I move—

The Preliminary Commercial Agreement between the Union and Newfoundland has now been in operation since the 5th October, 1939. It provides for the duty-free importation into the Union and South-West Africa of Newfoundland newsprint whilst, as a quid pro quo to the Union, sausage casings imported into Newfoundland from this country are admitted against payment of a reduced duty of 7 per cent. ad valorem. In addition. Union jams, fruit jellies, preserves and marmalade are, upon importation into Newfoundland, accorded the benefit of the “British Preferential” Rate of Duty. As members will recollect, the Agreement was concluded at a time when considerable difficulty was experienced in obtaining supplies of newsprint for our newspapers. The war in Europe had interfered with our normal supplies from Scandinavian countries and there would have been a serious shortage of newsprint in the country if it were not for the fact that Newfoundland offered us a sure supply of this commodity. At the time of its conclusion, the Agreement was regarded as a temporary measure only, to be superseded by a more comprehensive Commercial Agreement as soon as the two Governments had had an opportunity of investigating the possibilities of increased trade between their respective countries. So far, however, it has been difficult to decide which products should be provided for in a more comprehensive Agreement between the two countries, as the uncertainties of trade under presentday conditions obviously make it undesirable that temporary developments in trade should be incorporated in a Commercial Agreement of a more permanent nature. In the circumstances it was felt, in the past, that the best procedure would be for the Preliminary Agreement to be extended for a further period of twelve months after its expiry at the end of each year. The circumstances militating against the conclusion of a more comprehensive Agreement between the Union and Newfounland are, however, likely to prevail for some time to come, and when the Preliminary Agreement came up for revision in December, last, both Governments agreed that, instead of annually extending the currency of the Agreement as has hitherto been done, it was preferable for the terms of the Agreement to be amended so as to provide for its continued operation after the 31st December, 1943, subject to six months notification by either of the two Governments. The Preliminary Agreement has been of decided benefit to the Union in that it has ensured to us the receipt of adequate supplies of newsprint at reasonable prices at a time when supplies of this commodity are difficult to procure from other sources. In addition, it constitutes a valuable basis for the conclusion of a more comprehensive Agreement between the two countries as soon as circumstances permit, and I have no doubt therefore, that this House will welcome the arrangement with the Newfoundland Government which provides for the continued operation of the Agreement in its present form.

I second.

Agreed to.

I move—

The Trade Agreement between the Union and the United Kingdom, which was signed at Ottawa in 1932, guarantees to the Union a preference of 10 per cent. ad valorem on South African fresh hake imported into the United Kingdom. Despite the existence of this preference, however, the Union has not been in a position to supply the British market with fresh hake and in May, 1940, therefore, when the United Kingdom Government requested the temporary suspension, for a period of one year, of the 10 per cent. preference which the Union enjoys in respect of this product, the Union Government agreed to meet this request. In May, 1941, the Union’s ability to supply the British market with fresh hake had not shown any appreciable improvement and the Union Government accordingly agreed to the further suspension, until the 23rd May, 1942, of the 10 per cent. preference on this product guaranteed to us under the Union-United Kingdom Trade Agreement of 1932. During May, last, the British Government informed the Union Government that it was essential that the maximum quantity of fish should be imported into the United Kingdom at reasonable prices and requested that the Union Government should agree to the continued suspension for a further period of one year, of the 10 per cent. duty on fresh hake imported into the United Kingdom. As the prospects of exporting fresh hake from the Union to the United Kingdom under war conditions are not promising, the Union Government agreed that the United Kingdom Government might further suspend until the 23rd May, 1943, the 10 per cent. preference which is guaranteed to the Union in respect of this product.

I second.

Agreed to.

I move—

I. Income Tax (Normal Tax and Super Tax) and Non-resident Shareholders’ Tax.

1. (1) That, subject to an Act to be passed during the present Session of Parliament and to such amendments of Act No. 31 of 1941 (as amended) as may be provided therein, there shall be paid as from the first day of July, 1943, on all incomes received by or accrued to or in favour of or deemed to have been received by or accrued to or in favour of all persons from any source within, or deemed to be within, the Union—
   1. (a) a tax (to be called the Normal Tax), the rates of which for the year of assessment ending the thirtieth day of June, 1943, shall be—
      1. (i) in the case of companies the sole or principal business of which in the Union is mining for gold, for each pound of taxable income, three shillings;
      2. (ii) in the case of companies the sole or principal business of which in the Union is mining for diamonds, for each pound of taxable income, four shillings and sixpence;
      3. (iii) in the case of all other public companies, for each pound of taxable income, four shillings;
      4. (iv) in the case of persons other than those referred to in sub-paragraphs (i), (ii) and (iii), for each pound of taxable income eighteen pence increased by one one-thousandth of a penny for each pound of the taxable income in excess of one pound, subject to a maximum rate of three shillings and threepence in every pound: Provided that for a married person the rate for each pound of taxable income shall be fifteen pence increased by one one-thousandth of a penny for each pound of the taxable income in excess of one pound, subject to a maximum rate of three shillings in every pound: Provided further that there shall be added to the amount of tax calculated in accordance with the preceding provisions of this sub-paragraph (including the first proviso thereto) a sum equal to fifteen per cent. of the net amount arrived at after deducting the rebates provided for in section thirteen of Act No. 31 of 1941 from the amount of the tax so calculated;
      5. (v) in the case of any company or person other than a company who derives any portion of his income from mining in the Union for gold, in respect of each pound of the taxable amount so derived, a percentage determined in accordance with the following formula:
         
         in which y represents such percentage and x the ratio, expressed as a percentage, which the taxable income derived from mining for gold bears to the income derived therefrom:
      Provided that the tax determined in accordance with sub-paragraph (v) shall be payable in addition to any tax determined in accordance with sub-paragraphs (i), (ii), (iii) and (iv); and
   2. (b) a tax (to be called the Super Tax), the rates of which for the year of assessment ending the thirtieth day of June, 1943, shall be—
      For each pound of the income subject to Super Tax two shillings increased by one four-hundredth of a penny for each pound of such income in excess of one pound, subject to a maximum rate of seven shillings and sixpence in every pound: Provided that there shall be added to the amount of tax calculated in accordance with the preceding provisions of this sub-paragraph a sum equal to fifteen per cent. of the net amount arrived at after deducting the rebate provided for in Section twenty-nine of Act No. 31 of 1941 from the amount of the tax so calculated.
2. (2) That the rates fixed by sub-paragraphs (a) and (b) of paragraph (1) shall be the rates fixed in accordance with the provisions of Sub-Section (2) of Section five and Sub-Section (2) of Section twenty-three of Act No. 31 of 1941, respectively.
3. (3) That subject to an Act to be passed as aforesaid the Non-resident Shareholders’ Tax shall be levied at the rate of seven and one-half per cent. of the amounts subject to the tax.

II. Gold Mines Special Contribution, Diamond Mines Special Contribution and Excess Profits Duty.

That, subject to an Act to be passed during the present Session of Parliament amending Act No. 25 of 1940 (as amended)—

1. (a) the Gold Mines Special Contribution shall be levied at the rate of twenty-two and one-half per cent. on the dutiable amount.
2. (b) the diamond mines special contribution shall be levied at the rate of three shillings in every completed pound of the dutiable amount;
3. (c) the excess profits duty shall be levied at the rate of fifteen shillings in every pound of excess profits.

III. Personal and Savings Fund Levy.

That, subject to an Act to be passed during the present Session of Parliament amending Act No. 40 of 1942—

1. (1) a basic tax of seven pounds ten shillings shall be levied if the chargeable income of the taxpayer for the basic year amounted to two hundred and fifty pounds or more: Provided that in the case of a taxpayer who is a married person and whose chargeable income for the basic year did not exceed three hundred pounds, a basic tax of five pounds shall be levied;
2. (2) there shall be paid from time to time to the credit of the loan account referred to in the General Loan Consolidation and Amendment Act, 1917 (Act No. 22 of 1917) out of the consolidated revenue fund sums equivalent to 50 per cent. of the amounts paid by way of basic tax at the rate of seven pounds ten shillings in terms of paragraph (1), and sixty per cent. of the amounts paid by way of basic tax at the rate of five pounds in terms of the proviso to the said paragraph (1).

IV. Railway Passengers Tax.

That—

1. (1) subject to an Act to be passed during the present Session of Parliament, there shall be paid for the benefit of the consolidated revenue fund, subject to such definitions, conditions, exceptions and exemptions as may be provided in the said Act, a tax (to be called the Railway Passengers Tax) at the rate provided in paragraph (2), by every person in respect of the fare paid by him for first or second class conveyance of any passenger by the Railway Administration;
2. (2) the rate of the tax shall be fifteen per cent. of each completed shilling of the amount of any fare so paid, and the tax shall in every case be computed to the nearest completed penny.

V. Excise and Customs Duties.

That, subject to the provisions of Acts to be passed during the present Session of Parliament, and to such rebates or remissions of duties as may be provided for therein—

1. (1) the excise duties on the articles as set forth hereunder be increased to the extent shown.

In terms of Section nine of the Excise Act No. 45 of 1942, the abovementioned increased excise duties are payable on all spirits which were not delivered from the stocks of manufacturers of wholesale or retail dealers before the 25th February, 1943, as well as upon any subsequent additions to such stocks, and on all beer, cigarettes, cigarette tobacco and pipe tobacco which were not delivered from the stocks of manufacturers or wholesale dealers before that date, as well as upon any subsequent additions to such stocks.

1. (2) the customs duties on the articles as set forth hereunder be increased to the extent shown.

In this motion the House is asked to go into Committee of Ways and Means to consider the taxation proposals of the Government. The taxation proposals were explained comprehensively by me in my Budget speech. Subsequently, in my reply to the Budget debate, I dealt with the proposals even more comprehensively in replying to the criticism. There is thus little fresh that I can say now. All that is really necessary at this juncture is that I should explain how, by giving effect to these proposals, the taxation policy which has already been discussed at length, will be carried out. But let me first say this: Hon. members are aware of the fact that the Government has decided to accept the recommendation of the Select Committee in connection with the pay and allowances of soldiers. This involves a considerable additional expense. The proposals will not be applicable to the full financial year, but nevertheless I think that it will be necessary now to increase the amount of £96,000,000 which we ask for Defence to £100,000,000, thus an increase of £4,000,000. Provision for that will be made in the supplementary estimates, £2,000,000 on loan estimates and £2,000,000 on revenue account. The additional £2,000,000 on revenue account can however be found from the surplus for the year just concluded, which is more than I expected. It will therefore not be necessary to impose any additional taxation in consequence of the adoption of the proposals. We therefore remain at the proposals as I indicated them in my Budget speech. At the moment there are five proposals before the House, and I shall deal with them seriatim. The first proposal relates to income tax. Actually we go further in this proposal than to deal merely with the proposed increases of taxation. In accordance with constitutional usage, which is also contained in our Income Tax Act, it is essential to determine the ordinary normal and super-tax scale every year so far as income tax is concerned; in other words, although no change is brought about in the ordinary normal and super-tax scale, it must be determined each year by Parliament. Thus in the proposal now before the House we have to do not only with the increase of this taxation, but it also involves the renewal of the existing taxation scales. This resolution therefore includes in paragraphs (i) to (v) the dual normal taxation on the gold mines—that is the fixed scale of taxation of 3s. in the £ and the formula taxation. This taxation remains unchanged. The increase in the taxation on the gold mines is brought about by means of an addition to the special amount which will be dealt with in a later proposal. The ordinary taxation remains unchanged, but notwithstanding that it must be renewed here. Then we repeat in (iv) (a) and (b) the existing scales as regards normal income tax and super-tax on individuals. So far, therefore, there is nothing new in the proposals. But now I come to the part of the proposals whereby existing taxes are increased. In the first place we come to (a) (ii). There it is proposed to place the normal tax on diamond companies at 4s. 6d. on every £ of the taxable income. There is a special contribution from diamond companies which is also increased, but as regards the normal taxation on the diamond companies we propose to increase this from 4s. to 4s. 6d. in the £, and we expect that this will yield a sum of £45,000. In paragraph (iii) we have to do with other public companies, and in that case we propose increasing the taxation from 3s. 6d. in the £ to 4s. in the £. We expect that this will give us £1,300,000 over the full year, but for the current year only £1,030,000. In (a) (iv) and (b) we also make provision for the surtax on the normal and super taxation on individuals. Hon. members will remember that I indicated that we intended to place 15 per cent. surcharge on normal and super taxation payable by individuals. For the full year that will bring in £1,540,000, and this year £950,000. As a result of the increased taxation, however, we shall collect about £150,000 less as regards the ordinary taxation, and that brings us down from £950,000 to £800,000. Then in conclusion so far as this proposal is concerned, we make provision in sub-paragraph (3) for an increased taxation on foreign shareholders, which we propose to increase from 5 per cent. to 7½ per cent., and which is anticipated to yield an additional £780,000. It is not necessary to add anything to what I said on another occasion in connection with these taxes. There are only two things that I have to explain in connection with the 15 per cent. surcharge on the ordinary normal and super taxation on individuals. The first is that the 15 per cent. will have no effect on the calculation of the provincial taxation, which is payable by individuals. We shall insert a clause in the Act that will make it clear that at the calculation of the provincial taxation the 15 per cent. surcharge will not be taken into account. In the second place the 15 per cent. will have no effect on the personal and savings fund levy. It is calculated on the income tax of the previous year. The personal and savings fund levy, insofar as it is calculated on the income tax, will be calculated for this year on the income tax that was payable last year when there was no surcharge at 15 per cent. The 15 per cent. surcharge therefore will not involve any increase of the provincial taxes, or the personal and savings fund taxes. I now come to the second proposal. In the second proposal we make provision for the increase of three taxes imposed in terms of Act No. 25 of 1940. In the first place the special gold mines contribution. It is through that medium that we are at present increasing the taxation payable by the gold mines. The amount was calculated in the first place on the scale of 9 per cent., then it was increased to 11 per cent., thereafter to 16 per cent., last year to 20 per cent., and now we propose that it be increased to 22½ per cent., which according to the estimates will yield an additional amount of £910,000. In the second place we provide for an increased special diamond mine contribution. This was also imposed in 1940 by way of a taxation on a scale of 2s. in the £, which we did not increase thereafter, however, particularly in view of the fact that the taxable revenue on the diamond companies was not particularly big. But the position has changed, particularly during the past year. The diamond mining industry, although the mines are not operating, is flourishing. Diamonds are being sold on a big scale and it is therefore fitting that the special contribution of the diamond mining industry should be increased from 2s. to 3s. in the £, from which we expect an additional amount of £90,000. In the third place we propose increasing the Excess Profits Tax. It was calculated in the first place on a scale of 10s. in the £. Thereafter it was increased to 13s. 4d., and now we propose increasing it to 15s. in the £. This will yield £1,100,000 for a full year, and this year we expect to receive £825,000. Then I come to Resolution No. III which we propose, namely in connection with the personal and savings fund levy which we instituted last year. As hon. members know this is a dual taxation and it is calculated in the first place by means of a fixed amount that is payable by everyone with an income above £250. The fixed amount is £5 in all cases, except in the case of married persons with an income of more than £250, and less than £300—they pay £3, and then there is also a rebate for children in all cases. The second part of the taxation is imposed by way of a percentage of the income tax, normal and super, that was payable by the taxpayers. The joint sum is then divided between the taxation account and the savings fund account, in which the money is set aside for the taxpayers. May I say in passing that hon. members will remember that when we adopted the law we made provision that persons who pay this tax will be able to withdraw it after six months, that is the money placed to their credit in the savings fund. Eight months have now passed, and I am very glad to be able to say that the amount that has hiherto been withdrawn from the savings fund is comparatively small, considerably smaller that I myself expected. Most of the people are apparently prepared to leave the money in the savings fund. As I have said, this is a dual taxation. What we now propose is to leave the second part of the taxation unchanged, that is to say the surcharge on the income tax. But so far as the first part is concerned, we propose increasing it from £5 to £7 10s., which we shall divide equally between the taxation account and the savings fund, and from £3 in the case of married persons with an income of less than £300 but more than £250, in whose case it will be £5, of which £3 will go into the savings fund and £2 to the taxation account. That, we expect, will give us an extra £350,000 on the income account and £350,000 in the savings fund account. Then under paragraph IV we come to the tax on railway passengers. As hon. members know we propose levying a surcharge of 15 per cent. on railway tickets, with a few exceptions. This taxation proposal has already been discussed fairly comprehensively, and I feel that all that it is now necessary for me to do is to give a little more detail than I have given hitherto in connection with the taxation we propose. In the first place no surcharge will be levied on ordinary tickets that cost less than 10s. The surcharge will have effect only subsequently. Then there will be no surcharge on tickets for the transport of passengers by air, ship, or road motor service. There will be no surcharge on season tickets costing less than £30. Only the more extended season tickets will be subject to the surcharge, and the man who has to go to his work every day will not be subject to the tax. Then the taxation will not be imposed on the concession tickets of various groups. There are for instance military concession tickets, which also include concession tickets for Boy Scouts and Voortrekkers. On that no surcharge is payable. No surcharge will be imposed on the tickets of pupils or students, or on blind persons and their attendants, of ministers of religion, of children under 16 years, of members of the Defence Force.

Who then are the persons you want to catch?

There will still be sufficient persons to catch, so as to give us £500,000 in the current financial year.

What about concession tickets for public service officials? That is leave concessions.

The hon. member will have to wait until the Bill is introduced before receiving a reply on that point. I think the proposal can be considered reasonable. Then, in conclusion, I come to the fifth proposal in connection with Customs and Excise duties. The proposals are particularly significant as regards Excise duties. The proposed Customs duties are actually only counterparts of the Excise duties. Where you increase the Excise duty it generally involves also the increase of the Customs duty, but in practice it will mean that we shall receive very little additional Customs duties, because very few of the commodities concerned are imported today. There are virtually four proposals here. One is in connection with cigarettes. There we do not only propose an increased tax, but also a changed basis of calculation for the taxation. The changed basis is drafted agreement with the companies interested. In the past difficulties arose as a result of the various methods of packing of cigarettes. Some were packed in packets of twelve, others in packets of ten, and they were subject to the same taxation. We now make provision for a discriminating tax that will keep account of the weight of the cigarettes. The lighter cigarettes will be taxed less than the heavier cigarettes, and taxation by this means will undoubtedly be more fair. But, although we alter the basis, it will mean practically no change in the yield of the taxation. But now we include a special duty which in the most cases will work out at 2d. for fifty cigarettes, and this is a special duty that will yield us an additional income which is estimated at £1,000,000. Then as regards pipe tobacco, on which the tax in the past year was 6d. in the pound, there we propose increasing the tax to 1s. per pound, and through this medium we expect to collect an additional £300,000. In this respect representations have been made to me in regard to the position of the producers of the cheaper kinds of tobacco, and I am considering the possibility of instituting a rebate as regards the cheaper varieties of tobacco, which will mean a considerable concession. Then we come further to beer, and there are two types of beer that are taxed, namely, the ordinary beer, in connection with which we propose increasing the taxation from 1s. 9d., to 2s. 9d. per standard gallon, and then the lighter beer, the so-called tickey beer, in connection with which we propose to increase the taxation from 1s. to 1s. 6d., and we hope to receive £605,000 from this. Finally we come to the increase of the Excise tax on spirits. There are three kinds of spirits, in connection with which we propose an increase of taxation, namely, wine brandy, grape brandy, and other spirits. We propose in so far as the three groups are concerned imposing an additional taxation of 10s. per imperial gallon. The Customs taxation will be increased in accordance with this, but under existing circumstances the amount that we shall receive from this will be insignificant, and I put it nominally at £50,000. This is necessary, however, to retain the correct relations between the imported commodity, of which small quantities are still coming in, and the locally produced commodity. These are the proposals which I now ask the House to consider in Committee of Ways and Means, and I can restrict my explanations at this stage to what I have already said, and what I have said on previous occasions. The details can be dealt with in Committee, and also at the discussion of the five Bills which I shall have to introduce in the event of these proposals being adopted. In this connection I want to repeat what I have said before, namely, that in the legislation which we shall introduce we shall also propose certain amendments in the provisions of the existing legislation. Apart from the scales that are being increased, we shall propose certain amendments, but I shall not deal with them now. That can be done when these are before us. As regards the amendments in the Bills, I shall lay a White Paper on the Table of the House for the guidance of hon. members, and this, I think, will assist hon. members in judging the proposals, and until that is done I shall now refrain from further comment on the proposals.

I second.

I would like to move the following amendment—

1. (a) not imposing any new taxation or surcharge on small incomes;
2. (b) reducing the existing burden by allowing a rebate for all children who are still at school or at university, including those above the age of eighteen years, according to a progressive scale;
3. (c) amending the Income Tax Act in such a manner that taxpayers shall be allowed to deduct medical and hospital expenses from their taxable incomes;
4. (d) encouraging bona fide farmers to reduce the burden of farm mortgages by exempting repayments from excess profits duty; and
5. (e) assisting new industrial and commercial undertakings in respect of the excess profits duty in order to enable them to build up reserve funds”.

This is the fifth occasion since the outbreak of war that the Minister of Finance is compelled to plunder the people so as to obtain money for an unnecessary war. It happened the first time on 28 February, 1940, when he imposed extra taxation for the year to an amount of £9,774,000. That proved to be under-estimation. The excess profits tax, for instance, was estimated at £800,000, and in that year it yielded £2,600,000. But although the Minister imposed extra taxation to an amount of £9,774,000 in 1940, it proved to be inadequate for the war. It then became clear that the war was not a picnic, as the Government side represented it to the people at the beginning, and even before the end of the year the Government was obliged to summon Parliament and to ask that further taxation should be imposed for the year. It was on 28th August, 1940, when additional taxation was imposed, which was to yield £4,800,000 for the remaining portion of the year, and for a full year £6,400,000. Thus in that year alone fresh taxation to an amount of £16,000,000 was imposed. And from that time it has gone from bad to worse. Every year new taxes have been imposed. The Minister has piled Paleon upon Ossa.

And Olympus upon that.

That will still come. He has come with new taxes every year. The following year, on 12th March, 1941, he imposed taxes amounting to more than £8,000,000. In the following year, 1942, he imposed £9,000,000 in taxation, and now again the Minister is imposing new taxes to an amount £9,195,000. The position is therefore that at the end of the year, the end of March last, an amount of £137,000,000 was borrowed, and new taxes were imposed to an amount of £90,000,000 and £100,000,000. If we take the new taxation proposals of the Minister then we find that at the end of the next financial year the position will be that our national debt has swollen to £187,000,000, while taxes to an amount of £140,000,000 will have been drawn from the people. That is the position. I think we all feel that it is a very heavy burden for a population of about 2.250,000 Europeans. It would have been a heavy burden if the whole population had been in favour of the war. But it becomes an unbearable burden when we remember that this war was started without the approval of half of the population: and I would like the Government, and particularly the Minister of Finance, to remember—it is something that he apparently forgets—the bitterness that is being caused in the souls of the half of the population of our country when they have to contribute to a thing that they scorn. I wonder if the Minister of Finance sometimes bears in mind that the half of the population of South Africa scorns this war and will have nothing to do with it? And yet we find that from the meagre incomes of the people—incomes of £500, £600. £700 or £800 per year—and these incomes are becoming more meagre year by year because the purchasing power of the money is decreasing—they are compelled every year to contribute ever increasing amounts to the Treasury. These people who have incomes of from £600 to £1,000 per year and who scorn this war must pay bitterly in taxation. And now I want to say this to the Minister, and I think I speak from the heart of the whole Afrikaner people when I say this—we are asked to vote this money for a war that is allegedly being fought for very big things, and vet we see about us every day how everything that is good and noble in our national life is being contaminated and broken down to the ground. And if the Afrikaner dares to raise his voice against it then he is torn from his family placed behind barbed wire, and treated like an ordinary criminal.

He is treated much worse than an ordinary criminal, because the ordinary criminal at least gets a proper hearing.

I want to say this to the hon. Minister and to hon. members on the other side, that they are causing a great deal of bitterness in the soul of the Afrikaner. We are stomaching it because we cannot do otherwise now. We have to bend. But I believe that the wheel turns.

It has already turned.

The wheel turns and very probably—much sooner than members on the other side would like to see—the time will soon come when we shall sit on the other side, and I would like to say here today—we do not harbour in our hearts a revenge against the man who has the courage to take up the rifle and to go and fight at the front. It is our intention to do justice to those people. But one thing I can assure—we have no sympathy in our hearts for those people who remain behind—for the vultures who remain here to wax fat. No, as we have now been compelled to contribute out of the bitterness of our soul to the war which we do not want and which we scorn, so shall we pluck those vultures after the war. What troubles us the most in respect of the new taxation proposals of the Minister is this, that there is a tendency on his part to shift the war burden from the people who want the war, and who make money out of the war, into that section of the population who have little or no sympathy with the war. I am going to compare two industries with each other this morning. In the first place I am going to take the manner in which the gold mining industry is treated under the new taxation proposals, and then I am going to take the way in which two Afrikaner industries, namely the tobacco and the wine industry, are treated under the taxation proposals of the Minister. We all know that since 1933 the mining industry has experienced fat years. They lived on the fat of the land. Their dividens and revenue reached a new peak practically every year. If there is one industry in the country that can make a broad and liberal contribution to the war effort then it is the mining industry. They wanted the war. We have been told more than once that the mining industry is the Naboth’s vineyard in South Africa, and they said that we must participate in this war to prevent other people from getting hold of the gold mining industry. It is because of the gold mining industry that South Africa is in the war. They ought to contribute more; and what is now their position under the taxation proposals of the Minister? Actually the gold mining industry is going to pay £1,300,000 less in taxation this year than last year. That is according to the Minister of Finance’s own figure. Now let us compare this with two Afrikaner or farming industries, namely the wine industry and the tobacco industry. In connection with the wine industry a new taxation has been imposed that will provide an additional sum of £1,400,000 to the Minister’s treasury from the product of the vine. Thus, on those two farming industries, new taxes are imposed that together amount to £2,700,000. The position of the wine farmer has already been explained on this side of the House by the hon. member for Swellendam (Mr. S. E. Warren). I come to the tobacco industry. The total value of the product of this industry amounts to £1,600,000. That is the total value of the production—not the profits that the farmers make. If we now deduct from that the production costs—which at a conservative estimate we can put at £1,000,000— then a sum of £600,000 remains over. The profits that the small tobacco farmers throughout the country make on the tobacco they cultivate will be approximately £600,000. Those profits have to be divided among hundreds of small tobacco farmers in the country.

Among thousands.

Yes, among thousands. And now the Minister comes and on that product he lays an additional tax of £1,300,000, and it means that the share that the State receives from this product which the tobacco farmers produce is raised to an amount of £6,400,000. The State now gets from the Excise taxation on tobacco, together with the amount imposed this year, no less than £6,400,000. It is idle for the Minister of Finance to come and tell us that the tobacco farmers do not pay this taxation. In the last resort the tobacco farmers must pay. It is a tax on the product of the tobacco farmer, and it has been put so high on this industry that it prevents the farmer from getting a bigger price for his product, with the result that both the wine farmer and the tobacco farmer are virtually the only people in the country who can draw no advantage from the position of artificial prosperity which we have had in South Africa during the last few years. There was a small increase in the price of their products, but this scarcely compensates for the rising costs of production and cost of living. All the other industries in the country have experienced a rise in the price of their products. But because the Minister has imposed such a high taxation it is impossible for the price of tobacco, the product of the tobacco farmer, and the product of the wine farmer, to go up, with the result that it is ultimately the wine farmer and the tobacco farmer who have to go bent under the burden of the increased Excise taxation. Now that is the one point. Then I come to the excess profits tax. This the Minister has increased from 13s. 4d. in the £ to 15s. in the £. I would like to remind the Minister of the words which he employed in this House last year, namely, that he admits that the excess profits tax affect particularly the new undertakings and not the old undertakings.

I did not use those words.

That is what the words of the Minister amounted to. And then he said that, in order to make the old undertakings pay up equally, he, proposed a special levy on industrial profits.

I spoke about certain old undertakings.

The Minister felt that the old undertakings in the war circumstances did not pay equally with the new undertakings, and he therefore imposed a special levy on industrial undertakings. Why does he not increase the special levy on industrial profits? He increases the excess profits tax by 1s. 8d. in the £, namely, from 13s. 4d. to 15s., and why, as a balancing factor, and in order to conform to what he himself said here in Parliament last year, does he not also increase the special levy on industrial profits? Is the Minister afraid of annoying the old established companies in the country? Is it because the old established undertakings have a powerful Press that the Minister is afraid to tax them equally? In order to implement what he said in this House last year, the Minister must increase the special levy on industrial profits by at least 1s. 8d. in the £. But, no; the old undertakings can just go on making more profits. Take an undertaking such as a rubber company, which made great profits before the war. The company continues making great profits without the excess profits tax affecting the company. It is the new undertakings that are affected by the excess profits tax, and to prove this I have a few figures that I want to submit to the House. I shall compare an old undertaking with an annual profit of £5,000, with a new undertaking. Before the war the old undertaking made a profit of £5,000, and under war conditions it is still making a profit of £5,000. Then I take the figures of a new undertaking that started since the outbreak of war, and that now yields a profit of £2,500. The old undertaking with a profit of £5,000 pays in taxation—these figures have been revised by the Department of Internal Revenue, and they are guaranteed—a sum of £1,506. That includes all the taxes. It means normal taxation £715, the special levy on industrial profits £666, and Provincial taxation £126— a total of £1,506.

That is a company?

Yes, that is a company. Now we come to the new undertaking that yields a profit of £2,500, namely, the half of the profit of the old undertaking. This undertaking pays in normal taxation £223, Provincial taxation £45, and excess profits tax £967—Altogether £1,235. There now we have the difference. An old company with a profit of £5,000 pays £1,506, and a new undertaking with a profit of £2,500 pays £1,235; and then the excess profit is calculated to 13s. 4d. in the £, and not at 15s., as the Minister now proposes. It is precisely this new company that should be enabled to build up a reserve fund. The old undertaking has had the fat years, and has been able to build up this reserve. The new undertaking still has to do this, and I want to ask the Minister if it is fair? Why does he new increase the taxation on the poor, small companies, without touching the old undertakings? He ought at least to increase the special levy on industrial profits in equal measure. And now I would like to explain this position to the House this morning. The Minister has said that there are only anomalies in his taxation system. What I now want to explain is this—not anomalies, but it refers to the basis of the whole taxation system of the Minister. I am taking four people who live in the vicinity of Rondebosch. These are actually cases that have come to my attention. These people have all an income of £2,500 per annum. They have all increased their incomes to that level since the outbreak of the war. The one obtained an appointment in connection with the National Supplies Board; the other is a doctor, who, since that time, became successful, and his income increased to £2,500. The third is a business man who in the beginning had to do considerable investigation and had to devote a large part of his capital to that. Ultimately he attained success, and his business is going on well, so that he gets an income of £2,500 from it. The other person is one of those whom the hon. member for Humansdorp (Mr. Sauer) terms the idle rich. This man’s father is dead, and he inherited gold mining shares. He is living at ease and the money is rolling in. He is the only one of the four who does not work. He lives on his interest. The man with the salary has to spend every day at his office. The doctor must work very hard, and the business man, particularly because it is a new business, must give a great deal of attention to his business.

Is it a public company?

No, it is a private company.

What is the capital?

The capital is £10,000. The one man among those four who is envied by all is the “idle rich”. He does not have to go to office. He lies about the house all day, or he drives about in his motor-car—the money just flows in. He gambles now and then on the share market, and in that way supplements his income still further. Now and again he throws a cocktail party—he is the envy of the whole neighbourhood. And ultimately comes the income tax form. I want to mention the figures to the House to show how the taxation presses on the various classes of persons. The man with a salary of £2,500 pays £292 in taxation. I want to say here again that these figures have been revised by the Department of Revenue. They have been certified as correct. The doctor pays £803 in taxation. He pays almost three times as much as the man who draws the salary. The business man pays a tax of £1,075.

Does that include the excess profits tax?

This person is virtually the only shareholder, and that is the taxation he has to pay. Now we come to the “idle rich”, who gets his income from shares and who makes a little additional from speculation. His income tax returns also come along, and on that we find £97. I would now like the House to realise what impression this makes on that man’s friends. It is idle for the Minister to come here and say that the shares must be taxed at the source. Here we have four persons whose incomes are the same. The one pays £1,000, the other £800, the third £300 and the “idle rich”, the man who boasts of his money, pays £97. Do you know what impression this makes on the country? There is a feeling of grievance; there is a feeling that an injustice is being committed, and the attitude of the public towards the Treasury is becoming the same as one had in America for a considerable time, namely that it is not dishonest to cheat the Government.

Is that a new attitude?

I say that it is an attitude that is becoming very strong these days.

Was it not there before?

It is now becoming very strong. Permit me to mention another case. I fear that the Minister in this respect is not very well informed, and he does not realise how heavily the married man in these years of war is affected in comparison with the unmarried man. This time I have riot mentioned the high-incomed group. I have taken the incomes of persons who receive £800, £900 and £1,000 respectively. The position is that the unmarried man paid £29 on £800 before the war, and in 1943 he pays £75—an increase of 96 per cent. The married man in 1939 paid £15, and this has now gone up to £42, namely an increase in taxation of 180 per cent. I want to say again that these figures have been revised by the Department of the Interior, and they have been certified correct. On £900 the unmarried man paid £33 in 1939. Last year he had to pay £67, an increase of 103 per cent. On the same income the married man paid £19 in 1939. Now he pays £51, an increase of 170 per cent. What one would now like to ask is whether, because the Minister of Finance is unmarried, it should be considered a crime for people in South Africa to marry and to have a family.

Why are you selecting only one series of incomes?

I have mentioned three incomes, namely £800, £900 and £1,000.

Why do you confine yourself to that?

I have mentioned those figures because those are people who belong to the middle class and they form a large group of income tax payers. In the case of an income of £1,000 the unmarried man has experienced an increase of 116 per cent., and the married man an increase of 160 per cent. I would like to say to the Minister of Finance that it is not only members on this side who feel that the pressure of taxation is wrong. It is not only the Afrikaans section of the population who feel that the taxation presses unfairly and unjustly. I have here the latest issue of a periodical “Common Sense”, and I think that the title of the periodical should imbue the Minister of Finance with respect. In the March issue of this periodical, “Common Sense”, says in connection with the taxation proposals of the Minister.

The hon. member may not quote comment from a paper on a debate in this House.

I sincerely regret that I may not do so. It would have done the Minister good to listen to it. One thing is certain—here is expressed the opinion of people who are not fanatical political people. It is a paper that is more or less independent. It is a liberal paper, and the conclusion at which it arrives in connection with the Minister’s taxation proposals, is this—

That is strong language. It will cause considerable injustice towards the poorer section of the population. That comes from an English paper which professes that it wants to be independent in its action, and it says that the Minister’s taxation proposals “will cause a great deal of injustice to the poorer section of the community”. Because we on this side felt that a great deal of injustice is being committed towards the population of the country and particularly to the poorer section, we have come forward with this amendment which I have already moved. The rules of the House compel me to draft the amendment so vaguely, and I therefore want to supplement it somewhat now. I want to say in the first place that by small incomes we mean incomes of £800 and less. We ask that new taxes should not be imposed on incomes of £800 and less. The taxes to which we object are in the first place the increased personal tax and the savings fund levy, namely from £3 to £5 in the case of incomes under £300, and from £5 to £7 10s. above that. And then we object to the surcharge of 15 per cent. on the income tax of incomes of £800 and less. It was difficult for us to find out precisely how much the loss in revenue to the Treasury will be if the Minister adopts this motion. The increase in the personal tax is estimated to yield an increase in income of £350,000. The surcharge of 15 per cent. is expected to yield £800,000. It is difficult to say, but I think that if the Minister does not impose new taxation on incomes of £800 and less then he will have to sacrifice revenue to an amount of £750,000. I think the Minister will concede this. Now we want to say to the Minister that he can easily make up that £750,000. We want to submit this to his consideration. We may not propose it, otherwise such a proposal would have appeared on the Order Paper. We suggest that an additional 3d. be added to the tax on foreign shareholders. We know that the 6d. increase yields £480,000. The 3d. will thus yield £240,000. Then we would also like to propose an additional 1½ per cent. on the special gold mines contribution. If the Minister does that, he will receive an additional £555,000 from this tax. That gives the Minister £800,000. That will not cause the gold mines to die of hunger, and I think that our proposal is very fair. And then we come to the second part of our motion, namely rebate for children up to the age of eighteen years, and for all children who are at school or in the university, according to a rising scale. We feel that for the first child a rebate of £5 can be allowed; for the second £7 10s., and for the third £10. And then, if the family becomes still bigger, we can make the costs still higher, say another £5 higher for children who come after that. I think the whole House will agree that where we have families with ten children such families ought to be exempted from taxation where the income is below £1,000. We are proposing this with the greatest confidence. There is a war in progress, and some of our best sons are falling on the battlefield. We need an increase of population, and we would like to see that the increase in population should come from the middle class. That is the best section of the population. It will perhaps also be an encouragement to the Minister to get married, and if the Minister reaches the stage where he can announce to the country that he has ten children, we would be glad to exempt him from taxation. In other countries a bonus is given in respect of a big family, and we would particularly like to encourage big families in the middle class. Those are the people who pay the income tax. I would like to quote to the Minister what he himself said. The Minister is one who can say such pretty things and do such ugly things. He reminds one of Sir Roger Baker—“the wisest man and the biggest wrongdoer”. On 28th August, 1940, the Minister moved his second additional taxation, and on that occasion he said inter alia—

[Time limit extended.]

The Minister went further with his description of what taxes ought to be—

Now listen to what the Minister says about taxation proposals—I really think the Minister should go and read that beautiful advice which he gave this House over again—

It is particularly with an eye to the following taxation that I want to discuss, because I want the House to note what the Minister says further—

I do not want to read further. The Minister should ponder once again what he said at that time. We want bigger families in our country, and we want the children to be educated as well as possible. That useful object is attained by No. 2 which we suggest to the House, and I hope that we shall have the support of the Minister for it. In the third place we propose that the Income Tax Act should be amended in such a way that the taxpayers should be allowed to deduct medical and hospital costs. I think we speak here not only on behalf of this side of the House, but for all sides. Sickness is a matter over which a family has no control. It comes suddenly and unexpectedly, and it costs a lot of money. If you take a family with an income of £700 or £800, which is suddenly overwhelmed by sickness, and an operation is necessary, then it means a big doctor’s account and high hospital expenses. Those people struggle to pay those costs,— they are people who belong to the middle class and they get nothing free—they struggle to pay the accounts. They have to pinch to do it, and then comes the income tax assessment and he has again to pay a big account. I do not think I need enlarge further on this subject. Our fourth proposal is that in order to encourage bona fide farmers to redeem their bonds, that part which is paid off on bonds should be exempted from taxation. I think a very strong case can be made out for this. The aftermath of the last war affected the farming population particularly. The depression after that war was a farmers’ depression. It brought the agricultural industry and the farming community, who were always the pride of South Africa, to their knees. They were not responsible for it. They suffered as a result of the war policy of the previous Government. Now they are just busy rehabilitating themselves; they are now busy strengthening their financial position; they are now to some extent able to build up reserves, and the best reserve that a farmer can have is to possess a farm without a bond. If the Minister really wants to do a service to South Africa then he should accept this part of our amendment. We want a mortgage-free farming population. When the war is over and difficult times return, this will be in the interests of South Africa and in the interests of the Government. The farmers are not going to pay excess profits tax. What they do today is this. If they see that there is a danger of them having to pay excess profits tax then they buy land and put stock on it, and in that way they evade the excess profits tax, but they weaken their financial position. That is not in the interests of the country. Now, I come to the last point, namely that new undertakings in commerce and in industry must be encouraged to build up reserve funds by means of concessions in respect of the excess profits tax. I want to quote again what the Minister said in August, 1941. All he has to do is to supplement his own advice to the country. I already quoted the figures of what a new undertaking must pay on an income of £2,500. It is an excess profits tax of about £1,000 on the basis of 13s. 4d. in the £, which the Minister has now increased to 15s. in the £. Now what is over for the director of such a company? He must also live, and from what must he then build up a reserve? Does the Minister want these new undertakings to go to the wall when the difficult post-war times arrive? I think that everything we have proposed here is fair, and I hope the Minister will accept it. In conclusion I just want to say this. Difficult years lie ahead for us. The Minister has told us how he is going to increase pay and other things. I have no objection to that pay being given to the man who takes up a rifle and who goes to fight at the front. But I object that it should be given to the idlers in the country. I want to say this to the Minister: If ever there was a time that the country should have had a Minister of Finance who is able to say “No” firmly and who has a long head to be able to see far in the future then it is now. There are many people in our country who are afraid that one of these days the gold mining industry will no longer be able to obtain machinery, with the result that the revenue from that source will decrease and that unemployment will ensue. There are people who fear that our factories will not be able to obtain the necessary raw materials, which will also bring about a position of unemployment in the midst of a surplus of money. We need today a financier with a long head, and unfortunately all we have is a politician with a swelled head.

I second. The taxation proposals which the hon. Minister of Finance has put before us do not suffer from originality. That is certainly one of the sins that are not practised in these taxation proposals. The Minister, one may say, has come and submitted a sort of surcharge-Budget to the House. His whole idea is to take existing sources of taxation and then to add 12 per cent., 15 per cent. and 50 per cent. to various taxes in order to secure the additional amounts that he wants from the sources of taxation. One is in some measure grateful that he revealed no originality, because we have already said that one of the weak points of the whole taxation system is the multiplicity of taxes. The mute commercial community are today desperate in their efforts to ascertain precisely where they stand in regard to all the new taxes and the variations thereof that are constantly put before them. I say that we have no Originality here, but on the other hand we have also not obtained no degree of simplification of the taxation system. The one new tax that is being imposed is of such a nature that one is filled with anxiety, and that one is grateful that the Minister did not have other opportunities to impose original taxes in such a manner. I refer particularly to the tax on railway passenger fares. The Minister may juggle as he wishes and say that it is a tax on the users of the Railways, put it still remains a tax which makes use of the Railways, a monopoly in Government hands, as taxing machine. We cannot get away from that big principle. That was one of the most important principles discussed at the National Convention. There was a considerable difference of opinion on that matter. Before that time is was the practice in all the Provinces to use the revenue of the Railways on the General Revenue Account. That was the state of affairs at the establishment of Union. In this connection I can only refer the House to the summary given by Sir Edgar Walton in his book: “The Inner History of the National Convention”, as regards this particular point. He puts it thus—

That was the position which the fathers of the South Africa Act found when they conferred on this matter, and they were not satisfied with the position. They investigated it. The matter was very thoroughly discussed, and they came to the conclusion that is embodied in Article 127 of the South Africa Act. Perhaps I may quote a few of the arguments used on that occasion, since they are arguments that are still applicable today. Sir Edgar Walton says on page 237 of his book—

And then he discusses the question of the various arguments that were used there—

Then he mentions one of the most important arguments from the point of view of the National Convention, and that is the following—

It is very clear what the spirit is of the decision to which the National Convention came. I do not want to dispute for one moment that this House has the power to overthrow Article 127 of the South Africa Act at any time. But I want the House to realise that in doing this it is tampering with a very important principle. The only excuse that the Minister has offered today is that a war is in progress. Now we want to know whether any sound principle incorporated in the South Africa Act as a principle of fundamental importance, may simply be overthrown today on the ground that a war is in progress. The argument has been made that general revenue makes a certain contribution to the Railways. Where uneconomic freight-rates are paid, the general taxpayer is asked to make a contribution to the Railways. Is this really a justification of the Minister’s attitude? It embodies the correct idea that the Railways are a monopoly in the hands of the Government which must be conducted on business lines, and where the Government expects to have uneconomic freight rates it must also be prepared to pay for them, but it must not burden the users of the Railways with the cost. The argument that is used here is precisely an argument to keep the whole of the Railway revenue apart from ordinary revenue. And I want once again in these circumstances—even though it may be in vain—to raise my voice in protest against this assault that is being made on one of the basic principles of the South Africa Act. When posterity has to pass judgment on the action and attitude of the Minister of Finance, then this act of his will be placed on the debit side of his account, it will be a mark against him as the man who made use of the Railways as a taxing-machine. Apart from this one tax we have to do with surcharge-Budget. We have in the case of the special levy on gold mines an increase from 20 per cent. to 22½ per cent., an increase thus of 12½ per cent.; we have an increase from 13s. 4d. to 15s. in the £ in the case of Excess Profits duty. That again is an increase of 12½ per cent. In the case of the Company Tax we get an increase from 4s. to 4s. 6d., which is an increase of 14 3-7 per cent. The normal and super tax on individuals is increased by 15 per cent. We find—and this is an important tax—that the tax on persons with an income of under £400 is increased by 50 per cent. in the case of married persons who have an income of more than £300, and unmarried persons with an income of more than £250. If it is a married man with less than £300 and more than £250, then the increase is 66 2-3 per cent. In other words, the further we go down the scale of incomes the greater becomes the levy, and the poorer becomes the man. These figures may be compared with the figures for the taxation increase on the dividends of foreign shareholders. The man who is overseas and draws dividends in South Africa has his taxation increased by 50 per cent. This person is merely a step-child of the Union. He has invested his money here and he draws his dividends overseas. His taxation is increased by 50 per cent. But when it comes to its own child, its own poor child, we find that the Union of South Africa increases the taxation of the married man with an income of less than £300 by a greater percentage than that of this stepchild of the Union. He must pay 66 2-3 per cent. more than last year. The Minister told us to remember that half of this tax is not taxation but goes to the Savings Fund. That was also the case last year. The percentage is not reduced on that account. The Minister must take that into consideration. When he says that half of this amount is not taxation but goes to the Savings Fund it makes no difference in principle. Last year half went to revenue account, and half is going again this year to revenue account, and that half is increased by 50 per cent. in the one case and 66 2-3 per cent. in the other case. I know that the Minister also said that this percentage-argument is an error. He says that one must not look at the percentage increase. If one must not look at the percentage in the case of the poor man—if one must look at the gross increase and not at the percentage increase that he must pay—well, it caused me to think this morning, when the Minister spoke so lightly about the pressure of the new taxes on the poor people, about the people who draw a salary of less than £400 and are going to find it very difficult to pay, then it causes me to think of this verse—

It is no use for the Minister to tell those people who earn less than £400 that the tax does not press heavily on them. It is the people themselves who know precisely when taxation presses heavily on them. It is useless for the Minister and the hon. member for Kensington (Mr. Blackwell) to say that the tax does not press heavily. The poor people know best where the shoe pinches them. We opposed this tax last year and we do so again in the case of people with less than £400. In the circumstances in which we find ourselves, those people should not be liable for this direct tax. Last year it was the first time in the history of South Africa, that a person with that income became subject to this direct Union taxation. The Minister said last year that this tax affects about 60,000 people. I assume that the number has increased. I assume that the number this year will be 70,000, and if we take into account the total number of people who pay income tax—when we see that the number is about 200,000—then we see what a tremendous new field the Minister is appropriating for income tax. It is 70,000 people. It is precisely this class of people who suffer in consequence of the higher cost of living. We have seen that, according to the latest figures, there is an increase in the rise of the cost of living from 20 per cent. to 22 per cent. It is those people who feel it the most, and we find that these direct assessments are made on their income. For the poor man an increase of 50 per cent. to 60 per cent. is infinitely more than it is for the rich man, because indirect taxes, too, hit him more heavily. If he buys ten cigarettes or drinks a glass of beer the additional taxation means much more to him than to the rich man. If one considers these taxation proposals today, one cannot but come to the conclusion that the whole trend and basis of them is to let the people who are at the top of the income scale in our country get off comparatively lightly. Let us glance at the proposition I have laid down and which is concerned with the second proposal that we have made. Compare the comment in the “S.A. Mining Journal” on the taxation proposals, how they welcome them, and how completely satisfied they are, with the reaction that came from a newspaper like “Forward”, which perhaps more than many other newspapers is the mouthpiece of the poor people. I do not want to quote the opinions of newspapers that are definitely political newspapers. If we simply compare the reaction which the taxation proposals had on those two newspapers we find immediately justification for the proposition that these taxation proposals of the Minister, like his previous taxation proposals, show a tendency in favour of the rich man and against the poor man. We have the Personal and Savings Fund Levy. I put a question to the Minister concerning how many people there are on the scale between £250 and £400, and how much they must pay. He told me that he could not reply. He gave me the total number of persons liable for the tax as between 275,000 and 280,000, and the total yield from the tax as £1,930,000. But I think one can introduce here a measure of scientific guessing, and estimate that there will be about 70,000 people with an income of £250 and £400 who will have to pay this tax, and you can take it that the amount which they will have to pay will average £6, or a total of £420,000, for revenue and for the Savings Fund. The hon. member for George (Mr. Werth) has moved that no tax be imposed on people with an income below £800, but if the Minister does not want to accept that I wish to ask him at this stage to exempt people under £400 for the Personal and Savings Tax. Why must they pay it if there are still people who can draw big salaries and who in proportion do not feel the weight of the tax as much? I simply want to tell the Minister that it is very easy to obtain the amount of £420,000, as the hon. member for George said, simply by raising the tax on foreign shareholders by 3d. He has increased it now from 1s. to 1s. 6d., but if he makes it 1s. 9d. he will get £240,000 from this source alone, and if he increases the special levy on gold mines from 22½ per cent. to 23 per cent—by only ½ per cent.—he can get another £182,000. Then he will have enough for the amount of £420,000 which he now wants to draw from the poverty of the poor people. It is not for us to suggest alternatives, but I do want the Minister to bear in mind that justice must be done, and that there are people who are bowed down by burdens almost beyond their carrying capacity. It is, too, not only in this respect that one finds that the taxation proposals cause unreasonableness, but the whole foundation is wrong, in other respects as well. The new taxes are, of course, war taxes, but I contend that in wartime, too, taxes must be imposed in accordance with post-war rehabilitation and reconstruction, when the country must be rebuilt. Any tax which is imposed at this stage must take account not of what is happening today, but what possibly and probably the conditions will be when the war is over. I think one can assume that it is a sound principle that any tax that will check or dislocate post-war employment and development must be avoided at all costs. What is the position in respect of the taxes of the Minister? In my view they do not fulfil the basic conditions that I put forward just now. Take the excess profits duty. We accept that taxation of excess profit is justified up to a certain point. One cannot find fault with the taxation in a certain measure of excess profit that is made out of the war. But the difficulty is that today you cannot say that this profit arises from the war and that one does not. The Minister cannot draw a dividing line, and now he does not logically say that all incomes must be taxed, or that they must not be taxed, but he draws an arbitrary dividing line with reference to excess profits duty. Take, for example, the position of the professional man and the salary-earner. Why must there be differentiation? The Minister says that the professional man’s increased income is attributable to the fact that his colleagues are perhaps away in the North, but he says that is not the case with the salaried man, that an increase in salary generally is not a result of the war. Has the Minister thought of the person who today is general manager of a big business, and whose salary as a direct result of the profit of his company in the war has been raised? If he had a salary of £2,500 and now receives £5,000 as general manager, he does not have to pay a penny in excess profits duty, but the poor fellow who began as a doctor, attorney or advocate and has no pre-war standard, and who normally would have progressed to the stage where he made about £1,500, he must now pay 15s. in the £. But the wealthy manager who perhaps has been manager of the business for years and whose salary is increased from £2,500 to £5,000 pays no excess profits duty. There is no logical basis for the system which the Minister is applying. It is an arbitrary thing. In the last war, too, we had an execess profits duty but then the professional man was not involved, whereas now he is drawn in. There is a great difference between the last war and the present; the Government at that time did not consider it necessary to include the professional man. Today it is actually done. It is an arbitrary thing and the tax is not built on a logical foundation but is something that is imposed in accordance with arbitrary discretion of the Minister and his advisers. The consequence is that you have no balanced taxation pressure. Apart from the excess profits duty we have in addition the undivided profits tax. Between the two the young company cannot lay a sound foundation. The one compels a company to divert its profit in the form of dividends and the other prevents it from building up a reserve. I am pleading now in particular for new companies, new undertakings, not so much the older companies. You have new undertakings that have now reached the profitable stage and which at this time must take account of conditions after the war. Not everyone finds things as easy as the Minister and the Government. Furthermore, they are not all blind to the war, but there are numbers of young undertakings which are looking beyond the war and realise what the position will be after the war. They realise that a depression will come and they must now consider how to strengthen themselves in order to resist the depression. In this time of seeming prosperity they must make provision, as the Minister put it. But people are not enabled to do this. They are prevented from building up reserves. The Minister does not want to allow them to equip themselves to ride the storms of a depression. Between the undivided profits tax and the excess profits duty it is virtually impossible for a young company to build up a reserve. Now I want to ask the Minister to make a concession because this is an unhealthy state of affairs. If the Minister wants to preserve the excess profits duty, can he not meet the young companies? I want to give a hint to the Minister: Cannot provision be made for a refund of a part of the excess profits duty if satisfactory evidence is provided that it will be used for an approved purpose? In other words, cannot a part of the excess profits duty be paid back if that part, say 5s. of the 15s., is used for an approved purpose that is concerned with the permanent assurance of the new source of income, and will the Minister not be able to give it back in the form of a rebate under certain conditions? That will not only be an encouragement to the companies to put themselves on a sound financial basis, but the excess profits duty also discourages the establishment of new companies and the expansion of existing companies. I know that in wartime there is a danger of too many companies being established and that in the intoxication of temporary prosperity people lose their heads and establish companies that cannot exist in normal circumstances. I have no objection to the application of selection in connection with the establishment of companies so that no companies may be helped which have no vitality. I have no objection to that but this excess profits duty does not work selectively. It exercises its checking influence on good and bad companies, on companies with or without prospects. All are combed with one comb and this sort of tax does not take account of the strengthening of undertakings which will have to undergo a severe test when the war is over. Is it not possible to introduce a greater measure of elasticity in the tax according to the character of an undertaking? We know that the fixed statutory percentage for companies shows no elasticity and does not take account of the character of the business. I find that in England for example a measure of elasticity exists and it depends on the character of the business, the capital invested in it and the risk that is entailed. I find for example that they say that in the last war there were applications in respect of 147 different concerns and undertakings and that concessions were made in 133 cases varying from 25 per cent. in the case of tin mines to 8 per cent. in the case of daily newspapers. The statutory percentage that we have does not possess that elasticity. But in England they have the elasticity so that in connection with a mine where there is a fair risk, and a daily newspaper where the risk is not so great, differentiation is made. That is what I want to suggest to the Minister for consideration. But there is another important respect in which this tax is dangerous, especially in war time. We are dealing here with the great problem of inflation. The Minister knows how difficult it is to hold the tendency in check. He is making all sorts of attempts to check it not with great success, but nevertheless he makes an effort and then he comes along and through the excess profits duty he stimulates inflation. What do you find? That many of the businesses that make a profit above the point permitted statutorily do not give the money to the Minister but give it to their own workers in the form of increased wages or bonuses. In other words they increase the amount available for consumption, for the purchase of goods, and this is precisely one of the dangerous circumstances that aggravate inflation. Through increased wages and bonuses more money is put into circulation. The position now clearly is that many people prefer to give the money to their workers rather than give it to the Minister, and the workers then in a certain manner promote the inflation process. There is an increased spending power for this section of the people. And in this connection I also wish to give a hint to the Minister and to ask whether it is not possible to set aside for workers after the war a percentage of the taxation that he receives in this way on excess profits. Can he not say to the firms: Look, I am prepared to give back a percentage of it for use by the workers after the war. In the meanwhile I shall control it as a savings fund and then after the war it can be allocated to them. Then employers will feel that they are not doing an injustice to their workers and at the same time it will be an attempt to restrict the spending power of the population. Let him allow them, under the necessary guarantees, to set aside a part of the excess profits which they must pay out in taxation, in a savings account for workers after the war. That will contribute to the checking of inflation. Then we have another factor that assists inflation, namely the Profits Tax on fixed property. The object was precisely the opposite but the effect has been to raise prices so that today we have terribly high prices. Something else that strikes the eye today is that while the Minister appeals to the people time and again to spend nothing that must not be spent you have the anomaly that the Minister through his taxation system does in fact put a premium on money extravagance. After all you have again to do with human nature and people who earn more money than the fixed statutory standard permits are not very eager to give it to the Minister but use it for all sorts of other purposes. We see for example tremendous advertising campaigns being launched and the object is not to sell goods, because they have not the goods to sell, but to keep their names before the public and by this expenditure to avoid paying the money in excess profits duty. It is an absurdity and shows that the whole basis of the tax is unsound. There is a tendency today to obtain supplies. There is a shortage of supplies, but every business is out to obtain with the money it has more supplies before the end of the year so that it does not have to pay excess profits tax. There are many of these cases we see, and therefore we come forward with the amendment of the hon. member for George, and we ask that not only in this respect, but also in other respects, the poor man and the small man, and the small company that needs every encouragement, should not be taxed unnecessarily. I would just like to give the Minister figures in connection for instance with a private company which has more than 10 shareholders and which makes a profit of less than £500 per year. What is the position under the existing taxation system? That company can be assessed by the Commissioner at 4s. in the £—I am now taking the old taxation.

Are you speaking about the private company.

Yes, it has more than 10 members and a profit of less than £500. On the old scale of 4s. which is now 4s. 6d.… .

Those are public companies. The private companies divide their incomes among shareholders and the shareholders are taxed with the amounts.

The Commissioner can consider them public companies. That is my point.

A private company is a private company in terms of the Act.

That may be the law, but the Commissioner need not necessarily recognise them as a private company. Under Clause 39 of the Act the private company itself may be taxed instead of the individual members. It depends on his discretion.

Only in the circumstances defined.

But in this particular case the particular cumstances existed, and I want to point out how unfairly it operates. This is a company that makes a profit of less than £500, and it has more than ten members. In the discretion of the Commissioner they had to pay a tax of £59 11s. 8d. when they made a profit of £260. But if this had been a private person, then he would have paid nothing, and if it had been a public company it would also have paid nothing, but because it is a private company with a profit of £260, £59 11s. 8d. must be paid.

Excess profits tax, income tax, or company tax?

Companies tax. On £500 the private company pays £115 11s. 8d., the private person pays about £10, and the public company in this case £17 11s. 8d And then you get the surprising anomaly that if that company makes a profit of £501, then it pays nothing. Then the private person (with £501 profit) still pays about £10, and the public company £17 16s. 3d. These are anomalies that must be removed. Is it not possible to give these people a rebate of £45, such as the public companies get? It seems only fair to me that the position should again be equalised. The peculiarity, perhaps it is unintentional, but the peculiarity is that you get no examples where taxation anomalies and mistakes are in favour of the poor man or of the small company. I do not know if it is mere coincidence, but one seeks in vain for mistakes in favour of the poor man. In this time in which we are living it is precisely the small man and the small business that should be kept going. After all is said and done, they are the backbone of the country, and we want a strong and sound middle-class in our country. The Minister has spoken about the people who earn from £800 to £1,000, and he asks why he should exempt them. I want to ask, however, why just those people, the middleclass, with incomes between £800 and £1,000, should be affected so heavily as regards taxation? [Time limit.]

In reply to the hon. member for George (Mr. Werth) may I first of all say a few words about the criticism of the hon. member for Fauresmith (Dr. Dönges). The hon. member for Fauresmith has taken a line in his speech this morning that in many ways replies to the hon. member for George, the fact being that the hon. member for Fauresmith, I believe, is beginning to interest himself in the businesses and industries of this country, and he is beginning to understand something about the facts as facts, instead of merely theories as theories that the hon. member for George constantly brings to our attention. And that, to my mind, is an exceedingly encouraging feature of the Opposition, Sir, that they are beginning to be more practical in their criticism, because they are connecting up with the real economic life of the country and learning much more about it.

However, if one were to take a résumé of the speeches made during this Session of Parliament by hon. members of the Opposition, from the economic point of view, I think we would find a hash which no one can make head or tail out of. Can you imagine for one moment any logic in the standpoint of the hon. member for Fordsburg (Mr. B. J. Schoeman) when you compare his speeches with those of the hon. member for Fauresmith. On the other hand, when you compare the speeches of the hon. member for Fordsburg with those of the hon. member for George, you cannot make head or tail out of it. I suggest that hon. members opposite require a complete overhaul, and they must go into things and see to it that they speak with one voice if they want any influence with the country and if they want any influence with this House. Today they speak with so many voices that we do not know where we stand.

Stop talking mush.

When the hon. member for George gets up and begins by saying “die onnodige oorlog” (the unnecessary war) …

Surely we speak with one voice there.

What is the worth of the hon. member’s criticism of a war budget, after a statement like that. Why cannot he leave that on one side and give us workmanlike criticism of the taxation proposals, without making a statement like that; because inevitably when you say “this unnecessary war” you think of the alternative. And what is the alternative, Sir? The alternative, I submit, would be a useless neutrality. There is no other alternative.

Why useless?

It may be very useful to the country.

If the war is unnecessary, then from that point of view neutrality would be completely useless. Let us look at this thing from the objective point of view. According to the hon. member for George we are unnecessarily in the war, or we are in a war that is absolutely unnecessary, and the alternative to that is the neutrality that he no doubt still advocates and that his party advocates. He referred this morning, in his closing remarks, to the wrath to come. He spoke of factories without material, of shops without goods, of workers without work.

Men without shirts.

That would have happened if we had had a policy of neutrality, not in the future, but in the past. What would have been the economic position of this country if we had remained neutral?

I am afraid the hon. member is wandering from the subject.

You are off-side again.

I am replying, Sir, to the point made by the hon. member for George.

The hon. member must confine himself to the motion.

I submit that we must have this alternative, and the alternative would be a very bad alternative for this country. Then he goes on to paint a picture as a result of the Minister’s war taxation proposals of poor people on the one hand, and “aasvoëls” (vultures) on the other hand. I want to take the hon. member’s mind back to the beginning of our war taxation. There was just this one thing in the mind of the Minister of Finance, that out of the war there should be no profits made by any person in this country. That was laid down as fundamental, and that was backed up by the public opinion of this country. We are in a death and life struggle, and no person must make profit out of this war.

Do you say they have not done it?

The first thing that comes to the mind of any Minister of Finance as an instrument is the excess profits duty. As you know, Mr. Speaker, at the time many people said that the excess profits duty should be 100 per cent. of the excess profits made. The Minister, in deference to anticipated criticisms said: “I will leave a part of these war profits for legitimate expansion”, it being the desire that the progressive spirit should not be killed. We wanted to give an impetus to our industries and economic activities. We did not want to put a break entirely on the enterprise of the country, and in that regard the hon. Minister originally took 50 per cent.; then he took 66 2-3 per cent. and in his Budget this year he is taking 75 per cent. Everyone will admit that the Excess Profits Tax is a very unscientific form of taxation. One cannot get away from it; it is not a scientific form of taxation, and the Minister himself will admit it. I take it that the Commissioner of Revenue has to admit it every day of his life, but when you have a country calling for all profits to be taken which were made as a result of the war, what was the hon. Minister of Finance to do in these circumstances? I submit that he did the only thing he could do, and that was to impose an Excess Profits Tax. I have stated already why he did not put on 100 per cent. tax. With that Excess Profits Tax, as you know, we are building up a system whereby, if undertakings find later on after the war that they have made losses, the Excess Profits Taxes which they paid can be given back to them to the extent of their losses; they can have those Excess Profits Taxes refunded to them. Having chosen that form of taxation at the beginning of the war, I cannot see any farseeing Minister departing from it now, because he has started a building, as it were; he has taken so much in taxes; he has promised to give back to the taxpayer so much in the event of his suffering losses, and having started on the construction of the building he must now carry on with it. We cannot just abandon it and start a new system. We chose that system, and if hon. members opposite were pleased about one thing in the taxation proposals of 1939, it was that the Minister of Finance had decided to impose an Excess Profits Duty. That was one thing they were agreed about.

What proof have you of that? You get 50 per cent. and I get 8 per cent.

The hon. member will get a chance to make his speech. We are in that position today, and hon. members opposite have got to recognise that we cannot change the system now. Let us criticise on that basis, but to talk about bringing in a new system is on a par with the argument of the hon. member for George that we are in an unnecessary war. Now I want to say a few words about the incidence of this Excess Profits Tax. When you hear hon. members opposite talking about anomalies, you would think that the general taxpayer who comes within the provisions of Excess Profits Duty is having a good time, that he is rapidly becoming a full-blown “aasvoël” (vulture), ready for plucking. I wonder if hon. members opposite know this, that we have taxpayers in South Africa who are paying up to 17s. 6d. in the £. That is a very high proportion of their incomes to pay, and there are hundreds such taxpayers in the country, and let there be no mistake about it; I quite agree that there are anomalies—there must be anomalies with an unscientific tax like the Excess Profits Tax—but by and large the Excess Profits Tax of the Minister of Finance is getting the people he wants to get. That is the point I wish to make. I have never been an advocate of the gold mines, they need no advocacy of mine, but when my hon. friend comes along and says that the gold mines should pay higher taxes than they are paying today, I must say that I disagree with him. I have got a sense of proportion. As a good South African who thinks of the future of my country, I realise that you can reach a stage in your gold taxation, where you would do tremendous harm to the gold mining industry in this country. The hon. member for George asks why the Minister did not tax the gold mines to a greater extent. He gets up and almost sitting down asks: “Is the Minister prepared for the day when the gold mines may have to close down because they cannot get machinery?” Does he realise that that is the position today? Does he realise that instead of having an asset in the gold mines, he may very shortly have a liability. I submit that it was for reasons of that kind that the Minister of Finance in this budget took from the mines the smaller percentage of taxes that he did, because he had not in the phrase of the hon. member for George a swelled head. If the hon. member for George had been the Minister of Finance and had put into action the words he uttered here this morning in the earlier part of his speech he would have taxed the gold mines more. I do not know how much more he would have taxed them, but he certainly would have taxed them a great deal more than the hon. Minister has done, and if he had done so, he would have proved that he not the Minister is the man with the swelled head, and what the Minister of Finance has done has shown us that he is a man with foresight, a man who looks at the future of the gold mining industry in this country. I submit in these circumstances that the tax that the hon. Minister imposed is abundantly justified by the facts as we know them today.

You are talking mush.

I would like to revert for a moment to the speech of the hon. member for Fauresmith. He made an extraordinary statement here. He said that it was not the amount of taxes they were grumbling about by the percentage of the tax. In other words, if a man was paying 6d. in taxation last year and the new taxation measures made him pay 2s. 6d., then immediately the hon. member for Fauresmith would have got up and said: “There you are taxing the poor man 500 per cent “extra.” It is only an increase of 2s., but 500 per cent. looks at lot. Then the hon. member compares that with the 15 per cent. you put on companies, the 12½ per cent. you put on this section of the community and so on and so forth, and he tries to prove that the poor man is being penalised by the high percentage of the taxes. The hon. member for Fauresmith knows very well that unfortunately because we are in this war we have had to bring into the net taxpayers who have never been taxed before, directly, as they are being taxed now. We have had to do it, Sir, and in the circumstances—again on a comparative basis—I make bold to say that in many cases these poor people are very pleased to pay the taxes we have imposed on them. I have had many people coming to me and saying: “I am glad that this tax is being imposed; it is only a small contribution I am making to the war effort, but I am glad because I now feel that in my own small way I am doing my share.” We may not have that spirit amongst hon. members opposite, but we have that spirit right throughout the country amongst hundreds and thousands of our poor people. If the hon. member wants to find true patriotism let him go to the poor people in this country. I submit that it is perfectly ridiculous for the Opposition to say, as they did in the House this morning, that they are not concerned with the amount—they admit that the amount is small—that they are concerned with the percentage. I would also like to point out this, that when the hon. Minister for George ….

Coming events!

I bear the hon. member no ill-feeling. When he gets up and talks about this money that we are wasting—he talks about the poor on the one side and the “aasvoëls” on the other—does he realise that something like £60,000,000 of the money we spend goes into the pockets of the poor people of this country? The soldiers are getting that money, their wives and families and dependants.

Are they the poor people?

Many of them are poor people. If the hon. member reads the evidence that was given before the Select Committee on soldiers’ pay, he will find how many men have gone into the war and are better off financially in the army than they were out of the army. And the money that is making them better off in the army, is money that comes from taxes we are putting on in this House. That presents a very different picture to the one that was painted here by the hon. member for George this morning. If the hon. member would just lay the facts before the people of this country .........;

He is incapable of doing that.

The hon. Minister says that my hon. friend is incapable of doing that, well I do not know. I have known the hon. member a good deal longer than the hon. Minister has known him and I think he is capable of doing a lot of things.

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

When the House adjourned I was saying that so far as the hon. member for George was concerned I did not despair of him in the way the Minister of Finance did, because I really think that in due course and in due time if we had him on this side of the House we would make a very good South African of him.

Evil communications.

Oh, no, no. There are one or two other criticisms which I want to deal with before concluding. I want to deal with this point raised by the hon. member for Fauresmith with regard to this levy on railway tickets. I am sorry the hon. member is not in his seat, because as I have already said we find that the hon. member for Fauresmith is beginning to take a very practical view of the questions concerning the country at the present moment. He is less theoretical perhaps than other Opposition members and in that regard we have great hopes of him. It is quite true that taking this levy from the Railways is something which has disturbed all of us, who have a regard for the constitution of the country; all of us who respect not only the constitution but also the men who drew up that constitution, did originally feel somewhat concerned. On the other hand, I would ask hon. members opposite to look at the position of our Railways today. The Railways being State Railways cannot be taxed as if they were privately owned. In other countries where the Railways are privately owned we find that today they are one of the most prolific sources of revenue. Directly we cannot tax the Railways. We see the huge surpluses which the Railways have had year after year, largely as a result of the war, and I would ask hon. members just to imagine how relieved the Treasury would have been if it had been able to get excess profits tax, super tax and normal tax from the Railways. That avenue has been closed, and as practical business men, or rather as practical statesmen, we have to look at this position. And although my hon. friend over there talks of this being an unnecessary war, we are in this war, and we have to sit down and consider the whole position from a business standpoint. We see that the ordinary methods applying to ordinary business do not apply to the Railways because of the Act of Union—and not only that—they do not apply because it would be against the policy of the Government. The ordinary methods of a business concern, a private concern of this kind, would be to regulate its traffic, to reduce its traffic, by increasing its tariffs under conditions such as we have here at the moment. We cannot do that here. But in the circumstances the Railways, in order to reduce their traffic, have dealt with the position in a different way. We are now proposing to deal with the matter, so far as concerns passenger traffic, in the way the Minister has put forward—at the same time the Minister proposes to use these means towards improving the revenue of the country. I say that this is a most businesslike arrangement, and in that regard I say that the Minister of Railways and Harbours and the Minister of Finance are to be congratulated. We must also bear in mind that the Minister has met a great deal of the criticism in regard to this matter by making some concessions. He has met the human element in the whole position, by the way he has dealt with this matter, and I think that for the time being, certainly during this period of stress and trouble, we can be thankful for this measure of relief which is being afforded by the proposals of the Minister. And as far as I understand the position, the legal advisers state that the Minister’s proposal is in no way in conflict with the provisions of the Act of Union. So I think that if the hon. member for Fauresmith would consider this matter from the point of view of practical politics and as a business man, he would agree with this innovation. Now, the hon. member for Fauresmith is usually very correct in his facts, but today I notice that he was wrong in one or two particulars. For instance, he said that the salary of a person, the manager of a business, whose emoluments were raised from £2,500 to £5,000 per year, would not be assessed for excess profits. He is wrong there. The income tax people would see to that. The man who gets an ordinary reasonable increase in his salary, of course, is in a different position, but in a case of this kind …

You are referring to the case of a manager of a business.

Yes, I am referring to the case of a manager of a business. The manager of a business getting his salary doubled certainly, directly or indirectly by getting at his firm, would have that portion of his salary brought under the Excess Profits Tax. What I would like to ask my hon. friends opposite is this—whether they like it or not, they should realise that South Africa, like the rest of the world, practically speaking, is at war. There are one or two neutral countries, it is true, but otherwise we are seeing a World War today, such as the world has never seen before. And when we think of the fortunate position in which this country is today, when we think of a world smashed to pieces, when we think of the blood that runs and the destitution, and the homeless people, the orphan children, when we think of the world outside South Africa, we should go down on our knees and thank God for the fact that we are in South Africa. Now, some hon. members may say that our fortunate position is not due to our being in this war. But let us deal with the fact that we are in the war. Do hon. members opposite ever make contact with some of these poor people who have been shipwrecked—hundreds of them have landed here in Cape Town, month after month, mariners from other countries—seamen who were in many cases on their way to bring us goods from other parts of the world? These men have some terrible stories to tell of the conditions in their own countries, of the hazards they have braved, of the perils they have gone through, and of the suffering they have undergone.

We are sorry for them, but not for you.

Those of us who have made contact with those people and who have heard their stories, who have listened to their harrowing tales, must realise the happy position South Africa is in. I say that if hon. members opposite had any sense of proportion at all they would speak a word of thanks to this Government for what it has done in promoting the safety and the well-being of the people of South Africa. In conclusion, I should like to say a few words about this matter of the incidence of the Excess Profits Tax as it affects new businesses and new undertakings. I want to submit, Mr. Speaker, that in the earlier part of the war this did not matter so much, but most of us believe that the war is going to end, perhaps sooner, perhaps later, and we in South Africa think we should do everything we possibly can to build up our economic position against the time of peace that is coming. Now, sir, the Minister himself agrees that the incidence of the Excess Profits Tax presents many anomalies. He agrees that some undertakings are unfairly dealt with in comparison with others. Now I would suggest to the Minister of Commerce and Industries, who I am sorry is not present, that he should have some machinery set up to examine every one of these undertakings, so that if a young industry is handicapped by this Excess Profits Duty, and is not going on as it would like to do, it might come to the Minister, have the position examined, and representations made by the Minister of Commerce and Industries to the Minister of Finance, with this proviso that any assistance given to that undertaking must be on the condition that its operations are in the national interest. I submit that if a department of that kind were set up, it would be an enormous benefit to the country. We have a tremendous lot of latent enterprise in our country at the present moment that is looking for a job of work, and if such machinery were set up I think it would be an excellent thing for the future particularly after the war period, and in the end might be as fruitful a source of revenue to the Treasury. I hope the Minister will give due attention to this suggestion. In this matter it would appear that I join with the hon. member for Fauresmith (Dr. Dönges) and the hon. member for George (Mr. Werth) in representations they have made about the same thing.

It was interesting to listen to the hon. member for Maitland (Mr. Mushet), particularly when he was busy trying to bring the House under the impression that these taxation proposals now before us are intended largely not only to find money for the war but also to build up a sound economic position in our country. All the taxation proposals are allegedly necessary to strengthen the economic foundations of the country. I am really astonished how the minds of some people can lead them to approve of things that they would otherwise have condemned in their more reasonable moments. The hon. member knows as well as any other reasonable human being knows that you cannot build up a sound economic position in the country when you are busy bleeding the people white for a war, and particularly for a war in respect of which it was not necessary for those people to be bled white. He also defended the 15 per cent. on Railway tickets, and in that connection he said that it is a sound position because it would keep people from travelling on the Railways. It is this same class of person, the merchants of South Africa, who perpetually attacked the previous Government when it tried to lighten the Railway tariff on products; they perpetually attacked the Government and asked the Government to take into consideration that the Railways, according to the South Africa Act, must be run on a business basis. But now, after all this, we have to see that hon. member agreeing that the Railways must be used to levy taxes for war purposes. Now it is suddenly a good thing to tax people so that they should not make use of the Railways, because those hon. members have only one thing in their minds, and that is the war! For all that the sound institutions of the country must be overthrown. I do not intend to analyse that sort of mental reasoning. I think that those hon. members themselves if they ponder the matter in reasonable moments, will realise that they are arguing against their better judgment in connection with this matter. I want to refer more particularly to the class of person whom I may call the small persons in our country, who are affected the most heavily by these proposals of the Minister. The hon. member for George (Mr. Werth) dealt this morning with the position of the middle-class man, the man with an income of £800, £900, or £1,000 per year. I want to confine myself to the class of man who has an income of from £250 to £400 per year. The Minister of Finance will recall that I introduced a motion on the first day of the Session on behalf of the Afrikaner Party. He will find it on page 128 of the Minutes, and with reference to this motion which is now before the House, part of that motion of mine reads—

In other words, the idea behind that motion was to draw the attention of the Minister to the fact that he must not further tax that little man, the ordinary shop clerk, the ordinary bank clerk, the railway officials, and the public servants, and the little farmer, with an income of £250 if he is single, and £300 if he is married, still further. I say that it was a reminder to the Minister so that he should have time to consider the request before he came forward with his taxation proposals and his Budget to the House; that he should give serious consideration to the request that he should not impose increased taxes on that class of person. Notwithstanding that the Minister now comes to the House with his proposals, and he increases those taxes. He increases the taxation pressure on those people still more than in the past, and he did not take any notice of the fact that that class of man needs protection in view of the fact that living costs weigh heavily on him; and, secondly, that there is no hope for him to increase his income at this time. Paragraph 3 of the Minister’s proposals now increases, up to £5 and £7 10s., the globular amount that every man must pay if he is unmarried and has an income of £250, or if he is married and he has an income of £300. Now does the Minister consider this fair, while he had other sources of income which he could have tapped and from which he could have obtained bigger amounts? As I understand the Minister the savings fund tax will yield an additional amount of £350,000. Now let us notice what the Minister did since 1941 with reference to that class of person. The first that he has decreased the rebate for normal and income tax for married persons from £400 to £345. In the same year he suspended the rebate of 30 per cent. on the basic income tax, which was also introduced in 1940. In 1942 he added a further 10 per cent. to the surcharge, and levied the savings tax of £3 on incomes up to £300. In 1943 he increased the savings tax from £3 to £5 in the case of married persons, and from £5 to £7 10s. in the case of unmarried persons. In addition there is the increase of 15 per cent. because the surcharge on income tax was raised in general and because railway tickets were increased by 15 per cent. I must say that it is always more pleasant to speak to the Minister if there is not someone sitting in front of him with his back to us. But I want to talk past the back, and perhaps oblique shots will still strike the Minister. This taxation of the Minister in the first place affects the family of that man who has to support his family on an income of between £300 and £400. He cannot expect an increase of income in this period, because everyone is afraid to ask for an increase or for an improvement of working conditions because he is afraid that he might also be sacrificed. Consequently those people are suffering greatly, not only as a result of the taxes which the Minister has imposed but also the result of the living costs that are rising daily. With these taxes the Minister is virtually taking the bread from the mouths of the children. Every pound by which the taxation on this class of person is increased means that a pound is taken away from the children of those people. The amounts that he expects to receive from these persons, according to the calculations I have made from the Minister’s Budget speeches, amount to £5,000,000. Will the Minister deny that about half of that amount of £5,000,000 affects that class of persons who receive a salary of between £300 and £400. The hon. member for Fauresmith (Dr. Dönges) put a question to the Minister to which the Minister replied that approximately 60,000 persons in the country are affected by this taxation, and I say that fully the half of the £5,000,000 is to be derived from these people who receive low income. The Minister has other sources which he could have tapped, and there he would have obtained much more than the amount which he has collected from these people last year and this year. If he had added 2½ per cent. to the special contribution from the mines he would have received £910,000, more therefore than he will receive from these people. If he had added 6d. to the taxation on the dividends of foreign shareholders he would have received £1,000,000 or three times the amount that he is exacting from these people. The objection one has to the taxation system launched by the Minister is twofold. The first is that the big people who can pay and who can pay more are being spared. The man who suffers little inconvenience through the increase of taxation, those people who have shares and who, if they have to pay an additional 6d., simply go to the bank and write out a cheque, those people who can do this with a smile, they are the people who are being spared. We had the proof of that when the share market rejoiced over the Minister’s Budget speech. They had reason to rejoice. But I say that if we compare this with the feeling of the class of person who has to maintain a family and who receives a small salary, then we have the position that every additional pound of money of which the Minister deprives them means that sustenance is being taken from the mouth and the body of the child, and that is why we feel that the Minister is not acting fairly and justly towards that class of person. I want to make an appeal to the Minister, and that is for him to take into consideration that this is not all the taxation which those people have to pay. They also pay the indirect taxes of the State. Over and above this there are the provincial taxes, and I really think that the Minister should eliminate this class of person from his increased taxation. He cannot go on and tax them higher and higher every year, and think that he will thereby increase his revenue. It is a heavy burden when £350,000 additional taxation is imposed upon these people in one year. If we take the small farmer who made £300 per year last year, then we find that he will not make £200 this year, owing to the vicissitudes of nature, and we really do not think that the Minister took such circumstances into consideration. He merely looked at the money.

I am sorry that the hon. member for Maitland (Mr. Mushet) is not in his seat. I wanted to tell him that I like listening to his speeches in this House, because he is a practical man, and he is sometimes able to make practicable suggestions. But where he appeared in this House as advocate and defender of these taxation proposals, I am afraid that he did not succeed very well. Nor could the position be otherwise, because he had a poor case to defend. When at the end of his speech, he made practical suggestions to the Minister, based on his experience, we found that he had kept in stock good suggestions, and he agreed with members on this side that the resolutions in connection with the excess profits tax were unreasonable and that they pinched and prejudiced new industries. He agreed that the representations of this side of the House were fair. But there were two things which the hon. member said, which I cannot allow to pass without comment, and I hope that the electors in the new constituency (Vasco) will bear that in mind. He said that the poor people were not only satisfied with the taxes they were paying today, but that they were proud to pay them. That is what the hon. member believes, but I am convinced that the voters of Vasco do not think so. They are not proud of nor willing to pay these taxes, as the hon. member for Maitland said. Then the hon. member proceeded to defend the proposed tax on railway tickets, and I asked myself whether the hon. member did not know that he represented railway people, and whether he did not know that this tax would be to the disadvantage especially of the railway people? If this tax had not been levied, the railway income would have been greater, and that would have been to the advantage of the railway people. But the hon. member for Maitland went so far as to congratulate the Minister of Finance on his resourcefulness in drafting such a proposal, which, in fact, is going to prejudice the railway workers. That is all I want to say in connection with what the hon. member said. I am convinced that the voters, and especially the railway voters in the new constituency (Vasco), will have something to say to him in regard to this matter. There can be no doubt that the people and the country in general are groaning under the heavy taxation burden which rests on the nation, a taxation burden which is the result of the ever increasing taxes imposed by the Minister of Finance. These taxation proposals of the Minister are the result of the increasing costs which are brought about by the Government’s war policy. The Minister of Finance knows that from the beginning this side of the House was opposed to the war policy of the Government, or rather, what we most resented in the policy of the Government was that the Government did not adhere to its original proposals in connection with the war.

The hon. member cannot discuss that again.

I refer to it in connection with the taxation proposals. I want to give the Minister the assurance that the taxpayers of the country are very dissatisfied because they have been plunged into this war which is costing the country so much, a war which brings in its wake these high taxes, and we want to ask the Minister whether he cannot hold out the prospect to the country that the taxes will be reduced. We notice that there is a great possibility that the war in Africa may come to an end, and if that is the case—and according to the views of the Government there is every prospect of that—then it is the duty of the Minister in these circumstances to hold out the prospect to the country that he proposes to reduce the war expenditure. The extent of our participation in the war must surely decrease when there is no longer a war in Africa, and for that reason we hoped that the Minister would be in a position to hold out the prospect that in the next budget he would not again propose higher taxes for war purposes. Since the Minister did not do that, the people are feeling today that the taxation proposals are so severe that it may impair the whole economic development of South Africa. Today the war is already costing us £100,000,000 per annum. We hoped that the Minister would tell us that it would be considerably less the following year. The Minister must consider whether it will not be the best policy gradually to reduce his tremendous forces at this stage so as to reduce the expenditure in connection with those troops. If he does that, we shall not reach this position that when the war is over 100,000 people or more will have to be discharged from the army all of a sudden. That will cause an economic depression which the country will not be able to bear. As a result of these heavy taxes, and the war expenditure for which it is intended, we have this position today that there are essential services which the Government should have given to the country but which are being neglected today. I want to mention a few of these services. Take the shortage of houses in the country. As a result of this big expenditure, the Government cannot render this essential service to the country.

What has that to do with the taxation proposals?

If these taxes which are being levied had been used for this purpose, then the people would not have been so dissatisfied about it. These taxes are now being used in a manner which will not be to the advantage of the nation. Take land settlements

The hon. member cannot discuss those matters now.

I do not want to discuss those matters. I mention them only in order to show how, as a result of the war which is being waged, the Minister fails to devote these heavy taxes to essential services such as housing, land settlements, irrigation, agricultural development, Railway development, etc. These are essential services which the country needs and which we cannot get as a result of the misuse on the part of the Government of the income derived from the taxation. I want to support the hon. member for George (Mr. Werth) when he complains in this House that the Minister, in imposing these taxes, is going to hit the small man, with the small income very hard. Does he not know that those people have been hit very hard in other ways? Does he not know that the increased cost of living is hitting those people very hard? And now the Minister proceeds to tax those people even more heavily. The middle-class man and the poor man who should now have been warned and encouraged to make provision against the post-war conditions, when there will be a general depression, and when this man will be hit, and when his income will be such that he will not be in a position to make the necessary provision for proper housing conditions, for example—this man is now being taxed more heavily by the Minister, and it has been made almost impossible for him to prepare himself to meet the post-war conditions. As a result of the great shortage of houses which arose in the country, we can expect that rentals will be very high after the war. It is the poor man who will be hit hardest by this, and instead of helping this man to strengthen his position with a view to that depression, the Minister is now engaged in putting his hand so deeply into the pocket of the public, that those people will be weakened even further, and they are not in a position today to say what their position is going to be after the war. Then I come to the proposed reduction in the case of children over eighteen years of age who are at school and at the university. This is something which is of importance particularly to the platteland. The platteland finds that the expenses in connection with children do not cease when they reach the age of eighteen years, but that the biggest expenses begin at that age. That is the time when they have to go to technical schools, to commercial schools, and to the university. Instead of these children over eighteen years costing the parents less, they cost the parents a great deal more. That does not apply to people in the cities. They do not have to face those costs. This also applies to the plea which the Minister must take into consideration and which was made here for a rebate in respect of medical and hospital expenses. The Minister knows that in this respect, too, the platteland has to face great difficulties, and that medical and hospital expenses are high to a person with a family. The people in the big cities have very good medical services and hospital services at their disposal, but it costs the people on the platteland a great deal to avail themselves of medical and hospital services. The Minister should consider the advisability of applying this small exemption for taxation purposes in such a way that the platteland, in so far as this matter is concerned—and since the platteland is in this unfavourable position—will be properly met. When we make a plea in this House to the Minister in connection with the excess profits tax, I also want to contribute my share by asking him to take the motion of the hon. member for George into serious consideration. He knows very well that we have repeatedly made representations to him to assist the farmer to redeem his debt burden and to rid himself of his heavy capital burden. Here is an opportunity to encourage the farmer to do so. I therefore ask the Minister to encourage the farmer in this way, but instead of doing that, the Minister is today doing the exact opposite. As a result of the increased prices of cattle and products, and the danger which exists that when a farmer goes beyond a certain limit he has to hand over three-quarters to the State, he makes some other plan, and he proceeds to make further capital investments. He buys more land and stocks it with cattle, expensive cattle, with the result that if the war were suddenly to come to an end and the prices were to fall, those people would again be saddled with high capital burdens. That is what the Minister is doing to these people today. He should encourage them to reduce their mortgage liabilities, and he should evolve a proper system in order to put this into effect. The fact is that today there are farmers who hesitate to market their cattle. The prices are good, but they hesitate to market their cattle because if they do get good prices, they may have to hand over three-quarters to the Government. Then you get people who want to be honest and who want to devote their money towards the payment of debt, if only they can get some encouragement, and, in so far as those payments are concerned, exemption from taxation. If the Minister does that he will be rendering a very great service to the country in general, and to the farmers in particular. The country takes great interest in the mortgage liabilities of the farmers, because if you have a sound farming community the whole country reaps the advantage. For that reason it is in the interests of everyone that the farming community should be encouraged at this stage to rid itself of its heavy capital burdens. With regard to new undertakings, hon. members who spoke have made out a strong case. We were even supported by the hon. member for Maitland, so that we do really hope that the Minister will give his serious attention to this. He must consider how unfairly these new undertakings are hit. They are heavily taxed, and this compares quite unfavourably with the good services which they are rendering, and it is out of all proportion to the enormous profits which are made by other capitalists in the country and the taxes which they have to pay. In 1939 when we abandoned the gold standard there was a state of affairs which corresponded with the present position. Today the war is the cause, and we find that the value of goods and products have risen. There is a premium on the value of goods which the Minister is now taxing. At that time there was a premium on gold. Have you ever heard of an excess profits tax being placed on the gold premium despite the enormous profits which were made? The Minister knows that the man who invested his money in the gold mines is not being hit, because he bought his goods before the date which the Minister took as the basis for the calculation of excess profits. Those people represent the biggest capitalists and their income has been exempted, while people who are now making excess profits during the war are being heavily taxed. We heard this morning from the hon. member for George that the man who invests money in the gold mines is scarcely taxed, while four or five times as much is taken from other people in taxation. The Minister must see to it that his taxation proposals are reasonable. These proposals do not fall equally on the people. There is differentiation between one member of the community and another. Now I want to say a few words in connection with the tobacco tax which the Minister proposes to impose. He knows that this is a tax which hits the people very hard, and which directly hits the industry and indirectly the farmers and manufacturers. But the Minister also said that the public was practically paying the tax. He knows that it is not only the public but also the producers.

You were not here, but I said that I was considering the question of allowing a rebate in respect of the lower grade.

I am glad to hear that, and I hope that the Minister will do so. There is not the slightest doubt that the people who will be hit hardest by this tobacco tax are the small manufacturers and the small farmers, and also the poorer classes of the consumers. I am glad therefore that the Minister is prepared to consider the position of these people. The position is that the tax on the cheap type of tobacco—for example, the dark tobacco—is being increased by 100 per cent. The Minister will realise that if he forces this type of man to pay 100 per cent. more for the article he will undoubtedly use a smaller quantity. The Minister may know that the dark type of tobacco is used for pipe tobacco, and that is produced mainly by the small farmer, and this tobacco is processed mainly by the small factories. The majority of the factories cannot manufacture cigaretes but pipe tobacco only, and if the Minister increases the tax on pipe tobacco by 100 per cent., he is taxing the small man, the small farmer and the small manufacturer especially. I am glad therefore that he will again consider this. But I also want to explain to him that there is a real danger that if he taxes the lower grades of tobacco so heavily, he will reduce the consumption, because the tendency will be not to use pipe tobacco any longer but cigarettes. In order to prevent overproduction, he must refrain from taxing the tobacco—especially the dark tobacco—so heavily that the consumption will decrease, while on the other hand overproduction will be accentuated. There is also this consideration that while the dark tobacco is now being produced chiefly by the small tobacco farmers, this tax may have the effect of encouraging other people to produce this tobacco on a small scale in areas which are not under control. In the past we have experienced great difficulties in that connection. We are trying to control the tobacco industry, and up to the present we have succeeded 99 per cent., but if it is the policy to tax the dark grade of tobacco so heavily that, as a result of that, the demand falls off, people who are not under control will produce this tobacco in other parts of the country. I have in mind, for example, the native territories. There has been a tendency in the past to produce tobacco there. The Tobacco Control Board and the tobacco industry will then no longer be able to exercise control. The Minister must therefore carefully go into the matter and reduce this tax. The Paper Controller laid down that tobacco cannot be sold other than in packets of a quarter pound, and under the taxation proposals of the Minister, a quarter pound of tobacco cannot be sold at less than approximately one shilling. That means that poor people. Europeans and non-Europeans, who are today pipe smokers, cannot buy tobacco for less than one shilling at the shops or elsewhere. The person who only has a 6d. or 3d. to spend, will then have to buy cigarettes because he can buy cigarettes in any quantity. The cigarette manufacturers are today even selling loose cigarettes. But one cannot buy tobacco for less than one shilling. That will also be an incentive for the poor man to smoke cigarettes which in the long run will cost him more than tobacco. That will prejudice the poor man and the poor producer. I therefore ask once again that the Minister must bring about an alteration in that respect. I do not think there is a single farming community which will be satisfied with the low income which the tobacco farmer receives. We therefore have a strong case when we make a plea for these people. The hon. member for George and also the hon. member for Riversdale (Mr. P. M. K le Roux) stated the other day that the gross income of the tobacco farmers was not much more than £1,500,000. There are 30,000 or 40,000 who have to live on this income, and I think one can put the average income of a tobacco farmer at £50. That is a very small income. But the State takes no less than nearly £6,500,000 in taxation on tobacco, and when the organised tobacco farmers pressed the factories for ½d. increase, especially for the poorer and smaller tobacco farmers, the reply was that the industry could not afford it. But the Minister proceeds to increase the tax by 100 per cent. in comparison with last year. Does he realise what he is doing? The Minister must be very careful. I think we have a very strong case and I hope the Minister is going to meet the tobacco farmers by giving a reasonable rebate in respect of certain types of tobacco.

We have heard speeches today asking what the money which the Minister wants is to be spent on. Now I understood that the Budget debate had already settled that question. The question today is not how the money is to be spent, but how it is to be raised. Now, one usually finds that people look at taxation from the point of view of how it is going to affect them personally.

That is most human.

They want to know how it is going to affect their own purse. If we take those taxes as a whole there are admittedly many serious anomalies, and some have been referred to by the hon. member for George (Mr. Werth). But the Minister on previous occasions has pointed out the very great difficulty which exists in imposing a tax which is going to affect everyone alike. Some hon. members complained this morning of the different way people in receipt of the same income were affected. There was a reference to people having incomes of £2,500 per year, and where they paid totally different taxes. Of course, in those cases this was partly due to some of these people having to pay excess profits duty. Now I want to ask hon. members whether they would be in favour of people earning more money today than before the war paying 100 per cent. excess profits duty.

Yes, hear, hear.

Is the hon. member prepared to take away everything anyone makes in excess of what he may have made before the war? Is he prepared to take away from the salary earner everything he earns in excess of what he earned before the war? If the hon. member is not, then his criticism in that regard is not honest. I agree that this tax is in many respects wrong. Many persons may make more money than they did before the war, due to reasons which have nothing to do with the war. Many people are getting far more money than they did before. It has been recognised, particularly with regard to certain forms of businesses, that in times of war, the so-called excess profits tax is perfectly legitimate. But where there has been justifiable cause for criticism is that subsequent to introducing the excess profits tax the Minister introduced the trades profits levy tax, in which he made a discrimination as between the rates laid down for that tax and the basis laid down for the excess profits tax. In regard to the trades profits levy tax, he laid down the basis of £3,000—a minimum of £3,000. Many of the instances quoted by the hon. member for George are probably the cause of the irritation felt by people over this excess profits tax—the irritation probably due to the fact that the excess profits tax is based on an amount of £1,500. I suggest that the Minister might very well consider that, whereas the income tax people allow an abatement—whereas they allow an 8 per cent. abatement, and a small abatement of £250 per annum—they might also raise the abatement in respect of the excess profits tax either to £3,000 or 8 per cent.

For the companies also?

Yes, I would do that for everyone. I don’t think it would make much difference. The majority of companies with any form of capital … . I don’t think you would lose very much, and I submit it would remove a great cause of irritation among the so-called non-trading classes of the country. I can hardly include the professional classes under the trading classes. If that abatement were put on for excess profits duty in the same way as it is for the trades levy tax, it would remove a lot of the irritation prevailing today, and it would remove considerable hardships among certain sections of the people. What the effect would be I don’t know. But admittedly where you have a tax pressing in such a different way on precisely the same form of income of five or six different persons, I think every possible step should be taken to try and smooth out these anomalies. I think it might well be considered by the Minister whether he could introduce something of that kind. Now, another point I want to refer to on this question of excess profits duty is this proposal that 95 or 100 per cent. of all excess profits should be taken by the State. I understand that in Sweden a definite national income is laid down by law, both for business concerns or professions. If anyone earns more than that maximum, it is taken by the State. I am informed by people who have been there that the effect of that tax is that people when they get to a certain stage, and have made the amount of money the State allows them, they simply take a holiday or they don’t work as hard as they would otherwise do. I have heard from people who have been there that business men take long holidays because they know that no matter how hard they work, the money goes to the State. It is not a question of patriotism. People say: “If the State takes everything why should we go on working? We take all the risk and the State takes all we make.” Is it not one of the planks of the Labour platform that we should have a 30 or 35 hour week? Well, this sort of thing will work in that direction. A 30 or 35 hour week is only an extension of the principle of the State taking everything a man makes above a certain amount. And that will be the effect of a policy of that kind. Now, I want to refer to another matter to which the Minister did not reply when he answered the Budget debate. I am referring to this question of Railway tickets. I am sorry I can hardly agree with the hon. member for Maitland (Mr. Mushet) in the support he gave this tax, nor do I agree with his arguments. I don’t think it is a sound proposition at all.

You are quite right.

I am told that no doubt the Act of Union could, if necessary, be amended to cover this tax. Of course the Minister could do that if he wanted to, but I cannot see any justification for imposing a 15 per cent. tax on the user of the Railways, I don’t care where they come from. But when I turned up the Estimates I found under the Railway Vote a subsidy in respect of Farmers’ Produce carried by the Railways—we are paying the Railways a subsidy of something like £1,250,000 in respect of farmers’ produce. That is coming out of the consolidated revenue fund, and then we are putting up a 15 per cent. tax which we are asking the Railways to collect for us. Since it is provided in the Act of Union that the Railways must be run with due regard to the development of the country, with due regard to the extension of the country, here is an amount which the Railways can justifiably be asked to pay, more especially as the Railways are going to make a surplus this year. We are clearly paying £1,250,000 out of the consolidated revenue fund—money which we badly want, to balance or budget. Yet, in order to make up the deficit we clap on a 15 per cent. tax. I cannot see the justice of it. I am afraid the Minister did not deal with that point properly in replying to the debate, and that the Railways are still showing large surpluses in spite of the way they are putting money into the different funds, I say that we should reduce that amount and let the Railways carry part of the burden in regard to that subsidy. Another interesting proposal has been made here, namely that the farmer should be allowed to set off the redemption of their bonds against their income tax. I would heartily support that proposal if the Minister would extend that to business concerns as well.

Why only to business concerns, why not to all of us?

Quite! We know what would happen. People would buy farms and take up large bonds and then ask the Minister for a redemption or for a reduction in income tax.

I only spoke of bona fide farmers.

Who is a bona fide farmer? We have cheque book farmers, attorney farmers, legal farmers and I don’t know what. Who is going to define a bona fide farmer? In the days I had little to do with income tax I saw some of the returns coming in and you would be surprised at the types of people who call themselves farmers.

Don’t blame the farmers.

Obviously such a proposal would be quite impossible, and in view of the privileges which the farmers already get in the amounts they can set off in income tax returns as compared with ordinary business men I think they did very well indeed. Taking the taxes as a whole, I think they are just an extension of the taxes which we had the previous year. There are one or two matters in regard to the Customs duty which we can deal with when the Bill is before us. Then reference was made to the tobacco tax. I seem to remember that only a few months ago the price of cigarettes was reduced by 1d. per 50 under price control. Now the Minister has put up the price by 2d. so the consumer is paying 1d. more than before. When the hon. member tells me that the producers pay that tax then I can only say that the smoker does not agree that the producer does, because it is the smoker who pays.

The consumption is less.

He mentioned that he could remember the day when cigarettes were 1s. 6d. Now they are 2s. 6d. and 2s. 11d. Well, I think it is correct to say that it is the consumer who is paying the tax. Speaking generally, the consumers of this country have found very little in the way of increases in taxation. Where there have been increases they have usually been due to efforts of the Government to protect the farmers by way of subsidies and other methods. That I think covers most of the points one finds to comment on. No doubt when we see the Bill we shall be able to raise other points.

Some years ago the present Minister of Agriculture introduced a motion in this House, providing for the exemption of the farmers in this country from the payment of income tax. At the time he introduced that motion, I did not appreciate what was behind it, but since then I have fully experienced it. A certain great economist said that the agricultural community, in the composition of the community, was just like a growing tree; the roots and the trunk or the growth around the trunk forms the farming community, and the branches which are fed by the roots of the tree represent the other industries which flow from the agricultural industry. South Africa is in this particular position that everything which has been built up in this country has agriculture as its foundation stone, and it surprises me therefore that this Government, and, indeed, all Governments, have not yet realised that fact and arranged their taxation system accordingly. Here, again, we have a case where the agriculturist who has to contend with all the vicissitudes of nature and who continually gambles for a livelihood on the land, is treated on a par with the other taxpayers. We talk of a national security code. That has come from the Government benches; it has come also from the benches of the official Opposition. But I say that unless we begin at this stage to arrange our system of taxation differently in respect of the farmer, we will find that when that promising Utopian condition has to be created, we shall have an impoverished farming community and an impoverished nation, and we shall not be in a position to have sound economic conditions. If the agricultural industry is not looked after in so far as taxation is concerned, we are heading for ruin with everything we possess. There are many city dwellers who will not realise that fact. They continually agitate for cheap food and food in plenty, and one continually hears that the agriculturist is spoon-fed. But they forget that if the agriculturist cannot make a living, nothing can exist in the country, and the proposed taxes do not take that fact into account. Some years ago the previous Minister of Agriculture gave a choice to the farmers of completing their taxation forms according to the cash sales on their farms, or according to the increase in their stock. That system is hopelessly out of date. At the time when the tax was introduced, it may have been desirable to have it in that form, but since then matters have developed in such a way that that system is absolutely out of date, and many farmers have already found that they are prevented by the heavy taxes from converting their stock into cash, stock which after all represents their capital. If they dare do that, the State takes such a big portion of the capital that the farmer is put back where he was in the past. I want to make an appeal to the hon. Minister of Finance to appoint a Committee, consisting of people who have a knowledge of these matters. I want to make an appeal to him to have this matter thoroughly investigated. That it will result in a tremendous amount of work and trouble as far as the Department is concerned, I readily want to admit, but that is not sufficient justification to postpone such an investigation. The old system is hopelessly out of date. The farming community must be given an opportunity of making a better living than they have had in the past. I have referred to cheap food and food in plenty which the city dweller continually demands. As the taxes are increased, the farming community is compelled more and more to exploit their land, and that exploitation will eventually have a detrimental effect not only on the farmers but on every industry which exists in the country. We are simply drifting, in respect of this out of date system of taxation against the farmers along a stream which ultimately must lead to complete ruination. But I want to go further. Under these taxation proposals of the Minister of Finance the farmer, in respect of income and super tax, is treated on an equal footing with some of the bigger companies which do not have to take this great risk for their income. There are farmers who have frequently been described by the hon. member for Umbilo (Mr. Burnside) as capitalistic farmers. I admit that there are rich farmers in this country, but the rich farmers in this country constitute the country’s insurance policy in respect of the food supplies of the people, and with the taxation burden as it is today many of these people are paralysed to such an extent that all initiative on their part is killed. Recently I heard a prominent farmer say: “As far as my mealies are concerned it seems to me that it will pay me better to drive my lambs and ewes on to the mealie lands rather than to harvest the crop.” The farmers are not in the same position as the industries in the big cities. Those farmers have to take great risks. It frequently happens that a farmer has to struggle and battle for three or four successive years in order to make ends meet, and during the fifth year he may get a crop which covers his losses during the preceding years, and then the Minister of Finance comes along under this out-of-date taxation system and grabs everything for the State. These taxation proposals are paralysing that type of man, and to such an extent that eventually the country will experience a setback as a result of it. A sound agricultural community in this country is the foundation stone on which everything can be kept economically sound, and we must see to it that our agricultural community will not be driven to the point where they will be compelled to embark on a system of exploitation. I got up only in order to draw the attention of the House to these few points. The first portion of the motion which was recently introduced in this House by the hon. member for Heilbron (Mr. Liebenberg) asked the Minister to consider the question of meeting the farmers in respect of exemption from income tax, where they made payments with a view to reducing their mortgage debts. That is extremely necessary. I am not putting these points in a spirit of frivolity. I am in touch with the farming community. I know how they feel, and I know how they are hit from time to time by adverse economic circumstances. The time has now arrived to evolve a scientific system so that those people will be enabled to make ends meet. If that is done, the entire population will benefit, especially bearing in mind this so-called security code which the Government holds out. If the agricultural community is paralysed, we cannot create improved conditions for the rest of the people.

Mr. Speaker, I wish to raise a protest, very briefly, against the continual increase of the taxation of malt liquors. I know the Minister has his stock answer, that this is a voluntary tax, and if you do not want to pay it don’t drink beer or stout. Well, sir, that may apply to the Minister, but there are thousands of people in this country who drink beer and stout as a necessity. I refer to those people, of whom there are many thousands in my constituency, who work seven and eight hours a day under conditions which cause considerable body perspiration the whole of their working hours. And that is not one or two days; it is six and seven days a week for the whole of their working lifetime. I refer to miners, who work seven, eight and nine hours a day underground, working in rock temperatures of 85 and 90 degrees, whose clothes are saturated with perspiration all that period. I refer to such artisans who work over fires, blacksmiths, boilermakers, drill sharpeners, welders, engine drivers, firemen and stokers and steel workers, and these people, not all of them, but the large majority of them, take malt liquor as an essential. For three years running now the Minister has …

Not three years running.

Well, three times in the last four years the Minister has seen fit to increase the taxation on this very necessary commodity. If the Minister goes out on the Reef towns and watches what happens to the men when they come from their work, he will see thousands of them on their way home stopping and having a couple of pints of beer or a couple of pints of stout. Now, sir, these people take that as a necessity. They do not go home and swill themselves with a couple of pints of tea; they don’t fill themselves up with the horrible pink, green, and yellow drinks one sees hawked all round the place; they take this malt liquor as a beverage of nutritive value and as an essential to replace the body moisture that is lost in the course of their daily occupation. I notice the Minister does not tax tea and coffee. Why? Because he considers it an essential household commodity. I would like to assure the Minister, and I am sure the medical men in this House will support me when I say that beer is just as much an essential to these men who work under the conditions I have described as tea is probably to the Minister after a hard day’s work in this House.

After cricket.

Lemonade.

I think if the hon. member for Rosettenville (Mr. Howarth) had a glass of lemonade he might rust.

I sure would.

I would like to make an appeal to the Minister on behalf of these people and ask him if it is possible to cut out this excise on beer? It virtually boils down to class taxation. He is taxing individuals who are not drunkards and alcoholics, but who take beer as an essential item to replace the fluids that are lost in the course of their daily occupation. One realises that three times in four years the Minister has come along with what I call this inconsiderate, scandalous and iniquitous increase in the cost of an essential beverage. An unfortunate man who works under conditions as I have already described, has to pay 1s. 2d. for a pint of beer, probably the highest price of beer anywhere in the civilised world.

Not the highest taxation.

The highest price, and I think the Minister and his Department have shown a shocking lack of knowledge of conditions in various parts of the country when they continually impose the taxation that I have described. I make an appeal on behalf of these people, and I ask the Minister to realise that beer and stout and malt liquors are as essential as tea and coffee, and other like commodities that he has quite rightly not seen fit to tax.

You should change your Minister.

Better the devil we know. Well, Mr. Speaker, it would be a measure that would be accepted with acclamation by thousands of people, particularly working people in the labour areas of this country, and if the Minister can find some other ways and means of raising the necessary finance, I think he would be well advised to do so. It would be carrying out a good principle of not taxing essential commodities, and on behalf of these people I have mentioned, I would appeal to him to realise that this is not a voluntary tax. Any medical man will tell him that these people drink it as a necessity, and I therefore ask him to reconsider this particular item of taxation.

I do not think the hon. Minister can be very proud of the defence of his taxation proposals which have so far been put up by his side Three hon. members spoke on the other side, and as far as I could judge, I think the hon. member for Maitland (Mr. Mushet) and the hon. member for Pretoria, Central (Mr. Pocock) cancelled out each other. The one really tried to break down what the other had said, and as far as I coud judge, I thought that the speech of the hon. member for Pretoria, Central was perhaps slightly better; in other words, the Government still has a debit balance. And the last speaker, the hon. member for Springs (Mr. Sutter), also attacked the hon. Minister in regard to his taxation proposals. I hope therefore that the Minister will take the unusual step, when putting these taxation proposals to the vote, of definitely allowing hon. members on his side to vote as they please, and then we may still be able to reject these taxation proposals. What was so striking about the speech of the hon. member for Maitland was this; he touched upon three small points which he thought should meet with approval. In the first instance he said that no one should make profit in times of war.

Except he himself.

Just let me say this to the hon. member for Maitland.

I did not say that.

The hon. member personally knows—and it was proved here by the last two speakers, especially the hon. member for George (Mr. Werth)— that there are people who are making improper profits. I have leading articles before me which were printed by Government journals, and one finds the same views expressed here. Why does the hon. member not say that steps should be taken to proceed against these people? The Minister himself told us, and the Government journals told us, that we were inevitably heading for bad times after the war. Now I want to say this to the hon. member for Maitland. If we cannot improve our position under the present circumstances, how are we going to do so when the depression arrives? In the second place, if we are going to remain in the same position, how is the farming community going to make ends meet if in the future we experience a depression and if they have no nest egg on which they can fall back? This country will find itself in a critical position if the House pays any attention to this argument on the part of the hon. member for Maitland. In the second place the hon. member said that the hon. member for George had come here and spoken about the mines, and he asked whether it was not a scandal to think that the hon. member wanted to take more from the mines at this time, when there was a danger that the mines could not obtain machinery. Is it any argument to say that in the future the mines may not be able to get machinery?

They have not got enough today.

One may as well argue that in the future the farmers will experience a depression and that consequently the Minister must not tax the farmers. That argument is quite illogical. We have to declare war in order to protect the mines, and now the hon. member for Maitland acts as the advocate of the mines. Let me say here that the policy of the Minister in general as far as that is concerned, is altogether wrong. And that is not an opinion that comes from me only; his own people make the same statement. I have before me an extract from a journal in regard to the general policy of the Minister. This is what they write—

Which journal is that?

I am quoting from the journal “Trek”. They go on to say—

There we have an opinion which indicates what the public thinks. The only argument which the hon. members on the other side can advance is this: The mines may in the future not be able to get sufficient machinery. That is surely a ridiculous argument. I hope that the hon. member himself feels that he has missed the target. He has only landed the Minister in greater difficulties. But he advanced a further argument, namely this: He says that the hon. member for George did mention a few things which seemed to be wrong, but he says that those are the exceptions. Every law or every rule has an exception, and here is a small mistake and consequently it is reprehensible on the part of the Opposition to criticise these small mistakes. The hon. member took four persons—the salaried person, the doctor, the business man and the rentier. In South Africa we have practically only those four classes of people. We have the salaried men, the doctors, the business men and the rentiers.

Look at the taxes in general.

I should like to point out this to the hon. member: It is not a question of four persons. It is a question of thousands and thousands of people. If it had been a question of four people only, it would have been quite, a different matter, but it is a question of thousands who fall under those four classes, and the hon. member cannot say that that is the only weak point which was exposed. I really do not know what the Minister is going to do now that the hon. member for Kensington (Mr. Blackwell) is leaving, because he certainly did put up a better fight to defend the Minister’s taxation proposals than the hon. members on the other side did today. I should like to draw the Minister’s attention to a few points in connection with which I feel the Minister should bring about an alteration. Take in the first instance the unmarried man who draws a small salary of £250 per annum, or the married man who receives a salary of £300 per annum. I should like the Minister to bear in mind the background of the case. The Minister is not the only person who taxes this poor man. This same person whom the Minister now taxes with no less than £5 and £7 respectively, is subject to various forms of taxation. The Provincial Council levies various taxes on him. If a man is unmarried and he earns £250 per annum, he has to pay a provincial tax of approximately £2 6s. Then there are taxes levied by the municipalities, divisional councils, etc. This poor person who is already taxed by various bodies, must now still be taxed by the Government. What is the position of this man? Let us take the position of a man earning £300 per annum—a married man. The cost of living has risen enormously. Whether the hon. Minister wants to admit it or not, the cost of living has increased by more than 18 per cent. The increased cost of living has been fixed at 18 per cent., but the cost of living has certainly risen by more than 18 per cent. This person receives an income of £300 and on that meagre income he has to feed and clothe his wife and children, and in addition to that he must pay taxes to the Government. Then take the case of a teacher who receives £675. After his pension contributions have been deducted, he gets something like £640. On that, he receives a cost of living allowance of £48 per annum, but that does not at all cover his increased cost of living. His cost of living has risen by at least £100. In reality he is therefore in a worse position. Now the hon. member for Maitland says that no one should make a profit out of the war. But he forgets that this salaried man is actually in a worse position, but notwithstanding the fact that the cost of living has increased to such a great extent in the case of this person, the Minister still wants to tax him. He is on a salaried basis and apart from his salary he does not earn anything. He receives a cost of living allowance which is not sufficient to cover the increased cost of living. The Minister was himself connected with the University, and he is still connected with the University today. He will remember that a few weeks ago he received representations from students in regard to the increased cost of living at the universities. If one has a child at the university today, one can be pleased if one gets off with £150 per annum. Take the case of a person earning £300. He may have two children. It costs £150 in respect of each child; in other words, £300 per annum for two children What must this man live on if he wants to put his children into the university? If you have two children at the university and you earn £300 per annum, it absorbs your whole salary. Notwithstanding that, the Minister still wants to tax those persons. They still have to pay rent, life insurance, and all those things must come out of the £300. I want to ask the Minister at least to consider the question of raising this scale somewhat. In these days £1 is no longer worth £1. I do not know whether the Minister knows how often these people spend sleepless nights, thinking how they must live on the income they receive. If he takes that into consideration, then he has no right to say that those people must pay a bigger share of the taxes. The Minister particularly advanced the argument that 50 per cent. of this tax did not represent taxation, but that it went into the Savings Fund. He says that he must see to it that that money goes into the Treasury, so that these people have not got the money to live royally. Can the Minister seriously say that a man who has an income of £300 per annum, in these days, when everything is so expensive, has money to waste and to live royally? No, the Minister has no right to say that, because he knows that this man cannot do it. These people are poor. Why must he now compel them to pay a savings levy? Then there is a second point which I want to bring to the notice of the Minister, and it is this. The Minister said that he would consider the question of removing the tax on cheap tobacco. I wish the Minister could give us the assurance that he will do so. Last year I advocated that that tax should be abolished. I explained to the Minister on which section of the community this tax pressed most heavily. I pointed out to the Minister in my speech, inter alia, that the cheaper type of tobacco was used, in the first place, by poor people, and then, too, by coloured people. I do not know whether the Minister knows what the practice is on the platteland, but I can tell him that the practice is that the farmer has to provide his labourers with tobacco, and if this tax of 20 per cent. or 25 per cent. is levied, it will not be the coloured people who will be hit, although they use this tobacco, but the farmer, because he has to provide it. Where the usual small bag of tobacco formerly cost 6d., it now costs 9d., and in every respect the Minister is forcing it on the farmer. I also want to point out to the Minister that this cheap tobacco is used for other purposes. It is used for dipping purposes, for spraying purposes, and also in connection with cattle fodder. There are so many other things for which the cheaper type of tobacco can be used, and I hope the Minister will at least give us the assurance that he will not subject this cheaper type of tobacco to this tax. I want to make an appeal to the Minister in no circumstances to tax those people who produce this tobacco. Then I want to come to a third point. I want to draw the Minister’s attention to this tax of 12½ per cent. on railway tickets. The Minister mentioned four or five exceptions—for example, children under the age of 16 years, blind people and their companions, certain season ticket holders, etc.—which are excluded from this tax. Now I should like to bring a few other classes to the notice of the Minister, and I want to ask the Minister whether he will not exempt those classes from this tax as well. In the first place, we have the teachers, who get an annual concession ticket. Is the Minister going to tax them with this 12½ per cent.? These are not people who travel about the whole day. The object of this tax is not to obtain additional revenue, but to prevent people from using the railways. If that is the object of this tax, and the Minister gave us the assurance that that is the object, then he should exempt the teachers. The teachers have to avail themselves of the Railways perhaps four times during the year, but they get only one concession per year. Now I want to ask the Minister whether he is prepared to exempt them from this 12½ per cent. levy. In many parts of the country which are far removed from the amenities enjoyed by the more privileged towns, we have some of these teachers who have to go away on holiday. Take people of the Western Province or elsewhere who teach in the North-West. For the sake of their own health and for the sake of the education of their pupils, they have to go on holiday. They cannot remain where they are stationed, and they have to make use of the Railways. I therefore want to ask the Minister also to include them under the exceptions. The second class represents the Railway officials. I want to ask the Minister also to exempt them as far as this 12½ per cent. is concerned. The Minister may previously have had experience in this connection. People who have to do the same routine work every day from morning till night, must be able to get away once a year from the environment in which they live. It is absolutely imperative for those people to go to some other place on holiday annually for health reasons, and I want to ask the Minister to include that type of person under the list of exceptions. Then there is still a third class. A few days ago we had the congress of the Woolgrowers’ Association, and the Minister of Railways granted concession tickets to the delegates. It is imperative for the wool industry in South Africa and also for the farming industry in general, that such congresses should be held at which the difficulties of the farmer can be discussed. I should now like to ask the Minister to agree to the exemption from the payment of this 12½ per cent. tax in the case of persons who have to attend such congresses. Then there is a fourth class. The Minister told us that the blind people and their companions will not be subject to this tax. Well, there are people who are not blind, but who are ill and who have to go to the doctor, or who have to visit Cape Town or such places for the purpose of undergoing an operation. I cannot emphasise the fact too strongly that we have this position in the North-West that there are large scattered areas where there are no doctors. And even apart from the North-West there are other places too where there is not a specialist available, and these people have to go to Cape Town, Johannesburg, or elsewhere for consultations or operations, which cannot be undertaken locally. Those people have to pay the doctors’ fees as well as the hospital expenses, and now the Minister is still compelling them to pay a tax of 12½ per cent. on their Railway tickets. On which grounds can the Minister justify this? Blind people are excluded, but the sick who face death have to be taxed. I should like to know from the Minister whether it is not possible, where people produce a doctor’s certificate to the station master, to issue a ticket to them which will not be subject to this tax of 12½ per cent. I know that the North-West will be very grateful if the Minister will make this concession. I know that these things often have to be done, and the increased tariffs on the Railways will make the position of these people more difficult. Then I also want to raise my voice in connection with the income tax burden, and the form in which the Minister is levying the tax; the manner in which the ax is being levied. I want to say immediately that the Minister has already stated that he is prepared to consider a reduction in respect of doctors’ fees and hospital expenses for the next year. We are grateful to him for that concession, and it goes to show that we on this side put a reasonable request to him. But is it necessary, in the circumstances, to wait until next year? Cannot the Minister realise how imperative it is, and that there is every justification to accede to our request this year? It is no exception that these people incur doctors’ fees and hospital expenses, but it frequently happens in those parts that the people have to travel long distances in order to get to a doctor. The Defence Force has absorbed the doctors, and the result is that certain unattractive areas and towns are without doctors today. Even though it is a small illness, it may very easily cost a person £25 or £50. If the person concerned has an income of £300 and one illness costs him £50 or £100, what is the position of that person going to be if he has not got the right to deduct that? It simply means that he is being taxed on something which he no longer has. I should say that the State should be sympathetic towards that person. It is said today that there should be a free medical service for the whole country. In these circumstances it should be a very easy thing for the Minister to say that since it is the policy to provide free medical services to the country, provision should immediately be made for the deduction of doctors’ fees and hospital expenses from taxable income. I hope the Minister will see his way clear to do that during this Session. My last point is this—and I should like the Minister to give his serious attention to it, because my intention in raising this may very easily be misconstrued. I can tell the Minister that amongst the farming community, rightly or wrongly, there is today a growing feeling of resentment with regard to the income tax. If the Minister knows anything about farming, he will realise that it is one of the most difficult things to keep books of one’s farming operations. Apart from that fact, we have this position, that a large percentage of our farmers are not able to keep their books. This is an unfortunate fact, but today we have this position that where the farmer does not keep books the tax collectors are entitled to estimate this man’s income, without saying on which basis they do so. This is a most unfair position, and I do not know why it was ever passed by this House. If a farmer has no books, the collector has the right to assess his income without indicating on which basis he does so. The Minister knows that today he is sending inspectors throughout the country in order to see whether the farmers are paying the correct amount. I should like to bring a few little things in this connection to the notice of the Minister, things which to my mind are very unreasonable. The farmers of South Africa will later demand that the Government should send a person to complete their forms for them. We cannot expect anything else, because today the taxation system is so fraught with difficulties, and the farmer does not know what he is allowed to deduct, or what is right and what is wrong. Let me mention a few points. Let me say here, and I say it in all seriousness, that if these people are regarded as dishonest because in respect of certain items they furnished wrong information, then 100 per cent. of the farmers in South Africa are dishonest. They are unconsciously dishonest. There is no question of their doing so deliberately, but these are mistakes which do occur. Now we find that the inspector comes to the farmer and puts certain questions to him. The first question is how much the farmer paid in doctors’ fees and hospital accounts during the year. Usually the farmer says that he does not know how much he paid. Then he is asked whether he has ever undergone an operation. He is asked how much that cost, and if he again says that he does not know, the inspector suggests that it may have been £50 or £100 for the year, and the farmer says that he can put it at that figure. Then he asks whether the farmer went on holiday. The farmer replies that during one year he may have spent £100, or £200, but that he spent nothing in other years, and the inspector then suggest that he will allocate £150 in respect of holidays. One question follows another. I know that this actually happens. Then they come to soil erosion works. Assuming the farmer puts down £250 he is asked how many of his own coloured labourers he used, how many additional people he employed, how much farm produce he used for the workers; and all this is deducted. Then the inspector allows £1 per month per boy. Others again allow more. What the inspector then does, if he thinks that the forms in respect of the past seven years are incorrect, is that he simply multiplies the amount of medical services, holiday expenses, by seven, and in this way he reaches a large figure. In his way he calculates that the farmer did not pay taxes on thousands of pounds. Then he tells the farmer: “The Government is not going to prosecute you.” He should add: “The Government is going to execute you.” Assuming then that the farmer had to pay an additional £1,000, that figure is doubled or trebled. The farmers of South Africa do not want to be dishonest in regard to their income tax. We find dishonest people in every section of the community, but I can assure the House that the farming community does not want to be dishonest, and this method of doubling and trebling the income tax of the people is absolutely impossible. I want to ask the Minister whether he cannot intervene, and whether he cannot give the people a basis which is stated clearly. Let the Minister send a circular to the farmers instructing them how to complete the forms, so that they may know on which basis the Government wants them to complete such forms. Do not let these people get into the position where their income tax is doubled or trebled. The Minister must not prosecute the people in this manner until such time as he has sent out a circular so that these people may know how to complete the forms. Only thereafter should he consider the question of applying the Act in so far as the doubling of the income tax is concerned. If a farmer really intends to be dishonest, let him pay this fine. But if that is not the case, let us meet the farmer and assist him properly to complete his forms. Let the Minister go to the agricultural congresses, or let a deputation of farmers come to him to explain the matter to him fully. If he does not do that he will not be able to appreciate with what difficulties the farmers are faced. I want to mention one case to the Minister. In this case the individual got an extension of time for the completion of his form. He had to submit it only in November. The inspector went to his farm, and the farmer told him that he had not yet submitted his income tax form, and he asked the inspector to assist him. The inspector told him that he had made a mistake here and there. This man wanted to be honest, and said that he did not want a continual bickering about his income tax. And, believe it or not, this man had to pay double income tax. The inspector assisted this man, and the result was that his taxable income was higher than he had originally shown on the form. The form had not yet been submitted, and the inspector only gave him advice as to how he should complete the form, and nevertheless his income tax was doubled on the amount of the difference. Is that fair? I want the Minister to remember that this man had not yet posted the form. It was still at home, and he asked the inspector to assist him to complete the form. If the Minister has the slightest sympathy for the farmers in South Africa, and if he is not bent on crippling the farmers by getting the last drop out of them, I want to give him the assurance that he has no option. He must meet the farmers. He should send out a circular concerning the basis on which the form must be completed. He must put at their disposal a person to assist these people in completing the forms. May I say to the Minister that there are people who have got into difficulties with their assessment. They went to the magistrate for assistance because they did not know how to complete the forms. This is matter of great importance to the farmers. It is not only a matter which affects farmers on this side, but it is a matter which affects everyone, whether they are Fusionists or whether they belong to the Nationlist Party. This is a matter which sooner or later is going to cause trouble. I am glad that the Minister of Agriculture is here. He is a practical farmer, and I hope he will give his support in this connection, and that he will assist the farmers of South Africa to put this matter right. I do not want this matter to be given a political colour, and I ask the Minister of Lands to use his influence in this connection. I can give the Minister the assurance that a coloured boy on a farm costs us no less than £3 per month today, even though he eats meat produced on the farm, and even though we give him our own wheat meal. [Time limit.]

The hon. member who has just sat down (Mr. D. T. du P. Viljoen), when he gave that quotation: “Let the mines go scot free,” rather reminded me of the days of long ago. I remember the late Mr. Merriman saying: “Tell me what you want exempted and I shall tell you what you are”. That might be applied in a way to members from various parts of the House. In this debate the Minister really tells us what he wants, and he tells us how he is going to get it. And we seem to give him by our speeches a little political sentiment across the floor.

I did not talk politics.

Well, there has been a lot of politics talked. We seem to give the Minister the authority for what he asks. Now, I only want to dwell for a few minutes on that. I want to draw attention to one or two matters and then I shall conclude with a word on the excess profits tax. Perhaps one of the strongest complaints we heard here was about this 8 per cent. maximum which, of course, has created a good deal of comment. There are many who will tell you that it is not sufficient to allow anyone to take a risk, they will tell you that you can draw a bigger percentage by other investments.

Where?

The Minister must not get nervous, I am going to agree with him. They talk about all sorts of investments without the anxiety of business, or without the anxiety of industry, and they say that they can do very much better. That, of course, is not true. The Minister in his interjection apparently thought it was not true either. Now I want to say this, that I agree with the Minister, and I hope he will stand fast on that. Eight per cent. two years ago is not 8 per cent. now. There is a continuous fall in all investments in this country, and if there were a proposal to reduce that today to 7 per cent. it would be very much more in reason than asking for an increase. Not only that, I think whether there is a fall in money or not, the investing trader is very well repaid if he does get this maximum of 8 per cent. The question arises whether it is advisable at all to encourage them to go into business or manufactures at the present time when in all probability such undertakings will only last while the war lasts. Now, this trade profits special levy is another matter that does concern our people very much, and I think widening of the term “trade” is the cause, probably, of the difficulty. Professional men, our doctors, our solicitors, accountants, and so forth are brought into this, and they are taxed accordingly. In other words, their dignity is brought down to the ordinary trade level instead of the professional position which they think they did occupy. But that is only by the way. I do think that in this particular case, there is matter for consideration by the Minister. The term “capital” is so very varied, and in the case of the professional man it strikes so much more than to the ordinary tradesman. Their capital is smaller, and I think their case does require consideration. Now here is another matter which was brought to my notice—this is an appeal to the Minister, and I do not think he has it yet, and I myself do not quite know who it is from. It is very interesting this, because it deals with capital other than cash capital. I am going to read this to show that other forms of capital are greater than cash capital, and no notice is taken by the Minister of this other form of capital. I think that this may perhaps bother the Minister, or he may be amused by it. This is a claim for exemption, if not, indeed, a claim to wipe out this tax altogether. It mentions as other forms of capital, patents, trade marks, services performed, quality of goods manufactured, old standing business connections—these are all capital according to these people. None of these things are represented in capital employed as defined by the law. The document goes on to say that profits are derived from other forms of capital, plus credit and plus intangibles. I do not know what that means, but these intangibles include hard work — the hon. member for Pretoria, Central (Mr. Pocock) knows something about that—integrity, knowledge, initiative, energy, goodwill, risk taken, prevailing conditions and fortuitous prosperity. Now these are all claims for wiping out this tax. The conclusion is they ask that this tax be abolished. I do not think the hon. Minister has got this yet.

Not yet.

No, sir, with regard to this question of simplicity of taxation, we hear on every hand that taxation has got to such a pass that it is necessary now to have a lawyer to tell you what you have to pay. Many of our leading people favour a single tax, they say we should have an income tax to cover everything.

It sounds very attractive doesn’t it?

There is no tax ever created or can be created that would get into the crevices and all the nooks and corners of income.

Hear, hear.

Much as I hate approving of taxation, one must agree entirely with the Minister and his Department that his mode of taxation is the better one and the only safe one. Now I come to the question of income. It is very interesting to note here what they are doing in England. They have really put a ceiling to income there. When you get to £6,000 in England you can get no more, because the tax is the same as your income, or rather in one case it is 19s. 6d. and in the other 20s. in the £. Now when a country like England has got to that, the thought occurs to one as to what radical changes may be in store in the future and before we are very older. That brings me to this question of Excess Profits Tax, which the Minister will agree is very sweet.

Sweet?

Sweet to you, not to everybody. It wrongs nobody; the Minister takes is from nobody, because the person from whom this money is taken in Excess Profit has already got his profit, and this is excess to what he ought to have made, and consequently it goes to the State. I am forced to ask myself the question, should not this continue, should it not be with us for all time? The amount collected this year is only £10,000,000.

£11,000,000.

It does not make any difference whether it is £10,000,000 or £11,000,000. You fix a rate upon the capital to bring in a certain amount, say 10 per cent., 12 per cent. or 15 per cent., or anything you like, but according to the risk. That will at once put the State into trade, and who would you injure? You secure these people in business, and it will not only mean an easing of the general taxpayer, but it means that you will have the country with all its equipment and powers working to provide an amount of money that almost becomes alarming, when you take the profits of our own country. The other day there was a question of big expenditure on social services, and I think it was the Minister who interjected that our national income is only £340,000,000 or £380,000,000. It will interest him, at any rate to know that in Soviet Russia, during their first five years, they increased their national income by 600 per cent. I am not quoting that as anything that I agree with, but that increase, as the House will probably know, was due largely to control of trade and commerce. I think in that there is at least thought for the Minister. I am not advocating it, but just look at it from the point of view of where we are today and where we will be in twelve months or two years time. Is this country or any other country going to allow capital the same privileges and to make as large profits as in the past? You are curtailing capital now, and capital is being curtailed in every country in Europe and in America. Are you going back to the old position, and so to speak allow capital to run riot? As somebody once said: “Capital is your master, it has no limitation.” We have limitation on the payment of wages and other things, but until this year there was no limitation of the profits made by capital. It is interesting to know that this year is the first year that this country has ever taken any portion of the profits from capital. In the last war, as you know, the necessary money was raised by the ordinary taxation, and capital made its total profit. This is the first occasion when there has been limitation of that profit, and it is a great change. Without expressing any opinion, I would like to say that the Minister, with his brain which is a hundred times bigger than mine, should look into a matter of this kind now that we have for the first time taken control, to a certain extent, and limited profits. I think the Minister should give it very serious consideration.

I should also like to say a few words about paragraph (c) of the amendment which proposes exempting individuals from the payment of income tax in respect of medical and hospital expenses. I also want to say a few words about the proposal to exempt from excess profits tax the amount which farmers expend in the redemption of their bonds. Let me start with the latter point. The Minister is anxious to get the farmers to pay off their bonds. I feel that that is a right and proper policy. The Minister will recollect that after the last Great War when we had a bad depression we were obliged to come to the assistance of the farmers with an interest subsidy owing to their mortgage bond commitments being too heavy. But as money is plentiful today it would be a good thing to encourage people to redeem their bonds so that there will be no difficulties cropping up when the prices of products come down. Farms have gone up in value not so much because the farmers speculate, but because the townspeople, the professional people, are now buying farms in order to have an investment and in order to pay less taxation. There may be some rich farmers who are also buying farms because they happen to have money to invest, but there is a large class of farmer which often has to be assisted by the Government because they must have a place for their family, and consequently are compelled to buy land. If we bear in mind the fact that bad times are ahead we are entitled to ask the Government to help those people who are paying off the bonds, by exempting the money used for that purpose from taxation. I even think that so far as income tax on capital commitments which they are redeeming is concerned, that it is in the interest of the State and of the community to make concessions to these people. The little bit of money we are going to lose in income tax will be saved afterwards by the fact that there will be no need to help those people. It will be a good investment to help these people to pay off their bonds. It is in accordance with the Minister’s own aims and ambitions, and I therefore want to ask him to encourage those people. I am expecting the farmers to have very bad times after the war. For a year or so after the war we may get good prices but production is being extended today and all kinds of means are being used to increase production. Seeing that the farmers are able to produce more in difficult times they will surely be able to do so under normal conditions. There will be a large surplus of products and the supply will exceed the demand. In view of the difficult times that are ahead therefore we should make people as strong as possible. When the bad times come the business man, if prices drop, will be able to sell more cheaply, and yet make his profits, but the farmer cannot do it. He produces and he has to sell. I wish I could take these townspeople who talk so glibly about farming conditions and put them on a farm for a couple of years, and tell them to make a living out of farming. They would then realise the difficulties a farmer has to contend with. He has to contend with poor markets and unfavourable climate conditions. The marketing system is rotten and not worth anything. Now, as regards section (c) people with small earnings are now brought into the net to pay taxation. A man earning £250 or £300 should be entitled to deduct from his taxable income the amount he pays in respect of medicines, medical assistance and hospital expenditure. Personally I am of opinion that a married man earning less than £500 should not pay income tax, while, on the other hand, a man earning £2,000 is earning quite enough, and I consider that the State should take anything he earns over £2,000. After all the war is being waged not for the sake of the poor man who is suffering hardships but for the sake of the capitalists and for the class of people to which the hon. member for Maitland (Mr. Mushet) belongs.

And also for you.

It is for the hon. member and people like him with their big incomes that the war is being fought. The poor people have to go and fight for the sake of people with big incomes. If a man earning less than £1,000 incurs large expenses owing to sickness he should be allowed to deduct those expenses. Who is it that is being protected today? Whom is the war being fought for? It is being fought in order to protect the capital of the rich man. That is why everything should be taken from people earning more than £2,000. It’s no use putting part of the money into a Savings Fund. The poor man has to pay for it. Possibly he cannot afford it at the moment but he has to pay, and he may perhaps get it back at a time when he has less need for it. It is unfair to expect the poor people to bear those taxes. I again want to appeal to the Minister to exempt from taxation those lower paid people earning £250 and round about that amount. The hon. member for Maitland has been speaking about the incomes which people were making out of the war, the pay received by soldiers. It is true that a large number of poor people have joined up because they were forced to do so by sheer want. The hon. member and people like him whose incomes run into many thousands every year do not need to go and fight, but the people who are suffering hardships often cannot help themselves and are forced to go. I really want to appeal to the Minister to exempt the poor. Let those people pay who are responsible for the war — those people who want to fight the war.

We are paying.

You pay as little as possible. There are hundreds of people today making large profits out of the war but who do not pay a single penny. The hon. member may call that cheating, or whatever he likes to call it, but that is what is happening. They try to evade their obligations and they are able to do so because they are well off and they can afford to get the best available advice. The poor man always has to pay. I fail to see how a man can live decently as a white man today on less than £500 per year, and those people should not have to pay any tax.

When the hon. member for George (Mr. Werth) quoted figures this morning in connection with the taxes and the country’s debt, etc., he ultimately came to the conclusion that all the taxes are for an unnecessary war. Later the hon. member became somewhat inconsequent because he said that he takes his hat off to the soldiers who went to fight. I wish to remind the hon. member of two things. The first is that it will not help if you take your hat off to the soldiers. They cannot go to a shop and say: “The hon. member for George took his hat off to us.” They cannot buy anything for it; it does not help them at all.

Does it help them if you draw a double salary?

There we have the bombastic member for Boshoff (Mr. Serfontein) again. The hon. member for George must remember that that would not help the soldiers at all. Two years ago the hon. member said in his criticism of the Budget that his party does not want to spend one penny on the war. Therefore he does not want to give the soldiers a penny on which to live.

Not a penny for the war.

The soldier’s pay is in connection with the war. You cannot have a war without expenditure, and the pay of the soldiers is justified above anything else. Neither is it true, as hon. members on the other side wish to contend, that every penny which is spent is being shot away. Let us remember that the greatest part of the money is being spent in our own country. The greatest part is being spent in our country on wages. I think that if the Minister of Finance were to investigate, he would perhaps find that hon. members on the other side, who are talking so much about it, are also making pots and pots of money. The Minister of Lands said the other day that the hon. member for Wolmaransstad (Gen. Kemp) is also executing certain contracts for Defence.

What has that to do with the motion?

I would like to reply to the statement by the hon. member that all the expenditure is in connection with an unnecessary war.

The hon. member can do that under the Budget but not under the Income Tax Proposals.

I would just like to reply to the argument of the hon. member for George.

I did not hear the hon. member for George dealing with these things this morning.

May I with all respect say that the hon. member quoted figures in connection with war expenditure, and he added that it is for an unnecessary war.

The hon. member made that remark in passing. The hon. member for Krugersdorp (Mr. M. J. van den Berg) cannot now pursue a war debate.

I would like to point out that this is not an unnecessary war but that it is necessary … .

The hon. member must leave that matter and confine himself to the Income Tax Proposals.

I bow to your ruling. You can give us the best advice in order that the debate may be pursued in the proper way. You naturally put me out for the time being, and you will have to give me an opportunity to find my feet again. May I just emphasise the fact that the hat-raising politics of the hon. member for George will not help us at all, and it will not help those soldiers to whom he takes off his hat either. We want the hon. member, in his criticism of the taxes, to prove to us that the taxes are unfair; the pith of the hon. member’s whole argument was: You have capitalists on your side and we also have capitalists; you must leave my capitalists alone; you can tax your capitalists, but you must not tax my capitalists. In that argument the hon. member is being supported by the hon. member for Fauresmith (Dr. Dönges) and by several other members on that side of the House. Their whole argument boils down to this: Look here, you must leave our capitalists alone; we do not mind if you tax your own capitalists, but our capitalists you must leave alone. And what reason is given why their capitalists should not be taxed? The only reason which has been given is this: Because they have nothing to do with the war, that is why we must leave them alone. We must not tax them: we must allow them to make pots and pots of money. With the exception of the hon. member for Victoria West (Mr. D. T. du P. Viljoen), who pleaded for the salaried man, who should not be taxed; all the other speakers on the other side pleaded only for a certain type and a certain class of capitalist who is on their side, and their excuse was that those people do not subscribe to the war policy, and therefore they should be exempted. Hon. members on the other side are again arguing as they have always done, in a circle. Are they also prepared to say: We do not want to be taxed because we do not want to have anything to do with the war; we are not prepared to pay taxes, but neither do we want to make any profits out of the war. They cannot refuse to pay taxes when they are benefiting by the war. They cannot have their bread buttered on both sides. They cannot refuse on the one hand to pay taxes and on the other hand draw benefits from the war. You cannot have both sides. I think hon. members should be satisfied that up to the present they have been having quite a jolly time.

What about your double salary?

You are the man who has been having a jolly time.

Hon. members are again talking about double salaries. I shall repeat my offer to them which I made the other evening. I shall donate my so-called double salary to the hospitals or charitable institutions if hon. members on the other side will do the same. How dare hon. members always throw stones when they are sitting in glass houses, especially where the glass is quite thin. They cannot have it in one direction only. If one day we had to calculate how much hon. members on the other side receive from this Government in the form of double salaries, contracts which come from the Government and which are a result of the war conditions, we shall find who has been dishing the cream off the war situation. Then we shall realise that the fight which is being put up by hon. members on the other side is nothing other than a sham fight. Those hon. members on the other side are praying our dear Father today that Gen. Smuts must remain at the head of affairs. In this House they will put up a sham fight, but they know that there is only one way in which this country can be governed correctly, now and after the war, and that is that the Government which is now in power must remain in power.

I am afraid the hon. member is again straying away from the motion.

I now come to their conception of the taxes. I trust that I shall be able to discuss that. I trust that you will allow me to discuss it. I have been listening all day to the speeches by the hon. members on that side. Their idea is this: You should exempt certain incomes from tax after approval by the Minister. I think the hon. member for Fauresmith used the word selective. He wants selective approval for certain expenditure. I have already heard much in my constituency about what is called “favouritism”, but this is the first time in my life that I have heard that there should be selective action and that certain expenditure should be approved and exempted from taxes. If that is not favouritism, then I do not know what is. It is nothing else.

That is what you get under the old system.

Today a man can only dodge taxation in an illegal manner, but there is no selective way in which Mr. A. may get exemption in respect of certain expenditure, while Mr. B. must be taxed. That is something which I cannot understand at all.

But you cannot understand anything.

If that selective system is being allowed, then only certain people who belong to certain parties will benefit. I think that the whole idea of taxation, as suggested by hon. members on the other side today, is not only unpractical, but it is open to the insinuation that it invites favouritism. I must say I am surprised at the hon. member for Fauresmith, and I am sure the hon. member has been advocating something today which he did not really mean.

There is a tendency among hon. members of insinuating that other hon. members say things which are not sincere, and that cannot be allowed.

I did not mean that my hon. friend, who is certainly one of the most upright members in the House, would say anything which he did not mean. But it can happen that one says something unknowingly, which you did not really mean. When you come from the atmosphere of the High Court, there is a possibility that you get confused in connection with the taxation problems. But the last thing which I want to do is to ascribe a motive to hon. members.

The hon. member may continue.

Hon. members on the other side took the whole day to expound their ideas on taxation. Now let us summarise what it boils down to. I am only excluding the hon. member for Victoria West who put in a good word for the exemption of Railway tickets from taxation; but so far as the other speakers are concerned. I am putting it into a nutshell when I say that they have suggested something which is unpractical and impracticable.

I shall be very brief. But there are a few matters which I want to bring to the Minister’s notice. I wonder whether I should waste any time in telling the House that I am very much surprised at the speech of the hon. member for Krugersdorp (Mr. M. J. van den Berg). He has been trying to tell us that we on this side of the House were only pleading the cause of our own people when asking for certain exemptions and for certain special treatment. Does not the hon. member realise that what we have been pleading for is being given effect to today by the Government sitting opposite, and does he not realise that we have not been pleading for our own side when we were asking for certain concessions, but that we also pleaded the cause of the other side and not merely that of our own side? I am sorry the hon. member had to ask for a little time occasionally to enable him to think. It really seemed to me that he could not gather his thoughts. He should have asked for a little more time. Now I wish to raise a point which I should like to keep out of politics. I don’t want to drag this matter into the political arena and I hope hon. members opposite will not do so either. I am referring to the question of income tax inspectors who are travelling through the country today and collecting the taxes. I want to assure the Minister that the way those inspectors are collecting those taxes is making the people on the platteland most unhappy. We know that it is most difficult for a farmer to keep a proper system of books. We farmers are not all educated men to the extent that we are able to keep proper books. Prominent and well educated farmers often meet together and discuss this question of bookkeeping, and there is a very great difference of opinion among them as to the correct or the best methods of keeping their books. Now inspectors are travelling throughout the country to inspect the farmers’ books, and if they find that a farmer has paid too little taxation, that farmer has to pay three times the amount he should have paid. When the farmer puts in his income tax return he is perfectly honest in the return he makes. He reckons out his income for the year and then he hands in his forms. Those are approved of by the Receiver of Revenue and the farmer honestly believes that he has filled in the form correctly. Next year he sets about the business in the same way, and along the same lines. If the inspector comes along and it is found that the farmer has made a mistake on his first form, if it is found that he has paid too little, he has to pay the amount he has underpaid three times over. That man has made a mistake in perfectly good faith, he has simply followed the procedure according to the lines approved of by the Receiver of Revenue. If he makes a mistake in subsequent years it means that he has to pay in a tremendous amount in fines. I want to appeal to the Minister to remove those inspectors—from the point of view of fairness he should do so. I agree that if a man deliberately tries to evade paying his taxes he should be fined heavily; let the fine be a very heavy one, but do not fine the farmer who makes a mistake in good faith. In most cases the farmers do not understand how to keep proper books. Give the farmer someone to whom they can go to assist them in making up their returns. I want to make an appeal to the Minister not to make the position of the farmers more difficult. It is really unfair, and the platteland feels very much aggrieved at the fact that people are now being forced to pay fines in respect of their incomes for the previous six or seven years. There is another matter I want to bring to the Minister’s notice. We know that any form of taxation involves all kinds of difficulties. We know that it is practically impossible for the Minister of Finance to levy a tax which is not going to affect some people in a manner different from what the Minister had intended. Now I want to point out to the Minister how his excess profits tax is interfering with and handicapping farming today. We have the case of a farmer who wants to sell up his farm, or the case of a farmer who wants to do away with certain of his farming activities — certain branches of his activities. As the Minister knows, the large majority of farmers today run their business on a cash basis. I believe the hon. member for Hoopstad (Mr. J. H. Viljoen) earlier in the debate pointed to the fact that so far as the farmers were concerned the present system was very much out of date and obsolete. We know that most of the farmers today are running their business on a cash basis. Now it is found that if a farmer wants to sell his farm, or if he wants to give up cattle farming, he has to pay 15s. in the £ on his actual capital; in other words, if that man is on the verge of having to pay excess profits tax and he sells his cattle, he has to pay 15s. in the £. I know that the argument is deduced that that farmer could have been on the cattle basis. Very few farmers today are on the cattle basis. Why? The farmers found out that it was impossible for them to continue on that basis. I myself used to be on the cattle basis, and in those years we had to keep books to show the amount of cattle we had, and to show the different ages of our cattle. One got so hopelessly confused that one was forced to abandon that system. Unless one is a stud farmer one does not know the ages of one’s cattle, and in most cases one has to estimate the ages of the cattle, which leads to all sorts of mistakes and to a great deal of confusion. Now if a cattle farmer wants to give up his cattle farming he is called upon to pay 15s. in the £ and I want to put up a plea with the Minister and ask him whether it is not possible to introduce a change so that if it is actually proved that a farmer has sold out, or wants to give up a particular branch of his farming activities, he will not have to pay excess profits tax on the part of his farming activities which he has sold out. He is merely turning over his capital. I want to show how detrimentally the farmer is affected by this tax. We know that not a year passes without some part of this country experiencing a terrific drought. It is the practice of every cattle farmer, when he sees that he is not going to get sufficient rain, to sell part of his stock. If the farmer does not do so his stock, for which he has not sufficient grazing, dies. The fact that one has to keep more stock on one’s farm than the grazing really permits is the cause of that stock, which one could otherwise have saved, also dying. If a farmer keeps too much stock on his land we know that that farmer is ruining his land. If a farmer finds today that he is unable to carry the amount of stock he would normally have through the winter, on account of lack of rain, and if he sells his cattle, he is compelled to pay excess profits tax on what he has sold. It is argued that the man can sell but that all he has to do is to buy again before the end of the tax year. But that is exactly the difficulty. I need not point this out because it is a well-known fact that the farmer is not always able to do so. I want to ask the Minister, where there are bona fide cases such as these, where statements are signed before a magistrate, or before a local body, and where it is proved that a farmer has been compelled to sell part of his stock, or cattle, on account of the drought, whether it is not possible to place that tax on a suspension account? If the farmer is unable to buy before the end of the financial year, I want to ask the Minister to give the farmer some extra time in such cases, to give him time until the next financial year so that by the time the winter is over he may be able to supplement his normal quantity of cattle. I can assure the Minister that in my area the farmers are very seriously affected by this position. We have had no rains yet. We have grass veld and without rains and winter fodder the farmers are unable to pull their cattle through the winter. The first week of April is past and we have not had rains yet; we have not planted any green feed yet and there is hardly a farmer in my district who will not be compelled to sell his cattle before the winter — if he does not do so his cattle will die. I want to make a serious appeal to the Minister to advise some plan so that the farmers can get time for the payment of their taxes, or have their taxes placed on suspension account. If, when the next financial year comes, the farmers have not bought again, they can be assessed, but I want to put up a plea with the Minister to give the farmers the opportunity of getting over the winter.

Listening to certain of the Opposition members speaking this last hour, one gains the impression that the poor farmer is being taxed out of existence through our present income tax measures.

If he is poor he won’t be taxed.

Yes. It is interesting to compare what is said by hon. members over there with what is being said by men in industry and in business. I have come into contact a good bit with men in business and in industry on the Witwatersrand. The man in industry is comparing his own lot with that of the farmer. He is wearing out his machinery in order to assist in the war effort, and he finds that when it comes to replacing machines the expenditure is treated as capital expenditure, his taxation is so heavy that the margin of profit is little enough to pay for new machines. He compares that with the position of the farmer, who is allowed to purchase stock, who is allowed to purchase equipment., to put up buildings and to expend money in the improvement of his farm, and in respect of all this expenditure he is relieved entirely of all taxation, not only excess profits tax.

And he is subsidised for buildings.

It is, further, interesting to listen to these farmers’ complaints, and then to hear the hon. member for Victoria West (Mr. D. T. du P. Viljoen) read out an article from a paper, in which the gold mines are described as going “scot free” of taxation. In 1915 the revenue derived from the gold mines was just short of £1,500,000. That was during the last Great War. The mines were then paying income tax at the rate of 2s. in the £. The mining taxation was increased after the war to 3s. in the £, at which it remained until this country went off gold, when the taxation over two or three years varied considerably until, in 1936, it was stabilised after the report of that departmental committee, which recommended a fixed amount plus the sliding scale based on the formula. Mining taxation had risen considerably. But what I want particularly to deal with now is the position since war broke out. Since war broke out mining profits have dwindled. Each year the profits have decreased owing to obvious circumstances, owing to increased working costs, primarily; owing to difficulties in getting stores, and more recently owing to the shortage of labour there has been a fall in tonnage milled. In the face of decreasing profits the rate of taxation has been increased consistently each year. The gold mines’ special contribution is, unlike the other taxes, not based upon the taxable profit. It is levied upon the gross profit of the mines and that gross profit is quite a fictitious figure. The ordinary taxation of mining is based on taxable profit and in computing taxable profit allowance is made for expenditure upon machinery, plant and development, but not property. In the special contribution no such allowance is made. The percentage is based on a fictitious profit altogether—a profit which does not exist. The Minister has increased the contribution first from the initial 9 per cent. to 11 per cent. in 1940, then in 1941 to 16 per cent., then in 1942 to 20 per cent., and now the Minister proposes to increase it to 22½ per cent. If that were equated to produce the same revenue from the taxable profits of the mines the percentage would be nearer 27½ per cent. Now, what is the present position? The gold mines pay the flat tax of 3s. in the £. They pay this further flat tax, which I have explained is equal to 27½ per cent., in all a total of 8s. 6d. flat in the £. On top of that they are paying the formula tax, and on top of that the State is deriving £2,500,000 annually, I think, in respect of realisation charges — which the State saves on the realisation of gold, and that is just as much a tax as anything else. So we find that in face of falling profits since war broke out the mines have been paying an increasing percentage every year. It has now got to this, that from 3s. in the £ when we went off gold, the taxation of the mines has now reached—that is in direct taxation — 15s. in the £, and I do not think that that is an extravagant estimate. I am talking only of direct taxation. Surely we are facing a dangerous situation. Surely it is dangerous for Opposition members to suggest that the Minister has not taxed the mines sufficiently. It has been found that every increase in the rate of taxation has yielded less revenue. I suggest, that being so, that the ceiling has been reached and that the red light of danger is showing, and that this is the limit. Contrast this position of the mines with the farmer’s position today. The farmers are making very much more money today than they did before the war. I do not think anyone on the Opposition side will deny that, and I wonder how much income tax the farmers do pay. In the latest departmental report available they returned about £1,500,000 in taxation. I do admit that the case for the farmer made by the hon. member for Smithfield (Mr. Fouché) illustrates the great handicap of a tax like the excess profits tax. Where a farmer elected to be assessed on a cash basis and has in consequence over a long period been relieved of taxation at low rates—pre-war tax was at a low rate — now that the market is favourable and stock is being turned into cash he finds that he is being taxed at very high rates. It is admittedly heavy.

His capital is being taxed away.

So is the business man’s capital being taxed away. The difference is, however, that the farmer has been allowed to develop and accumulate, he has been allowed to do so tax free, which the man in business has never been allowed to do. The business man compares his lot with that of the farmer, for when he buys new machinery he gets no relief except for depreciation. He also compares his lot with the South African Railways, which are making a profit of £6,000,000 a year, and are in measure competing with private enterprise but are not paying one penny in taxation. To return to mining, I feel that we are facing the time soon when, no matter how willing the mines are to pay taxation and how willing this House is to exact higher taxation, in the interests of the country and of conserving the mines, we shall have to consider this matter very seriously indeed, and I think the Minister is right in resisting the demand to increase the mining taxation more than he has done. We have now been at war for three and a half years and any proposals for increasing taxation must be viewed purely from the angle that this country is inexorably committed to financing and winning this mortal struggle, in which we are engaged. It is just waste of time to talk of an “unnecessary war,” as hon. members opposite have done, and to proceed to criticise taxation in that light. This war has proved more costly than anyone at the outset ever imagined, and war expenditure has reached almost alarming proportions. We must realise and appreciate that the Minister of Finance has been faced with a formidable task in raising the money. Taxation in South Africa must of necessity be heavy, as taxation is heavy in every country of the other United Nations. Mr. Speaker, I submit that no matter how heavy our taxation is, the taxpayers of this country are prepared to meet it and to meet it willingly, because there is only one task before us, there is only one objective, and that is to win this war. If this war is lost then no amount of capital assets will make any difference. There is no doubt that the country substantially supports this view. In the process of framing taxation measures I do think there are certain fundamental principles that should be borne very closely in mind, but I fear that in recent times, particularly in 1941, 1942 and 1943, some of these sound principles have been disregarded and thrown overboard, and it is this very fact which is causing certain dissatisfaction, which is being expressed rather freely today all over the country. For one thing, it is essential that taxation should be equitable, that it should bear equally and evenly on the taxpayers. For another, it is equally essential that taxation measures should be as simple as possible. I am afraid, however, that the policy of introducing one new tax after another, of making these taxes involved and complicated, and of making them sectional in their application, has led to considerable inequities being created, to extremely involved taxation, and to the efforts now being made in an attempt to try and iron out the difficulties. These taxes, by virtue of the fact that they pyramid one upon another, are complicated in the extreme. Any accountant with a deep knowledge of taxation will tell you of the complex nature of all this taxation, and one and all are complaining very bitterly because of its complex character. I submit that it is the very complexity of the taxation, which is giving rise to the inequities, about which so much is being said today. I feel that there is too much of the expert touch about our taxation measures, and not enough of the practical touch, and I think the Minister would be well advised to get a little practical advice, so that we can amend our taxation and bring it more into line with that of other countries. Not only is our taxation inequitable and complicated, but it unquestionably suffers from another fundamental defect, and that is that in one instance the tax is levied at the source, and in the next instance it is levied on the individual. This leads to the most absurd anomalies, such, as for example, persons who are not really liable for income tax, being very heavily taxed, because of the fact that the tax is levied at the source—the company is taxed and not the individual. It is just a defect like this which is causing so much of our trouble. To deal with the several taxes, first of all let me take normal and super tax. The Minister proposes to add to the existing rates a surcharge of 15 per cent. Well, Mr. Speaker, first of all the principle of a 15 per cent. surcharge is not sound, when a tax is graded from nothing up to 14s. 7d. in the £. I submit that is unsound, because 15 per cent. on nothing means nothing, but it means quite a good deal on the higher rates—not that. I am making out that the taxation on the higher income is excessive. I submit that it would be sounder to recast the rates completely and to add appropriately to the normal and super tax instead of creating an additional tax like the personal and savings levy. This would eliminate one tax, which, in turn, would eliminate a great deal of work and simplify the work of both the department and the taxpayer. In the Budget debate I made reference to the fact that, as compared with other countries, our normal and super tax rates are absurdly low, and so they are. A married man with one child in this country is taxed in respect of normal tax, personal and savings levy and provincial tax, a matter of something under £12 on an income of £500. In New Zealand such a person’s tax is approximately £66, in Australia £75 and in the United Kingdom £101, that is to say £66, £75 and £101 against. £11 or £12 in South Africa. On the higher incomes, we find a similar state of affairs existing, though our taxation rises fairly steeply, especially when a flat percentage surcharge is imposed. I submit, however, that right throughout the scale of normal and super tax our rates are entirely inadequate, and that that is the fundamental reason for nearly all the trouble today. Under normal and super tax, if A earns £500, £5,000 or £50,000, he pays the same tax as B, who earns a like amount. That is fair and equitable and simple, and had normal and super tax rates been raised to provide the increasing revenue instead of resorting to the imposition of these many sectional taxes, I submit that the complaints in this country would have been far less than they are today. Unfortuantely the Minister has instead followed a policy of multiplying and pyramiding taxation. Another tax that has provoked a lot of criticism is the excess profits duty, but I think it is in principle a reasonable and fair tax in time of war, and I do not see how the Minister could have avoided the introduction of such a tax. The country needs the revenue, and the principle of the tax that no profit should be made at the expense of the consumer is undoubtedly equitable in itself. Unfortunately the definition of “excess profit” has been a difficulty. It has apparently been impossible, not only in this country but also in other countries as well, to frame a satisfactory definition, with the consequent result that this tax is being applied to profits which are in no sense excess profits. It is being applied to profits which are made in a normal way through the progress of a business run under healthy conditions. That is a fundamental weakness of this tax, which does not take cognisance of reasonable profits accruing because the turnover has increased through initiative and energy on the part of the management. Those profits are liable to be taxed. The second point is that this tax is based upon a statutory percentage of 8 per cent. in the case of every business which has not earned a pre-war standard of profit. It means that all businesses have been ironed out, irrespective of risk, irrespective of whether the business is one that requires big capital or small capital. No cognisance is taken of goodwill, of brains, energy and enterprise. The unfortunate thing is that the tax imposes a most definite penalty on brains, energy and enterprise, and must undoubtedly lead to a state of affairs which one hon. member has already described as prevailing in Sweden. It has led, to my certain knowledge, to professional men saying that rather than sweat their hearts out to earn a bit more money and pay an enormous portion by way of tax to the Government, they will conserve their energy. That is the effect of removing incentive to work, the incentive to battle. There is only one result, people will take things easy, and that is the dangerous effect which our taxation, at any rate in this respect, is having upon this country. I do not see how the Minister can completely surmount these two difficulties that I have outlined, first the definition of excess profits, and secondly the statutory percentage basis. In 1940, however, serious representations were made with a view to having a special body set up so that the different classes of business and the different risks could be considered, and effect could be given to these variable factors by the imposition of appropriate statutory percentages. The hon. member for Fauresmith (Dr. Dönges) has in this respect already referred to what was done in England. That is the only known practical way of getting over the difficulties. It is, from the revenue aspect, a tax bringing in an enormous sum of money; how much it is ultimately going to yield net to the country no one at this stage can tell. Unquestionably, many firms, who have paid substantial sums in excess profits tax realise, that, if the tide turns against them, refund of tax is claimable and they have in the interim accumulated a substantial sum as a nest egg and a cash reserve against that day, and as we have had this tax in force since 1940, one does not quite see how it can now be abolished. The alternative is to remove anomalies and injustices where possible. In this connection I do say quite seriously that it is regrettable that many of the concessions that have been granted under this tax have taken so long to materialise. I should just like to cite the instance of base metal mining. In 1940 I pointed out to the Minister, when he was about to introduce the original Bill, that under this tax it would be quite impossible for base metal mining to develop. These words have since proved only too true, to my sorrow and regret. Then, in 1941, the Revenue Advisory Committee was set up, but here again it was established on such complicated lines that we do not know what recommendations the Committee has made. It is a pig in the poke business. The determinations of the Committee are not made public, and nobody knows them. I see, in his memorandum, the Minister is now proposing in the case of strategic base minerals to allow capital expenditure to be recouped before any excess profits tax is payable. It is a very fine move, three years belated, but nevertheless I want to compliment him on it. I only regret it has taken so long, because in the interim there has definitely been a stagnation of mineral development due to the tax. However, I say better late than never. It is a step in the right direction, and one that the country has been asking for. There are various anomalies in the excess profits tax I would like to deal with, but I think criticism is best deferred until the Bill is before us. Then, sir, there is the inconsistency wherein at one stage profits are taxed at the source, and at another stage they are taxed in the hands of the individual.

That is something I inherited.

Yes, I grant that you did, but I do not know why it should be perpetuated. In 1941 there was a complete recasting of the taxation, and the Minister then introduced into the taxation of private companies the principle that profits would be apportioned amongst the shareholders in proportion to their shareholdings. That follows the method of taxing partnerships. In theory this principle is good, and I think at that time it was fairly universally accepted as being a welcome change for the better. It simply means that the profits of a company are diverted into the hands of individual shareholders for the purpose of levying, and that in consequence each individual will pay tax at a rate appropriate to his own income. Unfortunately, in practice, some disturbing anomalies have emerged, and it is a question whether this principle of apportioning profits, which appeared admirable in principle, is desirable.

We shall be dealing with that in the Bill.

Yes, I have studied the Minister’s memorandum, and I am coming to his point later. While we apportion profits, a company’s losses are not apportioned. I have spoken of this unfair and inconsistent provision in the two previous years and I do appeal to the Minister to listen, because I am hearing a great deal of criticism. As a matter of fact, as the result of this practice, some taxpayers are paying more in tax than 20s. in the £. If they are interested in various companies their profits are all taxed, but they get no relief whatever for their losses, and it is happening in certain cases, therefore, that taxation exceeds income. We follow the principle in the case of partnerships as regards profits, but we do not do so as regards losses, and it is manifestly unfair and unsound to try to maintain such a position. The fact that losses are carried forward in the accounts of a company is of no advantage whatever to the taxpayer. It is no relief to him to know that, when he suffers a very serious loss in a company, a loss which he has to make good, he finds himself taxed very heavily because he is apportioned the profit made in another company. The person who runs two businesses can set off a loss in one against the profit in another, and is only taxed on the net income. That is not the case with a shareholder interested in several companies, and this is one of the anomalies which requires urgent redress. The next anomaly is that in apportioning the profit of a private company a shareholder finds himself liable for tax on money which he did not receive and possibly can never receive. In fact, he is taxed on the undistributed profits, which remain in the coffers of the company. He finds himself liable for a substantial tax on money he has not received. This is one of the serious difficulties which arises out of the method of apportioning the profits of a private company. Then also the taxpayer’s dividend may be a small one, that is, relative to profit apportioned, and in this event the less his dividend is the more his difficulty is accentuated. The Minister, in his memorandum, sets out a plan to get over this problem. We provided in the 1941 Income Tax Act that the aggrieved taxpayer, who had received little or no dividend and was still liable to tax, could have the excess tax recovered by the Commissioner from the company, but the conditions provided make that quite impossible, and the Minister now wants to make the issue more impossible in an effort to improve it. I must here sound a warning note. The Minister is proposing that in cases where the dividend is nothing or less than the tax on the particular profits, the taxpayer can ask the Commissioner to recover any excess tax for him from the company.

He can ask, but it does not follow that he will get it.

Granted, but if he has had no money, it is only fair and right that the Commissioner should protect him, especially now when income tax can run up to 14s. or 15s. in the £. One is now going to find that a shareholder in a company, who has a small interest in the company but has a big income himself, can call upon the Commissioner to make the company pay him an amount which may equal a dividend of up to 75 per cent. of the taxable profit in order to pay his income tax. The company cannot claim that back from him, and the company is faced with paying an amount equal to 75 per cent. of his share of the taxable profits in order to pay his income tax. Such a position can easily arise. In the same way, you may have another shareholder in the same company who may be quite a substantial shareholder, but with a relatively small income. The company is unable to distribute any dividend, because it is called upon to reinvest money in the company for the purpose of expansion, or something like that; and in this case the shareholder can ask the Commissioner to collect his tax at the rate of, may be, 1s. or 2s. in the £. Thus we have the anomalous position arising of the company paying out for the one shareholder 15s. in the £ of his profit, and for the other shareholder only a shilling or two. I think the Minister should now consider overhauling the whole method of taxing private companies because it is evidently the principle which is proving unsound fundamentally, and the more he tries to patch up unsound foundations the more trouble he will encounter. The Minister might well consider in the taxation of companies taxing the dividend in the hands of the recipient for both normal and super taxes, allowing the total dividend as a deduction from the company’s profit, and on the balance of profits, which remain with the company, levying the tax on the company. The taxpayer then only pays on money he actually receives, and all these complications would be eliminated. I would next like to deal with the Trade Profits Special Levy, but I observe it is nearing the time for adjournment.

At 5.55 p.m. the business under consideration was interrupted by Mr. Speaker in accordance with the Sessional Orders adopted on the 28th January and 26th March, 1943, and Standing Order No. 26 (1), and the debate was adjourned; to be resumed on 6th April.