This is a very interesting case. Here a portion of what was intended to become a European settlement, is now being used as a Bushmen reserve. The farm Struis Zyn Dam was allocated to a European who got water on it. The Government finally compensated him for the farm and it has been proclaimed as a reserve. On the other side of this farm, however, there is a farm belonging to the parson of Upington. A portion of that farm has already been sold to another party, so that two persons on the other side of the reserve own land, the parson and the person who has purchased portion of the farm. The party to whom a portion of the land was sold, is anxious also to buy the other part of the farm, but we understand that the Minister’s Department is not prepared to sanction such a transaction. He wants to buy under the Land Settlement Act. I now want to ask the Minister what he is going to do in connection with this land. If he is not going to purchase it, then I must object to this item, because it will mean that there will be a white spot in a brown area. I want to know from the Minister whether he will approach the Rev. Weideman of Upington and the other party, to buy that land from him.

As the hon. member has said, those two farms are in the centre of a brown spot. My Department is inclined to buy that land and the Land Board will receive instructions to negotiate for the purchase of that land.

Recommendation put and agreed to.

Recommendations Nos. (25) to (58) put and agreed to.

House Resumed:

The CHAIRMAN reported that the Committee had agreed to certain Resolutions.

Report considered and adopted.

I move—

I second.

I see that the Select Committee makes some comment in its Report with reference to the Report of the Irrigation Committee, and they express their regret that no mention is made in the Report of scouring and other matters specially referred to the Commission.

At the moment there is nothing before the House. To bring the matter in order, I suggest that the hon. member should move that Paragraph (2) be referred back to the Select Committee.

You can discuss it under the Vote “Irrigation”.

May I not discuss the recommendation of the Select Committee?

There is no recommendation.

Then I shall deal with it later.

Motion put and agreed to.

Report adopted.

I would like to know from the Minister why the amendment is being made. It seems to me that the Registrar is receiving exceptional powers. The Building Societies, particularly the small Societies, feel, according to the memorandum they have issued, that too much power is being given the Registrar. I would like to know from the Minister what the position is, because they object.

May I say in general that I think that the difficulty that has been raised by the small companies has now been removed as a result of an amendment which I shall move to another clause. I think that in general the objections will fall away. As regards this particular Clause, the position is that Building Societies in terms of Clause 4 of the Principal Act cannot accept registration before they have obtained the minimum paid-up share capital. For that reason the provision is made that the Building Societies must first satisfy the Registrar as regards this point. It is an essential protection measure.

Clause put and agreed to.

On Clause 3,

I move—

This is an amendment to which I referred in my second reading speech. I indicated then that it was not really my intention to go as far as the Clause, as drafted, went. We did not want to impose rules on Societies, we merely want to be in the position where points requiring consideration crop up to bring them to the notice of the societies and then leave it to the members of the Societies to make the necessary alterations. This amendment is moved to give effect to that intention. May I take this opportunity to say that this amendment, together with the other amendments which I air going to move, have been fully discussed with those who are particularly interested in this Bill, and also with representatives of the Building Societies, and I think I can say that we have been able substantially to meet the difficulties which have been raised, so that in effect this is now an agreed Bill. Unfortunately the Natal Building Societies, which were very much interested in the Bill, were not able themselves to send representatives from Natal to discuss matters with us, because of travelling difficulties and the end of the financial year, but one of those Societies has a local representative who has participated in the discussions and the Natal members of Parliament have also participated in the discussions, so that we have been able to discuss the various points of view fully. I would like to express my appreciation of the assistance rendered to me by various hon. members in arriving at an agreement in regard to this Bill, and I am glad that as a result we are able to go forward with a better and more practicable Bill than I originally introduced.

Amendment put and agreed to.

Clause, as amended, put and agreed to.

On Clause 5,

I move—

1. (2) Any decision of the Registrar in terms of Sub-Section (1) shall be subject to an appeal to the Minister: Provided that such appeal is noted within one month after the decision of the Registrar has been made known.

In moving these amendments I may say that I have taken one of these over from the hon. member for Hospital (Mr. Henderson)—I have taken it over from him because it was found more convenient that I should move it. It applies the appeal also to this clause, and the other amendment which is printed takes the place of that which I originally gave notice of, and it makes it clear that this submission of forms will only apply to forms other than mortgage bond forms. That is now proposed as a result of the discussions which have taken place, and substantially meets the difficulties which have been raised.

Amendment put and agreed to.

Clause, as amended, put and agreed to.

On Clause 6,

I should like to move the amendments appearing in my name on the Order Paper. I move—

1. (a) in regard to existing savings deposits the adjustments necessary in order to bring them into conformity with the said limitations must be effected within a period of two years after the date on which this Act comes into force, and no further deposits may be accepted in respect of any savings account as long as such account exceeds such limitation;
2. (b) every society shall within thirty days after the commencement of this Act furnish the Registrar with full particulars in respect of all deposits exceeding the said limitations and if the Registrar finds in the case of any society that an undue proportion of deposits exceeds the said limitations he shall report to the Minister accordingly, and the Minister may thereupon, after hearing the society concerned, require such society to hold a higher proportion of liquid assets than that which is prescribed in Sub-Section (4) of Section 23 of the principal Act.

The first amendment is to paragraph 3 of (d) on page 4. That will make it possible for the Registrar to give his consent in general terms in regard to exceptions from the general provision in the matter of maximum deposits. The second amendment is merely a verbal one making the position clearer, and then the third amendment is on the following page. The final amendment amends the proviso in Sub-Clause 3 by extending the period of grace from one year to two years, and at the same time laying it down that societies which hold a large number of large deposits should submit a statement to the Minister in respect of such holdings.

I should like to express the appreciation of members of the way in which the Minister has met us in regard to various points that have been raised. It has gone a long way towards removing many objections and I should like to say that the Minister’s action is very much appreciated. I just want to say in regard to this clause—this (d) that there was strong objection to that limit of 20 per cent. But I understand the position is this, with regard to those societies where the limit is already exceeded—there is no intention to take any drastic steps to bring it down. And furthermore, I understand the position, if there were any urgent need and a good case could be made out to the Registrar, special permission could be given in certain cases even to exceed that. I just want that confirmed so far as the present position is concerned, that no society will be put in a worse position by having to reduce their holding, and their position is protected, and as far as that is concerned it is up to them to try and adjust matters within a reasonable time without being compelled to make any forced liquidations.

Yes, the position is as the hon. member has stated it.

Amendments put and agreed to.

Clause, as amended, put and agreed to.

On Clause 7,

I move the amendment standing in my name. I move—

This is a small amendment which hardly raises any question of principle. This will give some administrative relief in regard to the section which we are amending.

Amendment put and agreed to.

Clause, as amended, put and agreed to.

On Clause 8,

I move—

1. (2) In so far as the provisions of paragraph (b) of Sub-Section (1) place a limit on the average amount owing in respect of all advances the said provisions shall not come into force for a period of two years as from the date of commencement of this Act.

This Clause, as I explained in the second reading, deals with the question of advances by societies and the amendment here proposed is of an important nature and is, as I have indicated, the result of the discussions which have taken place. The amendment not only will have the effect of meeting the difficulties which have been raised, while at the same time securing the objects which I have in regard to the Bill, but will also considerably simplify the Clause. The effect is simply that the full amount in respect of advances by a Society shall not exceed £1,250. That will have the effect of preventing a Society from locking up too much of its money in large advances, and indicating to the Societies that its primary object is to help the small man with small advances. I think the amendment represents an ingenious solution of what proved a considerable difficulty and I think it will be accepted as such. The further amendments to this Clause are to some extent consequential and otherwise of a minor character.

I agree with the Minister and I want to thank him for the compromise which has been arrived at. The compromise does not give just everything that was wanted, but it does seem to me that on the whole the Minister’s amendments fairly meet the case. All this is really part of the compromise, and it is simply in anticipation of the consolidating measure which we hope to get later on.

Yes, that is so.

I appreciate the Minister’s attitude.

Amendment put and agreed to.

Clause, as amended, put and agreed to.

On Clause 16,

I move—

This is a small amendment. It affects paragraph 3 which relates to amounts owing by directors and officers to Societies, so as to expose possible abuses. Abuses are not possible in respect of loans against Building Society shares or deposits, so it is proposed to confine this to advances, and that is why we have the words here, “In respect of advances”.

Amendment put and agreed to.

Clause, as amended, put and agreed to.

On Clause 17,

I do not actually want to propose an amendment, but I think it is not fair that the Building Societies should have to give their reports in only one language. I think they should give it in both languages. It is necessary so far as the shareholders are concerned. It may happen that a shareholder does not know the other language and then has to go to expense to know what the position of the Building Society is.

We have not to do here with statements intended for the public, but with records which the Society must keep for inspection purposes. It is more for domestic purposes. Last year we accepted an identical provision in the Banking Act. This clause is the same as the one which appears in the Banking Act. It is not a public document, but is only intended for inspection by the Registrar.

Clause put and agreed to.

On Clause 19,

I move—

Hon. members will see the amendment on the Order Paper, the main purpose of which is to make it perfectly clear, and remove any possible misunderstanding that in regard to this provision of security for employees, the societies may themselves take out insurance or establish a fund for the purpose. The clause as drafted was liable to misunderstanding and we want to make it quite clear.

Amendment put and agreed to.

Clause, as amended, put and agreed to.

On Clause 26,

This constitutes an effort to define urban immovable property. It is in respect of Urban Immovable Property that the societies may give advances and it has been found very difficult to define “Urban immovable property”, especially in regard to peri-urban areas. But I think we have solved our difficulties, and the amendment as submitted will give us a workable definition. I move—

Agreed to.

Clause, as amended, put and agreed to.

The remaining Clause and the Title having been agreed to.

House Resumed:

The CHAIRMAN reported the Bill with amendments.

Amendments considered.

Amendments in Clauses 3, 5, 6, 7, 8, 16, 19, and 26, put and agreed to, and the Bill, as amended, adopted.

Bill read a third time.

I move—

This is the last of the five Taxation Measures which have been introduced to give effect to the resolutions adopted by the House in Committee of Ways and Means. Like its predecessors, it has a twofold object. The first object is to put into terms of law the rates of increased taxation of which the House has approved. I shall refer to the Clauses which give effect to that. Clause 1 provides for the increased gold mine special contribution. Clause 2 for the increased diamond mines special contribution. Clause 3 for the increased rate of excess profits duty. Clause 10 (1) (a) provides for the increased rates of personal and savings fund levy, and in that connection Clause 12 gives effect to our announced intention to divide the additional amount payable under that levy equally between the savings fund and the consolidated revenue fund. These Clauses merely give effect to the resolutions which we have adopted and I do not think it is necessary for me, certainly at this stage, to add anything to what I have said on these proposals. The second object of the Bill is to make certain amendments in the existing law in regard to the excess profits duty, the trade profits special levy, and the fixed property profit tax. One of these amendments, perhaps the most important, embodied in this Bill, was announced by me in the Budget speech. I then said that we intended to make special concessions in regard to the excess profits duty for the benefit of new concerns, for the development of strategic base minerals. That intention is given effect to in Clauses 5, 6 (b) and 7 (b) of this Bill. Briefly, what we contemplate is that in the case of such minerals the allowance for redemption of capital expenditure will be calculated for excess profits duty purposes, on the basis that the life of the mine is only one year. In making this proposal we have the precedent of the Namaqualand Mines Act, which was enacted, if I remember rightly, in 1937. That Act did much to secure the re-establishment of the copper industry in Namaqualand, and I hope that the proposal which we are making here now is going to have similarly beneficial results. The machinery to give effect to that intention is contained in the Clauses to which I have referred. The first, thing that would happen would be that the Minister would decide on those classes of mining undertakings to which the concession will apply, and in doing so, of course, he will act in consultation with the Mines Department. Then, secondly, anyone who commences a new mining venture falling within the scope of mining classified will be permitted to submit his case for special consideration by the Revenue Advisory Committee. The third step comes then. The Revenue Advisory Committee may then recommend concessions within the scope of its present powers—for instance, in regard to the rate of excess profits duty—and in addition the Revenue Advisory Committee must recommend the calculation of the redemption allowance for such undertakings on the one year’s life basis, moreover the redemption allowance to be so calculated, will cover not merely the capital expenditure in respect of which the taxpayer is entitled to claim redemption in terms of the Income Tax Act, but also such other capital expenditure as the Revenue Advisory Committee may, in terms of the powers it already has, recommend that the taxpayer be allowed to redeem. But all such capital expenditure would then for excess profits duty be regarded as admissible on a one year life basis. That means, in effect, that the taxpayer will not become liable for excess profits duty until all capital expenditure of both these types have been redeemed. That, I think, is an important concession and, as I said, I hope it will lead to similarly beneficial results to the similar arrangements made in regard to the Namaqualand copper. But while it is an important concession I regard it as justifiable from the Treasury point of view. In the first place you encourage such ventures. Again I quote the Namaqualand copper industry as an instance of that. Secondly, one has to take account of the fact that we are dealing here with concerns, the life of which must be in the nature of things uncertain. They come into being to exploit mineral occurrences which at normal prices would not be payable but because of the increased price resulting from war circumstances and because of the need of such minerals it becomes worth while to exploit them, but they have no certainty as to what the price level will be when the emergency disappears. It is therefore reasonable that we should assume in such cases that the life of the mine on one year’s basis, because as I indicated, if the price drops to pre-war levels, such undertakings would have to disappear. It is therefore reasonable from that point of view. But I think I might further point out that from the angle of the Treasury’s approach I do not think that in any case we are going to lose money on this. We may on the face of it lose money, but if, as I said, the result is to create new undertakings, we shall gain more than we lose. So I have no hesitation in defending this alteration from the Treasury point of view, as well as from the point of view of the country. The further features of this Bill affect the fixed property profits tax. They are proposals which were not mentioned in the Budget speech. Now, let me first say a few words of a general nature about the fixed property profit tax. It has been argued that because that tax has brought in less than we envisaged last year it has failed in its objective. I do not think that argument is tenable. The tax has brought in less than anticipated but the primary reason is that we over-estimated the proportion of transactions liable to taxation. Hon. members will remember that this tax is only applicable in respect of sales of fixed property where the previous transaction took place after 1st October, 1939. Now the great mass of transactions now taking place are in respect of properties where the previous transactions took place before that date. We over-estimated the proportion of transactions in relation to which this tax would apply, but quite obviously also the proportion of transactions which will be liable to tax will steadily increase from year to year. Now, what has been the effect of this tax on property values? Hon. members will remember that while the tax was imposed as a revenue raising measure, a very important objective was also to check undue rises in property values. This tax has not stopped the increase in property values, but it has checked the increase. Before the tax was imposed the figures show that the increase was very sharp. When the tax was imposed the increase for a time virtually stopped. Thereafter, the increase commenced again, but not quite as steeply as before. I have no hesitation in saying that but for this tax the position would be much worse than it is today. Undoubtedly buying with purely speculative motives has definitely been restricted by this tax. People who buy for speculative motives cannot but be discouraged by the fact that if they buy today for that purpose the State is going to take two-thirds of their speculative profits. This tax therefore undoubtedly has been a factor in checking such speculative purchasers. We hear, of course, a great deal about evasions of the tax. No, often this talk about evasion of the tax is put about by people with the intention of persuading us to drop the tax, and so to leave the field open to the speculator. That we do not intend to do. We do not intend to abandon this tax and assist the land speculator. The proper course, rather, is to prevent evasions. On that point I made a few general remarks on a previous occasion. Perhaps I should repeat this. The evasion of the tax implies recording for purposes of the tax purchases at a price lower than was actually paid. It means that the sale is reported to have gone through at a price lower than the price which the purchaser pays the seller. I shall say nothing about the question of perjury, but let me say this. Let us assume that to enable the seller to evade the tax the purchaser connives in the entry on the records of a price lower than he actually paid by say £500. Very well. That transaction is now recorded as having gone through at a lower price and in due course, when the purchaser comes to sell the property, the present purchaser will have to pay tax on that £500. He won’t have made that as a profit. It is a profit of which he has made a present to the seller. The State will not be the loser but it is the unfortunate purchaser who will ultimately have, to pay instead of the seller. Now, I know there are some people who take that risk because they say in time the tax will be repealed. Probably it will. It was a tax imposed to meet special circumstances. If it is repealed, then I think it is fair to assume that just as in the case of the similar increments value duty which the Transvaal Province imposed twenty years ago, or more, the tax will have to continue to be payable in respect of sales subsequent to a transaction which took place during the period of the validity of the tax. The Transvaal Province today is still collecting increment value duty in respect of subsequent transactions, in respect of transactions which took place more than twenty years ago, and I think it would be well that purchasers today who are lending themselves to this form of business, should remember that ultimately it will recoil on them. There are certain provisions designed to deal with evasions. One method is by means of selling immovable property along with movable property. A house may be sold along with a refrigerator in the house, or a stove, and the refrigerator or the stove is put forward as representing quite a large part of the purchase price so that the purchase price of the house is correspondingly reduced. I want to draw attention to Clause 16 (1) (d) and to Clause 20. The purpose of these clauses is to make it possible to apportion fairly the price paid for the two items—the property separately and the refrigerator separately. It is proposed to empower the Commissioner to require the production of sworn appraisements in respect of the property sold along with immovable property. If a transaction goes through where the refrigerator is sold for £500 it will be possible to require a sworn appraisement of that refrigerator, and an assessment will be made accordingly. We also intend to close up a loophole by way of cancellations of sales which are affected to avoid the tax. We have had cases of this kind. An agreement to sell property was entered into before the first date mentioned in the Taxation enactment, namely October 1st, 1939. Well, the purchaser, before the sale has been finally completed, has the chance of selling the property at a profit, and so as to evade the tax he makes an arrangement with the original seller to cancel the sale. The previous transaction then becomes the first transaction before September, 1939. And the new sale is not liable to tax. In order to close that loophole, having regard to the fact that in effect that cancellation is really a re-sale, we have inserted a provision in Clause 14 and in 16 (c) and several consequential amendments, all of which are set forth in the White Paper. Then I want to refer to one or two concessions designed to meet cases of hardship. I want to draw attention to Clause 16 (1) (a). The clause deals with the case where the mortgagee has to buy in mortgaged property. In such cases part of the profit on re-sale may really only be a recoupment of his loss on the bond. We met that case in the original Bill. We exempted that profit so made from tax, but we only met the point as far as a first mortgage was concerned. We now propose to extend that to cover subsequent bondholders. Then there is Clause 22 which deals with the position of Railway employees whose properties under Railway Housing schemes are taken over by the Railway Administration under what purports to be a Deed of Sale. Strictly speaking such transactions are subject to tax, but in reality what takes place in such cases is not a sale but rather a provision of security by the Railway employee to the Administration for the advances which are made under that Housing Scheme. No real profit accrues to the Railway official, and we therefore make provision for exemption in relation to such cases. I think I have now explained the main provisions of the Bill. Other clauses, as well as those to which I have referred, are dealt with in the White Paper. I do not think I need go into all the details now. If need be I can give further information at a later stage.

The trouble with this special legislation is that evasions and anomalies are always discovered as soon as the law is applied.

That applies to all legislation, particularly where taxation is imposed.

Particularly if one attempts to obtain money not along the ordinary, well-beaten tracks. Then there will always be difficulty, and the ingenuity of the people will always be a few hundred yards ahead of the legislating body. But as regards this aspect of the matter, i.e., the removal of cases of possible evasion, the closing of the loopholes, we abide by the efforts of the Minister and we can only hope that these efforts will be more effective this time. One could express the thought, however, and I am speaking now particularly of the profits tax on the sale of fixed property, whether the numerous evasions which are still taking place in spite of the Minister’s efforts, are not a proof that there is something fundamentally wrong with this sort of taxation, and whether there are not other possible ways of achieving the object which the Minister has in view. One thing is certain in connection with the tax, and that is that it has not stopped a rise in prices. That is also comprehensible. The Minister has admitted that the miscalculation regarding revenue from this source has been due to the fact that the ratio, the percentage of the sales which are subject to the tax, was less than expected in comparison with the total sales. In other words, there were perhaps 5 per cent. or 10 per cent. of the total sales subject to the tax. The 5 per cent. or 10 per cent. of the people must now pay tax when they sell. They want to get the tax from the sale and in addition make a profit. They therefore want to obtain a higher price when they sell. But the 5 per cent. or 10 per cent. of sales on which the tax falls set the standard, as it were, for sales. The other 90 per cent. are influenced by the fact that in 10 per cent. of the cases the high price was obtained, and you then get a general rise of prices, or in any case you keep the prices high. That assists inflation. The Minister tries to stop inflation on the one hand, and on the other hand inflation is encouraged by this kind of measure. That has now become clear. As regards the other object, namely, the increase of the tax which he proposed, I want to abide by the doctrine which we have already laid down, namely, that the pressure of the tax is uneven. This applies to various types of taxes which the Minister has imposed or increased. As it now is, you get in proportion almost a climbing scale as the paying power decreases. We objected to that, and this is generally the principle we have laid down. We realise that in existing circumstances, and with the war policy which the Government, is following, the Government must impose more taxation to cover the costs. We also consider that it is better to get as much as possible from taxation than to increase the national debt. Yet we think that where the extra money is obtained by means of taxation, it should be the policy of the Minister to apportion it in such a way that the heavier burden shall press on those who are best able to bear the burden. Here we have a general increase. There is an increase as regards ordinary companies of 12½ per cent., and as regards mining companies of 12½ per cent., and of 12½ per cent. in respect of the excess profits tax, but when you come to the personal tax and the savings fund tax then you get a rise of 50 per cent. and 66⅔ per cent. in some cases. That is the percentage rise among the different classes we have mentioned. It is against this unequal rise that we again want to protest emphatically today. In this connection we again want to draw the Minister’s attention to the position of people with small incomes, and I hope that he will soften his heart a little. We plead for the people who under existing circumstances really cannot afford the tax and maintain a proper standard of living. We are particularly pleading the cause of the 70,000 taxpayers, those with incomes between £250 and £400. Among the 70,000 there are people who get wages and salaries and who, as a result of the rise in the cost of living get a measure of alleviation through cost of living allowances that have been made compulsory. But many of these people do not draw salaries or wages and consequently do not have the benefit of increased cost of living allowances. I am thinking of a few particular cases. I am thinking of the cases of teachers and predikants, pensioned men and women who get £250 per annum. The living costs of these people have risen by more than 22 per cent. The £250 which they got before the war is actually worth no more than £205 today. Now the Minister comes and takes £5 from that £205. There remains, in comparison with the pre-war period, a sum of £200 for them. Can one expect those people to maintain a civilised standard of living on that income? In the case of the wage earner who got £250, there is still a cost of living allowance, but the pensioner gets no compensation for increased cost of living, and the Minister’s taxation presses heavily on the aged people and he takes another £5 from them. People at that age are particularly subject to sickness and generally have doctors’ accounts to pay. All these things are dearer as a result of the war, apart from the ordinary cost of living which is much higher. Now these people are to be taxed £5 more heavily. There are other similar cases. There is the widow whose husband has perhaps left her a little endowment of £6,500. All the income she has is the interest on that money. Before the war it was at the rate of 5 per cent., £325. That was her income before the war. But now she no longer gets 5 per cent. interest. Assuming that she gets 1 per cent. less on an average, she now gets £260 per annum for her investment. From that must be deducted 22 per cent. for increased cost of living, so that the real value of what she gets as compared with what she got before the war is £212. And from that £212 the Minister now takes another £5 with his tax. In other words, she had an income before the war of £325, and now as a result of increased cost of living and decreased rate of interest, and as a result of the Minister’s tax, she gets only £207. I want to draw the Minister’s attention particularly to these cases. These are cases among the 70,000 that are affected by this tax, and I want to ask the Minister if he sees no chance at all of exempting them; is it not possible to reduce the burden so far as they are concerned? Cannot they be treated on last year’s basis? Let him then in any case not apply to them the increased initial tax. Cannot the people who get under £400 be dealt with on last year’s basis? It is a matter of principle on which we stand here, and I want to bring to the attention of the Minister with all the earnestness at my command that he should make that concession even at this late stage. It will not mean that he will have to sacrifice much revenue, and he can easily rectify the matter by a small increased tax on the mines. If, where he now shifts up the mine taxation from 20 per cent. to 22½ per cent. he shifts it up from 23 per cent. to 25½ per cent., he will get the additional amount. Then there is another matter in connection with the excess profits tax that I want to touch upon. There we protested, and I want to refer to it again in the light of the inelasticity of the statutory percentage for a certain class of business. We proposed, and we shall again take the opportunity of proposing, that in cases where new underetakings are busy building up reserves for the post-war period—because they know that a period of depression will come—they should be met. I made the suggestion, when the taxation proposal was discussed, that a portion of the 15 per cent. that must be paid should be given back to the businesses in the form of a rebate, on the condition that they use it for an approved purpose, such as for instance the building up of reserves. The Minister said that on the recommendation of the Advisory Committee only 10 per cent. will be paid in some cases, and that it will have the same effect. But what the businesses want is certainty; they do not only want the possibility that the Advisory Committee may do it, but they want these considerations to be taken into account. They do not want to have it hanging in the air, but they want certainty. The Minister said, and he virtually repeated what I said, that the establishment of all sorts of companies should not be encouraged at this stage. In so far as this tax curtails the establishment of undesirable new companies I have no objection to it, but the trouble is that this tax is not selective and will not only discourage unnecessary new businesses that are weak and have no chance of survival, but also all new businesses. The Minister is not acting selectively, and I say therefore that the Minister should make a change, as he did in the case of companies that have to do with the development of base metals. In the same way he can provide that companies which have a good chance of survival in the future, when the war is over, shall also be met, so as to enable them to put their house in order and to meet a depression after the war. The attitude of the Treasury is a narrow one. The considerations that apply in respect of the development of base metals apply also here, perhaps even in a greater degree. The Minister said that the concession would encourage the development of base metals. I say if it is necessary to encourage these companies, it is also necessary to encourage other companies which show that they can survive, which can show that they are able to make a living after the war. The Minister used the argument, also in connection with the development of base metals, that the Treasury does not actually lose money because if they now lose a little, they will again get the money back later. This also holds good for new businesses. If the Minister makes a concession in this respect he will be feeding the goslings which will lay the golden eggs after the war. Thus from the narrow Treasury standpoint it is also of importance to do this. Another argument employed for a concession to the companies that develop base metals, is that the Minister said that it is of a temporary nature, particularly because m many cases the companies will perhaps not be able to exist after the war. There my argument is much stronger, for I plead for companies that will be able to continue after the war and that will be an asset to the country in length of days, and that will be able to contribute annually to the Treasury. We feel that there should be more elasticity in this excess profits tax so as to give this kind of company a measure of preference, a measure of help, so long as the Treasury has the assurance that the concession will be employed to cultivate permanent assets, to build up reserves, or otherwise to assist companies to become a permanent asset to the State. That is the big principle, and that is our standpoint in respect of this tax. We shall deal with the minor points when the House goes into Committee.

I wish to make a few remarks in connection with those provisions of this Bill which affect the fixed property profits tax. As far as that tax is concerned it seems to me that it would have been wise if the Minister had provided that there should be an annual percentage allowed to the owner of the property during the period for which he held it. There are cases, for example, in which the property had been purchased in 1939, after the date on which the tax became leviable. If the Minister had made an annual allowance before the tax could be calculated it would have been more equitable than to say that the tax should be leviable from the original cost price. This relief can take the form of an annual percentage, say, of 6 per cent., and the tax should only be leviable on the balance. The tax in the form in which it exists today is hitting the poor man much harder than the large property owner. Immediately after this tax was imposed, a case was brought to my notice in which a property dealer had purchased a property for £600. He was quite prepared to sell it for £700, but when the tax came into operation he raised the price to £800, and the purchaser, who was a small man and who needed that particular property, had to pay £100 more than he would have had to pay under normal conditions. I am sorry the Minister has not taken into consideration the advisability of exempting small profits from this tax. I suggest that he should consider exempting a small basic profit of, say, £100 before the tax becomes leviable. That would exclude the smaller type of transaction from the operations of the tax, because it is the small purchaser who is loaded with the additional amount and suffers most. The tax should only be levied after a certain basic profit has been provided for. The second point I wish to make is in connection with the cancellation of transactions under Clause 13. This Clause does not provide for the case where the cancellation is a genuine cancellation, and is not made with the object of evading the tax. It seems to me that a case of that nature can very easily be met by an amendment to the Clause which would allow the Commissioner to decide whether the cancellation was made with the intention of evading the tax, and in the event of the person taxed objecting to the Commissioner’s decision, he could appeal to the special court, where the onus would be on the taxpayer to satisfy the court that the cancellation was not made to evade the tax. There must be many cases in which the cancellation was made for some other reason than to avoid tax, perhaps inability to pay or some reason of that kind. The Minister should only be interested in getting the tax where the cancellation was directed to evading the tax, and I would therefore ask him to consider an amendment to provide for this.

The hon. Minister, on a former occasion in connection with the Bill with which we are dealing today, said, among other things, that he was prepared to conduct an investigation into the operation of the excess profits tax or other taxation for the purpose of eliminating anomalies, and to prevent sound economic development from being retarded. That was the promise given to us by the Minister in February. He does not want sound economic development to be retarded, and the result of it is quite interesting, namely, that the Minister has decided to increase the excess profits tax from 13s. 4d. to 15s. in the £. This upside-down method has been discovered by the Minister, and I think he will find it rather difficult to make it acceptable to us. The Minister apparently has at the back of his mind, as he indicated on the same occasion, that industries all live, as he expressed it, “in marble halls”. The Minister made the remark apparently with an eye to the name of one of the new industries, and it may perhaps be valuable and interesting to the Minister to know that this quotation certainly does not fit this occasion, when he considers the historical development of the name. It comes to this, that the name was different. When the place, the first marble industry, originated, it was found that the formation was peculiar. There were a few round holes in the marble, apparently caused by the action of water. The supervisor whom we had there at the time, a simple man from the platteland, knew no word of English. Visitors spoke about the “marble hole”. The superior understood it as “marble hall”. The Minister, without knowing it, in February last said a true word, namely, that he has put new industries in an ugly “hole”. It seems as if something is done in this Bill, but even about that I have doubts for it appears that the Minister is prepared only to grant certain concessions for the development of what he called in his Budget speech “strategic minerals”. I do not know precisely what it is, but the Minister knows, because he must himself draw up an approved list of strategic materials. Thus he will be able to say what is understood by it. But the fact is that the concession, the encouragement, can be given by him only for taking the wealth out of the ground, in other words for reducing the wealth of the country, because every ton of metals or minerals that, is taken out of the ground is sent away, also for strategic purposes, which means that the country is impoverished, and that is precisely what we do not want. We want to enrich the country. It seems that the Minister is very much inclined towards the sort of things that do not contribute to the development of the country but to the country’s impoverishment, for I read in connection with the same legislation, in connection with the same taxation, in the “Cape Argus” of 27th February of this year, a report from their London City Correspondent on this subject. He says—it was just after the Minister’s Budget speech—that in the South African Budget the special levy on the gold mines was increased by 2½ per cent., which was less than they expected. They expected a 5 per cent. increase. The correspondent states further that the increase in the diamond tax was less than they expected. Thus, to their great surprise, the big capitalists in London found that the Minister, so far as the gold mines were concerned, had come with an increase of merely 2½ per cent., while they reckoned on 5 per cent., and they were also surprised that the diamond tax was not increased. They are highly satisfied that they got off so easily. Now the Minister goes ahead in the same way and he is prepared to grant certain concessions only in connection with the mining of minerals and metals, in respect of which he will say what minerals and metals will fall under the provision. This shows that there is something wrong with the policy of the Minister. It seems to me that he perpetually works in the interests of the section who are out to draw capital from our country, to impoverish our country, and to enrich themselves. I want to make it clear that I have the greatest admiration for the way in which our gold mines are organised. I believe that there are few undertakings in the world that are as well organised as the gold mining industry. I also readily admit the great economic factor of the gold mines. I also admit the great significance of minerals and metals, even diamonds. But the great difference between the Minister and me is that I want to build up industries of a permanent nature at the expense, if necessary, of temporary industries which are out to take wealth from our land and send it away and in this manner to impoverish the country. Let me tell the Minister that he has more opponents than I in respect of his policy. No less a person than Dr. van der Bijl apparently also holds the same opinion as I do. On a previous occasion I quoted the opinion which he expressed on the subject. But while the Minister proves by his words and his actions that he is out to impoverish the country, to encourage impoverishment and to promote the extraction of wealth. Dr. van der Bijl declares that we must do all in our power to develop industries in our country. The Minister recently said that the development of our industries cannot progress because we do not dispose of sufficient man-power, but Dr. van der Bijl, according to a statement I have here, dated 10th February of this year, expresses the opinion that everything that can be manufactured in our country should be manufactured here. You see therefore that there is a difference in principle between Dr. van der Bijl and the Minister. Dr. van der Bijl advocates what I have been advocating for years, and for what I have worked. We want to build up industries that will go from strength to strength, while the Minister affords protection to the exhausting industries of our country. This great difference must be put right if South Africa is to become a really happy country. It is not necessary to adduce old arguments again. The Minister knows just as well as I do, and better, that we shall ere long be faced with a great crisis as regards a surplus of man-power, and then the man-power will be available without there being a place for the people as a result of the policy of the Minister. We must follow the policy laid down by Dr. van der Bijl to manufacture as much as possible in our country. The Minister will not take it amiss if I say clearly that this legislation of his is very diappointing, not only to me but also to hon. members on the other side of the House who with me are convinced that our economic salvation lies only in industrial development. That is not only Dr. van der Bijl’s opinion and mine, but the opinion of everybody who has practical experience, which with due respect to the ability of the Minister, he lacks. If he had gone through the mill like those who have gained practical experience, like us who have to sweat and struggle to create something of a constructive nature, he would have more sympathy for our striving and for the policy we preach. Perhaps when he becomes a little older and has had a little trouble he will understand it, but I want to advise him to listen a little to people who have attained more experience than he. Let him try, while the financial burden on our country becomes noticeably heavier, to implement the promise he made on a previous occasion, namely that sound economic development will not be retarded. Some progress has indeed been made during the present war, but the figures which I quoted on the previous occasion prove that this progress is not at all what it ought to be. I want to emphasise again that the progress should be swifter, in strides instead of by crawling. I can only state that the Minister’s industrial policy does not encourage big industrial development in our country, but that his policy will rather result in the ultimate exhaustion of South Africa, when we shall be left with a lot of holes while other countries reap the advantage of the wealth of our country.

I can only express my disappointment at the fact that the Minister is not prepared to exempt amounts used by the farmers to decrease their bond burden from this war taxation. The Minister cannot get away from the fact that the bond burden today, so far as bona fide farmers are concerned is still very big. He knows that the agricultural unions have repeatedly urged upon him to come forward with a bond redemption scheme. Not so much pressure is being brought to bear on the Minister today to come forward with such a scheme because of the increased prices that are obtained today in war circumstances. But does the Minister not realise that he should make use of this side to come with a scheme to help the farmers to reduce their burdens? The farmers must be encouraged, and opportunity must be created for reducing their bond burdens. The Minister knows that immediately before the war, during the 3 years which he lays down as the basic years on which the incomes must be calculated for taxation purposes, were years that were particularly unfavourable to the farming community and during which their incomes were low. Now, as the result of the increased prices, if the farmers want to make use of the improved conditions in any sense, they run the danger that the Minister will take 15s. out of every £. For that reason we come and ask the Minister to exempt these people from excess profits tax, because they lose the income to reduce their mortgages. A more reasonable request cannot be made to the Minister. Where we ask this and he pays no heed to our request, I cannot but express my deep disappointment. I want to ask him to think of what happened on a previous occasion in similar circumstances. Then it was a benefit for the gold mines arising from the departure from the gold standard. Great profits were made by the gold mines as a result from the departure from the gold standard, but then a gold premium excess profits tax was not imposed. The Minister did have a special gold tax at the time, but under the tax certain concessions were yet made. He allowed the gold mines for instance to deduct from the taxable profits certain contributions for development work to enable them to mine low grade ore. He met the mines. We now have similar circumstances so far as the farmers are concerned, and he ought to exempt the farmers in these circumstances, i.e. bona fide farmers who avail themselves of the better prices to pay off their bonds. Because he does not do this, I am afraid that he is tempting the farmers to increase instead of decrease their capital committments. They see that they have to pay 15s. in the £ to the Treasury, and for that reason they are tempted to invest the money by purchasing stock or purchasing more land. That is human. The people are not all so sound of judgment as to remember that the tax may catch them in future. I want to ask the Minister to consider this matter further, and then to move an amendment on those lines at the Committee stage. The Minister said this morning that he is going to extend certain concessions to mining companies that work copper or other base minerals so as to enable them to redeem their capital within a short time. If there is one industry that we can compare with an industry for the exploitation of base metals, an industry that has to do with the exploitation of ore of a low grade, then it is the farming industry, and if the Minister can give more concessions in connection with the development of mining, then he should meet this industry of a low grade in a particular measure. We have to do now with an increased demand for farming products and the Minister should now follow the policy of enabling the farming industry to strengthen itself in such a way that it is exempted from the depression difficulties that lie ahead. The Minister says in respect of those mining companies that he considers that he will get his income in future. The same applies to the farming industry. We know that there is going to be a tremendous slump after the war and we should therefore give the farming industry an opportunity of strengthening itself so that the industry can withstand that slump. I therefore want to urge strongly upon the Minister to consider this matter and to see whether he cannot accept a concessionary amendment at the Committee stage.

I would first of all like to deal with the excess profits duty, and some aspects of that tax. The Minister has in this Bill raised the rate of tax from 13s. 4d. in the £ to 15s., and I do feel that that is rather an indication of the lack of appreciation of the difficulties under which new industries have been struggling under this particular tax. The difficulty with the rate of tax, as I see it, lies in one feature, namely, that the excess profits are not limited to taxation under the excess profits tax alone. The procedure has been that of the amount of excess profits, a duty of 13s. 4d. in the £ was deducted, and on the balance of 6s. 8d., taxation under other headings has been levied. The net effect of that has been that the aggregate tax on the excess profits has been—I think it is safe to say—anywhere from 16s. to 17s. in the £. The balance of the tax is subject to quite a large number of taxes. There is in certain cases, the normal and super tax, the companies tax, the foreign resident shareholders’ tax and the provincial tax and the personal and savings levy. All these taxes are piled on to the profits that are made under the heading of excess profits. I want to suggest to the Minister that it would simplify our taxation if the excess profits were limited to taxation under the excess profits tax alone, so that the balance is free from these numerous other taxes. I think that is particularly important now, because as the rate has been increased to 15s., we are getting to a figure which is likely to do more harm than good. In England, and I think the position is now the same in Canada, the rate of excess profits tax is 20s. in the £, but it is necessary to bear in mind that the rate of the tax alone is 16s. in the £ there. The remaining 4s. represents a compulsory postwar saving, so that in those countries the actual rate is 16s. in the £. We in this country have reached the figure of 15s., which is very close to it, and I would like to ask the Minister to give careful consideration to the point I am making. It would be better at 16s. in the £ free from these other taxes than at 15s., with the balance subject to those other taxes. In the calculation of excess profits, various factors creep in which really produce a fictitious figure for the excess profits. The Commissioner has the power to control the amount paid to a manager or a director. I have had examples brought to my notice recently of the extraordinarily drastic manner in which the Commissioner is interpreting those powers under that Section. I have a case where in one engineering industry the manager was paid £2,000, but the Commissioner arbitrarily decided that £850 was quite enough for that man, and the firm has no redress in the matter. I have another case where the manager in question received as much money before the war as he is receiving today. He is operating under a contract that has been in force for many years. In this case the Commissioner decided that he was getting too much money and he arbitrarily reduced the figure. In this particular case an appeal was noted, and here the Section of the Act provides that any decision of the Commissioner in this connection shall be subject to objection and appeal. The special court which heard the appeal increased the figure, meeting the position half way between what the company had shown as remuneration and what the Commissioner had allowed. The Commissioner is now taking up the attitude that his decision is not subject to appeal to the income tax special court, and I begin asking myself where we are getting to when we have an official like that acting in this arbitrary and most drastic manner. He is giving to excess profits an entirely fictitious figure, and on that fictitious figure the taxpayer is called upon to pay a tax of 15s. in the £. It is necessary to make sure that the rate of tax does not act as a retarding factor, and I now commend to the hon. Minister the idea that the excess profits should be subject only to the Excess Profits Duty Tax, and that they should not be subject to the many other taxes, as is the position today. With regard to the innovation in this Act dealing with strategic base minerals. I do not want to compliment the Minister on the innovation, but I want to say at the outset that I do not quite know why it has been necessary to introduce this innovation, because, reading the provision of the Act as it was introduced in 1941, it would appear that the Revenue Advisory Committee have had the discretion that is provided for in this Act, and it makes me wonder if my interpretation of that section is correct, whether the Revenue Advisory Committee has broken down in some way or other in this connection. However, I fully agree and I fully endorse the Minister’s action in this matter, that in connection with these strategic base minerals, the life of the mine should be limited to one year, and that the capital expenditure subject to amortisation should be recovered over that year, the effect of that being that all the capital which ranks for amortisation will be recovered before the profits become liable to excess profits duty. I am not sure as to how far the Minister is going to go in this connection. The Bill before us provides that the Minister will make up a list of the minerals which he considers to be of strategic importance. I would urge upon the Minister not to be ungenerous in drawing up his list. I would ask him to make his list sufficiently comprehensive so as not to restrict the deliberations of the Revenue Advisory Committee. That is the first point. Secondly, the Revenue Advisory Committee, in its recommendations may go further in allowing capital expenditure which does not rank for amortisation. It may be as well to explain what capital expenditure does rank for amortisation. It is capital expenditure on shaft sinking and plant, but it does not include capital expenditure on the property. I presume that the Revenue Advisory Committee will be able to make recommendations in respect of capital expenditure on amounts, which are not admissible under the amortisation heading, which will include an item such as the cost of the property. It would be singularly fair if it did, because all mining properties are wasting assets, and the only means that the shareholder has of recovering the cost of the property is from the profits made in the process of winning the metal. There I hope the attitude of the Revenue Advisory Committee will be one of a generous character, and if it is so it will go a long way towards assisting in the development and the production of strategic base minerals. I notice that the Minister intends to apply this particular provision only to propositions which come into existence after this Act has become law. I think it is a pity that it should be so restricted, and here I feel that it would be highly beneficial to the country, if this provision were made retrospective to cover existing properties, and which are having a hard struggle indeed, because of the onerous effects of the taxation. The mercury mine has been referred to here on several occasions. Under these conditions, that mine will not rank for the concessions we propose to confer on future concerns. That mine has spent a considerable amount of capital expenditure, and it is a pity to deny it the same concession which we are here conferring on new companies. The Minister referred to Namaqualand copper. I want to point out that the Act in question goes further than the Minister really gave us to understand. That Act provides that the Namaqualand copper concern will be free of all taxation, not only excess profits but the normal tax as well, that that company cannot be taxed until such time as it has recovered from its profits all its capital expenditure. The Minister has told the House that the effect of that Act was very beneficial to the country. I submit that that was a very wise measure. Its operations can only ensue to the benefit of the country. In the present Bill we are not exempting a mining concern from all taxation. The provision here is to exempt it only from the excess profits tax, until such time as its capital expenditure has been recovered. If the Minister would go further and do as we did in the case of Namaqualand copper I should be extremely happy to support him in that connection. The Minister, in introducing this Bill, unwittingly I think, omitted to tell us about on section contained in the Bill. That is the section dealing with the assessing of more than one company under one heading; in other words, assessing parent and subsidiary companies as one tax entity. The memorandum sets out the position, and the effect of it is that the Minister now proposes that the provision, which exists today and which enables the parent and its subsidiary companies to be taxed as one tax entity, should be abolished. I see the grounds given in the memorandum are that all companies have now had ample time to establish their right to be taxed as one tax entity, and that the need for this provision now evidently falls away. The position is not exactly in that light. There are a number of companies who have not established that right, but which would like to be able to do so once they get on to a profit-making basis. I know of one particular case, where up to the present the company concerned has been making no excess profits, and therefore the company has not applied and caused the Revenue Advisory Committee to investigate its case with a view of establishing whether or not it will be entitled to be assessed as one tax entity. I can conceive that under this section of the Act, subsidiaries may be brought in largely for the purpose of evading the tax. But I do not think that is sufficient justification for abolishing this right. This matter was very carefully discussed in 1940 and 1941, and it was in 1941 that the right to tax the parent and subsidiary companies as one entity was introduced. I think it is a pity to abolish this condition, but I would say that if the Minister wants to abolish this, then I would ask him not to abolish it but to qualify the present provision to the effect that where companies are in existence at this date and have not established their claims they will have the right in the future when an appropriate occasion presents itself to come forward and have the right established. I hope the Minister will give his consideration to this point. Then I come to the trades profits special levy. Under the trades profits special levy the Minister is proposing a small amendment, which has a bearing upon the calculation of the pre-war standard on the statutory percentage basis. I think his amendment is perfectly reasonable, and I see that in practice, what is being given effect to has been the policy adopted by the Department. It is quite fair that the statutory percentage should be based, as this Bill now provides, but in this basis the statutory percentage allowed is a flat 8 per cent.; there are no considerations for variations in risk or any other feature, and it is subject to a minimum of £3,000. That minimum of £3,000 is generous, as I see it, in its application to partnerships and individuals, but in its application to the private company it is a most iniquitous condition. A private company which has five partners can only get £3,000 as an abatement between the five partners. But if those five persons are in a partnership they can get a £15,000 abatement, that is £3,000 each. I would urge the Minister to explore ways and means of evening up the position of the shareholder in the private company with that of the individual or the partner is the partnership. The individual or partner will get a rebate of £3,000 whereas the company is treated as a tax entity and gets £3,000 as a rebate only. That condition is giving rise to the most unfair taxation. I have already given the case of a shareholder who paid £61 in income tax in 1941, and who by virtue of this very provision is in 1942 paying £387, and his income is £1,250. If he were earning £3,000 he would not pay £387 taxation, and the effect of this provision is this, that this shareholder, who has an income of £1,250, finds that one year he pays £61 and the next year he has to pay £387 on the same income. It is grossly unfair, and that case is not an isolated case by any manner or means. This hardship applies to any shareholder in a successful company, and the more successful the company the greater the severity of the tax. If the Minister can see his way clear to modify this condition—the application of the minimum amount of £3,000 to a private company—he will go a long way towards removing a great deal of dissatisfaction which exists in regard to this tax. It is a bad tax; it is based on no principle. This is the most discriminating tax we have on our Statute Book. In the debate yesterday upon the Indian issue, I heard objections to discrimination voiced by the hon. Minister. Let me say, Sir, that the greatest discriminations in Acts passed in this House during the past two years are to be found in the hon. Minister’s own taxation measures. It is discrimination of a type that almost passes comprehension. Finally, I want to deal with a few points affecting the fixed property profits tax. The new provision that is inserted in this Bill, giving the Commissioner the power to cancel an existing sale, is a good condition in the circumstances for which it was devised. It is quite conceivable that the practice to which the Minister referred would be resorted to, and that it would result in a considerable evasion of this particular tax. But here again, in the effort to tighten up the Act, it often results in giving the Commissioner powers which can create the most serious hardships. This provision is not subject to appeal, and I want, to ask the Minister to make it subject to appeal to the Income Tax Special Court.

Are you referring to the fixed property profits tax?

Yes. I believe there is an appeal only in respect of Section 37, and this is only in regard to the decision of the Commissioner as to whether a private company is a property company or not. In the exercise of his discretion the Commissioner, I am sorry to say, does not always go into the case very carefully. His discretion can be and is sometimes delegated to junior officials.

Do you say the Commissioner has the power to cancel a sale? Where is it in the Bill?

What Clause are you referring to?

It is in Clauses 13 and 16.

He has no power to cancel the sale.

I am sorry, I was going on the wrong line. He has the right to treat the sale as cancelled, and the property as reacquired.

It is not in his discretion.

To get this point perfectly clear—where a sale has been cancelled the Commissioner has the right to treat that transaction as though the sale had never been cancelled.

The Commissioner has no discretion there. The hon. member for Pretoria, Central (Mr. Davis), wants to give him discretion, but he has no discretion.

He is entitled to do it under this Bill.

It is not at his discretion.

Who has the right to cancel it? Who has the right to negative the cancellation?

The law does that.

I do not see that here at all. Well, I shall pass on from that point. Then there is the other point which the hon. member for Pretoria, Central made, which was also made last year and which I would like to ask the Minister to consider. This tax of 13s. 4d. in the £ applies to every penny of the profit from the sale of fixed property, whereas the excess profit duty is allowed the statutory percentage of the pre-war profit as an abatement. I think it would improve the tax considerably, if there were some minimum exemptions provided for, either in the shape of a fixed sum, so as to prevent small transactions from being included, or on the basis of a percentage on the profit. The hon. member for Pretoria, Central suggested 6 per cent. Personally I think 6 per cent. would be unduly generous in the case of fixed property. It might be a lower percentage. I think that would be a fair provision. In other respects I think the Bill is highly desirable, and the Minister has introduced several amendments here which are improving the position considerably.

I think it is common cause that the Treasury is very disappointed at the yield from the fixed property profits tax, and the Minister has indicated that there are probably two reasons why there has been this disappointing yield from the tax. The first is that there have been evasions, and secondly, that the tax does not apply to transactions entered into before October, 1939. I want to deal only with the question of evasion, and I want to put one or two suggestions to the hon. Minister.

Always gratefully accepted.

In the Transvaal, under the Transfer Duty Proclamation, it is stipulated that a sale of immovable property shall not be valid unless it be reduced to writing and signed by the parties thereto. But in actual practice, as a conveyancer of many years experience, I find that I may fairly say that 50 per cent. of the transactions in regard to immovable property are not in writing, and the question of the validity of the contract can only arise where there is a dispute between the parties. But we find in practice in a great many cases that the purchaser and seller simply come into your office and say: “This property has changed hands; will you put the transfer through.” We then simply draw up the declarations of purchaser and seller. Those declarations are submitted to the Receiver of Revenue when you tender your transfer duty. The deed of sale is not filed with the Receiver of Revenue, so he has no information as to the details of the transaction. He knows only that the purchase price is a round figure. I would suggest to the Minister that it would go a long way towards tightening up the provision of this tax if it is stipulated that every transaction in connection with the sale of immovable property must be in writing and further that when the declarations of purchaser and seller are submitted to the Receiver of Revenue they must be accompanied by a written deed of sale. That deed of sale shall stipulate what the purchase price is and it should stipulate how that purchase price is computed. The case which has been put by the Minister, namely that in some of these land transactions you might have a sale of property where movables are sold with the land and where a stove, for instance, is put in at £500, would disappear, if the deed of sale, specifying how the purchase price is made up, were submitted to the Receiver of Revenue. The Receiver of Revenue would then be able to see at a glance how the purchase price is computed.

Business suspended at 12.45 p.m. and resumed at 2.20 p.m.

When business was suspended I was dealing with the question of evasion of the fixed property profits tax, and I suggested to the Minister that the law should be amended so as to provide that in every case of a sale of immovable property a deed of sale must be entered into and that when the declarations of purchaser and seller are tendered to the Receiver of Revenue they must be accompanied by that deed of sale.

What will that help? They will simply attach a bogus deed of sale.

That will be fraud.

It will be fraud in any case.

Well, when it comes to fraud then any person can evade any Act.

But how do you get over the difficulty by this suggestion?

My suggestion embraces this, that if the deed of sale is submitted to the Receiver of Revenue he will be placed in a position where he can see how the purchase price is computed. If in the purchase price and the land there is included a price for the purchase of movable assets, he will be able to see it. As the matter stands today, all that the parties have to do is to submit declarations of purchaser and seller to the Receiver of Revenue, and only the total amount of the purchase price is stated. There is nothing therein to indicate to the Receiver of Revenue that that purchase price may include the price of movables, so that there is nothing to show the existence of another transaction such as the Minister visualised this morning—the case of a stove being included in the purchase price and being inserted at £300.

Can you compel them to put that in a deed of sale?

I submit that if the deed of sale is a correct record of the transaction then that item will figure in the deed of sale as something apart from the price of the land. It has been said that the Receiver of Revenue has the power to call for the production of a deed of sale, but that request is easily met by the parties saying that there is no deed of sale, and then the Receiver of Revenue is powerless. In order to remedy that state of affairs, I suggest that if it is made obligatory on the party to exhibit to the Receiver of Revenue the deed of sale in every case, it would overcome the difficulty to some extent; it would enable the Receiver of Revenue to check up on this purchase price.

How does the absence of a deed of sale affect the legality of the contract?

As the law stands today, if there is a dispute as to whether or not there was a sale, then in the absence of a written agreement, the Court presumes that the sale is null and void under the Transfer Duty Proclamation in the Transvaal. I do not know what the position in the Cape is. I think the House will agree with my suggestion when I point to this further fact, that in this amending Bill the Minister intends to eradicate the abuse also of the cancellation of a sale between the parties in order to evade the tax; that is where A sells to B and B then sells to C and where, in order to evade the tax, the sale between A and B is cancelled and A sells direct to C. I suggest to the Minister that this also may be very difficult to detect in the absence of a written deed of sale—and it may well be that where there is no deed of sale in existence it would enable the parties very much more easily to evade the law by saying that the sale between A and B was verbal and that there is only a written deed of sale between A and C. I suggest to the Minister that unless he takes power unto himself in this Bill to close up this gap, that the safeguard which he has inserted here with regard to the cancellation of the sale will not be effective; I suggest that it will be possible to evade it completely in the absence of a deed of sale. I would also submit to the Minister that in addition to laying down that there should be a written deed of sale he should amend the present forms which are in use in connection with this tax, the forms which are signed by the purchaser and seller. I suggest that provision should be made in these forms that every item bought by the purchaser should be specified and that the price should be stated opposite the article. I submit to the Minister that the forms, as they read at the moment, are not completely comprehensive enough to close this gap of evasion. I make these suggestions to the Minister in the hope that he will refer them to his advisers, to the Commissioner, for consideration, because I feel, after many years of experience, that the absence of the deed of sale is the crux of the matter, and if the law is tightened up to provide that in every case there shall be a deed of sale, where land is sold, it may have the effect of closing up this gap.

I would like to associate myself with hon. members on this side—the hon. member for Fauresmith (Dr. Dönges), the hon. member for Oudtshoorn (Mr. S. P. le Roux), and particularly also the hon. member for Orange Grove (Mr. Bell)— who again emphasised the fact that the Minister’s taxation proposals have an extremely unfair and discriminating effect on various taxpayers. It is so bad that even a loyal supporter of the Government, such as the hon. member for Orange Grove, had to express himself this afternoon in language that one cannot view as anything but indignant language about the terrible difference that is made between taxpayers who have precisely the same incomes. It is characteristic of the taxation proposals of the Minister that not the least attempt is made to provide an equal scale of taxation in respect of persons who have the same incomes. I do not want to enlarge on this matter. I just want to give you an instance, and that is the difference in taxation that has to be paid by someone who has no prewar standard and someone who has such a pre-war standard. The one who has no prewar standard pays this excess profits tax. Let us take an example. Take the case of a young farmer, a doctor or a business man who started after the outbreak of war. He attains success; he conducts his farming or his business without making any profit from the war, but entirely on an ordinary sound basis he gets so far as to make an income of £4,000. There is no question of war profits. It is ordinary expansion of business. Then on a sum of £2,500 he must pay 15s. in the £ excess profits tax. He must pay this terrible tax on the whole income above £1,500, and this means that this person must pay £1,875 excess profits tax. Now take another person who before the war had an income of £4,000, and who still has an income of £4,000. He pays only 6s. 8d. on an amount of £1,000, namely the amount above £3,000, so that his tax comes to £339 6s. 8d. This is what the Minister calls special tax on industrial profits. This sort of thing cannot but create indignation among the public, as the hon. member for Orange Grove (Mr. Bell) said. The one person has to pay almost £2,000 in taxation, and the other person pays a little more than £300 on precisely the same income. I shall leave it at that. I have mentioned this example to reveal clearly how unfair the Minister’s taxation proposals work out. Just another little point in this respect. If there is one thing one cannot emphasise strongly enough then it is that the pressure of taxation should be uniform. The second is that m so far as this war is concerned, extra taxation should be imposed only on those who can bear it. In other words, instead of the Minister virtually extorting money from people with small incomes of £250—I refer to the personal and savings fund tax that has been increased from £5 tot £7 10s.—he should rather increase the income tax in such a way that where he now levies 15s. in the £ above the pre-war standard he should levy an income tax that will take virtually everything above £4,000 and £5,000, so that people with big incomes who do not feel the tax so much shall pay the extra taxation. A man with an income of £4,000 can live decently, and the Minister should rather impose taxation on such incomes and if necessary take the whole income above that amount instead of extorting money from poor people who find it very difficult today to make a decent living in view of the increased cost of living. Then there is another aspect of the matter in so far as this excess profits tax is concerned. The Minister is aware of the fact that during the past few years the Afrikaans-speaking section, who in the past had precious little share in the business world, have slowly but surely come to an awakening and have participated in this sphere of our economic life on an increasing scale. During the past few years the Afrikaner has made his presence felt more and more in the sphere of trade and industry. He has raised his head there. But this excess profits tax of the Minister makes it virtually impossible for those people to develop in that direction. We feel this tax more that do the English-speaking section and the Jews, for they have long since been established in the business world, in the sphere of industry and trade. They have a pre-war standard. The Afrikaans-speaking and the English-speaking sections—but I mention particularly the Afrikaans-speaking section because they have only now started—find it almost impossible to expand their businesses, for as soon as their incomes rise above £1,500 the Minister takes practically everything. It does not help at all to say that 12 per cent. is allowed on their capital. What expansion can those persons bring about with the small amount which the Minister allows them as a profit of 12 per cent. on the capital? They cannot develop. The Minister is strangling them to death. I want the Minister to realise that we feel this tax more than do the English-speaking section and the Jews because we are in the unfortunate position that our people started taking an interest in trade and industry, and commenced their participation in trade and industry, only during the past few years. Apart from this, the taxation proposals of the Minister have the effect of preventing the smaller undertakings from expanding, while the big undertakings can develop. If a big undertaking can make a profit of 12 per cent., then there is still a fair sum over for development. When it is a small undertaking, then there is precious little over. It is very unfortunate that the position should be so, for if ever there was a chance for South Africa to take a big step forward industrially, then that chance is now. It is difficult today to import commodities from overseas, and we now have the opportunity to start manufacturing commodities that were previously imported. But these taxation proposals made it virtually impossible for smaller undertakings to undergo any expansion of business worth mentioning. I, therefore, want to support the plea of the hon. member for Fauresmith (Dr. Dönges), that in this respect the Minister should give greater concession so as to allow the younger industries to build up and expand their undertakings, not only in their personal interest but in the interest of the country as a whole. I say again that if South Africa wants to be anything in the near future, or even in the distant future, then it must be able to provide a livelihood to a much larger European population than we now have here. That expansion can only take place if South Africa develops industrially, and that development cannot take place with these taxes of the Minister which press so heavily on the country. I want the Minister to take this into consideration. There is another little point, namely the one which the hon. member for Oudtshoorn (Mr. S. P. le Roux) touched upon, and that is that if farmers pay off their bonds from excess profit then that money should be exempt from this tax, should be exempt from this terrible excess profits tax. The Minister ought to realise the fairness of this request. It is stated by the Department of Agriculture as well as by other persons who can speak with authority that if there is one thing from which the farming community in South Africa is suffering, then it is the fact that their farms are over-capitalised and too heavily mortgaged. The result has been that the Government has had to intervene from time to time in the past to assist the farmers in this respect. The farmers are being told ad nauseam and quite correctly that they should make their position sounder by reducing their bond indebtedness. Thence also the perpetual requests to the Government that it should, in view of the millstone that hangs about the neck of the farmer, it should create a debt redemption scheme. The Minister of Finance has come forward with a sort of redemption scheme, because he realises that the whole farming industry is crippled by the burden that rests upon them. Here we now have a golden opportunity, such as the farmers have never had before, of getting rid of this mortgage burden. But what does it now avail the established farmer, in the circumstances we have today where improved prices prevail, to expand his farming? It avails him nothing. Nobody will do it. It does not pay the farmer to take the risk. If before the war the farmer did not have a bigger income than £1,500, then it means today that as soon as he expands his farming and his income rises above £1,500, then he must pay 15s. in the £ tax on it. In the circumstances the farmer will not consider it worth his while to expand his farming. No farmer will do it. If the Minister will now allow the money which the farmer pays off on his bond to be exempted from this excess profits tax, then it will assist materially in placing the farmer’s position on a sounder basis, on a sounder footing, than the one prevailing at present. If the war continues for a year or two, I can give the Minister the assurance that if he continues with this tax which rests upon the farming industry the farmers will not be in a position to attain the sound position where the State will no longer have to issue alms. I want to ask the Minister, therefore, to consider this point and to meet the farmers in this respect.

I am glad that we are getting the support, at the eleventh hour of the hon. member for Oudtshoorn (Mr. S. P. le Roux) and the hon. member for Waterberg (Mr. J. G. Strydom) for a motion which we introduced from these benches on 16th January, namely, that where a farmer sells stock and devotes the proceeds to a reduction of his mortgage, that these proceeds shall be exempted from the excess profits tax. It emphasises the gravity of the matter and the necessity that the Minister should pay serious attention to it. He will recall that we repeatedly raised that point on these benches and that we pleaded and urged that this should be done. Today we have received the support of the official Opposition for our plea. This is no mere propaganda point that we are raising, but it flows from a really vital necessity for the platteland population. We cannot get away from the fact that trade and industry and all branches of national activity are fundamentally based upon the agricultural industry. At the moment the agricultural industry has the opportunity of recovering to a certain extent from the setbacks of the past. But now the Minister comes with this heavy tax which is of such a nature that it becomes impossible for this industry and for the individual to recoup by benefiting financially from the improved price level of agricultural products. I employed the illustration the other day that the economic system in our country is like a tree. The roots and the stem are the agricultural industry, and from those grow the branches such as secondary industry, factories, etc. The leaves on the branches represent the people who live in luxury. If you continue tampering with the roots and the stem of the tree then you must expect the sap to recede from the branches and the leaves, and that is the commencement of the death of that tree. Here the Minister is busy withdrawing the sap from the roots and the stem of the tree by his taxation system. Where the roots and the stem are injured, it must of necessity cause the drying up and the death of the branches and the leaves. That is an inescapable fact. This tax affects the farmer particularly heavily because he goes bent under the income tax. The stock farmer had two alternatives. He could choose to pay on the stock which he converted into cash. In other words, even though the stock he sells represents 100 per cent. capital, he has to pay tax on that 100 per cent. of his capital. It has developed to the point where it is nothing less than capital confiscation. The other choice was that he should pay on the increase of his stock. That choice represents a fair basis. The cash basis is obsolete, and although the farmer had a choice in the past, the whole matter should now be reviewed afresh. The people now have a sounder realisation of the position, and the farmers will today make a better choice on a sounder economic basis. The Minister can perhaps not visualise the situation as can someone who is directly concerned in farming, but he can take my word of honour for it that this system affects the farmer at the core of his existence and it is impossible for him to recover under the present system. The Minister should take it into review. I had hoped that this Taxation Bill would comply to the plea which we directed to the Minister on 16th January, but it really seems now as though the situation has crystallised like a rock and that we cannot get away from it. I want to ask the Minister again if it is not possible to take the whole question into review?

Mr. Speaker, I hope the Minister will regard this as the proper time in which to ask the Minister whether he has come to any conclusion in regard to relief for those farmers in the Vryheid district whose cattle are being slaughtered.

I am considering that in connection with the Committee stage of this Bill. If the hon. member wishes to make the point, let him please do so, but I shall consider it in connection with an amendment at the Committee stage.

I am glad it is under consideration at the moment, but at the same time may I mention the relief of farmers generally who are devoting themselves to increased production? These should have some encouragement in the shape of relief from excess profits duty. It is unreasonable to expect a farmer who is only growing a certain amount of produce which falls below the excess profits duty to grow an additional amount when he will be immediately subject to a tax of 15s. in the £. No man on earth can embark upon the expensive and harassing business of farming for increased production with the prospect of such a low profit as 5s. in the £.

That is what he is left with.

I feel that this is a very serious question in view of the urgency of increasing production. We are having an experience which we have not yet gone through owing to the mealie shortage, and we are just beginning to realise what this shortage will mean in ultimate cost to the farmer. There is no doubt that this prospect of excess profits duty is hampering the policy of the Food Controller in his endeavours to encourage production among the farmers. Now another point, and that is this question of taxing dividends on shares which are held in Great Britain.

That is not in this Bill; that is in the Income Tax Bill.

Well, I hope the Minister will not regard the outlook of the farmer for the next twelve months with unconcern. It is a very grave problem, and I hope the Minister will realise that it calls for relief.

In Clause 1 of the Bill the Minister proposes to increase the special contribution of the mines from 20 per cent. to 22½ per cent. According to the rules of this House we cannot propose an increase. But I want to appeal to the Minister nevertheless to take this matter into review and to increase this percentage. I want to draw the attention of the Minister to the fact that if we take the taxation which the mines paid before the war and compare it with the taxation which the mines paid last year, then we find that the mines paid about £1,000,000 less last year than before the war. Now compare that with the colossal increased revenue from taxation sources, the taxation on mines and persons which the Minister has obtained, and then it is proof to us that the mines do not contribute what they ought to contribute to the war effort. If we go further, it seems that the Minister expects progressively less from the gold mines. If we compare the figures of 1943 with what the Minister expects for the year 1943-’44, then we find that the Minister expects to receive £797,000 more from the special contribution.

£910,000.

Well, let us take that amount. But if the Minister goes into the position he will find that the other taxes which he expects from the mines show a considerable decrease in comparison with last year. As regards normal tax, he expects to receive £1,962,000 less from the gold mines. As regards overseas dividends, he expects £95,000 less. Altogether, therefore the Minister expects over £2,000,000 less than he received from these two taxes last year. If we add the increase of the special contribution, it means that the Minister still expects £1,000,000 less than last year. The reason why I am pleading that the Minister should increase the special contribution is this, that today 50 per cent. of the war expenditure is defrayed from income, and the other 50 per cent. is found on loan account. It is debt we are making. The mines are a waning asset, and the day will come when this debt will have to be paid, when all the other taxation sources will have to be tapped to redeem this debt, and then the mines will not be able to make their rightful contribution. For that reason we should take as much as we can from the mines today, so that they contribute their share towards redeeming the national debt. The Minister does not do this, for the taxation on the mines is being decreased. If the Minister bears in mind that the rest of the population are being taxed enormously to defray this war expenditure of £100,000,000— it virtually means £50 per head of the population—and if we bear in mind also that we are increasing the debt annually so that it is virtually becoming unbearable for a European population of 2,000,000, then I say that the Minister should accept our suggestion to obtain as much as possible from the gold mines. Their contribution to the taxes should be increased instead of being decreased. The Minister will say that the taxation on the mines is so heavy, and that their capital burden is so heavy that they cannot pay more taxation. In that connection I want to point out to the Minister that the mines are permitted to build up reserves from revenue in order to redeem their capital. When a mine becomes exhausted then it has had the opportunity of redeeming its capital from income that was exempt from taxation. This means that the money invested in the mine has been paid back in full. In the second place the Minister allows the mines to deduct certain costs before the gold premium is taxed. He allows a deduction to be made for the capital invested in the mines for development. All this must be taken into consideration. What is more, is this. We find that the Canadian Government, as a means of obtaining funds for the war, went so far as to impose a tax of 15 per cent. on the dividends that are paid out to foreign shareholders. Here in South Africa the gold mining industry is a waning industry in which foreign capital is invested, and we find that the Minister imposes only about half of that tax on foreign dividends. I want to ask the Minister of Finance on what grounds he justifies it that those people who receive dividends from the mines should be taxed by only 7½ per cent., while a country such as Canada taxes the dividends that go out of the country by no less than 15 per cent. The companies in South Africa that are sound businesses will continue to be there for years and years and the Government will get its revenue from them, just as in Canada, but in Canada they tax the dividends that go out of the country much higher than we do, while they protect their own industries in their country. But the Minister allows a gold-mining industry such as we have in South Africa, which is a waning asset, which perhaps will not exist in ten or fifteen years when little or no taxation will be obtained from gold, to send dividends overseas and he taxes them by only 7½ per cent. That is not fair. He should take what he can from the mines, and what it is fair to take. Why can Canada impose 15 per cent. on the dividends sent out of that country, while we in South Africa tax the dividends that are sent out of the country by only 7½ per cent.? If the Minister increases the tax from 7½ per cent. to 15 per cent. then it is not necessary to impose the extra 15 per cent. on our population. Then he will get enough from that source so that he need not tax our population so heavily. Now compare the gold mines that export from £18,000,000 to £20,000,000 annually in dividends, that make from £18,000,000 to £20,000,000 nett profit after they have built up their reserves and have written off development capital, with an industry which has only a small income and which has to pay 15 per cent. in taxation. How can the Minister be so unfair and unjust to impose the additional 15 per cent.? He can take it from the gold mines which are making enormous profits and which can afford it. I say this particularly because when the gold mines in South Africa become exhausted there will be an economic dislocation in our country that we shudder to think about, and then the rest of the population will have to suffer the tremendous reaction, the collapse that will follow in the economic sphere. The burden will have to be borne by the farming community, by trade and industry and other sources of income. If the gold mines close, tens of thousands and even hundreds of thousands of workers will be unemployed and will have to be absorbed in agriculture, trade and industry. No revenue will then flow from the mines, and the other industries will have to bear the burden. Nobody has expressed the position more eloquently than the Minister himself-. He says that if the price of gold fell to the normal price that was obtained formerly then quite a few of the big mines would have to close. We see how the income of the mines is busy dropping, and the Minister is therefore justified to ensure that the mine magnets should not make more profits than they are entitled to. The test is that another country imposes 15 per cent. taxation on the dividends that go out of the country, whilst South Africa imposes only 7½ per cent. The Minister appears to be more concerned about the people overseas than about the interests of our own fatherland.

I just wish to ask the Minister one question in regard to the timber farmers.

They can be dealt with by the Revenue Advisory Committee.

Do they come under the excess profits duty?

They can be specially dealt with by the Revenue Advisory Committee, under the ruling given.

I do not want to go into particulars, for it has been pointed out time and again how unfair and uneven the taxation pressure is. I associate myself with the hon. member for Oudtshoorn (Mr. S. P. le Roux) who pleaded that the farmers, when they use their incomes to pay off their bonds, should not be taxed in so far as the amounts are concerned which they use to reduce their bonds. For once in their lives the farmers now have the opportunity of reducing their debts. Give them the chance. I protest against the action of the Minister in imposing his taxes so unfairly. He is busy killing all initiative. He taxes the young industries and the young professional people, but the older people, the older concerns that reached their zenith before the war, which reached the highest rung as regards profits, the Minister leaves scot free. The young and progressive undertakings he taxes more heavily. That is unjust. The Minister will have to come to the point where he will have to bring about a change so that people are taxed equitably. The Minister reminds me of the history of the Israelites. He reminds me of King Rehabiam. When the people started murmuring and protesting about the terrible burden he was imposing upon them in consequence of the construction of the Temple of Solomon, and when they ultimately came to revolt, Jerobiam became the leader of the revolt and he went to the king and said that the people could not bear the burdens and that Rehabiam should give relief. Then the reply of the king was: “My father chastised you with whips, but I shall chastise you with scorpions”. That is what the Minister is doing. He is chastising the people with scorpions. What was the result? The people of Israel were torn asunder and the same Rehabiam remained with only two tribes; ten tribes left him, and are still away today. This will ultimately also happen to this Minister who tries to chastise the people and who places a heavier burden on the people year after year. I notice that the Minister said yesterday: “We are only three”. Yes, three blind mice. They are three, but I fear they will also be only two later on, and the rest of the people will be lost. I warn the Minister. I have watched his career with interest, and I have known him since childhood. He does not know it, but I have known him all that time. I have followed his whole career, how he progressed at school and at the University, and every little picture that appeared in the “Good Hope” at the time I kept. I thought the world of him. Little did I think that he would be the man to tax us so heavily now, that he would be a second Rehabiam.

Where are the photographs? You must not tear them up.

I shall not. I am hoping that the Minister will change and improve. I warn him. He will also remain behind with only two. He is on the road of Rehabiam. He is busy chastising us with scorpions and Imposing heavier burdens on the people. The progressive young people are taxed the heaviest. Why should the young farmer, the young industrialist and the young professional man be taxed today? All should be taxed on an equal basis. Then I shall be satisfied. There must be equity. The Minister is busy taxing the younger generation more heavily.

I want to tell the Minister that facts count more than methods. We on this side contend that the pressure of the taxation is decidedly unfair towards the platteland, towards the farming industry. If the Minister goes into the statistics he will certainly find out that the profits and he excess profits are made on the platteland but in the mining industry, in secondary industries and in commerce. From those industries the excess profits tax is derived. If he goes into the statistics he will find that a large measure of insolvency is taking place on the platteland, particularly during the last years, which means that the farming industry is definitely not profitable. The farmers on the platteland are splashing in the circumstances to keep their heads above water. To tax that section of the community heavily, to tax them more heavily in comparison with the other section of the population, is very unjust. I want to adduce the facts. If we go into the matter we find that the farming population need a lot of help from the Government. Assistance loans, Land Bank loans, distress measures, all these various loans are necessary to see the platteland through. That in itself is an indisputable proof that no profits are made in the farming industry. We do not find that State aid is ever given to the mines or to commerce or to the big industries. Their profits are such that they require no assistance. To what industry has specific assistance to be given? To the farming industry. Is that not a proof that the farming industry is not as profitable as the other industries? Yet the Minister comes and taxes the platteland and the mines and commerce and the old industries in such a way that it is unfair towards the platteland. The platteland is busy bleeding to death. Just think of the tremendous exodus from the platteland to the cities. Old farmer families who were at one time well-to-do, flee in despair to the cities. Notwithstanding this the Minister tries to tax heavily those who have held on in the platteland with grim determination, without taking into consideration the facts I have mentioned. It is precisely this section of the population who in the past needed State aid, and who must now be taken into account. We must strengthen that section and place them in a position to pay taxes later. Take our markets as they are today. They upset the farmers in such a way that it is almost impossible for the farmers to make a livelihood. It is a well-known fact that if there is a little ray of light on the platteland, such as for instance an improvement on the potato market, then all the farmers rush to the little light and try to make a little profit in order to meet their commitments. The result of the action of the Government is that the little light is soon put out. What hope have the farmers if we think of the condition of the market? If they make a little profit, then the Minister comes along and collects it by way of taxation. They are being taxed is such a way that they are being destroyed, but the wholesale trade and retail trade and the mines and the big factories and industries make enormous profits but are not taxed in proportion. We heard just now about the king who taxed his people heavily and we heard what became of him. The Minister ought to go into the statistics and to arrange matters so that his taxation shall press evenly on all members of the population. Give the people on the platteland a chance to become independent again and to make a happy livelihood. The possibility exists at the moment. Make use of it.

This debate has covered a very wide range even though the time spent on it has not been great. To a considerable extent we have been ploughing over the same ground as we have covered several times before, but a certain number of new points have been raised and one or two helpful suggestions have been made. I appreciate, for instance, the helpful point raised by the hon. member for Brakpan (Mr. Trollip). One point he made was that in order to help checking evasions of the fixed property tax the forms in use might be amended so as to require greater specifications of the articles mentioned as sold. That is an administrative matter which will be gone into. The more important matter mentioned by the hon. member would involve legislation. It was to the effect that it should be laid down by law that a deed of sale should be submitted to the Receiver of Revenue in connection with this tax. That might be a very effective and helpful measure, but on the other hand it might involve certain extra expenditure from the point of view of the taxpayer. My main difficulty, however—but I don’t say this is final, I intend discussing it further—is a legal one. This suggestion, I may say, has been considered before and has been discussed with the law advisers and they have taken the view that a fiscal measure such as this, moreover a measure which is really of a temporary nature — because we can hardly regard this as a permanent tax—is not an appropriate place for making a change in the law of this nature. It would be a permanent change, and there is in that connection the further point that an important change in the common law such as would be involved should not perhaps be appropriately made without notice being given. That, I think, is a sound point, and makes me loath to proceed further with that suggestion merely by proposing an amendment in Committee. I realise, however, the good intentions with which the suggestion was made, and I shall give further attention to it. The hon. member for Illovo (Mr. Marwick) raised the question of the position of the farmers in relation to excess profits duty. It was rather difficult to reconcile what he said with the pathetic plea which we have just been hearing about farmers who are being strangled to death. People who are being strangled to death would hardly be liable to excess profits duty. In fact, when we fixed the excess profits duty we fixed it on incomes of not less than £1,500 and it was felt by many people that by doing so farmers would be allowed to get out of paying the duty. Happily that is not the position and farmers are doing a great deal better than before, and I recognise that a great many are falling within the scope of that tax, but there is a point in that connection which is not appreciated. And it is this, that in calculating this tax we have to take account of the whole period from the time when the tax came into operation. That means that if during the first two years the farmer who now has an income of over £1,500 fell below the minimum abatement, then the amount to which he was below that minimum is now put to the credit of his account in determining whether he is to come within the scope of the duty. If farmers have been making negligible incomes for the first two years and then make £2,000 now, those farmers would not be liable for excess profits duty at this stage. I am referring to the farmer who had no pre-war standard, or who had a pre-war standard of less than £1,000. Let us assume that for the first two years of the operation of the tax his income was only £500, and now his income is £2,000. That man is not liable to excess profits duty because he is credited with the amount by which his income fell short for the first two years. Of course, if he goes on having good years he will be liable.

What about the farmer who starts now?

He has the benefit of the £1,500 minimum. Now the hon. member for Pretoria, City Mr. Davis), raised one or two points in regard to the Fixed Property Profits tax. I am very loath to make concessions in regard to this tax which would make it less burdensome, which is what the hon. members aimed at, because part of the object of the tax is to check speculation, and the less burdensome you make the tax, the more you encourage speculation. Therefore, I do not think the hon. member can expect me to be sympathetic to his suggestion. I am referring particularly to my hon. friend’s point, that we should make an allowance for each year during which the seller has held the property. In effect we do that, and on a very generous scale, because in respect of the period from the 1st October, 1939, to some date in February, 1942, we actually make an allowance of one-third—33⅓ per cent. My hon. friend seems to have overlooked that, and also the further point that when comparison is made with the excess profits duty, the balance of the amount in the case of the fixed property profits tax is not liable to taxation—it is a capital accretion—but the balance of the amount in respect of the excess profits duty is liable to taxation. The hon. member also raised the question of our proposal in regard to the cancellation of transactions. He admitted that there is today an opening for evasion, but he thought we might be able to draw a distinction between genuine cancellations and others. I shall go into that point but it will be difficult to make this distinction, and I think if I were to make such a concession I should have to face the wrath of the hon. member for Orange Grove (Mr. Bell) because it will mean giving more discretionary powers to the Commissioner for Inland Revenue.

There is an opening for appeal.

I am very loath to drag the Income Tax Special Court too far into this question. After all, it is an Income Tax Court, and I am not sure whether it is the appropriate body to deal with these other matters. Now, the hon. member for Orange Grove raised a question on which I have already touched, namely that of the balance of excess profits, after payment of excess profit duty, being subject to other taxes. He wants the balance of the excess profits to be exempted from other taxes. I don’t think that would be reasonable because many people, after having paid excess profits duty, are still left with a considerable income, and I do not see why they should be exempt. It may be that we shall still have to take the whole of the 100 per cent. excess profits duty, regarding portion of it as repayable after the war. But on the whole I think that step would be more disadvantageous than advantageous. I think that even if 20 per cent. of the 100 per cent. is repayable after the war it will tend to extravagance. The hon. member has referred to the drastic powers of the Commissioner in regard to managerial remuneration. That is a matter where the exercise of the Commissioner’s discretion is subject to appeal. He has referred to a case where the question of the operation of this clause has been referred to the courts. That case is still sub judice but in general the law lays down that the Commissioner cannot exercise this power without his discretion being subject to appeal. Then he has discussed our proposal in regard to strategic minerals and he has asked why the whole matter could not be dealt with by the Revenue Advisory Committee. In a large part it could. But there is an important change made in this proposal now before the House, and that is that under this proposal where you have a new venture for the development of a strategic mineral this concession will have to be given. The Revenue Advisory Committee after all has discretion but the purpose of putting it this way is to encourage people to undertake such ventures because they will know in advance what their position will be. My hon. friend asks: “Why not make it retrospective? Why limit it to new companies?” Well, the existing companies have started on the existing basis, and especially where some of them are doing very well, I do not see why we should apply it to them.

Will you publish the list of minerals?

Yes, that is an essential part of our scheme. Then the hon. member has raised a question on the provision under Clauses 6 (a) and 7 (a) for the repeal of the present provisions in the law in regard to the grouping of companies. Well, he has said that there may be cases where companies have not yet had a chance of putting their case and he has suggested that we might qualify this proposal by still leaving the door open to companies existing today. I realise there is force in his argument. I don’t like his proposal that we should qualify it, but I am prepared to consider further dropping this provision altogether. I don’t undertake to do so but I shall give consideration to it. Then in regard to the trade profit special levy, the hon. member has again raised this point of the comparison between the private company where you have five shareholders in respect of which there is a minimum of £3,000, and the partnership of five partners each of which has a £3,000 abatement. That is not quite a fair way of putting it, because in the case of the company there is such a thing as managerial remuneration, and if these shareholders are actually taking a part in the administration of the company, they will be drawing such remuneration and getting the benefit for it. It is only after the managerial remuneration has been paid that the amount that is left is taxable, whereas in the case of a partnership the partners cannot draw salaries before one arrives at the amount on which taxation is levied.

†*Now I want to come to a few other points. As far as possible I do not want to revert to the ground we have already ploughed, perhaps ad nauseam, in the past. I therefore do not want to say much about the question of the co-called inequity of taxation—the fact that we have increased the taxation on the mines by only 12½ per cent., while we have increased the personal tax by 50 per cent. We have already gone into that. We have increased the taxation on the mines year after year. There is also, of course, a big difference—to mention an extreme case—between an addition of £1 to £1 and an addition of £1 to £10. I want to concede that there will be hard cases as a result of this levy. But we are experiencing hard times, and this imposition is necessary. Generally there is more money in circulation, and generally the persons who have to pay this taxation have more money available. This, of course, does not apply in the case of people who have fixed incomes, of whom my hon. friend spoke. I fear it is inevitable that there will be hard cases as regards this levy. But what I want to emphasise is this: Apparently this taxation has hitherto not turned out to be as hard in practice as we expected. We gave persons the opportunity of withdrawing their money from the savings fund after six months. What happened? Hitherto we have collected about £1,020,000 for the savings funds, and up to the present only £20,000 has been withdrawn from that fund. I certainly expected that much more would be withdrawn, but it appears from this that the tax has not affected the people as heavily as we thought would be the case. Then as regards the excess profits tax. My hon. friend spoke about the inelasticity of the statutory percentage. I just want to point out that we have a statutory percentage today that can move between 8 per cent. and 10 per cent. In Canada there is a statutory percentage that can move between 5 per cent. and 10 per cent. In Canada there is apparently more elasticity, but the minimum percentage is the same as here. What I want to emphasise particularly is the fact that in existing circumstances 8 per cent. is certainly not an unfair amount to concede by way of interest on money. Today 8 per cent. means considerably more than it meant when we instituted the tax, for today the rate of interest is considerably lower than it was two years ago. Where we thus give people the assurance of 8 per cent. in the case of companies and 12 per cent. in the case of individuals, I feel that we are not treating them unfairly. That also is my reply to the hon. member for Waterberg (Mr. J. G. Strydom).

That may be so in the case of a big company.

I think that even in the case of small undertakings it is not unfair. As regards the building up of a reserve fund, there I want to refer to the powers of the committee, and in the second place to the fact that we do make provision for the repayment of losses. We make provision for a re-calculation of the tax over the full period, and then an ultimate repayment where too much is paid in view of the business transactions over the whole period. I shall not be inclined to go further than that. I fear that if we go further we may perhaps do more harm than good, and it would be extremely difficult to prescribe more closely the type of company which the hon. member for Fauresmith (Dr. Dönges) wants to assist in that connection. So far as the hon. member for Pretoria, District (Mr. Oost) is concerned, he is of course opposed to the principle of the excess profits tax. I am afraid that we cannot agree on that point. It is an essential tax in war time. I was somewhat surprised at my hon. friend’s argument as regards our proposal in connection with strategic minerals, because he said that we impoverish the land by encouraging the exploitation of those minerals. I cannot see how one enriches the country by leaving the minerals in the ground. I can thus also not see how one impoverishes a country by encouraging the exploitation of the minerals. Then we come to the question of the farmers and the excess profits tax. I have already dealt with this on a previous occasion. It looks very attractive to say that the farmers should be exempted from excess profits tax in respect of the contribution which they devote to mortgage redemption, but it would only mean assisting certain farmers. If there is to be another mortgage redemption scheme, it will have to be general, but this proposal would mean that one would help the prosperous farmer and not the others. The hon. member for Waterberg (Mr. J. G. Strydom) has again raised the question of discrimination. The man with no pre-war standard pays more in taxation than the man with a high pre-war standard. Naturally. We concede that. The hon. member has mentioned the case of a doctor or the business man who now has to pay more because he had no pre-war standard and although he made no pre-war profits. Well, what are war profits? How can one say that those profits did not in a certain measure result from the war? It may be only as a result of the fact that the war has brought more money into circulation, but to a certain extent at any rate the increased income is a result of the war. There is more money in circulation and people are paying off more of their debt. As regards that point I want to point out again that we introduced the special trade levy profit tax last year for the precise purpose of meeting that argument. The person who gets off as regards the excess profits tax must now pay that special trade profits levy tax. All that remains then is the question of the taxation on the mines. I have dealt with this matter repeatedly. I just want to point out again: It is true that the mines will pay less this year than last year, but that is merely due to the fact that they will be earning less.

You are expecting £2,800,000 less in taxation.

I do not think that figure is correct. Apparently my hon. friend has added the tax on foreign shareholders, but foreign shareholders are not all mine shareholders. In any case, the reason why the mines are paying less on the present basis is that their profits are less, and not because we are taxing them less. My hon. friend’s argument is this: If an industry is a waning industry then one must tax it heavily. Well, I have knowledge of the sound economic fact that when an industry is waning one must tax it lightly. I do not believe that the argument that because the mines are waning they should be taxed more heavily will hold water. I think that about 50 per cent. of the foreign shareholders are mine shareholders. So far as they are concerned the scale is 15 per cent. in Canada, and with us it will be 7½ per cent. This tax is a tax which must keep account of the general taxation scale of the country. The grounds on which we justify this tax is that the persons, although subject to normal taxation which is collected at the source, are not subject to super tax which, however, is paid by internal shareholders. Our scale of taxation on our own people is considerably less than the scale in Canada. For that reason we shall not be able to justify making our scale the same as the scale in Canada. In addition there is the argument that hon. members on the other side wanted to employ, namely that we are a young country and that Canada is an old country, and that we shall probably need capital from overseas in the future, and in the circumstances it would not pay us to drive this taxation too far.

Motion put and the House divided:

Ayes—58:

Abbott, C. B. M.

Abrahamson, H.

Acutt, F. H.

Alexander, M.

Allen, F. B.

Bawden, W.

Bell, R. E.

Botha, H. N. W.

Bowker, T. B.

Clark, C. W.

Davis, A.

Derbyshire, J. G.

Dolley, G.

Du Toit, R. J.

Fourie, J. P.

Friedlander, A.

Gluckman, H.

Goldberg, A.

Hemming, G. K.

Henderson, R. H.

Hirsch, J. G.

Hofmeyr, J. H.

Hooper, E. C.

Jackson, D.

Johnson, H. A.

Kentridge, M.

Klopper, L. B.

Lawrence, H. G.

Lindhorst, B. H.

Long, B. K.

Marwick, J. S.

Miles-Cadman, C. F.

Mushet, J. W.

Neate, C.

Payn, A. O. B.

Pocock, P. V.

Quinlan, S. C.

Raubenheimer, L. J.

Reitz, L. A. B.

Robertson, R. B.

Rood, K.

Shearer, V. L.

Solomon, B.

Solomon, V. G. F.

Sonnenberg, M.

Steyn, C. F.

Sturrock, F. C.

Sutter, G. J.

Tothill, H. A.

Trollip, A. E.

Van Coller, C. M.

Van den Berg, M. J.

Van der Merwe, H.

Wallach, I.

Wares, A. P. J.

Warren, C. M.

Tellers: J. W. Higgerty and W. B. Humphreys.

Noes—35:

Bezuidenhout, J. T.

Boltman, F. H.

Booysen, W. A.

Conradie, J. H.

Conroy, E. A.

Dönges, T. E.

Du Plessis, P. J.

Erasmus, F. C.

Fouché, J. J.

Geldenhuys, C. H.

Haywood, J. J.

Hugo, P. J.

Le Roux, P. M. K.

Le Roux, S. P.

Louw, E. H.

Malan, D. F.

Olivier, P. J.

Oost, H.

Pieterse, P. W. A.

Schoeman, B. J.

Serfontein, J. J.

Strauss, E. R.

Strydom, J. G.

Swart, A. P.

Swart, C. R.

Van der Merwe, R. A. T.

Van Zyl, J. J. M.

Venter, J. A. P.

Verster, J. D. H.

Viljoen, J. H.

Warren, S. E.

Wentzel, J. J.

Wolfaard, G. v. Z.

Tellers: J. F. T. Naudé and P. O. Sauer.

Motion accordingly agreed to.

Bill read a second time; House to go into Committee on the Bill on 17th April.

I want to move an amendment here as follows—

We have already indicated the reasons for this, namely, that we feel that this extra levy of 15 per cent. should not be applicable to salaries below £800. This is a measure of alleviation for the middle class. If the Minister has any qualms of conscience that no difference is made here between a married man and an unmarried man, then I am prepared to make it “taxable incomes above £1,000 in the case of married persons, and above £800 in the case of unmarried persons”.

That will not make it more acceptable. Just put it as briefly as possible.

Then I move this amendment to Clause 1.

As I have indicated on a previous occasion, it is not possible to accept this amendment. We have now a scale which we worked out two years ago, and we now want to fit in the levy with that, and I think that in point of fairness we must apply the levy to the whole scale.

Upon which the Committee divided:

Ayes—33:

Boltman, F. H.

Booysen, W. A.

Bremer, K.

Brits, G. P.

Conradie, J. H.

Dönges, T. E.

Du Plessis, P. J.

Erasmus, F. C.

Fouché, J. J.

Geldenhuys, C. H.

Haywood, J. J.

Hugo, P. J.

Le Roux, P. M. K.

Le Roux, S. P.

Louw, E. H.

Malan, D. F.

Olivier, P. J.

Pieterse, P. W. A.

Schoeman, B. J.

Serfontein, J. J.

Steyn, G. P.

Strauss, E. R.

Strydom, G. H. F.

Strydom, J. G.

Swart, C. R.

Van der Merwe, R. A. T.

Van Zyl, J. J. M.

Verster, J. D. H.

Wentzel, J. J.

Wilkens, Jacob.

Wolfaard, G. v. Z.

Tellers: J. F. T. Naudé and P. O. Sauer.

Noes—62:

Abbott, C. B. M.

Abrahamson, H.

Alexander, M.

Allen, F. B.

Ballinger, V. M. L.

Bawden, W.

Bell, R. E.

Botha, H. N. W.

Bowker, T. B.

Carinus, J. G.

Clark. C. W.

Conradie, J. M.

Davis, A.

Derbyshire, J. G.

Dolley, G.

Du Toit, R. J.

Fourie, J. P.

Friedlander, A.

Gilson, L. D.

Gluckman, H.

Goldberg, A.

Hemming, G. K.

Henderson, R. H.

Hirsch, J. G.

Hofmeyr, J. H.

Hooper, E. C.

Howarth, F. T.

Jackson, D.

Johnson, H. A.

Klopper, L. B.

Lawrence, H. G.

Lindhorst, B. H.

Long, B. K.

Madeley, W. B.

Marwick, J. S.

Miles-Cadman, C. F

Moll, A. M.

Molteno, D. B.

Mushet, J. W.

Neate, C.

Payn, A. O. B.

Pocock, P. V.

Quinlan, S. C.

Raubenheimer, L. J.

Reitz, L. A. B.

Robertson, R. B.

Rood, K.

Shearer, V. L.

Solomon, B.

Solomon, V. G. F.

Sonnenberg, M.

Sutter, G. J.

Tothill, H. A.

Trollip, A. E.

Van den Berg, M. J.

Van der Byl, P. V. G.

Van der Merwe, H.

Wallach, I.

Wares, A. P. J.

Warren, C. M.

Tellers: J. W. Higgerty and W. B. Humphreys.

Amendment accordingly negatived.

Clause, as printed, put and agreed to.

On Clause 5,

I want to move an amendment to this clause, which reads as follows—

1. (b) by the insertion in paragraph (i) of Sub-Section (2) after the words “office or employment” where they occur for the second time of the following words: “or any sum actually paid by the taxpayer during the year of assessment in respect of medical and hospital expenses for himself or his family”.

In the Principal Act provision is made in the clause that is amended, namely Clause 11, for certain things that are taken into consideration at the assessment of the taxable incomes, and we want to propose here that where a person has actually paid out an amount in hospital costs and medical costs during the year of assessment, that these costs should be taken into consideration for the purpose of reducing his taxable income. It must therefore fall under the various reductions proposed in Clause 11 of the Principal Act. I considered that this would be the best place to insert it, for in this clause provision is made that amounts that persons pay into a fund to provide for their old age, or amounts that are paid into a widows fund, etc., can be deducted from the taxable income. An unexpected catastrophe may strike a family. A married person with a salary of say £800 per annum may suddenly be placed in a position where a member of his family has to incur high medical costs, perhaps has to undergo a few operations, and in spite of the fact that he has this actual expense, he must not only pay the extraordinary expenditure but he must also may income tax. I do not think that is fair. We often hear talk about social security. We often hear how important it is that the health of the people should be protected, and I think that one of the most practical ways in which to do this is to allow any expenditure on the health of the family contracted in this respect to be deducted from the taxable income of the taxpayer. I therefore move this amendment with a measure of confidence.

I have already said on a previous occasion that I intend to go into this matter before next year. I have said that similar provision is made in the legislation of Canada, where the taxation scale is considerably higher than here. Although I have not yet studied that provision in the Canadian law, I know that the provision is fairly involved. It will not be possible to do it as easily as this amendment proposes. There are various things that must be defined. In any case, I am not prepared to accept the amendment at this stage, but I again give the undertaking that I shall consider the matter and that we can deal with it next year in connection with the income tax.

If that is the Minister’s difficulty, cannot he then give us the assurance, before he introduces this legislation in the Other Place, that he will consider such an amendment? If he is prepared to give such an undertaking, I shall be prepared to withdraw my amendment. I feel that it is not a matter that should stand over until next year. It is something that has already stood over too long. It should have been incorporated in our income tax legislation long ago, I feel therefore that in view of the delay in the past, we should not allow further delay. If the Minister has difficulty as regards the form, then it can easily be put right by an amendment that such an amount which has been actually spent should be dealt with in this way in conformity with regulations to be drafted by the Minister. That will give him the opportunity of discussing the matter with his advisers and of making the necessary provisions, which need not necessarily be incorporated in the law. It can be done by way of regulation. I feel that it is important for us to accept the principle now, or to receive the assurance from the Minister that he will accept something like this when this legislation is before the Other Place. I would like to know if the Minister can give that assurance.

I cannot give such an assurance.

Then I cannot withdraw my amendment.

If the hon. Minister of Finance will not meet us to that extent, cannot he promise us that when he considers legislation during the recess he will put the matter in such a mould that provision will be made in these taxes this year that the contributions paid out in respect of hospital costs and medical costs will be deducted.

That is self-evident.

But will it be applicable also to the previous year?

No.

But the House can adopt the legislation in that form. The Minister says that he cannot make the arrangement this year, because he must first consider the legislation. But cannot he draft the legislation in such a way that the cases which occur now shall come into consideration for rebate next year.

If we adopt legislation next year that will determine the legislation for the year 1943-’44, and if we adopt that principle, then it will be automatically retrospective of this year. We cannot go back further than that.

Cannot we then also include this year?

No.

Why not, I cannot see that. If the Minister of Finance is really serious in his intentions, and is willing to meet the community, then he can insert such a provision. This House can do anything.

I am glad about the concession of the Minister. It looks as if he is softening his heart a little, and that he no longer wants to chastise us with scorpions. He says that he will consider meeting us the following year, but we need the concession immediately. The Minister has probably never had a long illness in hospital where he has had to undergo medical treatment. I do not think so. If that had been so, he would certainly have been more yielding. In the ordinary course of events the people who cannot pay are assisted. But there are others who can hardly pay, but they are so proud that they want to pay themselves, and they find it very difficult to pay. If a person has to remain in hospital twenty days or so, and there is medical treatment in addition, then the expense easily mounts to £90 or £100. That is nothing exceptional, and in such cases the Minister should not tax that money. There are many such cases. I think it is a very fair amendment, and the Minister should take the matter in consideration now and not wait until next year. These people have suffered long enough. Now is the time to assist them.

Amendment put and the Committee divided:

Ayes—33:

Boltman, F. H.

Booysen, W. A.

Bosman, P. J.

Bremer, K.

Conradie. J. H.

Dönges, T. E.

Du Plessis, P. J.

Erasmus, F. C.

Fouché, J. J.

Geldenhuys, C. H.

Haywood, J. J.

Hugo, P. J.

Le Roux, P. M. K.

Le Roux, S. P.

Louw, E. H.

Malan, D. F.

Oost, H.

Pieterse, P. W. A.

Schoeman, B. J.

Serfontein, J. J.

Steyn, G. P.

Strauss, E. R.

Strydom, G. H. F.

Strydom, J. G.

Swart, C. R.

Van der Merwe, R. A. T.

Van Zyl, J. J. M.

Viljoen, J. H.

Warren, S. E.

Wilkens, Jacob.

Wolfaard, G. v. Z.

Tellers: J. F. T. Naudé and P. O. Sauer.

Noes—58:

Abbott, C. B. M.

Acutt, F. H.

Alexander, M.

Allen, F. B.

Bawden, W.

Bell, R. E.

Botha, H. N. W.

Bowker, T. B.

Carinus, J. G.

Clark, C. W.

Conradie, J. M.

Davis, A.

Derbyshire, J. G.

De Wet, H. C.

Dolley, G.

Du Toit, R. J.

Fourie, J. P.

Friedlander, A.

Gilson, L. D.

Gluckman, H.

Goldberg, A.

Hemming, G. K.

Henderson, R. H.

Hirsch, J. G.

Hofmeyr, J. H.

Hooper, E. C.

Howarth, F. T.

Jackson, D.

Johnson, H. A.

Kentridge, M.

Klopper, L. B.

Lindhorst, B. H.

Long, B. K.

Marwick, J. S.

Miles-Cadman, C. F.

Moll, A. M.

Mushet, J. W.

Neate, C.

Payn, A. O. B.

Pocock, P. V.

Raubenheimer, L. J.

Reitz, L. A. B.

Robertson, R. B.

Shearer, V. L.

Solomon, B.

Solomon, V. G. F.

Sonnenberg, M.

Stallard, C. F.

Steenkamp, W. P.

Sutter, G. J.

Tothill, H. A.

Trollip, A. E.

Van der Merwe, H.

Wallach, I.

Wares, A. P. J.

Warren, C, M.

Tellers: J. W. Higgerty and W. B. Humphreys.

Amendment accordingly negatived.

Clause, as printed, put and agreed to.

On new Clause to follow Clause 5,

I would like to move a new clause as follows—

1. 6. Section 13 of the Principal Act is hereby amended by the insertion in Paragraph (a) of Sub-Section (2) after the words “year of assessment” of the following words: “or who attended any educational institution during the year of assessment”.

As the provision now stands, it is to the effect that from the amount of the taxation payable by a person, not a company, the following additional amounts will be deducted. And then we find under (a) that in the case of every unmarried child or step-child of the taxpayer who is alive during any portion of the year of assessment, and who was not above 18 years, there will be a rebate of £5. Now I want the words “above 18 years” to be deleted and the following words substituted: “If he has attended any educational institution”. In the circumstances in which we live today there are very few children who have left school by the time they have attained the age of 18 years. At that age they are still in the technical college or at the university. They continue to be a big expense to their parents, or perhaps to a widowed mother. They entail big expenditure for their parents, and the parents are not allowed to enjoy the rebate of £5. All we now propose is that when a child of 18 years still attends an educational institution his father or mother will continue to receive the benefit of a rebate of £5 on the tax that they have to pay. The matter is so self-evident that I do not want to waste the time of the House by enlarging on it further. I think we all agree that the Minister should meet us here. If we continue what we are doing now then we virtually put a premium on higher education. As Minister of Education the Minister takes a lot of interest in this matter and here there is now a practical way for him to show his interest in higher education by conceding this request so that we can encourage parents to let their children enjoy higher education.

If I understand the amendment correctly, it means that some people will pay less taxation and that others again will pay more. At the moment the taxpayer receives a rebate of £5 for every child under 18 years. Under this amendment he would only get a rebate for every child who attends an educational institution, also where the child is under 18 years of age.

No, only where the child is over 18 years is the demand put that he must attend an educational institution.

May I say that in this form it will only mean that certain persons will pay less taxation. That brings us back to the matter that we discussed comprehensively here two years ago. Formerly the age was 21 years, and we then put it at 18 years. Then the question was raised of children above 18 years who receive further tuition. The standpoint I took up and that I still take up, is that it relates to a minority. They are a small group, and I am not prepared to go and amend the law in order to meet that comparatively small group. Where it is possible for such a person to attend the university, it ought not to be necessary to give this concession of £5.

It is then that the parents have big expenses.

The expense they then have is an investment that will result in the child earning more in the future. I think they ought to be prepared to make that investment. For the same reasons which we adduced two years ago, I am not prepared to accept this amendment.

I don’t want to be on my legs all day, but where something is as fair as this proposal I cannot help assisting to get it adopted. I myself had a big family and my wife and I had to spend a great deal on the education of our children, and it is good for the parents to know what the child will cost them. It is precisely in those years, when they pass their eighteenth year, that there is great expense attached to the education of children. The Minister has said that it is an asset to the parents if the child is educated. It is, but it is a bigger asset to the child, and if the child as a young man is taxed as heavily as the Minister now proposes to do under his taxation proposals, then what can the parents get back? No well-intentioned parent expects the child to repay him. The object and the striving of the parents is to help the child forward in the world and to see the child happy. No well-intentioned parent will ask for the return of the money he spent on his child. There are hundreds and thousands of children who have had to borrow the money to study, and who have to repay the money over a period of subsequent years. It is difficult for such people, and the parents find it particularly difficult, for they can assist their children only with the greatest difficulty, or perhaps only partially. Now the Minister comes and imposes a tax which makes it still more difficult for the parents to assist their children as regards education.

I cannot imagine the Minister ever understanding the position of a married man with a family.

Speak for yourself.

Quite likely the Minister also comes from a small family, but I know my district and also the district in which grew up, and there are many people who have three or four children of 18 years in the University. Why cannot such people be met. Such persons do their duty and provide their children with an education. Now the Minister says it is an investment to have the children educated. It is not the children who pay the tax, but the parents, and the Minister is very headstrong in not agreeing to meet that class of man. I am convinced that if he accepts the amendment of the hon. member for Fauresmith (Dr. Dönges) then a sigh of relief will go up from many parents, particularly parents who think of the future of their children and who want to give their children an education so that they shall be able to make a proper livelihood.

I would also like to associate myself with the pleas that have been delivered here, and particularly with the contention of the hon. member for Fauresmith, that this is a kind of premium on higher education. If one considers the income tax system, then one finds that when the parents send their children to the universities and to the high schools—those are the years when the children cost the parents a great deal—then they are taxed the heaviest, but before that time, when the children cost less, they get a rebate of £5 per child. There is exemption in the years when the child costs less, but when the child really becomes an expense to the parents there is no exemption. I cannot but give my support to this reasonable amendment. The Minister’s excuse is that only a small group of taxpayers fall under this tax. Surely that is no argument. I myself think that there is a fairly big number, but big or small, these are people who really deserve to receive exemption. I cannot say that I shall be among the unfortunate who will now no longer receive any exemption, but I plead for this amendment because I consider it a fair amendment.

After listening to the hon. member for Gordonia (Mr. J. H. Conradie) I cannot help standing up to say that it is clear to me that the Minister has very little sympathy for the parents of children. I honestly think that the Minister does not view the matter in quite the right light when he says that parents who can give their children higher education must remember that they will get a return on what they invest. Parenthood is surely not a business undertaking. It is a privilege to be a parent, but it also involves big obligations, and the Minister knows that between the years of 19 and 21 and even up to 22 tremendously high expenditure is connected with the education of children, and for precisely that reason it is so fair and essential to have a rebate of taxation, and I still hope that the Minister will accept the amendment.

The reason why the exemption was granted in respect of children under 21 years of age was the idea that by the time the children are 21 years they will have their own incomes. The same principle should also apply here. It may be that certain children have their own income and employment when they reach the age of 18, but what I feel is that the Minister is coming forward here again with a tax proposal that affects the one section of the community particularly, and that is particularly the platteland parents. It is very seldom that the platteland child, at 18 years of age, is in a position to acquire a post. On the contrary, if the platteland parent wants to find a position for his child he must give the child technical education or professional education from that age, and for that reason, because the Minister’s taxation affects the community unequally here, I want to ask the Minister to revert to the original idea that in respect of children under 21 years of age, so long as they are supported by their parents, the parents should be allowed a rebate in respect of taxable income. As has already been said, one cannot imagine why the Minister should be opposed to such a reasonable request. A man does not want to take his children out of school unnecessarily soon, but he would rather give them a technical or academical education so that they can acquire better positions. Now people will be prevented from doing so as a result of the tax. A very strong case has been made out here, and I want to make a last appeal to the Minister to make the concession.

Proposed new Clause put and the Committee divided:

Ayes—31:

Bezuidenhout, J. T.

Boltman, F. H.

Bremer, K.

Conradie, J. H.

De Bruyn, D. A. S.

Dönges, T. E.

Du Plessis, P. J.

Erasmus, F. C.

Fouché, J. J.

Geldenhuys, C. H.

Haywood, J. J.

Hugo, P. J.

Le Roux, P. M. K.

Le Roux, S. P.

Loubser, S. M.

Louw, E. H.

Malan, D. F.

Olivier, P. J.

Pieterse, P. W. A.

Schoeman, B. J.

Strauss, E. R.

Strydom, J. G.

Swart, A. P.

Swart, C. R.

Van der Merwe, R. A. T.

Van Zyl, J. J. M.

Viljoen, J. H.

Wilkens, Jacob.

Wolfaard, G. v. Z.

Tellers: J. F. T. Naudé and P. O. Sauer.

Noes—60:

Abbott, C. B. M.

Acutt, F. H.

Alexander, M.

Allen, F. B.

Ballinger, V. M. L.

Bawden, W.

Bell, R. E.

Bowen, R. W.

Bowker, T. B.

Carinus, J. G.

Conradie, J. M.

Davis, A.

Derbyshire, J. G.

De Wet, H. C.

Dolley, G.

Du Toit, R. J.

Fourie, J. P.

Friedlander, A.

Gilson, L. D.

Gluckman, H.

Goldberg, A.

Hemming, G. K.

Henderson. R. H.

Hirsch, J. G.

Hofmeyr, J. H.

Hooper, E. C.

Howarth, F. T.

Jackson, D.

Johnson, H. A.

Kentridge, M.

Klopper, L. B.

Lindhorst. B. H.

Miles-Cadman, C. F.

Moll, A. M.

Molteno, D. B.

Mushet, J. W.

Neate, C.

Payn, A. O. B.

Raubenheimer, L. J.

Reitz, L. A. B.

Robertson, R. B.

Rood, K.

Shearer, V. L.

Solomon, B.

Solomon, V. G. F.

Sonnenberg, M.

Stallard, C. F.

Steytler, L. J.

Sturrock, F. C.

Sutter, G. J.

Tothill, H. A.

Trollip, A. E.

Van den Berg, M. J.

Van der Byl, P. V. G.

Van der Merwe, H.

Wallach, I.

Wares, A. P. J.

Warren, C. M.

Tellers: J. W. Higgerty and W. B. Humphreys.

Proposed new Clause accordingly negatived.

On Clause 7,

Mr. Chairman, I think we are indebted to the Minister for the way in which he has set out the whole of Section 39 which he is amending here. It is much more convenient in dealing with this matter. I do not know whether the Minister, in dealing with this question of apportionment as far as private companies are concerned, is not getting deeper and deeper into the mire by every attempt he makes to get out of the trouble. I am referring here particularly to the new sub-clause (f), and I would like him to give us some explanation as to what is the exact meaning of it. It reads—

My trouble is the precise meaning to be attached to these words “directly or indirectly”. From his memorandum I understand the explanation is that this tax has been evaded by one private company being a shareholder in another private company, and that private company being a shareholder in a second private company and so on ad infinitum. Now I can appreciate this, Mr. Chairman, but where does he draw the line? What is the position, for instance, if you have private company A. and they are shareholders in another private company B. which consists exclusively of individuals. Will this be applied in that case, or is it only when this chain of private companies is carried beyond the second?

That is what is intended.

That is what I am not clear about because there is no specific indication of the meaning of “directly or indirectly”. As I understand the Minister, there is no evasion if you have a private company A. who are shareholders in private company B„ and the shareholders in B. are all individuals or public companies. Then this would not apply, as I understand the Minister. I do not know whether that is clear in the Bill. The only indication we have of that are the words “directly or indirectly”. You will see that it makes a very big difference, because the terms of sub-section 2 (b) of Section 7, referring to (f) in the case of companies falling under paragraph (c) or (f), provides that the rate that they have to pay is the rate applicable to public companies as far as normal tax is concerned, that is 4/- in the £ plus 7d. provincial tax, with the rebate of £45, and as far as supertax is concerned, the ordinary rate of supertax 2/- to a maximum of 7/- in the £, with the rebate of £240. That means that you may find a company in that way having to pay a tax of 12/1 in the £, the normal tax and supertax together amounting to 12/1 in the £. Now if I understand him correctly, the object is not to apply this provision when there is only one holding private company, and the shareholders in that holding private company are all individuals or public companies. Then I would suggest for his consideration an amendment more or less on these lines. To add at the end of line 5 in sub-paragraph (f) “provided that the provisions of this paragraph shall not apply where the shares in such private company are held by one or more private companies whose shareholders are public companies or persons other than private companies”. That is a little involved, and I do not press it on the Minister at this stage. I have just hurriedly drafted it as an illustration of this question of “directly or indirectly”.

I will give you the chance of tightening up this at the report stage, which I will not take today. If you put it on the Order Paper we can consider it. There is another amendment to be moved, anyhow, and there must be a report stage. I will not take the report stage today.

I can hand it in and it will be on the Order Paper. It is merely a question of putting it into proper words. I do not move it now.

Mr. Chairman, I find myself in some difficulty in this case with regard to paragraph (c) relating to preferent shareholders.

That is (e).

Oh yes, it is (e). Mr. Chairman, the idea of this clause it to restore the position as far as the preferent shareholders are concerned to that which existed before the 1941 legislation was enacted. At that time preference shareholders received their dividends for the companies free of normal tax, but were personally liable for supertax. When the principle of apportionment was introduced in 1941, the position of preferent shareholders was changed. They found themselves under the Act obliged to pay both normal and supertax on preferent dividends. The idea of this clause is to restore the position, and that is clearly set out in the memorandum contained in the White Paper in which it says that as a result of the changes proposed preferent shareholders will be put into the same position as they occupied before the apportionment system was introduced. With that I entirely agree. The principle of restoring the position is sound, but in this particular clause there is a provision that will only apply to such companies as possess 20 or more preferent shareholders. I want to ask the Minister to consider the deletion in line 63 of the words “not less than 20 shareholders” so that every company, which has preferent shareholders, will be treated on the same footing. There is a reason for making that request. For a start, the number of shareholders may change from time to time. A company may have 20 share-holders one year and be entitled to the treatment in the clause, and the preferent shareholders will receive their dividends free of normal tax. The next year the position may be changed, and the number may fall below 20, in which case the shareholder will find himself liable to normal tax. One year he will be free and the next liable due to circumstances over which he has no control and due merely to whether there are going to be 20 shareholders registered in the company or less. In a private company it is usual to have a small number of preferent share-holders, and 20 is high as a minimum. I would propose the deletion of any figure at all, and by doing so we shall get more equitable treatment for preferent shareholders, and the position will then be genuinely restored to what it was before apportionment was introduced.

I have given consideration to this matter, which the hon. member raised on the second reading, but I do not think I can meet him on this point. We are making a concession here to the preferent shareholder. If we go too far we shall certainly open the door to evasion. My hon. friend admitted that. If I am to make this concession without any limitation as to the number, I had rather not make it at all. I am not prepared to take that risk. We have had so much evasion to deal with in the past that I am not prepared to make this concession in such a risky form. When I see how the thing works I may come back later and decrease the number, but I do not think we can go any further at this stage.

Twenty is certainly high.

In regard to this sub-section (f) there seems to be some difference between the White Paper and the Bill. In dealing with this sub-section (f) the memorandum reads as follows—

That is wrong.

That is not what is in the Bill. Can I take it that the Bill is correct?

Yes, I must apologise for the mistake in the memorandum.

Clause put and agreed to.

On Clause 8,

On the motion of the Minister of Finance, an amendment was made in the Afrikaans version which did not occur in the English version.

Clause, as amended, put and agreed to.

On Clause 10,

This clause is a very difficult one, I think, for several reasons. First of all in paragraphs (a) and (b) at the foot of page 12, the basis for calculating the amount which a shareholder will be entitled to ask to be recovered is laid down. It provides that the amount shall be the difference in tax calculated to include the amount apportioned and the amount of dividend received. Now, this means that due to the progressive scale of taxation the difference in income alone will bear the increased rate of tax on the remaining income. If a shareholder came along, who had an income of £20,000, of which £5,000 was by way of apportionment, and the company had paid no dividend, because the whole of the profit was put back for development, that shareholder in respect of the extra £5,000 apportioned to him would be entitled to ask the Commissioner to collect £4,609 equal to 18s. 5d. in the £ on the £5000—an amount of more than 90 per cent. of his share of the total taxable profits. That is because the figure is based on the difference between the two calculations. I submit that at most the tax should be collected at the same rate as applies to the man’s taxable income. The tax so calculated would then be £3,020 instead of £4,600. Then there is the question of the further paragraph containing all the provisions, under which the Commissioner will be entitled to ask the company to make refund. First of all the taxpayer himself must make his request within a period of thirty days, and if he does not make that request within 30 days, there is a provision that the taxpayer may make the request at some later stage, “if approved of by the Commissioner.” The difficulty here is that you may have four of five shareholders in the same company, they may be assessed over a period of one to two years, and it may be the man who gets the last assessment who makes the claim, and then the other shareholders will be faced with this difficulty, that they will be called upon to pay the tax of the one shareholder, and they will be precluded from making a claim themselves. Further, I see difficulty in this, with this provision as it is, and with the change proposed this year, that any amounts collected from the company will not be recoverable from the shareholder. I wonder how it is going to be possible for an auditor to pass the final accounts of the company. No company will know what its final liability is until the last shareholder has been assessed. It is going to create a most difficult position. In the case I have just cited of the £20,000 shareholder the company may be faced with a claim for £4,609 long after its year has closed. It is a matter which may involve big sums and how one is going to get finality I don’t know. And then the company may have to pay out as much as 18s. in the £ for one shareholder, and as little as 1s. in the £ for another. It is going to create grave inequities. The Minister explained the matter in these words: “The shareholders will pay on distributed profits, and the company on undistributed profits.” The trouble is going to occur in regard to undistributed profits. Is every shareholder going to be entitled to ask the Commissioner to approach the company about undistributed profits? And will the Commissioner agree to that? The Minister gave us the impression that there was some doubt and that the Commissioner might exercise a considerable amount of restriction. But there is this fact, that for that one shareholder the company may pay out 18s. in the £ and for the other one 1s. As it stands today, the small shareholder is likely to be at a distinct disadvantage as compared with the big shareholder. The method of calculating tax recoverable should be altered—the amount should be proportionate to the income involved, and I would suggest to the Minister that, in order to enable the company to reach finality where a company has distributed by way of dividend a reasonable proportion of the profits, there should be no claim against that company under this section of the Act. That is the point on which the Minister misunderstood me in his reply on the second reading, and it is quite an important point, because unless some provision is made no private company will be able to reach any finality until the last assessment is disposed of. I hope the Minister will take this particular point into consideration. There is a big issue involved. As a matter of fact I have received two letters from Johannesburg today on the subject and the writers are very distressed about the position involved, which has only just come to their notice.

A good deal of the difficulty in regard to this question arose from the idea which originally was conceived that this procedure was going to apply to every shareholder who applied. It is true every shareholder may make application but it is certainly not intended that every shareholder should receive this treatment, and for that reason we have now in this clause indicated definitely what the Commissioner must give consideration to in exercising his powers, quite obviously implying that not every application is to be conceded. But if the Commissioner is to give consideration to these points set forth I don’t see how he could in that particular instance which the hon. member has set forth, allow recovery from the company. It would be against the intention of Parliament. The hon. member has suggested that we shall by this method put an additional burden on the shareholder. That is the very thing which we don’t want to do. It is true, if we applied this in every case we would add to the burdens of the smaller shareholder, but what we want to do is to help the small shareholder. The hon. member further said that the auditors will be in a difficulty about signing the final accounts. They are in this position today. Today, recoveries can be made after the final accounts are signed. The auditor simply has to face that situation, and he can add a note to his certificate to that effect. There is nothing new in this proposal. If the auditor thinks it is necessary he should insert such a certificate but the principle is not new. What is new is that we are now indicating to the Commissioner that he should exercise his discretion. The hon. member apparently does not like the rate at which the recovery is to be made. Well, if he likes to propose an amendment I shall consider it for the report stage. The shareholder will make an application. He will know on what basis his assessment is made; in other words, how much has been apportioned to him, and he will also know what dividends he has received, and if he sees a substantial difference he will make an application. And the Commissioner will then decide what it is right for him to recover.

Is there any indication of what basis the Commissioner is to give?

The Commissioner is bound by what we have set forth in the clause. If he acts unreasonably he can always be taken to the courts, but at present he is absolutely unfettered in his discretion. The difference now is that Parliament gives him an indication as to how he is to use his discretion. Apparently what my hon. friend has in view is that if a company has paid a reasonable dividend there will be no apportionment.

There will be no right to claim against the company.

Oh, is that what my hon. friend means? I did not know that that was the point he had in mind. I do not know who is going to determine what is a reasonable dividend, but my hon. friend can move an amendment on that at the report stage if he likes.

On this question, whether the Commissioner will make a claim upon the company or not the Minister says that what I have said is hypothetical. It is surely quite feasible. Let me elaborate the case of Shareholder A who finds he has an apportionment from the company of £5,000. He has in addition received £15,000 on which he is liable to tax from other sources. The increase in taxation by virtue of that £5,000 is £4,609 equal to 18s. 5d. in the £. He has received nothing by the way of dividends from the company. I know of one big company in Johannesburg, an old established company, which has done £500,000 worth of work for War Supplies, and a little time ago it passed its dividend. Now the shareholder analyses the remainder of his income. Much of that income is on the books. Cash receipts are negligible. He is liable for £12,082 in tax. He goes to the Commissioner and says: “This is my position, the bulk of my income is a book figure, but it is not cash in the bank. By virtue of this apportionment I am landed with a further £4,609 in tax. By virtue of this I want you to make a claim on the company so that they will pay this oh my behalf. I have not the cash with which to pay my tax.” Now, by virtue of such facts I cannot see how the Commissioner can resist that request. That is the one point. The other point is the position of the other shareholders. This point may occur to the one shareholder, but only to one, and because he comes along and asks the Commissioner to collect and the Commissioner claims on the company, the others will be prejudiced. It will cause a great deal of inequity.

I must say that the Minister’s reply on this particular case is rather disturbing. I do not think the individual concerned should have very much sympathy on the amount mentioned by the hon. member. There is only this, that in this particular case the company did not distribute anything of its profits. That surely is a case where action should be taken to force the company to make a distribution of its profits, and if by reason of the fact that they have not distributed their profits and are forced to pay a heavy tax, well the company has rather asked for it. In regard to the other general points, I think there is something to be said if a company makes a distribution of 75 per cent. of its profits. If a shareholder receives a dividend on the basis of 75 per cent.—if 75 per cent. of the profits have been distributed, then there is no need to make a further claim on the company. But what has happened during the last year or two is that dividends have been distributed on the basis of one fifth of the total profits, and in many cases shareholders have been called upon to pay the amount equal to the dividend they should have received.

That is a point which the Commissioner must take into account.

If everyone were allowed to make a call on the company, it would be to the interest of the small shareholder, but I do think that if a company makes a distribution of 75 per cent. of its profits, no further call should be made.

I shall look into that.

I am not concerned with the exact figures, but I think the Minister should consider what the amount should be. Many people are concerned with this matter and the effect it may have on the small shareholder should be carefully gone into.

The remaining Clauses and Title having been agreed to.

House Resumed:

The Chairman reported the Bill with an amendment.

Amendment to be considered on 17th April.

In accordance with paragraph (1) of the resolution of the House adopted on the 11th March, the Estimates of Expenditure on Capital and Betterment Works, South African Railways and Harbours, for the financial year ending 31st March, 1944, stand referred to the Committee.

When the vote was last under discussion I put a question to the Minister in connection with unoccupied Government farms that are lying idle at the moment, and I mentioned a series of them, those known as the New Belgium Block in my constituency. I may not be here when the hon. Minister’s turn comes on Saturday, but I hope he will give me information on the point. I shall obtain the information later if he will only give me the necessary information when he replies. Now I would like to raise this point: In the northern part of the Transvaal, in Waterberg, Rustenburg, Potgietersrust, Soutpansberg and the so-called bushveld areas of the country, a large number of farms, as the Minister knows, were given out to settlers. There is a lot of timber on those farms. I mention particularly three varieties of trees such as the Marula, Blue Gum and Syringa. At the moment there is a terrible shortage of wood, also in respect of requirements for residential buildings. That is one of the reasons why there is such a shortage of material and why the supplies of the country itself are not adequate. There is now a great demand for that kind of wood. I mention these varieties particularly. If this wood is not chopped, it subsequently becomes valueless and becomes hollow inside, and ultimately that wood is suitable only for firewood. The Department of Lands refuses to give these settlers the necessary permission to chop down those trees and to sell the wood, while there is now an excellent chance of converting the wood into money. Every person who is acquainted with that part of the country knows that one will not destroy the timber trees by chopping down those trees. After a few years the trees start to grow again like hair on a hog’s back. Those settlers now have a chance of availing themselves of this golden opportunity of converting the wood into money, and if this is permitted the Minister can put the condition that that money should be paid off on the purchase price of the farm. The money will therefore not be wasted. He will realise that this offers these settlers an excellent opportunity of meeting their financial commitments. I presume that the Minister will see the matter in that light.

Where are the farms situated?

In the Waterberg district. Rustenburg, Potgietersrust, Soutpansberg and the so-called bushveld areas. I want to give the Minister the assurance—I come from those parts—that there is not the least danger of the land being deprived of its trees and shrub. These trees are not like the Geelhoutboom. I say again that the Government can determine a percentage that should be paid off on the purchase price of the farms. Take for instance the Tamboti tree. It has a beautiful variety of wood. When the Tamboti tree reaches a certain age it becomes hollow inside and ultimately it is only fit for firewood, while if you permit your settlers to chop down that tree when it is still in a healthy state, they will be able to make quite a lot of money from it for the benefit of themselves and to the benefit of the Department of Lands. I hope, therefore, that the Minister will give this matter his attention. Now I have a complaint, and it is this. I do not know if the Minister knows about it, but the fact is that certain officials of his, where they have to deal with settlers outside, bring political influence to bear on settlers who—to put the matter bluntly—are Nationalists.

Are you referring to inspectors?

I am referring to inspectors and to certain other special officials whom the Minister has appointed. I do not want to drag in the name of one official or another unnecessarily, but I want to bring a few cases to the attention of the Minister. I have had an exchange of correspondence with the Minister’s Department about people to whom temporary right of occupation has been given in the New Belgium block. I pleaded that those farms should be thrown open temporarily to farmers until the end of the war, when the Minister can give out the land finally. They have given farms to people there to work temporarily. Some time ago some of the people there were told to vacate the farms. It is peculiar that the people who have been thus notified are all Nationalists. The few Saps were not notified to terminate their temporary occupation. I wrote to the Minister about the matter. There is, for instance, the case of Major Aber, who was not notified to vacate his farm. Then there is the case of Mr. P. A. Swanepoel, who has also not been told to vacate his farm. They are both Saps. But the Nationalists there have been notified to vacate their farms. The Minister’s Department replied that the farms of the two persons mentioned were not required for the use of the Department. It is peculiar that, according to the Minister’s advisers, only the farms on which Nationalists live should be necessary for the use of the Department. It will be a good thing if the Minister can give us an explanation of this. I have many other cases, but I just want to mention one more case. The cases are from various constituencies. On the settlement at Brits there are cases in respect of which temporary occupational right was given on plots. These were not finally granted to the people, and the people merely have the right to work those farms until the Department may decide otherwise. Now take the farm Wolwekraal in the Brits constituency. There are quite a number of these people who received occupational right. Some of them have worked those temporary holdings well. Some of them have lived for quite a number of years on those farms and they have worked those farms well, always with the hope that they would ultimately get those farms. The Minister may perhaps say that they did not have the right to harbour that hope. But nevertheless the people did harbour the hope that if they worked the place well and they applied for it ultimately when it was given out, that they would receive sympathetic consideration, even if they had to apply in conjunction with others. Now there are quite a number of these temporary occupiers who have received notice that they must depart. Quite coincidentally it has happened again that the people who have received notice are all Nationalists. On that settlement quite a number of people are temporary occupants. Some are Saps, some are O.B.’s, some are Nationalists and some are colourless. According to my information, and quite a number of cases have been forwarded to me, all those who have been told to leave the holdings are Nationalists. I have no right to accuse the Minister of personally displaying this antipathy towards those people, for I have no proof that the Minister knew that those people are Nationalists. But the position is that the people who are Saps or who belong to other organisations did not receive notice. I now want to ask the Minister what information his officials are giving him so that it should be only Nationalists who are treated in this way.

There is one matter which I want to bring to the attention of the Minister. During this debate the Minister announced as the policy of the Government that in existing circumstances no land will be allotted under the Land Settlement Act. I wonder if the Minister realises that that policy of the Government in some cases borders on cruelty. I wonder if the Minister realises in what a hopeless position he places people in these circumstances. I want to bring to the particular attention of the Minister the position in which the non-landowning tenants find themselves today. In the past the hire of land was a business question. It was a matter of competition between the non-landowning tenant and the tenant who did possess land. Both tenants must view the matter only from the standpoint of a business undertaking. Today the position is totally different. We have the position that the non-landowning tenants are simply driven away from the platteland because they cannot compete with the landowners so far as the hire of land is concerned. Why is this? In the past, as I have said, when these two had to compete, both were on an equal basis. Both had to consider the profits yielded by their farms in ordinary circumstances. Today it is totally different. Today the well-to-do farmer is perhaps in the position of being assessed for excess profits tax; he calculates that he will be assessed for excess profits tax and that he will perhaps have to pay £200 in excess profits tax. He does not sell his surplus stock, and he goes to hire a farm. But now that man is in a position that he can pay £100 more for a farm than the actual economic value of that farm and then he is still £100 better off, as he calculates the opposition in the circumstances. He therefore goes and hires the farm from under the non-landowning tenant. I can bring numbers of cases to the attention of the Minister. I have the greatest respect for these tenants, because during the depression they clung with grim determination to their farming. They remain farmers. When the other farmers received interest subsidy on their bonds the non-landowning tenant received absolutely no assistance. He had to stand on his own feet and fight his own way. Now these people are being driven from the land because they cannot compete with the well-to-do farmers. This unfortunately is not the exception to day, but it has become the rule. I can give the Minister the assurance that in my constituency there are numbers of tenants who have been farmers for years and who have hired land. In the most difficult circumstances they fought their own battles and today they simply cannot get land. They cannot afford the hire price. The hire that is usually paid for farms is uneconomic, but it is yet paid by the landowning tenants who want to evade excess profits tax and who simply hire farms with their other land so as to place their surplus stock on the hired farms. In that way the ordinary tenants are driven from the farms. In these circumstances I want to plead with the Minister to alter the policy of not giving out any land at this time in view of the position of these people. I can understand that this Government which has gone into the war should have a feeling for those people who are in the army today, and that they should want to give those people land after the war. What is more, a Government whose intentions are honest in respect of the people of South Africa, no matter what Government it is, will not be unwilling to give those people who fought in the army and who have an aptitude for agriculture, a chance to obtain land. I want to concede that. But I want to plead with the Minister in the circumstances prevailing today to amend that policy at least to such an extent that where it is found that a man has hired land for a period of years and has farmed in such a way that he was a credit to the farming community, and where he cannot hire ground economically that consideration should be given to that man and that the policy will be altered so that men of this stamp will be placed in a position of being able to obtain settlement land. This is a practical difficulty that the Government has overlooked. I hope that the Minister as a practical farmer will realise this situation and alter the policy, and that he will help these tenants who were pushed from the land by giving them the opportunity of acquiring settlement lands. It will surely not make the position of the man who applies after the war impossible. There are not so particularly many of these people, but those who are there ought to be helped. I want to bring to the attention of the Minister and to emphasise again what I said before, that these tenants have provided the proof that they have an aptitude for farming. The man who did not possess his own land but who remained on his farm during the depression years proved thereby that he must have an aptitude for farming, for he remained there without the assistance of the Government. If that class of man is now driven from the farms it is a tragedy, and it is any government’s duty to do something for those people. They find themselves in a practical difficulty today, and I hope that the Minister’s heart will soften towards those people and that in these circumstances he will alter the policy of allotting no land insofar as these tenants who are being driven from the land are concerned.

I wish to ask the Minister what provision he is making for land settlement of our soldiers in Natal after the war, what land is available and also if the Government is prepared to buy suitable land that may be offered. I wish to point out to the Minister that our soldier boys who have gone from Natal are entitled to be given an opportunity to settle in Natal, where they come from, and I hope the Government will make provision for them when the war is over. At the present time large areas of land are changing hands in Natal, and I think the Minister knows that many of us are anxious that the Government should purchase some of this land so as to meet the needs of our soldier farmers when they come back after the war. I hope the Minister will keep this in mind, and will not wait too long, but that when land is offered he will consider whether it is suitable and try and buy it at reasonable valuation. Since the war has started, land has undoubtedly gone up in Natal, because of the possibility of farming on small areas in that part of the world which we consider most suitable for soldier settlement. We have a good climate, good land and a good rainfall, and any man who has knowledge of farming should be able to make good, there without the disadvantages which obtain in many other parts of the country. I hope the Minister will not neglect to take opportunities which may offer to provide the land which we feel should be obtained for our soldier farmers who have gone to the front. I feel that if he does not take this present opportunity, it will cause a great deal of dissatisfaction, and we shall have to give a good reason why he has not been able to meet this demand.

I would like to know from the Minister of Lands when that writing-off on the Boegoeberg-Karos settlement will take place. As the House will remember, the writing-off of an amount of £73,000 was approved by the House last year. It happened on the recommendation of the Minister of Lands, and we are grateful to him. The writing-off was to have taken place on the valuation as well as in respect of other debts standing in conjunction with it. I just want to tell the Minister that some of the people on that settlement are rather upset, for they are now getting accounts from the Department of Lands and interest is being calculated on the full valuation of the land. The law has been adopted. I advised them—and the Minister will agree that I have the right to do so—that in view of the fact that the law had been adopted, the Government has no right to calculate interest on the full amount. It will depend on the balance that remains after the valuation has been written off. Then I also want to say in connection with the accounts that these people are confused about the accounts. They showed me accounts, and I could give no proper explanation of them. I shall be glad if the Minister will explain the position, so that these people may become acquainted with the position as regards their financial obligations towards the Government. It is absolutely necessary, and I hope the Minister will do it as soon as possible. We know that he has to contend with a shortage of staff, but I trust that he will go into the position as soon as possible and give me the necessary information.

I raised the question the other afternoon of supervisors on farms that have been cancelled. I now want to bring a special case to the attention of the Minister. It is the case of Mr. van der Walt of the farm Vaalbank in the district of Venterstad. The Minister knows what the position is. In 1940 the holdings were cancelled. In 1941 Mr. van der Walt together with a fellow-owner hired the place for a certain amount which they paid. In 1942 applications were asked for the hire of the farm at the sum of £80, the farm was let to another person for £80. I have discussed this matter with the Department, and the Department could give me no satisfaction as to the reason why this farm was not allotted to Mr. van der Walt. It was let to him and another person in 1941, but in 1942 it was refused him. I speak under correction, but I think that I myself sent a telegram to the Minister in which the offer was made that the full amount or half the amount would be paid. Nevertheless it was refused him. Mr. van der Walt was not fairly treated. I want to come to another matter relating to the Minister’s action in connection with holdings that are cancelled. I understand that holdings are being investigated everywhere to ascertain whether they are economic or not. Where it is discovered that a holding is not economic I understand that the Minister permits the neighbouring owners to acquire the holdings. I speak under correction, but I think that is the position. Now I come, again to Vaalbank in Venterstad. That farm is 1,350 morgen in extent. The Minister went and sold 300 morgen of the farm to the owner of a neighbouring farm. I would like to know from the Minister why he did it. Was the intention of the Minister to make the neighbouring holding uneconomic in that manner, was it necessary to cut the 300 morgen on to that farm? I would like to have a reply. To my mind the Minister has committed a blunder. The neighbouring farm was 1,400 morgen aan Vaalbank was 1,350 morgen. The Land Bank reported that Vaalbank has a greater carrying capacity than the neighbouring farm of Poortjie. They took 300 morgen from Vaalbank and cut it on to Poortjie. Now I would like the Minister to view the matter thus. The Land Board’s argument is that on Poortjie two morgen is necessary per sheep, while Vaalbank can carry a sheep on a morgen and a half. Three hundred morgen are now cut on to Poortjie, and that 300 morgen, according to the Land Board, will now enable Poortjie to carry a hundred sheep more. Has one ever heard of greater nonsense? According to their own calculations Vaalbank can carry a sheep on a morgen and a half, but these 300 morgen now cut on to Poortjie, can, according to them, carry only one sheep on three morgen. Why such reasoning? I can come to only one conclusion. According to their figures they want to create the position that every farm can carry 800 sheep. The hon. member for Kimberley District (Mr. Steytler) knows that area well, and I would like to know what he thinks about this. It is now alleged that a farm of 1,700 morgen can carry just as many sheep as a farm of 1,050 morgen, and they lie side by side. The Land Board’s argument evidently is that they want to make Vaalbank more economic, more economic than it was formerly. According to their own calculation, before the 300 morgen were cut away, it would have amounted to £2 15s. per morgen. After the 300 morgen were cut off, the Minister can calculate it for himself, the price came to £3 2s. per morgen. That makes the farm 7s. per morgen dearer. They virtually went and made an economic holding uneconomic. The argument I want to adduce in this respect is that the improvements on Vaalbank were not such a good economic proposition. Fomerly there were three owners and there are three houses. Three houses on a farm do not improve the farm’s carrying capacity.

At 5.55 p.m. the Chairman stated that, in accordance with the Sessional Orders adopted on the 28th January and 26th March, 1943, and Standing Order No. 26 (1), he would report progress and ask leave to sit again.

House Resumed:

The CHAIRMAN reported progress and asked leave to sit again; House to resume in Committee on 16th April.