the Minister would tell us whether, when we come to clause 10 in the Bill, he will make it clear that all the provinces combined can only levy to the extent of 20 per cent. of the Union tax, that the total levy can only be 20 per cent. whether on an individual or a company.

Before these amendments are put I would like to ask the Minister of Finance whether he could not meet us on the question of relieving mutual life insurance societies from taxation. I understood him to say that he was going to take out of this item 9 reference to insurance companies.

I have moved that already, and I am moving some other amendments.

I understood that it was the Minister’s purpose to put in a clause which will deal specially with insurance companies.

That is so.

I understood that it was merely an assurance that he would impose a limitation of the amount not exceeding that at present in operation. I want to move definitely, so that we can get an expression of opinion, after the word “companies” in the second line, to insert in brackets “other than mutual life insurance companies” and there would then be no necessity for the following item which has been suggested and it would meet our case. Whatever may be said about a super-tax on income, that is bad enough, but it is not fair to take from the savings of people what they have put aside for those who are dependent upon them.

That has been dealt with.

It was dealt with two hours ago.

The amendment which I now mention has not been dealt with. I am trying to get inserted a complete exemption of the life insurance companies.

On a point of order, I have moved here to insert “other than insurance companies” and the other item has not yet been moved. The hon. member can discuss this principle when we reach the other item where insurance companies are dealt with. The amendment which he wants excluding insurance companies from the item now under discussion has been moved.

If my suggestion is accepted there will be no necessity to make any separate reference to the insurance companies as proposed.

I do not know what the hon. member (Mr. Hay) wants. In this item I have moved to insert “other than insurance companies” so that insurance companies are left out altogether from this item. When we come to the new item 10 the hon. member can then discuss the point which he has now raised.

I will move the exclusion of life assurance companies when the new item is reached which proposes to limit the tax to the existing rate. I want to remove the power to tax these companies from provincial councils.

I would like the Minister to deal with the point that was raised in regard to the meaning to be attached to “income or profits.” “Income” may be gross income, or taxable income, and it evidently has some different meaning to “profits.” Is it possible that “income” when it appears there refers to gross income? One would have thought that it would have been confined to the taxable income of the individual or company. One fails to understand what particular meaning is to be attached to “income” as contrasted with “profits.”

I can only say that the words are used in their generally accepted sense, as they would be used by the courts, that is, after allowing such deductions as are allowable. We have not put a definition here; I am not drafting an income tax Act for the provinces.

With leave of the House the amendment proposed by Mr. Stuttaford was withdrawn.

I should like to move another amendment, to delete the words “on the profits,” in order that there should be no doubt as to what is meant by “income” which I conclude is net income.

No. Gross income.

Well, that is exactly what I feared it was. Surely we are not going to allow the provincial councils to impose a surtax of 20 per cent. on the gross income of a company. This means that we are conferring upon the provincial councils a special power. Surely it is a remarkable position that we are pointing the way to the provincial councils whereby they may penalize companies by imposing a tax which, were it not for the limitation, might mean a tax on capital. I do not think the practice of the provincial councils in the past can give us sufficient confidence that they would not do this. I should like to move, as an amendment to this amendment—

The Minister has made a gross mistake here. I have had the experience, and no doubt others have had the same, where a certain amount of profit has been shown, but after paying expenses and losses the gross profit turned out to be a heavy loss. I hope the Minister will adopt the suggestion or the hon. member for Cape Town (Gardens) (Mr. Coulter).

It is not “taxable income.” The term must be wide enough to include gross income. In the one case it will be “gross income.” In the other case it will be “net income.”

Does the Minister think we are going to be foolish enough to trust the provinces with this? According to what he tells us, the provinces will have power to impose a tax on the gross income of a company.

Subject to such limitations as are in the body of the Bill.

These limitations do not take us any further. A mining company might have an income of a million pounds, but very little profit. The Minister says we are not to frame a special income tax for the provinces, but when we use artificial terms such as income, profits, etc., if we do not define them, we should qualify them by adjectives to show to what limits the provinces may go. Let the Minister take a little time to reconsider the wording of this clause. I am prepared to fight this for three days rather than give the provinces the power to put a tax on gross income We know some of the things they have done, and if that is the intention of the Minister, it is a pity he did not let us know earlier.

It must be so in the one case.

if so, then it can apply in all cases.

Subject to limitations.

The power of veto is very seldom exercised. I am sure the present Government, even in its present role of friends of provincial councils, will hesitate long before it imposes a veto, even with regard to a tax which it thinks unwise or unsound. To say that provincial councils should be allowed to impose taxes on gross income merely because of the particular case is absolutely absurd. This reminds me of the Chinaman who, when he wanted roast pork, burned down his hut.

Wasn’t the burning an accident?

The hon. gentleman, after making a most outrageous speech, went out without facing the music, and so I’ll not waste time dealing with him.

I must protest against the way in which the hon. member has been putting his case. I have indicated that income is wide enough to cover both gross and net. Further on we say subject to the limitations in sub-section (4). In one case it will be gross and in the other taxable, which is what he wants. At the very commencement I told him that when we come to the limitation clauses in the body of the Bill we can consider them. The schedule is just a general thing.

Really what the Minister proposes when he speaks of taxing gross incomes is to extend the powers of the provincial councils beyond what they were before. If you are going to tax, say, 5 per cent. upon the gross income of a company, you are introducing an entirely fresh principle. You could impose 5 per cent. on gross profit, the total amount to be limited to 20 per cent. of the taxable income.

Where do you get 5 per cent. in the schedule?

I am taking 5 per cent. by way of illustration. If the gross income of a company from the sale of goods was £100.000, a tax could be imposed upon it, and the Minister says a council can proceed on that basis and call upon the company to pay it, but when it comes to the limitation under section 10, then the taxpayer must not be called upon to pay more than 6d. for each £1 of taxable income. Why introduce this extraordinary provision of taxing gross income, which is really indirect taxation, because a tax on gross revenue, say of 5 per cent., is simply passed on by addition to the selling price of the commodity creating that revenue. Indirect taxation was served within the powers of a provincial council, and why, therefore, when those powers are being restricted, should this extension be given?

What is the intention of this schedule? Why is it here? To state the sources and means by which provincial councils may raise revenue, together with the power to legislate in respect thereof. For no other reason. The schedule is there simply to indicate which sources are open to the provincial council for taxation. That is all. Surely, it seems to me that what we are really here to discuss is whether we should have these sources or whether we should have any other sources. We should not try under this schedule to lay down the Act. For that purpose we have all the 18 sections. Your schedule does not affect at all the question as to what is meant by profit or income. We now find in sub-section 4 (b) of section 10 “in the case of a tax on the income or profits of companies, not more than 6d. for each £1 of taxable income.”

That expresses the limit. It does not define the source. That is defined in the schedule.

It says the sources shall be those from which a province can derive its income. He speaks of gross profits, and says we shall have to find in the schedule what gross profits mean. The Minister says “Wait, having indicated here what the sources are going to be, then when we come to section 10 in the substantial portion of the Bill, we can discuss this question as to gross profits.” He maintains it is unnecessary to define them, because, after all, when we look on sub-section 4 (b) we find the amount which eventually your provinces can get out of the companies. Whether gross profit or net income is taken, he is eventually limited by 6d. for each £1 of taxable income.

What is taxable income?

That is defined in the principal Act.

In the Income Tax Act?

Yes.

That does not apply to this Bill.

Then let us say—

I submit, in dealing with the schedule, it is not the place to tackle this question. We are simply dealing with the source, and the question of whether these sources are sources which should be admitted or not. That is the question.

May I point out to the Prime Minister we will assume for one moment that when we speak of income in the schedule we mean gross income. Then turn to the limits imposed by section 10. They are imposed at the rate of 6d. per £ on taxable income. If in the schedule you may appear to impose a tax on gross income, and in section 10 to impose a limit with regard to net income, you have two things which are irreconcilable.

I withdraw my amendment to omit “either.”

The amendments proposed by Mr. Coulter, Mr. A. S. Naudé and Mr. Oost put and negatived.

The amendments proposed by the Minister of Finance put and agreed to.

Item, as amended, put and agreed to.

New item 10,

I move—

Then I just wish to mention that later on, in the body of the Bill, I intend making provision for the point raised by some hon. members, to deal with the case of mutual insurance companies. A section will be moved providing that, in the case of a mutual life insurance company, the amount so payable shall not exceed 20 per cent. of the normal tax payable in respect of the receipts from investments in the province. Hon. members will thus see that, so far as mutual insurance companies are concerned, the tax will be limited to the receipts from investments in the province and are not to exceed 20 per cent. of the normal tax payable to the Union.

Will the hon. Minister put that on the Order Paper to-morrow?

I take it, it is the intention of the Minister that these three classes of taxation, on income, profits or premiums should be alternative, as in the last item, and therefore I take it he will amend this item now in the same way as he did the last item, by making it (a), (b) and (c).

Can there be any doubt as to what is intended?

Having gone out of your way to put (a), (b) and (c) in item 9, you may have some argument to the effect that the difference between that item and number 10 is meant to emphasize the difference in this case. I move—

Is it really necessary, in view of the arrangements made with the provincial executives, to have this new item 10? It seems to me that if it is in any way possible to avoid this provision we should avoid it. This is now a direct tax on the thrift of the people, and I think it is very undesirable. The Minister, in his Budget speech, impressed very strongly on the country the duty of practising thrift. Well, here we have it. The income that is derived by these mutual life insurance companies are simply the savings of the people, and I think if it is in any way possible we should not use this as a source of taxation, either for the provincial councils or otherwise. I would appeal to my hon. friend, unless he thinks he would be breaking the engagement made with the provincial councils, to leave the provision as we have it now amended under item 9, and not to have this additional item 10. I hope it will be possible for him to see his way clear not to have this as an additional source for the provincial councils to tax.

There is a difficulty which the right hon. member has indicated, for, of course, I have indicated this is a source of revenue to the provincial councils. I have informed the insurance companies that it was a great pity that they did not make representations to me before the meeting, for then I might have succeeded in making different arrangements. Unfortunately, the representations were only made later on, and I am just afraid that the provinces may object if I don’t carry out the undertaking I gave.

Perhaps it may be possible to narrow it and exclude the mutual insurance companies, for they have such a good case that I don’t think the Minister ought to tax their incomes. These companies earn no profits, for they go back to the members, thousands of whom are poor people who insure themselves against a rainy day or to make provision for their dependants in case of their death. I don’t think my hon. friend ought to have any compunction whatever, and I don’t think he is bound by any arrangement or understanding with the provincial councils that he is morally bound to tax the thrift of the people in this sense. If we have to accept new item 10, and if the hon. Minister says he feels morally bound by the understanding to adhere to it, I would ask him to make an exception in favour of the mutual societies, which return to the poor people the savings they have put into these societies.

I will move that we report progress, so that I may get into communication with them to-morrow. I am not at all keen upon this tax and I will put it to them, and they may agree to exempt the mutual insurance companies.

Will the Minister not also exempt the fire-insurance companies?

On the motion of the Minister of Finance it was agreed to report progress and ask leave to sit again.

House Resumed:

Progress reported; House to resume in committee to-morrow.