I move—

seconded.

Agreed to.

I move—

seconded.

Agreed to.

When the House adjourned yesterday, I had dealt with certain aspects covering normal and super-tax, the taxation of companies, and I was dealing with the excess profits tax. I pointed out some of the defects in this particular tax, some of the difficulties that were being encountered. I have no time left in which to recount those difficulties again, but it is a pity, I think, that the Minister has seen fit to increase the excess profits tax from 13s. 4d. to 15s. in the £. We must bear in mind that the balance of excess profit is taxable under other headings as well, and although the rate of E.P.D. itself may appear to be reasonably low, yet when other taxes are applied, the aggregate of taxation on excess profits in South Africa is very high. I want now to deal with my last point, the trade profits special levy, This tax is a first cousin to the excess profits tax. It does not suffer from the difficulty that I enumerated yesterday with regard to the definition of “excess profit,” but it is likewise founded on the basis of a statutory percentage of 8 per cent., and in that respect, if the excess profits tax is described as an unsound tax, as it was described in certain quarters yesterday, the trades profits special levy is equally and more so an unsound tax. I submit further that the trades profit special levy is really based upon no principle whatever. There is this much to be said for the excess profits duty, that is a tax on excess profits made in war time, and as such it is a tax, which meets with wide approval in the country; but in respect of the trade profits special levy, it is purely a tax on pre-war profits or income, and it seeks to tax one taxpayer and to absolve another taxpayer in respect of, I again emphasise, pre-war income. The taxpayer, who has been extravagant, inefficient and careless, who has not given the same attention to his business, but who may be earning a substantial income, is free from this tax. On the other hand the energetic, enterprising and efficient taxpayer, who earns exactly the same and even a lesser income is penalised and subjected to this tax, and the greater the degree of efficiency the heavier the effect. Why such negative discrimination? This tax unfortunately not only discriminates very widely between classes of taxpayers, but it, also contains certain very serious anomalies, one of which is in respect of the minimum abatement of £3,000. The minimum abatement applies equally to an individual, a partnership and a company, and the effect of that is this, that where you get a number of shareholders in the company—it may be five, or ten—between them they have to share the £3,000 abatement, whereas in a partnership each of the individuals is allowed the £3,000 abatement. The effect is well seen in an example which I have previously put before the hon. Minister in this House. A. is a shareholder in trade; B. receives his income from fixed interest. Both receive the same income. Each paid £61 tax for 1941, but for 1942 A. pays £387, and B. the rentier, pays £67. The taxation of the one has increased by £321 in one year and the taxation of the other by £6. Such discrimination which arises from the application of the trades profits special levy is a very serious matter, and I do ask the hon. Minister to give his earnest attention to this with a view to seeing whether it is not possible in the case of private companies to mitigate the situation in the same way that he has done in the case of partnerships and individuals.

I would like to associate myself with the amendment of the hon. member for George (Mr. Werth). I would like to draw the attention of the Minister to the fact that when a farmer reaches the stage where he must pay super tax, then it affects production. I was in Kroonstad recently and the bank manager came to see me. He had just decided to send a telegram to say that the big farmers were not prepared to continue to produce if they had to give up 15s. in the £. I have received letters from my district, almost all from supporters of the Government. They want to let their lands lie idle. They have reached the stage where they must pay excess profits tax in certain years, but they are not prepared to give up 15s. in the £ to the Minister. They say that they do not intend to exhaust their ground for Minister Hofmeyr, that they are not prepared to produce maize at 15s. per bag. In the case of maize, when a farmer produces more than 5,000 bags and reaches £2,000 he is taxed to the extent of 15s. in the £. If he cuts up his farm into two or three sections and lets it to small farmers, then the Minister will not receive excess profits tax and production will remain the same, but in the case of the big farmers production will be reduced considerably. There are ten or fifteen big farmers in my district. They intend to let their lands lie idle, or to let the cattle graze on them, but they are not prepared, especially in view of the shortage of fertiliser today, to exhaust their soil, and then pay 15s. in the £ to the Government. In the case of wheat a man who reaches 2,000 bags will become liable for excess profits tax. The man who farms with cattle, if he sells 500 wethers and 50 oxen, then he gets into trouble with excess profits tax. This type of farmer will not expand at all but will reduce his production, and I would like to report the Minister of Finance to the Minister of Agriculture who says that we must produce more. But there is another very important matter which I want to bring to the attention of the Minister, and that is the Gestapo-activities in Kroonstad against which I want to protest strongly. It is scandalous the way the farmers are treated. The big farmers are almost all supporters of the Government or former supporters, because I cannot believe that they will still support the Government. There were twenty of them who wanted to go to Cape Town with a deputation. I told them that they should rather wait until the Government is back in Pretoria and then to go to Pretoria. The Revenue Officer is now practically going from farm to farm and he goes back seven years and asks the farmer what his income was. One farmer has now been assessed for £1,000 a year and will have to pay a total of £7,000 for the last seven years. Now he must sell more than £15,000 worth of cattle to pay it. On the sale he will again have to pay tax and will have to sell for another £12,000 to compensate for it. This is the way in which the official is going from farm to farm. He asks how many children a man has, how many servants there are in the house. He says: “But here I see a refrigerator.” He wants to look into the wardrobe. One of the farmers chased him out of the house, and I agree with that farmer. If an official asks for information in the proper way, any farmer will give the information, but now the position has become impossible. At one farm the official remained for fourteen days. He then alleged that the farmer had sold maize through the bywoners, although so far he has not been able to give any proof of it. They come to a farmer and say: “You gave £500 to the Church. Where did you get it?” or “You have deposited £2,000, where did you get it?” It is worse than the action taken by the Gestapo against the Jews in Germany. One farmer sent the official to his lawyer because the lawyer made up his income tax. He went to the lawyer and then he wanted to peruse the papers. You know how the papers are kept in large envelopes. Then the lawyer produced the envelope of the person concerned and read out to him everything from the one envelope. Then the official said that he also wanted to see what was in the other envelope. The lawyer’s reply was then that they were private documents of his client. But the official wanted to see them as well. The lawyer chased him away and told him not to come back again. The first thing the official does is to get a signed document which gives him the right to investigate the man’s affairs at the bank and business houses. If the farmer does not sign, then he threatens to get instructions from Pretoria. The official then goes through the whole house, even the wardrobe of the wife to see whether she has bought new dresses. All this he takes into account to arrive at the farmer’s income. I protest most strongly against the way things are being done. The official boasts that he will get £60,000 from the Kroonstad area in taxation for the past seven years. The farmers are prepared to pay what they must pay. But if they forget something, or there is a small error, instead of paying £1,000, they must pay £3,000. I have told the farmers not to pay, but to wait until we go to Pretoria with a deputation. The majority are supporters of the Government. I do not believe that they will support the Government for long. When I voted against the war I told these people: I know that you will first have to sacrifice yourself, then your sons and your money, and you do not want to sacrifice any one of the three. But these Gestapo-methods are intolerable.

In regard to the question of the imposition of the excess profits tax, I wish to submit to the Minister some considerations bearing upon the taxation of persons who are closely identified with the production of food, with the production of the necessary materials for construction work, and the effect of the imposition of this tax on such persons. There is no doubt, for example, that in respect of the shortage of timber, the policy of the Government should be to foster the production of timber in this country for construction work. But there is no doubt that under present conditions the felling of suitable trees to be sawn for timber has been brought to a standstill, very largely through the 15s. in the £ excess profits duty. I have a letter here from a merchant in Pietermaritzburg who draws attention to this matter. He is by no means a man who can be considered to be a profiteer, or a tremendously prosperous man. He is a man who has had a great deal to do with the farming community, a man who supplies the farming community with their needs, and he writes as follows with regard to the question of timber—

This correspondent makes the same point in regard to the farmer who is actually being pressed by the Government to do everything he can to increase production in whatever line he is able to do it. He goes on to say—

I think in view of the importance of increasing production—and we shall only realise that by the end of the present winter; I think by that time we shall have realised what a desperate policy has been imposed on the country by the Department of Agriculture—the Minister of Finance will regret his policy of taxing the production of food. We shall not until then realise the losses that the farmers and other persons dependent on the farmers, have incurred. The policy of the country is to increase production. I say that the present Minister of Finance and of Agriculture are engaged in discouraging production.

We cannot have a general discussion on agricultural matters.

I realise that, Sir, and I shall not go further than to say that the taxation the Minister of Finance is imposing on so-called excess profits, is in effect going to prevent agricultural production in the country, and apart from that the outlook is very grave indeed. For a moment let me refer again to the question of the manufacture of suitable timber, or the sawing of suitable timber, for the constructional needs of the country. You have the anomaly that the Minister of Finance will pounce upon any man who has made what he calls an excess profit on the sale of timber, which is urgently needed in the country, but the Government Forestry Department may go on manufacturing and selling timber and disposing of it in the markets to the best advantage without any fear of taxation at all; the Department pays no excess profits duty and it is allowed to compete against the ordinary farmer timber, grower who is unwilling to put this product on the market at the present moment, because of the fear of the tax which the Minister holds over his head. In connection with the production of some of these Government forestry settlements, we have the fact that the Government gives out a contract, and the person who has that contract makes an enormous profit, but he does not come under this excess profits tax. The person who makes that profit is in an exceptional position, and he is not in any way impeded in his activities by the same conditions that prevent the private grower of timber from meeting the demands in the country for the production of timber for constructional work. I was sorry to notice the somewhat apologetic air which the Minister seemed to me to adopt towards the Opposition in regard to the spending of the necessary funds on the increases in the soldiers’ pay. That seemed to me an extraordinary attitude. It seemed to me that his attitude was that we are spending this money on the soldiers’ pay, but the Opposition must please understand that it is not being taken from the increased taxation that is being provided for.

There was nothing apologetic about it. It was a plain statement of fact.

It was construed by me and by quite a large number of people as an apology to the Ossewa-Brandwag that this money was being spent on soldiers.

You listened through an imperial ear.

I do not think that that calls for any reply from me.

It is nevertheless true.

I should like the hon. Minister, while he is dealing with the question of taxation, to give the country some sort of an assurance that there is going to be more care of Government funds than appears to be the case in the present circumstances. In no less than four instances it is on record that Government funds have been stolen from persons who are entitled to be regarded with grave suspicion. £1,500 was stolen from the Maize Control Board, a body that was found to have explosives in its basements, ready for the dynamiting of any unsuspecting victim. We had £5,000 looted in broad daylight from the State Advances Department, which is manned largely by members of the Ossewa-Brandwag, and we had the most recent incident at Park Station, where from £8,000 to £12,000 was stolen again in broad noonday from persons who were supposed to be in control of that money, and £4,000 was stolen in Port Elizabeth. It is high time that, when the Minister is engaged in imposing taxation, he should give the taxpayer the assurance that thieving of this kind will be brought to an end, that ordinary precautions will be taken to see that the people who handle this money are trustworthy. We do not want the plea from people who may be tried, that this was a patriotic effort on their part to reimburse the Ossewa-Brandwag. That has occurred before, and I hope that the strictest precautions will be taken to see that no untrustworthy person is allowed to handle the funds of the Government and to surrender them to members of the Ossewa-Brandwag masquerading as robbers.

I just want to protest against what the hon. member for Illovo (Mr. Marwick) has said, that it was the Ossewa-Brandwag that stole the money, that they were members of the Ossewa-Brandwag. How can he say that these people all belong to the Ossewa-Brandwag What right has he to say so? It is an untrue statement. These people might belong to any party, perhaps even to the party of the hon. member, or to the United Party.

Have they now also a women’s section of the Ossewa-Brandwag?

There is a women’s section, but I just want to protest against that statement of the hon. member for Illovo.

I have listened with interest to the various representations in support of the taxation proposals of the Minister. We expected those representations and introduced an amendment in anticipation. It is interesting to see how the hon. members for Maitland (Mr. Mushet) and Krugersdorp (Mr. M. J. van den Berg) have tried to defend the Minister. The one said nothing and the other said something remarkable. The hon. member for Maitland welcomed the taxation and more or less like the hon. member for Illovo (Mr. Marwick) deprecated the fact that this side was not in favour of more taxation being imposed on our soldiers and their dependants and also on the home front. He said that while we were against the less privileged of our nation who earned £300 to £350 a year being taxed, it is right that the tax should be taken from them for the benefit of those who are in the war. He wants to deprive these people of their bread by this taxation, and it looks as if in this way they want to force us all to go and fight. The object of this taxation must be to force us all into the war. Who will remain to be taxed? That is the irony of the whole matter. But while there are certain groups of people who are privileged and who are protected, the farmers on the platteland and the small dealer must be taxed. They must not be given the opportunity to strengthen themselves financially for the difficulties which will come later. They must not have the opportunity to build up reserves. Those privileged people have a quota, but the others have not. The hon. member for Maitland knows this. We have known each other for years already in the commercial world. Those privileged people have a quota, but the Afrikaner businesses do not get a quota. It appears to me that the Minister’s object with this taxation is to force everyone into the war. The hon. member for Kroonstad (Mr. Fullard) has said here that he has even recommended his people not to pay. I can understand this very well under the circumstances. The hon. member for Kroonstad has rightly spoken about the difficulties in which the farmers are placed by the taxation, especially on the agricultural industry it presses unfairly. I have experience in my farming industry. Without my business experience I would never manage with the valuation system for income tax purposes in the farming sphere. If it were not for my experience, I would never be able to work it out. In my third year — I was on the valuation basis of calculation for taxation purposes—I found myself in this difficult position. Many lambs and calves had died as a result of a drought which caught me and I suffered losses, and it was impossible to remain on the valuation basis. I had severe losses in cattle because I could not provide for winter feed in the few consecutive years while we had the drought. The Minister’s actions are quite theoretical, and also those of his Department. Twice two are four. In my business, in commerce, I can write off my bad debts, but the farmer cannot do so. He must pay and many anomalies and many injustices arise. The Minister is merely out to find money for the war. Every drop which he can squeeze out must be got out of those less privileged sections of our country. Does the Minister and the Government not believe that this war will come to an end and that it will bring its consequences with it? Does the Minister not think that it is his duty and the duty of the Government to see that the country is made as stable and strong as possible and that the people should be enabled to continue their activities after the war? It is true that we have a difficult country in the agricultural sphere, with all our mineral wealth, but now we are busy pawning our future in every sphere so that we will have nothing over to build up our country. It does not matter how the war ends and who will be the winning party. That I leave there, but it does not leave me cold that this country, or the economic conditions of the people, should be assured as much as possible. Today we are spending millions and millions. They speak about excess profits. The excess profits consist of paper values. When they talk about securities and credits, then they are merely smoke-screens. The whole basis of finance has been dislocated. Possibly we will have to return to the days of 1807, when a basis of mutual trade again had to be created. What measure of value is there today? Gold is still the measure of value even though we have departed from gold. But this measure of value is three times higher than normal, and it is the money that is being wasted here and which is being collected from the people. It is a falsity. It amounts to that. Now hundreds of thousands and millions and hundreds of millions are being wasted. How are we going to meet it? The only way will be to repudiate. Therefore I also now repudiate the actions of the Government which is busy destroying our future. For this reason we have moved the amendment, and the Government ought to accept it and act in accordance with it. What does the amendment say? In the first place that we do not want the people with low incomes to be taxed. Soon there will be numbers and numbers more of our workers who will no longer be able to support their wives and children. They will be unemployed, or the value of what they earn will be so low that they will no longer be able to live. I in my business have hundreds of mouths which I feed. I do not know at the moment if I can continue with it for another two or three months. The result will be starvation. They will not even have mealie meal porridge to feed their children. Now the Minister wants to tax those people still further who earn £300. We are against it. At the same time we ask that in respect of the education of children greater rebates should be allowed. Must only the well-off parents who have money have the opportunity to give their children a good education? It is especially disastrous in these times. The flower of the nations of the world are being destroyed. At least give our young generation an opportunity to be educated properly. Further we advocate exemption from taxation in respect of hospital expenses and other medical expenses. I know of numerous cases of people who suffer greatly as the result of illness. How can you tax a man of £300 or £400 if he also yet has a heavy doctor’s bill. And then our amendment comes and deals with the farming industry. Take the young man who is busy building up his small farm, and equipping it properly for intensive farming, which is an expensive business. For the first time in five years we have now in parts had a good wheat crop. We will never again apparently, in our areas, have such a wheat crop. Last year the maize crop was destroyed by drought and the army worm and consequently all the land was placed under wheat. It can easily happen again. A large part of the wheat crop has been lost, but yet the crop was such and the prices were such that the young man now has the opportunity to reduce his capital debt a little which presses so hard on him. Instead of giving a bonus and exemption to those who reduce their debts, we tax them and make it impossible. What the hon. member for Kroonstad has said, were not idle words. It will happen. We do not want the people to be fed and clothed by the State. They must play their part as citizens of the State, but with the viccisitudes of the farming industry the farmers in good years must have the opportunity of reducing their debts. I hope that the Minister will give his serious consideration to our amendment and pleas for the future of our people.

I was probably one of the first, who, when a war Budget was first introduced in this House by the Minister of Finance, earnestly urged upon him that taxation should be taken from the pocket of those people who make extra profits during the war and out of the war. I think it is no more than fair and right that where anyone makes a profit out of the war conditions of his country that the profit to the greatest extent should be taken from him and put into the Exchequer. I know that it is a very difficult task for any minister of finance, no matter how competent he is, and no matter with what talents he is gifted, to take all the profit that is made out of the war and to return it to the Exchequer as it ought to be. There are always means of evading tax, there are always means of escaping, and not to allow the proper share of what you make as war profits out of the war to flow back into the Exchequer. But while the Minister is no doubt doing his best to let justice prevail in this way and to see that those people who make war profits contribute to the greatest degree to the Exchequer. I cannot help urging the Minister strongly and again breaking a lance for that section of the population who really ought not to pay excess profits. When I say this I refer chiefly to the farming community. There is no doubt that the farmers have no regular income. Anyone who earns a fixed salary has had that income before the war. He cannot be taxed on the salary for excess profits and if the salary as a result of the war has risen so much that he becomes liable for excess profits tax, it is obvious that he receives this particular high salary as a result of war conditions. If you take any other industry, secondary industries for example, then you are dealing with regular incomes, with people who know exactly more or less what their turnover will be, and their profits in accordance with their turnover, and on the percentage basis you can therefore establish how far you can make a profit, without becoming liable for the war profits tax. There are people who exceed the limits and it is nothing more than right that when they make large profits as a result of the war that they should pay excess profits tax. But when you come to the farming community, you are dealing with continually fluctuating incomes. The incomes fluctuate continually as a result of the fluctuating climatic conditions. The farmers are dependent on favourable climatic conditions. They are perhaps lucky for one or two or even three years and have favourable years, and during the few favourable years they make a profit, but immediately afterwards there might be a series of years which are unfavourable and in which the profit which they have made in the favourable years are swallowed up by the unfavourable years. The old story that is told in the Bible about the seven fat years and the seven lean years always remains true in the agricultural industry. We know that the farmers have had a bad time before the war. There were several factors which contributed to it and it is not necessary for me to go into that. They are generally known. And when I say this I want to confine myself chiefly to that part of the country with which I personally am concerned and of which I have had practical experience during that time. Other hon. members can speak about conditions in other parts of the country, but I know that what applies to one section of the farming community, in a less or greater extent applies to the whole farming community at one time or another throughout the country. Take the whole wheat industry in the Western and South-Western districts in the years just before the war began. The crops were extremely weak over a series of years. As a result of unfavourable climatic conditions and grain diseases which affected the crops, the yield was low. You find that during the past few years, despite the fact that they were also comparatively weak years, certain parts of the wheat industry in the South-Western areas have had a fairly good crop. The position with which you are faced is that the people with the extra benefit which they have had from the crops in the past years—and in some cases also in the preceding years—they are in the position to make up for the losses which they have suffered. But now, because in the favourable years that have been given them by Providence, they have made extra profits, they must be taxed. Where they are so dependent on climatic conditions, it is fatal. Naturally they try to escape the tax. It is human. Anyone does it and if there is any one section of the population who is entitled to escape, then it is the farming population in view of the particular circumstances. But they will try to escape not only to the detriment of the Treasury, but also to the detriment of themselves. We have had the experience in the previous war that farmers made money and made improvements and bought land at high prices, with the result that they were caught in the period immediately after the war and some of the once well-off farmers are still struggling today with the consequences and more than one has already gone under. They are now trying to escape with the little extra by expanding and developing and making additional costs, but in the course of time they are going to be caught; they are going to be caught in the years which will naturally follow, in the weak years after the war. Previous speakers have pointed out how people let their cattle walk about on leased lands, how they are expanding their cattle stocks. Sooner or later they are going to be caught and then they will be forced to sell their cattle. The money which they might use now to reduce their mortgage debts will be taken up in this way. I think that it is something the Minister should consider seriously. Is it a desirable policy to tax people whose incomes are so uncertain and who are so dependent on climatic conditions, when they make a temporary extra profit? That is not all. Agriculture in this way is being retarded instead of developed, and we in this way will prevent development and production. The world is suffering hunger and South Africa is mentioned as one of the countries that will have to help the world when the war is over, to come on a sound footing. We know the conditions that exist in Europe. Misery and starvation exist in the whole world and South Africa will have to make its contribution to help to feed Europe and also the rest of the world. If we retard our agriculture by taxation, so that in this way we automatically retard agriculture, then we are undoubtedly not rendering our agricultural development any service by this. Shipping will again be available after the war to a greater extent to transport agricultural products to the markets where those products are necessary and essential for the feeding and clothing of the people and in those circumstances there will be no agricultural produce if we do not try to encourage it by not letting the farming community pay the excess profits tax. The agriculturist as a primary producer creates new capital. He creates the most essential form of new capital, i.e., new capital in the form of food and clothing. There is no other way in which you can create a more essential form of new capital for the development and progress of the country than by creating it in the form in which it is most necessary for the world, i.e., in the form of food and clothing, and it is being created by the agriculturist in the form of food and clothing, which is most essential, which is something without which both rich and poor cannot manage. It is wrong to tax profits that are not profits at all. If you study this matter carefully and go into it properly as I have tried in these few words to sketch it to the Minister, then you find that no extra profits are being made by the farming community in these circumstances. The price of agricultural products have all been fixed at a level which leaves some room for the agriculturists to cover their extra production costs and in addition a certain amount of profit for himself. How can you expect, unless Nature favours them, that this section of the community should make extra profits? It is obvious that it is impossible for the agriculturist to make extra profits in these circumstances, because the prices of his produce have been fixed and only leave him room to make a living. And where the agriculturist is favoured by Nature and gets a few decent years, he is in a position that the following year again swallows up everything, because Nature has been unfavourable to him. Is it now fair in these circumstances to tax these people for excess profits? I give these few suggestions in all humbleness to the Minister for consideration and I hope that he will consider this matter very carefully and that he will hot subject the farming community to this extra taxation in the existing circumstances.

I have asked the Minister of Finance a few questions in connection with mining taxation and before he replied to those questions he reprimanded me because I nut questions to him which took so long to answer. He has said that in the future he will not answer such questions. In connection with gold mining taxation I put this question to him—

His reply was—

Now I again want to put a question to the Minister. He knows that the mines are permitted to deduct increased production costs before they pay the tax.

No, that is not so.

The Minister has said that the information is not available. The question was what amounts have been deducted by the gold mines as increased production costs before they paid the extra tax. The Minister has said that the information is not available and now he says again that they do not deduct the additional production costs. The position is that they are entitled to deduct it before they pay the extra tax. I want to point out to the Minister that the burden that he is today placing on the gold mines to help cover the war expenditure is a very small burden compared with the burden which the population in general must bear. The Minister takes the attitude that when gold rose from 150s. to 168s. an ounce, and when the State took a part of it, that that was a tax on the mines. He regards it as a contribution by the gold mines to the war expenditure. There is a statement which we have had from Mr. Havenga when he was minister and which has been ratified by the present Minister of Finance, in which they said clearly that that tax was levied before the war broke out. It has nothing to do with war taxation. In other words, when the price of gold rose from 150s. to 168s. a fine ounce, the position was put to him that he should take all that money. The Minister agreed with that, because he has said that there was economic disruption in store for the country, and in view of this we must take the 18s., but he would not take all of it but levy a special contribution on the gold mines. Let us now more or less examine the figures in connection with the special contribution. In 1941 the production of the mines was 13,000,000 fine ounces of gold. If we take 18s. per ounce of that which should have gone to the Exchequer, then it means that this special contribution should have been about £12,000,000. The Minister has told us that altogether the mines have paid £22,000,000 in tax. If we deduct the special contribution of £12,000,000, then it means that the mines have contributed to the Exchequer in taxation about £10,000,000. In 1938 the mines, according to the Minister, paid £9,000,000 in taxation, so that the increased burden that was placed on the mines to help to bear the burden of war is less than £1,000,000. This calculation we can make on the grounds of the Minister’s own statements as they appear in the Hansard report. The Minister receives less than £1,000,000 from the gold mines to help to bear the tremendous burden of the war. How does that compare with the position which the hon. member for George (Mr. Werth) has sketched here—with the enormous burden that is imposed there on individuals and other companies? They pay twice and three times as much, and in reality the contribution of the mines to the burden of the war is less than £1,000,000. The Minister does not want to give us the information because he says it is too much work to get the information. I say that this country has the greatest interest in getting all the informaion. We want to know what share the Government takes from the gold mines, which is a flourishing industry in our country, but which at the same time is an industry which is being exhausted, as we know. According to the Minister’s own statement four of the biggest mines will have to close if gold returns to 130s. an ounce. Those people will then he unemployed. In other words, if those mines disappear, then we will also have to bear that burden, and then we are entitled today, seeing that the gold mines are a diminishing asset, to ask that they should make a reasonable contribution to the war effort. The Chamber of Mines issues written statements in which it speaks of the thousands of millions that are contributed for this or that. On the other hand we know that the dividends which the mines have paid since 1932 have risen tremendously without any additional capital being invested. I am not speaking of new mines, but of old mines. Their dividends, as a result of the gold premium, have doubled and quadrupled, and yet we find that the Minister takes less than £1,000,000 from them. It creates a bitter dissatisfaction among the people outside. I want to ask the Minister to give us an explanation of this in his reply. I have put a question to him today and he has said that he has not got the information. He must have the information, because he must have that information if he wants to levy his tax on the mines, and we say that he owes it to this House, and to the country to give us the fullest information in connection with the mines.

I want to say a few words about the tax on farmers. I hope the Minister is not going to tax the farmers further. He must realise that the farming industry is a very fluctuating industry. We get a period of good years, and then we get bad years again. Usually we get two bad years to every one good year. The Minister takes the attitude that the farmers sometimes pay off their mortgage bonds. Let me tell the Minister this, that money is now plentiful among commercial people. They lend that money to the farmers at a lower rate. It is not that the farmers are paying off their mortgage bonds from large profits, but they borrow the money from people and pay off. I have been to the Minister’s own Department to find out whether this is so, and whether the farmers are making the money to pay off their mortgage bonds. I find that it is not so and I hope that the Minister will go a little further in the matter. Then I want to ask the Minister why he is now supplying money to the farmers more cheaply. I understand that he is going so far to grant Land Bank loans up to 66 per cent. of the valuation. It shows that the Government has money which it wants to invest. I want to say that the money which the farmers are paying off does not come from profits which they are making, but from money which they can get elsewhere more cheaply. I think he also realises this, or otherwise he would not want to extend the Land Bank Act so that the Land Bank can go as far as 66 per cent. of the valuation of a farm. I hope that the Minister will extend it to 75 per cent.

That matter falls beyond the scope of this motion and the hon. member cannot discuss that now.

I just want to point out to the Minister that the farmers still have a lot of difficulties and that they cannot now pay higher tax. They have many things to put right. They must put their house in order. There are for instance the marketing difficulties which they have at the moment.

The hon. member cannot now discuss marketing, he must confine himself to this motion.

I just want to tell the Minister that all the money that the farmer spends on his farm will benefit the State and I hope that he is not going to tax the farmers further at this stage.

Although this debate has lasted more than a day, it has not really produced much that is new, and most of the points that have been raised are points that have been dealt with on previous occasions. They are points to which I have already replied. I do not of course take hon. members amiss that that should be the position. It is practically impossible when this debate has to be conducted after the Budget debate, which to a certain extent was concerned with the same matters. I shall try to answer the most notable points that were raised. Of course I shall not be able to go into all the details of a long debate, and especially into those points which would have been more suitably dealt with when the Bills, which will have to be introduced later, are before us. The hon. member for George (Mr. Werth) has proposed an amendment. I shall come to that amendment. But first I want to say a few words about what he said first. He began by making a summary of the additional taxations imposed by the Government. I do not want to act once again as a schoolmaster towards the hon. member, but I must say that as usual he again began with a mistake. He referred to the additional taxes which were imposed in 1940. He said we imposed an additional £9,700,000. But he did not say that 7½ million of that was by means of a substitution of the existing system of taxation on the gold mines. Seven and a half million was not new taxation, but represented a substition of a formerly existing taxation. But I want immediately to concede that in the last four years considerable increases in our taxes have been proposed. I maintain however that with a view to the general circumstances of the country the taxation system of our country is by far not beyond the carrying capacity of South Africa. Although we ask the country to bear increased taxes, the country is still capable of bearing that burden. The actual point in my hon. friend’s allegation however was this, that this tax was imposed with a view to the waging of an unnecessary war. I shall not—and you will not allow me to do so—go into a resumption of the war debate. With regard to that point, as I said on a previous occasion, we have no common ground. My hon. friend thinks that the war is unnecessary. We think that the war is vital for South Africa and that that of itself justifies the imposition of these taxes. Now I come to the comparison that my hon. friend made in connection with certain aspects of the taxation question. In the first place he made a comparison between the mining industry and what he described as Afrikaner industries. That is a strange sort of industry. He said that he compared Afrikaner industries, namely the wine industry and the tobacco industry, with the mining industry, which apparently is a foreign industry, although the majority of the shares are now held in South Africa and the greatest part of the dividends are paid out here. My hon. friend said that the mining industry pays £1,300,000 less this year. I think his figure is correct. It is correct in spite of the fact that we shall impose this additional £900,000 on the mines. What is the reason? The reason is simply that we have to do here with an industry that is less flourishing than it was before. The other industries are in a different position. There is the difference. In the case of the mining industry we have to do with an industry of which the working profits are slowly falling. The hon. member for Orange Grove (Mr. Bell) was quite right when he said that in spite of the fact that the working profits of the industry are falling, the rate of taxation is rising. From pure taxation considerations on the basis of taxation theory it is unsound to let that taxation rate rise, to tax such an industry in which the working profits are rapidly falling on a higher scale. But in the present circumstances it cannot be otherwise. We must impose the increased taxation. But the reason why the mining industry brings in less this year than in the past is not that we are treating the industry more favourably, but it is only because the general position of the industry is less favourable. I give the figures again. Between the years 1940 and 1942 the working profits of the mining industry decreased by £4,000,000. Where our taxation is calculated partly at any rate on the working profits it must be self-evident that the tax that is payable will become less. The dividends that have been paid out by the mines have decreased by £3,500,000 over the same period. I say again that the wellbeing of that industry has declined. In spite of that we impose additional burdens on the industry, but those additional burdens cannot be carried over to the consumer. Those additional burdens must be paid by the shareholders in the industry. That is an important point. Now I come to the wine industry and the tobacco industry. There we have to do with industries where the demand for the product has increased as a result of war conditions. In the second place, they are industries where the additional taxation is immediately carried over to the consumer and where it does not fall on the producer, which makes a world of a difference between those two industries and the mines. Take for example the position as it is set out in the white paper. Last year the original estimate of the excise on brandy was £1,600,000. The revised estimate was £2,000,000. In other words, it seemed that the consumption rose by 25 per cent., apart from the increase which we had already expected in making the estimate. In the case of cigarettes and cigarette tobacco the original estimate was £3,500,000 and the revised estimate was £4,200,000—again an increase of 20 per cent. There we thus have an industry where the consumption increases and the production increases. In the mining industry precisely the opposite is the case. There we have an industry where the burden is immediately carried over by the Price Controller to the consumer. In the case of the mining industry that cannot be done. It must be paid by the industry itself. What good is it therefore to make such a comparison. The hon. member for Bloemfontein, District (Mr. Haywood) also put a few questions in connection with the gold mining industry. He wanted to know what the increased costs of production were as a result of the war. He is apparently under the impression that they are deducted in the calculation of the taxation. I think he confuses the position under the existing system with the position as it was under the so-called Havenga system. The Havenga system was in force at the start of the war, and the aim was that the mines would pay the whole of the so-called gold premium, but it would be decreased by the amount of the increased costs of production. That is not the position now. We do not deduct the working costs, and we cannot therefore say what the increased costs of production are. One mine works on a greater scale than before, and other mines again work on a smaller scale. One mine has raised the grade of ore and another again has lowered it. Other mines again have only now begun to produce, and how in the name of heaven can one say what the increased costs of production are?

Can the mines not tell you?

No, they cannot. These are two things that cannot be compared. We cannot compare the costs of production of today with the costs of production as they were in September 1939. The position has changed, and it has changed in a different way in the case of the various mines. Just as I said in the past that we could no longer talk of a gold premium, it is impossible to calculate this difference. Because apart from the changed circumstances the grade of ore of the mines has decreased. We cannot today compare the mining industry and the activities of the mines with the activities and industry of the mines 3½ years ago. The two things cannot be compared. Then my hon. friend made a calculation of the increased contribution which the mines make. That calculation of his was partly based on what he called the gold premium. But he left quite out of account the important factor of the reduction of the grade of ore. There is another factor, namely, the working profits of the mines, which are considerably lower than they were two years ago. It is self-evident that where the working profits are lower and where the taxation is paid on the working profits, the yield of the taxation must of course be less. I have already explained to the hon. member for George why it is that in this year, in spite of the increased taxation that we are now going to impose, the mining industry is going to yield £1,300,000 less in taxation than last year.

But what of the 18s. per fine ounce?

I have explained to the hon. member that we have made a change in the calculation.

Under the Havenga system you would have received the full amount.

Under the Havenga system we would have received the 18s., but the increased cost of production would have been deducted from that. When I changed the system I did it in this way. On the basis of 1939 it amounted to a special contribution of 9 per cent. At that time we received just as much from the mines as we would have received under the Havenga system. But since that time the 9 per cent. has risen to 20 per cent., and this year it rises to 22½ per cent. On the other hand, the working costs have increased. We cannot say by how much. Thus, we would have to deduct considerably more today from the 18s., the so-called additional gold premium, than we would have deducted then. If we take all that into consideration, then the position has improved on our side, and we are today immeasurably better off with this system of mining taxation that we have than we would have been if we had continued with the Havenga system. We take immeasurably more from the mines today than the additional amount that they receive as a result of the increase in the price of gold. I come back to the comparison of the hon. member for George (Mr. Werth). He also made a comparison between four persons with an income of £2,500. He said that the salaried person pays £292, the doctor pays £803 in income tax, the business man, who controls a private company, pays £1,075, and the rentier pays £97. Let me explain this point at once. The difference between the rentier and the salaried person is this: The salaried person pays both normal tax and super tax, the rentier pays directly only super tax, because his normal tax is deducted at the source, at the company, before it reaches the rentier. That is not something for which I am responsible. It is not a part of the war taxation system.

Why do you not correct it?

What is wrong with it? In one case we deduct at the source. To correct that we shall have to change the whole system of taxation of companies, in other words, public companies will no longer have to pay us as such.

No.

It will work out in that way. Today you tax the income at the source. Then the hon. member made a comparison between the rentier and the business man. In the case of the business man the hon. member did indeed take into account the taxation that is paid by the company, but in the case of the rentier he does not take it into account.

What is a rentier?

The hon. member for George takes the man who only receives dividends and who does not pay normal tax on the dividends, but only super tax. But in the case of the business man the hon. member did take account of the tax that is paid by the company. I say again that it is part of our system of today, that his income from companies is taxed at the source, through which he receives lower dividends. I am not responsible for the system and to say now that the rentier pays no more to the State than £97 is wrong, because indirectly he pays considerably more. The hon. member for Oudtshoorn (Mr. S. P. le Roux) said for example that the rentier who draws interest from the gold mines pays nothing more as a consequence of the increased profits of the gold mines. Apart from the fact that that is not true in the case of all the mines, it is not accurate, because additional taxes imposed on the gold mines affect the man who has gold mining shares. In this Budget the gold mines are taxed with an additional £900,000. That must come out of the dividends that are paid out to the shareholders. Thus this man is taxed in this way. Then the hon. member made a comparison between the salaried person and the doctor. If his comparison means anything, then it means that that doctor had no income three years ago, and that the salaried person also apparently had nothing. It is therefore practically a case of excess profits tax, and all that is at stake here is whether you should impose excess profits tax on the professions and not on salaries. In general salaries are not increased in time of war, except in the lower grades. The hon. member for Fauresmith (Dr. Dönges) mentioned the case of a company which gives its manager increased remuneration. If that happens, the Commissioner of Revenue will, indeed act. He has the power to bring the increased salary back on the account of the company itself. But in general the higher salaries are not increased in time of war. But there is, indeed, an increase in incomes with regard to the professions, and it is without doubt a fact today that there are many doctors who are making considerably more purely as a result of the fact that there is a war, purely because some of their colleagues are absent, and also because there is more money in circulation, and the public is in a better position to pay. There is still a difference between the doctor and the business man. The business man pays more than the doctor. Why? Because in one case you have to do with a company, and this House deliberately set the rebate lower for companies than for individuals. Quite rightly so. Why? Because the company is able, in the first place, to pay a salary to its manager, and only after that is the income of the company taxed, after the salary of the manager is deducted. For that reason the whole House welcome the fact that a difference was made between the individual and the company. The hon. member for Pretoria, Central (Mr. Pocock), apparently wants to get away from the difference that we make, but I believe that it is quite fair. It would, of course, be popular to have a minimum of £3,000 with regard to excess profits tax for companies as well as individuals, and I think that to a certain extent it would remove friction, but it would cause friction of another kind, and I do not think that we are justified to give up the revenue. The hon. member for George further made a comparison between married and unmarried persons. That is an old corpse that has been dug up again. We had it two years ago. It is very old.

Just a bit more rotten.

Yes, the argument is a bit more rotten. In 1941 our general income tax system was changed. The previous taxation system was to a certain extent very undesirable. One aspect of the system was that the unmarried man had to pay income tax at £2 on every £1 above £400. Was that fair? Of course, not.

You as an unmarried man will say that it was not fair.

I think that the hon. member will himself say that it was not fair. The man between £400 and £800 had to pay at £2 for every £1 above £400, but above £800 he had to pay only at £1 for every £1. We removed that, and as a result of its removal you could naturally not establish that the same percentage increase should take place in the case of everyone. If everyone had been increased by the same percentage, inequities would have continued to exist.

What of the difference between a new undertaking and an old undertaking?

I shall come to that. I want now to deal with the amendment of the hon. member. In the first place, he asks that no new taxation be imposed on the smaller incomes. It is always very interesting to know what is meant by “smaller incomes”. Of course, it is very subjective. We each think, of course, that our income is very small. The hon. member talked of the meagre income on which £50 to £80 has to be paid in income tax. The married person with but one child must have an income of £1,550 before he pays £80 in income tax. That is the hon. member’s idea of a meagre income. I perhaps have a swelled head, as the hon. member thinks, but the hon. member has swollen financial ideas.

There is something wrong with your calculation.

I obtained my figures from the same authority as the hon. member, namely, the Department of Inland Revenue. He talked afterwards about the person with less than £800 in income. I want to ask whether we are serious in combating inflation. It is practically the person in that group who today has more money than before, and it is there particularly where the danger of inflation arises. Whether you like it or not, if we want to combat inflation, we must ask these people to endure a greater burden of taxation. In addition, there is the fact that this is the section of the income tax payers which is best off in comparison with the income tax payers in other countries. Our persons with greater incomes pay on a fairly high scale in comparison with other countries, but our people in that group pay considerably less than in other countries. Now we come to the further plea of the hon. member for persons below £400. There I can only say what I have already said, that in other countries the income notch is very much lower than with us—£150, £135. That may be a small comfort, but it is a fact that other countries in the same circumstances as we were compelled to tax the lower incomes. We introduced as an alternative our personal tax, and I believe that it is a very much better system.

Other countries have a higher notch than £400.

It may be that there are still such fortunate countries, but I do not know of one belligerent country that is in that position. The hon. member for Oudtshoorn complained that the small man is taxed to such an extent today that he cannot make provision for after the war. If I look at the figures in connection with the sale of Union Loan Certificates, which have again now amounted to more than £350,000 in one week, and if I look at the deposits in the Post Office Savings Bank, then I am very glad to be able to contend that the poor man still has money over today.

Those who draw war salaries.

I am glad that they are making this provision. With regard to the plea for an increased rebate for children, we dealt with that in 1941, and we considered the provision that we made there as a reasonable provision for normal times. We also compared our system then with those of other countries. I think it is fair, and that it is not the time now to change the system. The point was further raised in connection with medical expenses and hospital expenses. I have already said on another occasion that that is something which, in my opinion, deserves consideration with a view to the future. In Canada they have now introduced such a system, but the Canadian rate of taxation is of course considerably higher than our rate. But where we make our rate of taxation higher, I intend with a view to the future to give attention to this aspect of the matter. Then as a fourth point the Opposition asked for exemption from excess profits tax for farmers who pay off their debts.

“Bona fide” farmers.

I find it very difficult to satisfy myself as to why a farmer should receive a subsidy (it amounts to that) on redemption of his debts, while other sections of the community do not receive it. Why? I find it difficult to defend that. And what will the proposal mean? It will mean that a fairly well-off farmer, who falls in the excess profits tax class, will now receive a special subsidy from the State to reduce his mortgage, while other farmers will not receive it.

The farmers who make over £1,500.

Have we so many farmers over the £1,500 notch? But all the farmers with incomes of less than £1,500 will not receive the subsidy.

We think for example of the stock farmers, who sell a great amount of stock in one year

A farmer who makes more than £1,500 will then receive a subsidy and the greater his income, the greater the assistance he will receive from the State. Precisely the same applies to the plea of the hon. member for Heilbron (Mr. Liebenberg). He even wants to give an abatement for income tax purposes if an amount is paid for reduction of mortgages. What does that mean? The wealthy person, the man with a large income, pays income tax on a higher scale than the man with a smaller income. That means therefore that the wealthier a farmer is, the more extensive will be his subsidy.

Under your system the production will decrease.

Other matters were raised. The hon. member for Caledon (Mr. H. C. de Wet) talked about the principle of the application of income tax to farmers. That has been accepted and we cannot go back upon it. At that time we thought that the fixing of the notch at £1,500 as a minimum was an extensive concession. Hon. members want now apparently to take the point of view that £1,500 is a low figure. I am glad if it is so, but it also shows that a change and improvement has come about in the position of the farmers. As to the other point in the amendment, the Excess Profits Tax in respect of new undertakings, the hon. member for George represented it as if Excess Profits Tax is not payable by old undertakings, but that the special levy on trade profits is paid only by old undertakings. That of course is not correct. The old undertakings are subject to both, and most pay the Trade Profits Tax and Excess Profits Tax.

The old undertaking pays only if it is now making higher profits.

Most of the old undertakings are doing so. Where would we otherwise collect the considerable amount which we collect in Excess Profits Tax? It comes mainly from the old undertakings. The hon. member said: Why do you not act in accordance with your own advice to help new undertakings? Have we not done so? Did we not do so two years ago? Did we not especially with a view to new undertakings create the special advisory committee on revenue? We did not forget them. And let me add this: The hon. member for Fauresmith talks of building up reserves. He raised the same point on a former occasion, and he will agree that in the tax as it is today provision is made for a certain amount of reserve as, if losses are in fact suffered immediately after the war, we shall pay a certain amount to such undertakings.

Only if the business keeps going, but it may go bankrupt.

Even today he can receive repayment, he does not have to wait till after the war. Much is said about the discouragement of new compaies, but there is also another danger at a time such as this, and that is to stimulate unnecessarily the establishment of new companies. There are the two dangers, and in my view we have maintained the balance well.

You discourage the good as well as the bad.

The hon. member for Fauresmith also dealt with the danger of inflation. He said that if the Excess Profits Duty becomes too high persons who have to pay the tax will give their money out in a manner in which they woud not otherwise give it out. For this reason I have steadily tried to keep the scale lower in South Africa than in other countries. At the moment I cannot yet see disturbing signs of the danger of inflation but undoubtedly it is a point that we must bear in mind in connection with the raising of the Excess Profits Duty. A number of other points were raised. The hon. member for Fauresmith again raised the question of the Railways Passenger Tax. I do not want to repeat what the hon. member for Maitland (Mr. Mushet) said. I think his answer was effective. But I want to repeat again: It is not a tax on the Railways but on Railway passengers. The hon. member spoke of the Railways as “revenue producing,” and he said that it is in conflict with the principle of the Constitution that the Railways should become taxpayers. But to become a taxpayer is not the same as to become a tax collector. I mention again the example of the entertainment tax. African Theatres pay taxation direct to us but they also collect taxation for us. In other words, there you have a case where the same entity is a taxpayer and a collector. Under our proposal we do not make the Railways a taxpayer but only a collector of taxation.

†In connection with the remarks by the hon. member for Pretoria, Central (Mr. Pocock), he repeated the point which he had made before in comparing the Railway rebates which are voted on our Estimates with this tax on railway tickets. Well, may I say to him that the Railway rebates are not a subsidy to the Railways. They represent a form of assistance to the farmers. The Railways have fixed their rates for the conveyance of farm produce, and the Government of the day wanted to reduce those rates and said: “We shall subsidise the farmers through the Railways.” It is a subsidy not to the Railways, but to the farmers, and this tax is not a tax on the Railways, but on the railway users. My hon. friend wants us to drop this tax, and he wants us to reduce what he calls our subsidy to the Railways. The only effect will be that this £500,000 which we want to get will not be borne by the railway passenger, but by the farmer under the higher rates which he will have to pay.

Let them give a reduced rate.

We cannot force them to do so. They must be guided by Railway considerations. Their rates are already low in relation to farmers’ produce, and when the Government of the day came along and said: “We want the farmers to pay lower rates, lower than the economic rates as far as the Railways are concerned”, the Government of the day was prepared to foot the bill, and quite rightly; but the Government was helping the farmer and not the Railway. The Government did not relieve the Railways of a 1d. of expenditure. So those things are not comparable. Then the hon. member for Springs (Mr. Sutter) made a pathetic appeal to me on behalf of the drinkers of beer—using a minority group to justify his appeal. I am not sure that every appeal that has been made here has not followed the same procedure, namely, the use of minority groups. I am afraid the hon. member’s appeal will fall on deaf ears, and I don’t think he expected the result to be otherwise. He said we must not tax essential commodities, and that beer is an essential commodity after exertion. I know that some of my friends regard beer as an essential commodity after exertion on the cricket fields; I don’t. Happily there are also some mine workers who do not find beer an essential commodity.

It prevents exertion.

I now come to the hon. member for Orange Grove (Mr. Bell), who makes some general criticisms in connection with the complexity and the inequity of the taxation. He talked of the criticism which we had had from accountants, from commerce, and from industries, and he said I relied too much on expert advice, and that I should get more practical advice. Well, I have never been loath to listen to practical advice, and let me tell the hon. member what happened. In October of last year I received an encouraging letter. I was told that commerce and industries and its accountants had come together and wanted to give me constructive advice. They were putting their heads together, and they were coming along with constructive proposals, they would tell me how I could improve my taxation measures without loss of revenue. I was delighted; at last I was going to get that practical advice which I was so often enjoined to secure. Well, I waited a long time, but eventually I got from them a memorandum. They came to me on the 9th December, and I had to tell them, and I think that they had to agree, that their memorandum was not exactly constructive, it was not very helpful. But I said to them: “Well, try again—I shall give you three things which I want your practical advice on.”

Did they call on the hon. member for George?

No, unfortunately they did not; they might have been better off if they had done. Well, I asked them three things. The one was an alternative method of taxation in the event of the Trades Profits Special Levy being withdrawn—a levy which the hon. member for Orange Grove so much dislikes. The second was what additional powers could be granted to the Revenue Advisory Committee and the third, a new definition of private companies. On the 20th February I was told that the three organisations had given further consideration to the three questions referred to, but had decided that it would be advisable for them to wait for my Budget speech.

They first of all wanted to see what you were going to do.

That was the advice I got. Very practical indeed! In fairness to them I may say that they have since given me a memorandum on the question of the powers of the Revenue Advisory Committee, but I am still waiting for advice on the other questions which bear so heavily on the hon. member for Orange Grove. I am not going to deal with the question of the private company now. I am proposing to insert in the Bill certain provisions which bear on that matter, and we can best deal with that question there. I am also not going to deal in detail with the question of the Trades Profits Special Levy. The hon. member for Orange Grove has raised the same point in effect as the hon. member for George, namely the differentiation between the man who gets his income by way of interest, and the man who gets his income out of trade. I say again that there is every reason for differential taxation as against trade in relation to the rentier class. The rentier today is already being hit by our taxation in other ways, our taxation at the source. Apart from our taxation he is also being hit by the general decline in the interest rate, and I say again it is completely fair that if there is differentiation, that that should be as against those classes where these factors do not apply. What, after all, is the essence of all these complaints in regard to the excess profits duty? The excess profits duty is not a very scientific tax. It cannot, in the nature of things, be an absolutely equitable tax; but it is a temporary tax, and the people as a whole want it. The House wants it and the people want it. That tax is there, and as I have said before, that tax is going to remain there and we must just make the best of it. We have tried in many ways to remove anomalies and we are going on along those lines. The hon. member for Illovo (Mr. Marwick) raised the question of timber. We have brought timber growing within the scope of the functions of the Revenue Advisory Committee. I say again that we have done what we could, and we are going to go on doing what we can to smooth out these difficulties. But I do say that even with the present addition which we are now proposing, the excess profits duty in South Africa is still the mildest of all the excess profit duties in the belligerent countries in the world today.

Question put: That all the words after “That”, proposed to be omitted, stand part of the motion.

Upon which the House divided:

Ayes—67:

Abbott, C. B. M.

Abrahamson, H.

Acutt, F. H.

Alexander, M.

Allen, F. B.

Ballinger, V. M. L.

Bawden, W.

Bell, R. E.

Blackwell, L.

Botha, H. N. W.

Bowen, R. W.

Bowker, T. B.

Carinus, J. G.

Christopher, R. M.

Clark, C. W.

Collins, W. R.

Conradie, J. M.

Davis, A.

Deane, W. A.

Derbyshire, J. G.

De Wet, H. C.

Dolley, G.

Du Toit, R. J.

Fourie, J. p.

Friedlander, A.

Gilson, L. D.

Gluckman, H.

Goldberg, A.

Hayward, G. N.

Hemming, G. K.

Henderson, R. H.

Heyns, G. C. S.

Hirsch, J. G.

Hofmeyr, J. H.

Hooper, E. C.

Howarth, F. T.

Jackson, D.

Johnson, H. A.

Kentridge, M.

Lindhorst, B. H.

Madeley, W. B.

Moll, A. M.

Mushet, J. W.

Neate, C.

Payn, A. O. B.

Pocock, P. V.

Quinlan, S. C.

Raubenheimer, L. J.

Robertson, R. B.

Rood, K.

Shearer, V. L.

Smuts, J. C.

Solomon, V. G. F.

Stallard, C. F.

Steyn, C. F.

Sturrock, F. Q.

Sutter, G. J.

Trollip, A. E.

Van Coller, C. M.

Van den Berg, M. J.

Van der Byl, P. V. G.

Wallach, I.

Wares, A. P. J.

Warren, C. M.

Waterson, S. F.

Tellers: G. A. Friend and W. B. Humphreys.

Noes—44:

Bekker, G.

Bekker, S.

Boltman, F. H.

Bosman, P. J.

Bremer, K.

Conradie, J. H.

Dönges, T. E.

Du Plessis, P. J.

Erasmus, F. C.

Fouché, J. J.

Fullard, G. J.

Haywood, J. J.

Hugo, P. J.

Labuschagne, J. S.

Le Roux, P. M. K.

Loubser, S. M.

Louw, E. H.

Malan, D. F.

Naudé, S. W.

Olivier, P. J.

Pieterse, P. W. A.

Schoeman, N. J.

Schoeman, B. J.

Serfontein, J. J.

Strauss, E. R.

Strydom, G. H. F.

Strydom, J. G.

Swart, A. P.

Van den Berg, C. J.

Van der Merwe, R. A. T.

Van Nierop, P. J.

Venter. J. A. P.

Verster, J. D. H.

Viljoen, D. T. du P.

Viljoen, J. H.

Vosloo, L. J.

Warren, S. E.

Wentzel, J. J.

Werth, A. J.

Wilkens, Jacob.

Wilkens, Jan.

Wolfaard, G. v. Z.

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

Question accordingly affirmed and the amendment dropped.

Original motion put and agreed to.

House in Committee:

The Committee has to consider the taxation proposals on income tax, non-resident shareholders’ tax, gold mines special contribution, diamond mines special contribution, excess profits duty, personal and savings fund levy, railway passenger tax and excise and customs duties; the Committee has leave to bring up a report forthwith instead of on a future day.

Income Tax and Non-resident Shareholders’ Tax.

The Committee proceeded to consider the proposed income tax and non-resident shareholders’ tax.

I move—

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 13 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 subparagraph a sum equal to fifteen per cent. of the net amount arrived at after deducting the rebate provided for in Section 29 of Act No. 31 of 1941 from the amount of the tax so calculated.

I want to move the following amendment—

Then the proviso will read as follows—

I hope that the Minister of Finance will be prepared to accept this amendment. In connection with this proposal we are faced with the great question: On whom are we going to impose the burden of taxation the heaviest. Are we going to place it on the small man and middle class, or are we going to impose it on the rich people who can pay? I am unfortunately not able to move an amendment to increase the burden of taxation, or otherwise I would have made a proposal, especially as regards super tax, to increase it on the rich people. The Minister has told us that the tax that is paid by the rich people is fairly heavy, even in comparison with other countries. I would just like to ask the Minister whether the following is really the position. I have examined the tax that must be paid by rich people with an income of £2,000 and more.

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

Afternoon Session.

When business was suspended I was busy with the first taxation proposal. The hon. Minister in the course of this morning told us that the rich people in South Africa are taxed just as heavily as the rich people in other parts of the British Commonwealth. I would be glad if the hon. Minister would submit figures to us to support it. I would be glad if the Minister for example would tell as what a man with an income of £5,000 and more pays in South Africa in normal income tax and super tax and tells us what that same rich man with an income of £5,000 would pay in England, Canada, Australia and New Zealand. The most recent-figures which I have in connection with this matter appear in the annual report of the Commissioner of Inland Revenue for the year 1940-’41. In that report I find that there are 1,086 people who have incomes above £5,000. Their taxable income is £9,700,000. On that they pay super tax of £1,600,000. It works out to 4s. 4d. in the £. Then I find that if we include normal income tax, that there were 642 persons with a taxable income of £5,000,000. They paid £432,000. That works out on an average of 5s. 4d. in the £ for incomes above £5,000. Since that time the Minister has slightly increased the super tax and we now have a personal tax of 10 per cent. and the 15 per cent. surcharge. That increases the tax by 1s. 4d. It then amounts to 6s. 8d. in the £. Exactly what the super tax amounts to under his new system for 1943, I cannot say, but I doubt whether it will be more than 1s. in the £; so that according to the figures which I have been able to work out for myself, it amounts to this that the rich people with incomes of £5,000 and more, pay approximately 7s. 6d. in the £, and we would be very glad if the Minister would tell us what people with the same incomes would pay in England, Canada, Australia and New Zealand. We are inquisitive to know. I must say honestly that in my view the Minister ought undoubtedly to increase the super tax. On various sides, also by the Minister, the view has been expressed that we should place a restriction on personal income. I think that if you allow a person in South Africa to have a clear income of £5,000, that he ought to be satisfied. It is not altogether psychological to take 20s. in in the £ after that, but we can leave him something. If the Minister does this he will immediately have an extra income of £7,600,000, according to the annual report of 1940-’41, and I think that the Minister will agree with me that since that time the number of people who have incomes of £5,000 have increased considerably. The taxable incomes have increased considerably. According to the annual report of 1940-’41, he will have an extra income of £7,600,000 or in all probability £9,000,000 or £10,000,000. There is a solution to all the Minister’s difficulties. Then he can agree to all those things for which we asked this morning, and there will be less of the high living which is the cause of all our social evils in South Africa. I would put an end to that. Unfortunately the Rules of the House do not allow me to move that other amendment of mine, i.e. a rebate for children. I will therefore have to wait until the Minister comes to the Committee stage, and then I hope to move it there. I must therefore be contented with the one amendment which I have already moved.

The hon. member for George (Mr. Werth) has moved an amendment which will have the effect that the surcharge of 15 per cent. will apply only to incomes above £800. He will naturally not expect me to accept it. I have already advanced arguments about it, but I will again return to that point. My hon. friend has said that the question is practically on whom should the burden of taxation be imposed—the small man, the middle-class, or the rich man—and he then asked me what the position was of a man with an income of £5,000 here in South Africa and in other countries. I have some knowledge about conditions in our own country, but it is very difficult always to be acquainted with conditions in other countries. But I can tell my hon. friend that in our country a married taxpayer with one child, where he has an income of £5,000, must pay a tax of £1,251. I do not know what figure my hon. friend has given. His figure is, of course, for two or three years ago.

My figure was 7s. 6d. in the £.

Well, the amount on an income of £5,000 is £1,251. On an amount of £10,000 it is £3,862. I cannot say what the position is in other countries, but last year I went into that point thoroughly and on that occasion I gave the House certain information about it. At that time the position was that at the lower end our burden of taxation was about one-third of what it was in other countries like Canada, Australia and New Zealand. But when you come to the top, and then it climbs to three-quarters; £5,000 is, of course, not the top point. On £5,000 with us it will probably be about a half of what it is in other countries, but the higher you go, the nearer we get to the scale of taxation of other countries. I have already said that under the present taxation proposals it will be possible for one to have to pay 15s. in the £, which, of course, is a little more than three-quarters of the highest in any other country. It will, of course, be high, perhaps £25,000. On incomes in that series from £5,000 to £10,000 it is not so high in proportion, but then the super tax begins to rise rather rapidly. I come now to the actual amendment of my hon. friend, but I do not again want to repeat what I have already said. But I just want to explain this point, that what we are aiming at particularly with our proposal of a surcharge of 15 per cent. is equality. We have a system of income tax which was accepted two years ago. Now we propose to impose an equal surcharge on all income tax as calculated according to law. This, of course, does not mean that the amounts that will be paid, will be equal, because the same percentage is paid. I compared the position in my Budget speech. I said that a married man with two children and an income of £500 pays 5s. 9d. in normal income tax. He will have to pay a surcharge of 10d. Where the income is £600 the normal tax in his case is £6 19s. 10d. The surcharge will be £1 1s. The scale is less than a halfpenny in the £. Where the income is £2,000 the normal tax is £109 13s. 2d. The surcharge will be £16 19s., almost twopence in the £. When we come to an income of £5,000 the surcharge will be almost 5½d. in the £. The scale on the income rises, but on the income tax the percentage remains the same throughout. The hon. member for Orange Grove (Mr. Bell) has objected to this. He says that everyone should be treated more equally on the basis of their income. The answer is that everyone ought to be treated equally on the basis of their income tax. That means that a person with a fairly small income Will not really have to pay much in respect of the surcharge. My hon. friend will achieve very little with the amendment he has moved.

Why do you not agree to it?

Because I want equality and want to apply it to everyone. Therefore I will not abandon it. And in that respect I expect the support of the hon. member for George. If I accept this proposal then it will mean a favouring of the unmarried against the married. My hon. friend does not want to favour the unmarried above the married. Nor do I. Therefore I cannot accept this proposal. It means that an unmarried person with an income of £800 will as a result of the acceptance of the amendment of my hon. friend receive a cadeaux of £6 4s., but the married person who has two children will get only £3 4s.

Did he riot also get it last year?

No. The affect of this amendment would be favouring the unmarried against the married, and for this reason as well as other reasons I am not prepared to accept the amendment.

I would have had a good deal of sympathy with the amendment moved by the hon. member for George (Mr. Werth) but for the fact that our national income is already distributed in a grossly inequitable manner. According to the last figures available, the total national income is £329,000,000. Only 76,000 people are income tax payers and they together with 3,000 companies account for £144,000,000 thereof, and of these 48,000 taxpayers are in receipt of incomes between £400 and £800. The amendment of the hon. member for George would make the position even more inequitable, because these 48,000 people in receipt of some £26,000,000 would have to be deducted from the total of the 76,000 income tax payers. That would make the distribution even more inequitable than it is at present. I would have been inclined even then to sympathise with his proposal if it had been possible—I know it is not possible—to combine that with another proposal by which a ceiling could be set upon our incomes, so that the super-taxpayers in the Union should have their taxation steeped until when they got to £5,000 a year the tax should be 20s. in the £. I know I cannot move that, and therefore I do not want to make the position even worse than it is at present. In view of the fact that there is a general feeling that there should be less inequality in our income in the Union, I would like the Minister to give some indication as to whether he would not be prepared at some stage, perhaps during the war period, to consider having this limit on incomes of £5,000 per annum. In the United States they have already considered this.

It has been contemplated for a year, and nothing has been done yet.

I would like the Minister of Finance to tell me that he may do something in that matter. I know how long it takes between contemplation and action, and I would like the Minister now to give us some indication as to whether the matter is beginning to sink into his mind.

I think we must all admit that the objection which the hon. the Minister of Finance has raised here against the amendment of the hon. member for George (Mr. Werth) is quite a reasonable objection. We can understand his difficulty, because he can be accused of wanting to place married persons in a more unfavourable position than unmarried persons. We realise his sensitiveness on this matter and therefore I want to move the following amendment on the amendment of the hon. member for George—

Then the difficulty of the Minister has been met. Then it is quite a reasonable matter and no one will be able to reproach him for wanting to defend his unmarried state. The other point that has been made here by the Minister is this. He says that the 15 per cent. must achieve equality. But my contention is that it does not achieve equality. If you have a basic scale of taxation which rises, as we have in our system of taxation, then it is not equality to impose the same percentage increase on everyone. The Minister has said further that this amendment is not going to mean much as regards revenue, and why can he then not agree to it? He says that in the case of an income of £500 the surcharge on a married man with two children is 10d.; if such a person’s income is £600 then the surcharge is £1 1s. If this is so, and if it is not going to be a great sacrifice in revenue, why can the Minister not do so? We must remember that an income of £800 a year can now be compared with about £650 before the war. It is these people whom we want to protect. It is that middle class who today earn £800, but who are having a difficult time, because that £800 is no longer worth £800. It is these people whom we want to give the opportunity to keep their head above the water. We may not propose it, because we may not propose an increase in taxation, but if this concession by the Minister is going to bring about a shortfall—it might be a big shortfall—then the Minister can very easily obtain the necessary money if he wants to give effect to the hint that has been given from this side, and also from the other side of the House, and which has now been repeated by the hon. member for George, i.e., that a ceiling should be placed on incomes. That is that an income above what can be regarded as a safe income which can assure any person a reasonable living, say above £5,000 after the tax has been paid—above £5,000 clear—the income must be paid to the State. Everything which he receives clear more than that the State ought to take 90 per cent. or 100 per cent., and then we release these people who today must struggle in the circumstances in which they are, with the rising cost of living. As the Minister has admitted, it will not make a great difference. The person who earns £500 and who has two children must pay a surcharge of 10d.; on £600 a surcharge of £1 1s. and on £800 a surcharge of £3 2s. If this is so can the Minister not give this measure of relief to this class of people who earn between £400 and £800? We must remember that an income of £400 or £800 today no longer has the real value which it had before the war. It has the value of what incomes of from £250 to £650 had before the war. We plead for these people because we say that the middle class as such are the most important class in our social life. There are many who belong to that class and I take off my hat to those people who live a decent life on a salary scale of £400, £500, £600 or £700. It is not right that we should, impose burdens on these people. Let the man with an individual income of £5,000 and more pay on a higher scale. The whole method in which taxation is imposed is unfair towards the lower paid section of the community and it gives privileges to the higher paid people which they do not deserve. I do not think that the Minister ought to worry about where he will get the additional money if he makes this concession. He will be able to get it quite easily if he turns to the scale of super-tax. Why is there only a surcharge of 15 per cent.? Why is the surcharge also not on a sliding scale, just like the basic taxation is on a sliding scale? I hope that it will increase as the income increases for super-tax purposes. I am sure that the Minister will get more than enough in order to meet what we are asking for in this amendment.

I am grateful to the hon. member for Fauresmith (Dr. Dönges) for his willingness to meet me. But I was very careful, and I indicated clearly that this was not the main reason. It was a supplementary reason. My main reason is, and remains the same, that the 15 per cent. surcharge ought to be general on all income taxation. Two years ago we introduced a system for the calculation of income taxation, which, we thought, would be a fair system. The fairest way in which to get additional money in the form of income tax is to place the surcharge on the income tax calculated on that basis. I am afraid I cannot depart from that. It may be that the amount is comparatively little on incomes below £800, but it does not affect the principle. We consider that where we have to obtain the additional amount it should be obtained through the medium of a percentage on all income taxation.

†With regard to the question of a ceiling, the difficulty always is to know where the ceiling is going to be. I have already heard a ceiling of £1,000 advocated in this House.

I did not suggest that.

I know my hon. friend has not suggested that. I have a feeling that everybody would like to have the ceiling somewhere just above his own income, that is the psychology of it. We have also heard today of the way in which this ceiling works in one country where it is said to be in operation, how it has the effect of being a damper on enterprise and on initiative. I am inclined to think you cannot have an absolute ceiling. What you can do is to make your tax in the higher groups grade up more steeply, and that we are constantly doing. We have now reached the stage of 15s. in the £, and it is not for me to say how much further we shall have to go.

This is the only place where I can discuss with the Minister the question of the rentier. This is the only taxation to which he is subject, namely the super tax which falls under this paragraph. The Minister tried this morning to justify the exemption of the rentier from the ordinary income tax on the grounds that the rentier is already taxed at the source. He says that if he rentier draws his money from gold-mining shares, then the gold mines are taxed. The dividends are taxed at the source. Now I would like to commend this to the consideration of the Minister, and there I differ as wide as the poles from the Minister. I do not want the Minister to look upon the taxation which the public companies pay as a taxation which the rentier pays.

Who pays it?

The rentier does not earn his money. He does not work a stroke. The salaried man works. The doctor works. But the rentier does not work. He employs someone to work for him. He employs the gold mines to work for him, or other public companies. He gives them a part of his income to do the work for him. This is the only light in which the Minister should view the matter, and it is the only reasonable light. The rentier lies on his back and does not do a stroke of work. He simply receives. He pays other people to do the work. Where his income is taxed at the source, there it is taxed with the people whom he has employed to do the work for him, and he gets his income thereafter. After that he gets an income of £2,500, and what reason can there be to exempt him from normal tax? The person who has money and who puts it to use, who begins something new and develops it, is worth more to the country than the rentier. I have not much sympathy with the rentier. I want to ask the Minister if it is not a fact that South Africa is one of the few countries in which no difference is made between what is termed “earned income” and “unearned income”. The rentier’s income is an unearned income. The income of the doctor or the income of the salaried man is earned income. In all the countries I know a rebate is allowed to the taxpayer who earns his income. I would like the Minister to tell us in his reply whether this is not a fair point of view, and whether we should not take up the standpoint that that part of the income which the rentier sacrifices at the source is not taxation that he pays himself, but that it is paid by the people or companies whom he employs to work for him. They provide him with the income, and that income ought to be subject to the ordinary taxation of the country.

We are perhaps in danger of confusing two things. The one is the question of the difference between the income that is earned, and unearned income. The other is the question of the difference between the rentier who derives his income from dividends, and the rentier who derives his income from other source. We do not treat both in the same way, from dividends. He perhaps gets his income from interest on bonds. If he gets the income from interest on bonds, then it is subject to normal taxation. As regards income from dividends, it is deducted at the source. We do not treat both in the same. We treat the company on the basis that the income is taxed at the source. I repeat, as soon as we increase the gold-mining taxation we tax the shareholders, the persons who obtain the dividends. That is one question. The other question is of a different nature, and that is whether we should impose special taxation on incomes that are not earned. I do not think my hon. friend is correct when he says that we are practically the only country which does not do this. There are many who do not do this. But there are countries which do make the difference. In Canada no difference is made. My predecessor some years ago accepted the principle by imposing a special tax on interest on investments. I do not know if this is something that will satisfy my hon. friend. There was a tax on investments 8 or 9 years ago. I am prepared to consider the possibility of this, but if I get so far on a later occasion I trust that I shall have the support of the hon. member for George.

Amendment put and the Committee divided:

Ayes—38:

Badenhorst, C. C. E.

Bekker, G.

Bekker, S.

Boltman, F. H.

Booysen, W. A.

Bremer, K.

Brits, G. P.

Conradie, J. H.

Dönges, T. E.

Erasmus, F. C.

Fullard, G. J.

Haywood, J. J.

Hugo, P. J.

Le Roux, P. M. K.

Liebenberg, J. L. V.

Loubser, S. M.

Malan, D. F.

Naudé, S. W.

Olivier, P. J.

Pirow, O.

Schoeman, B. J.

Schoeman, N. J.

Serfontein, J. J.

Strauss, E. R.

Strydom, J. G.

Swart, A. P.

Van der Merwe, R. A. T.

Verster, J. D. H.

Viljoen, D. T. du P.

Viljoen, J. H.

Vosloo, L. J.

Warren, S. E.

Wentzel, J. J.

Werth, A. J.

Wilkens, Jacob

Wolfaard, G. v. Z.

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

Noes—59:

Abbott, C. B. M.

Abrahamson, H.

Acutt, F. H.

Alexander, M.

Allen, F. B.

Ballinger, V. M. L.

Bell, R. E.

Botha, H. N. W.

Bowen, R. W.

Bowker, T. B.

Carinus, J. G.

Christopher, R. M.

Conradie, J. M.

Davis, A.

Deane, W. A.

Derbyshire, J. E.

De Wet, H. C.

Du Toit, R. J.

Fourie, J. P.

Friedlander, A.

Goldberg, A.

Hayward, G. N.

Hemming, G. K.

Henderson, R. H.

Heyns, G. C. S.

Higgerty, J. W.

Hirsch, J. G.

Hofmeyr, J. H.

Hooper, E. C.

Howarth, F. T.

Jackson, D.

Johnson, H. A.

Kentridge, M.

Long, B. K.

Madeley, W. B.

Molteno, D. B.

Mushet, J. W,

Neate, C.

Payn, A. O. B.

Pocock, P. V.

Raubenheimer, L. J.

Reitz, L. A. B.

Robertson, R. B.

Rood, K.

Shearer, V. L.

Smuts, J. C.

Solomon, B.

Solomon, V. G. F.

Stallard, C. F.

Steyn, C. F.

Sutter, G. J.

Trollip, A. E.

Van der Byl, P. V. G.

Van der Merwe, H.

Wallach, I.

Wares, A. P. J.

Warren, C. M.

Tellers: G. A. Friend and W. B. Humphreys.

Amendment accordingly negatived.

Amendment proposed by Mr. Werth put and negatived.

Original motion put and agreed to.

I move—

1. (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 5 and Sub-Section (2) of Section 23 of Act No. 31 of 1941, respectively.

Agreed to:

Non-resident Shareholders’ Tax.

I move—

1. (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.

Agreed to.

The Committee proceeded to consider the proposed Gold Mines Special Contribution, Diamond Mines Special Contribution and Excess Profits Duty.

Gold Mines Special Contribution.

I move—

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.

Agreed to.

Diamond Mines Special Contribution.

I move—

1. (b) That the Diamond Mines Special Contribution shall be levied at the rate of three shillings in every completed pound of the dutiable amount.

Agreed to.

Excess Profits Duty.

I move—

1. (c) That the Excess Profits Duty shall be levied at the rate of fifteen shillings in every pound of excess profits.

The excess profits tax is levied on a scale of 15s. on every £1 in excess profits. I would like to move this amendment—

Then the excess profits tax will be levied at the scale of 15s. on every £1 excess profits on taxable incomes above £2,500. I make this proposal because my investigation of the matter shows that practically all the anomalies that exist arise from the fact that some people must pay very high excess profits tax on incomes of £2,500, and others again less, and a third group nothing at all. The first anomaly arises from the fact that incomes of about £2,500 are liable for excess profits tax, and I think that a man who conducts a business, or a doctor who works hard, is not guilty of profiteering if he has an income of £2,500. I think that if the Minister considers the matter, he will agree. It is not profiteering. Take the case of a private company, a new undertaking. It makes a profit of £2,500. The excess profits tax is 13s. 4d. in the £ and the company must pay £967. That was on the old basis, today it will be more than £1,000. On an income of £2,500 such an undertaking retains only £1,500. Supposing that there are two or three persons concerned in such a new undertaking. After everyone has received sufficient to live on, what remains to maintain the business and to make the business financially strong for the future? I hope the Minister will not adopt the attitude that because we have passed the Act of 1941 it is now an unchangeable law of the Medes and Persians. An act can always be improved and the feeling of injustice and grievance in the country among the people with an income of £2,500, of which the one has to pay £1,000 in excess profits tax, another £600 and a third nothing, will be removed if the Minister accepts my amendment. If the incomes of everyone are equal and everyone has received it since the war broke out, then you get that surprising difference in excess profits tax which they must pay. The hon. member for Pretoria, Central (Mr. Pocock), has expressed himself along these lines, so that my proposal apparently finds approval on all sides of the House, and I am convinced that if hon. members are left free to vote as they wish, then they will all vote for my proposal. I want to ask the Minister not to be so obstinate. Here we have a really good and constructive proposal which will assist the Minister in many of his difficulties. He will also remove many of the complaints that are raised here in the House every year and will give more satisfaction to the country.

The hon. member apparently contemplates that every taxpayer must pay 15s. in the £ in respect of excess profits above £2,500, whether it is an individual or a company or anyone else.

Taxable income.

Very well, everyone will now pay 15s. on taxable incomes above £2,500. That will apply to individuals and companies irrespective of the pre-war standard of the taxpayer. I do not know whether the hon. member has taken into account the position under the existing law. Excess profits today are the difference between the taxable income in a year and the pre-war standard, but there are four different ways in which the pre-war standard can be calculated. The one is the average taxable income for the last three years before the war, the second is the taxable income in the last year before the war, and the third is 8 per cent. on the capital, and the fourth is £1,000. I think the hon. member was thinking only of the last and not the other alternatives. What would the position now be under his proposal? Take for example Iscor, or let me rather take a smaller company with a capital of £500,000. The company, let us say, has made that statutory profit before the war of not more than 8 per cent. The company therefore has a pre-war standard of £40,000. The proposal of the hon. member is now that whether the company has made more than £40,000 or not, that company must pay 15s. in the £ on the difference between £40,000 and £2,500. That is the proposal of the hon. member, that immediately the income of an individual company exceeds £2,500 it must be liable for excess profits tax, but as long as the income is below £2,500, it is excluded. Here we have a company which before the war had an income of considerably more than £2,500. The company did not make a profit on an unreasonable scale, because it has only made £40,000 on a capital of £500,000. Now the hon. member says in his amendment that we must make the company pay 15s. in the £ on the taxable income above £2,500. That is what the amendment means.

I merely have the principle in mind.

The hon. member should not draft an amendment in this way. I do not think that he himself realises what it means and he can therefore not expect me to accept it.

I would like to put the position differently. I think that the hon. member for George (Mr. Werth) was thinking more of the individual than a company. But let me put it to the Minister: Say a company began during the war with a capital of £100,000. The company will be allowed to make £8,000 on the capital. After that it is liable for excess profits tax. One can perhaps say that this is a considerable profit, but shareholders can reasonably expect to get a dividend, because otherwise they will not invest money in it. I am speaking now of an industry that is necessary to our country in this war. If the dividend is reduced by 6 per cent., then there remains 2 per cent. or £2,000. Does the Minister think that this is sufficient to put to reserve so that the industry can continue after the war? Is £2,000 sufficient for that purpose?

My answer is that the company is in any case assured of 8 per cent. before any tax is imposed. 8 per cent. is today considerably more than what 8 per cent. was when we introduced the tax. 8 per cent. on your money means considerably more than three years ago. I do not think that 8 per cent. is an unreasonable provision. I know of course that a shareholder wants as much as he can get, but reasonable provision has been made and 8 per cent. is considerably more than it was when we introduced it three years ago and when it received the approval of the hon. member.

I think that what the Minister has lost sight of in connection with what the hon. member for Vereeniging (Lt.-Col. Rood) has said, is that it is in the interest of the company, not only to give the shareholders a dividend of 8 per cent., but also to try and make the company so strong that it will be in the position to maintain a 5 per cent. or 6 per cent. dividend after the war. This the Minister does not take into account. It is desirable to build up a healthy reserve. That is the weak point of the Minister’s system, this statutory inelastic 8 per cent. that is allowed. I do not know whether it is deliberate, but I also think that the Minister misunderstood what the hon. member for George (Mr. Werth) is proposing. What he is proposing, is that the small company or the individual whose income does not even reach £2,500, should be exempt from excess profits tax.

That may be the intention, but the proposal is quite general.

Then the hon. the Minister does not understand the proposal properly. Whatever the pre-war standard is, if the taxable income today is less than £2,500, the whole system of excess profits tax does not apply to such a person. The hon. member for George probably had in view the case of a small company with a capital of, say, £10,000. This company is allowed to make a profit of £800. That is all. Now we say if such a small company makes a profit of £15,000 it must not be assessed for excess profits tax. It must only be assessed for excess profits tax when the minimum taxable income of £2,500 has been reached. If the wording is incorrect, we can draft another amendment, as long as the Minister accepts that idea. Then I want to ask the Minister —I do not know whether it is in order to move such an amendment—to accept the following further amendment—

Here I contempt the building up of a reserve. It cannot be built up from the 8 per cent. statutory allowance. Let the Minister say that he will concede 5s. of the 15s. provided he is convinced that it will be used to make the business a success after the war, in other words to build up a reserve to place the company on a healthy footing, or for some other approved purpose. I do not want to limit it here. As I have said yesterday, it can perhaps be an approved purpose to place the 5s. in a savings fund for the workers in the business. Instead of giving it to them now and so assist inflation, it can be saved for them, if necessary in a Government savings fund, to be paid out after the war, when the danger of inflation by increased wages no longer exists. Then the Minister will find that there will be many attempts to evade this tax in all kinds of unhealthy ways. I do not want to discuss the approved purposes now, but I have mentioned a few.

I just want to point out that it is already possible under the existing law to keep the scale taxation at 10s., in other words, it amounts to a rebate of 5s. It is possible under the procedure laid down in the Act of 1941. It can take place on the recommendation of the Revenue Advisory Committee, and at the moment I am not prepared to go further.

The Minister says that 8 per cent. is allowed to companies, is he prepared to apply it also to farmers in respect of their capital?

Certainly.

Capital invested in land and cattle?

It applies also to farmers, according to law.

Amendments put and negatived.

Original motion put and agreed to.

Personal and Savings Fund Levy.

The Committee proceeded to consider the proposed personal and savings fund levy.

I move—

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 Loans Consolidation and Amendment Act, 1917 (Act No. 22 of 1917) out of the Consolidated Revenue Fund sums equivalent to fifty 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).

The paragraph against which we have the greatest objection, is the one which lays down that an unmarried person with an income of £250 a year must pay a basic tax of £7 10s., and a married person with an income of £300 must pay a basic tax of £5. Yesterday I discussed this point fully, and I now want to suggest to the Minister that he should meet this class of person. Yesterday I advanced all the arguments to show that the burden of taxation is too heavy on this class of person. I just want to point out to the Minister that the person affected here is the small farmer who has to contend with the vicissitudes of nature. One year he makes perhaps £300, and the next year he makes only £100. It is not only the small farmer who has a difficult time under this tax, but also the low-paid Railway servants, Civil Servants, and other officials, shop and bank clerks, who must make an existence on this meagre income. The majority of these officials who earn £300 a year are married people, and it is impossible for them to maintain their wives and children on this salary. I want to ask the hon. Minister to accept this amendment.

I regret, but I cannot drop this proposal. I have already explained the position repeatedly. In the existing circumstances we find ourselves in the position that we must lower the notch where direct taxation begins. In other countries they have made the income tax notch very much lower than we have. Here the position is still that the unmarried person with an income of less than £300 pays no income tax. The married person, even if he has no children, who earns less than £345, also pays no tax. In other countries today the notch is about £150. We do not want to make the notch lower, but then we feel that we must levy this globular tax. The globular tax is not levied on persons who have an income of less than £250; I still think that our system in this respect is very reasonable in comparison with other countries, and, although I am sorry for those people, I am afraid that we cannot drop this proposal.

I move as an amendment—

The effect of this will be that personal tax will not be levied on incomes of less than £400, and it will remove the difficulty which we on this side of the House feel and also cover the point of the hon. member for Heilbron (Mr. Liebenberg). Take this tax, which is not a graded tax, but which presses evenly on the man with an income of £10,000 and the man with an income of £250. I do not know whether the Minister knows how much £5 means to a man who earns £250. It is a terribly high scale for anyone on that low scale of income. A man who today receives £250 is the man whose real pre-war income was £200 or less. The Minister has said that he is putting on 15 per cent. so that the tax will press evenly on everyone. But where you come with a globular tax like this, then it is the negation of the principle of equality which he has now invoked, and I plead here for that low-paid civil servant and worker, he who today is being ground between the top and the lower millstones, he who has to contend with a rising cost of living on the one side and on the other side there is not the same proportional increase in his wage and salary. I am not now pleading for the middle class. It is for the poor man. The Minister boasts here about the surpluses he has. How dare he boast about it when there are people in the country on this meagre income and he goes and takes £5 from them in the form of tax? And then he expects these people to live a civilised life in this country. I say it is a blot on these taxation proposals. Last year we voted against this and the answer of the Minister is not to give relief but to select this form of taxation and to make the increase the highest of all. I have pointed out that it is 50 per cent. in the case of an unmarried person and 66⅔ per cent. in the case of an unmarried person with in income of £250. This is the form of taxation which the Minister has selected for the highest proportional increase. That is his reply to our representations to meet these people. Let us now see whether it it going to make such a tremendous difference to the Minister’s Budget. The Minister told me last year that there were about 60,000 persons on a salary scale of between £250 and £400. I assume that there are even 70,000. I assume that they pay £6 a head, then the Minister will get £420,000 from the people on the salary scale between £250 and £400. Is that not a bagatelle in a Budget of more than £100,000? How easily he can get that amount if only he had increased the tax on the gold mines from 22½ per cent. to 23 per cent., then he would have had £182,000; if he had increased the tax on foreign shareholders to 1s. 9d., then he would have had another £240,000 which he could have given to the poor people in our own country. Here £20,000,000 is paid out in the one year in dividends to people who are overseas

Gold mine dividends?

No, all dividends. If the Minister makes an increase of 6d. then he expects £480,000. I hope the Minister will at this stage still accede to our request. I do not want to say that the taxation proposals will then be spotless, but it will in any case remove one of the biggest stains on these taxation proposals if the hon. Minister will accept this amendment.

I regret that I can add nothing to what I have already said. The alternative to the proposal would be that we will have to put the commencing notch considerably lower than what it is today, and as far as I am concerned, I prefer this proposal as it is now, to that. Then this point: We must not overlook the fact that foreign shareholders must pay tax at the source and in addition they are taxed on their dividends. They are taxed additionally in respect of the special tax that is levied on foreign shareholders, and I do not believe that I can add anything to what I have already said.

I have spoken year after year about the tax on these poor people. I have also spoken about it this year. I do not understand the Minister.

You are talking to a stone.

It appears to me that it is of no use. It appears to me that he is so obstinate that he simply does not want to give in. But I again want to tell him this, that he has no right to take income tax from a man who earns £250, or £300 or £400. The Minister says he must do so because he wants to make the incidence of the tax equal. He says the higher we go the more we take from the rich man. Does be not take into consideration the capacity of the person to pay the tax? This is surely the first principle. I often deal with people who receive a small salary and I know what a difficult time they have. I know how they must struggle. We people who live with them know how those people must battle. If they get the slightest setback in the way of sickness, then their position is hopeless. What does it mean to a man if he has an income of £2,000 or an income of £5,000 to give up even £3,000 of it? £2,000 is sufficient for him to live on. He does not feel the burden of taxation. The poor man with an income of £300, however, cannot save any money; he must struggle to manage on it. When the Minister talks about equal incidence he does not know what he is talking about. He should go among the poor people and see how they must struggle to pay this tax. Now he says that the people who live outside the country and who receive profits from companies must pay a tax on the dividends. But those are rich people who can afford it. Take even 15s. in the £ from those people if it is necessary. The people who are outside, have for years already had the pleasure of investing their money here. Now there is a war in progress; the Government requires the money to pay its war expenses. The money is required to protect the property of those people. Let them pay for it. The people who should be assisted are the low-paid people with incomes of £200 or £300 a year. Now the Minister says they must bear equally. I say that if a man earns £25,000, then he ought to give up to the State everything above £2,000 in these circumstances, because it is his property that is being protected. The poor man lives in poverty and he will have to live in poverty whatever happens to the war. It is the rich man’s possessions that are in danger and he must pay for the protection of those possessions. Now the Minister says that there must be equality. That is not equality. A man who earns £25,000 cannot use it all. He can live on £2,000. There is a war in progress today and it is always being held up before us like a fig leaf. I say that it is the possessions of the rich man that are in danger and that he must make sacrifices What sacrifices does the rich man make today? He does not require more than £2,000 to live on. With the other £23,000 he can continue to profiteer and because it increases in his case to 15s. in the £ you must now tax the man on £250. If you are a young man in the city you have to pay £5 a month for a room alone. That is without your food. What have you left to buy food and clothes? It is really a sacrifice for that man to pay this tax. To the rich man it is no sacrifice. The Minister is obstinate. He has decided that it must be so and there it remains. He now wants to increase the percentage basis. I feel in my heart that the Minister has nothing over for that man because he does not associate with them and because he does not know them. If he knows how they must count every penny which they spend he would be more sympathetic towards these people. In my opinion this is not an unreasonable request. I think that if a man has made £2,000, then he has enough to live on and everything which he makes above that he must give to the State while the Government today requires money to prosecute the war to protect his possessions. They are not going to make any sacrifices. The poor man who earns £20 or £25 a month must make great sacrifices. I am speaking now not only of the unmarried man, but also of the young man in the city who earns £250 and who must pay £7 10s. He has not got the capacity to pay. The man who has the capacity to pay is the man who is in danger of losing everything in the war, and it is only fair that he should bear the greatest burden.

At the beginning of the Session the hon. member for Heilbron (Mr. Liebenberg), on behalf of the Afrikaner Party, moved—

1. (a) that where a farmer sells his stock and applies the proceeds to a reduction of his bond, the proceeds shall be exempted from the statutory provisions relating to excess profits;
2. (b) that the deduction of £300 in respect of normal income tax payable by married persons be increased to £400; and
3. (c) that paragraph (a) of Sub-Section (1) of Section 7 of Act No. 40 of 1942 be so amended as to substitute for the amounts £250 and £300 the amounts £300 and £400, respectively.

These proposals were prompted by the same reasons that have been given here this afternoon. We have had the opportunity on the platteland to observe the reaction and consequences and repercussions on the poor man on the previous year’s Act which introduced this tax, and I want to assure the hon. Minister that this taxation proposal of his is very severe on that poor man with a family and the poor man who is struggling with a landowner to make a living. It touches the soul of his existence, this compulsory savings tax which he is imposing here, together with this levy. It is for this reason that we cannot urge upon the Minister too strongly the need for reconsidering this measure, and to raise the scale, because the poor man simply cannot pay this tax. Owing to war conditions, necessities of life for this person has risen so high that he has practically to take this money from the mouths of his wife and children in order to be able to pay this tax. Clothing and food—all these necessities of life have risen, and this man struggles today to meet his obligations to his own family. For this reason we want to urge the Minister strongly not to continue his obstinacy in respect of this proposal. I ask him in the name of fairness to reconsider this question.

The Minister is still one of those statesman who believes in the Great Book, and he must have read where the Master used these words, that He was hungry and they did not give Him food, that He was naked, and that they did not give Him clothing. That charge comes from thousands of people who receive that small salary and who no longer have any faith in politicians. They will simply say to the Minister: “You have left us in the lurch; we were hungry and you did not feed us; we were naked and you did not clothe us.” I do not know whether the Minister has ever been poor in his life; and what is more, the Minister is not a married man. He has not got a wife and children, and he does not know how much it costs to educate children. He does not know how difficult it is for these people to come out on such a meagre salary. It simply cannot be done. It is impossible. If the Minister in his capacity as Minister of Education had provided for free education for the child of the poor man when he is in the most need of it, then there would still be something to be said for his taxation proposals. If the Minister had made provision for free medical treatment for the poor people, then there would still be something to be said for these proposals, but there are no free medical services; there is no free education. As an Afrikaner you want to live a decent life. You at least want to go through life decently. Now I ask the hon. Minister: How on earth can you live decently on that meagre salary? I say tax the rich people for whom the war is being prosecuted, the people who take delightful holidays at Muizenberg and stay at the best hotels. These poor people never see a pleasure resort. They must struggle from day to day to make an existence by the sweat of their brow. I want to associate myself heartily with the proposal of the hon. member for Fauresmith (Dr. Dönges), and express the hope that the Minister will accept this proposal.

We are pleading here for the poor man and I want to draw the Minister’s attention to the fact that this class who receive a wage of £250 is that class which has to work right through the year every day. Even though he feels he cannot work because he is ill, he forces himself to go and work. The rich person if he does not feel like going to work, remains home. The poor man does not spare himself for a single hour in a day. He tries to be sparing and thrifty in every way, and I feel that the Minister in this case should meet this working class. The rich person, after all these taxes have been deducted from him, still retains an income of £1,000 or £2,000 or £5,000 which is not liable for further tax, because it has already been taxed. And then the Minister comes with an equal scale of taxation, an equal burden, and the one lives in luxury on an income of £5,000 and the other must live on £250 or £300 and then on top of this he must still pay taxes. Is that now equal incidence? Is it fair? Who is responsible for certain conditions that have been created in this country? Is it not the Government? I am speaking of Communism and other things that are slowly hatching and developing and which are becoming established in this country. If the Minister continues in this way we will later have a dangerous situation among the people which he himself will fear. I say that the Minister is in a position today to eliminate that dangerous situation. That situation will not develop among the rich. It is among the poor who must struggle from day to day under these circumstances who become dissatisfied and who slowly develop vengeance in their soul against the Government and against the State. Is this not the greatest injustice? I do not want to speak of a scandal. But it is an injustice to tax that worker, the working class considering the poor circumstances in which he lives. It is not right; those people are in dire need for more than one day. I am not pleading for myself. I am pleading here for that great section of our population which comprises the working classes of our country. I want to tell the Minister this: Impose the tax on himself and myself a little more heavily, but do not tax that class who really cannot exist on their meagre income. See that the burden on them is not increased.

For the convenience of the hon. Minister I want to approach this amendment from another angle. During this Session we have heard much about social security, and the Minister has come and with much ado announced that he is going to make available £200,000 as payment towards social security. The £200,000 is going to be used to supply a hot meal a day to school children in South Africa. Where is the Minister going to find the £200,000 to give a meal a day to the children of rich and poor, black and white in South Africa? He is going to get more than £200,000 out of the tax which he is going to impose on people with an income of between £200 and £400. Of what avail is it that he gives with one hand and takes double out of the pockets of these people with the other hand, using part of the money to provide a meal for the rich man’s child? The Minister has told us that this is the first payment towards social security. I contend that the Minister dare no talk about social security in this respect. If this is the first payment, heaven protect us when the other payments come along, because every payment will have to be paid for by the sweat and blood of the poor people. It will be better for them if the Minister leaves that money in their pockets instead of giving a meal a day to all the children. Let us view the matter in that light, and if the Minister is really anxious to make a contribution towards social security for the sake of those who really need it, then he has to accept this amendment. Then he can say that he is not taking any money out of the pockets of these people to attain social security, but then he will take the money from the rich people who can afford to pay. I want to ask the Minister to approach this matter from the point of view of social security and to accept our amendment. Then this meal of 3d. a day will be somewhat more to his credit. He will do better by sacrificing this revenue and to leave the money in the pockets of the poor. That will be really a first payment towards social security in our country.

It appears to me that the Minister has got into difficulty with the figure mentioned in the amendment of the hon. member for Fauresmith (Dr. Dönges). Now I want to tell the Minister that if this is his great difficulty, then this Committee is quite prepared to let this question stand over until tomorrow or the day after to give the Minister a chance to think the matter over and then to give a figure on the basis of which he can give relief. I am convinced that the Minister can give us a figure which will not give him any difficulty. I am also convinced that the Minister is thoroughly convinced that this class of people for whom we are pleading are also the people who assist society in connection with social upliftment. They are people who must maintain a definite standard of living. If they do not do so, then they lose the employment they have. They must do so and they do so with great difficulty. I ask the Minister to reconsider this matter. We must remember that these people must educate their children. I have eight children, and I have had seven at school at the same time. I know what the position is and what it costs, and what every £5 or £6 means to such a parent. I ask the Minister to go into this matter and if the figure gives difficulty, then the Committee is prepared to let this matter stand over so as to give the Minister the opportunity to investigate it.

I would like to support the amendment of the hon. member for Fauresmith (Dr. Dönges), and I would like to say to the Minister that he must consider that money has a different value for different people. It has a relative value. It depends upon what it can be used for. Where money has that relative value, I want to refer specially to the position of parents who have an income of from £250 to £400, and where the family is large. I do not want to go into the Minister’s personal position, but I want him to try to realise this position. I do not know if he was ever in the position where his parents felt the pinch in having to provide what was necessary for his feeding and education, and where they fell just short of being able to provide those essentials. On the strength of that, I want to point out what the value is of £5 when a parent has to send his child to a school or a university. It perhaps just enables him to buy the necessary clothes to send the child to school. How many cases are there not where it is just that lack of funds for buying clothes that prevents the parents from enjoying the privilege of giving their children a thorough education? I just want to say to the Minister that if there is one thing that we should appreciate in any State and in any citizenship then it is that feeling of responsibility of parent towards child. It may be only a few pounds that such a parent must pay, but it is just that sum that he will be short of to do towards his child what he would like to do. Why should we now deprive the parent of that money that he can employ so well, and pay it into the Treasury, into which millions are paid, and from which millions flow without in many cases being accounted for? I want to say with the hon. member for Fauresmith in respect of social security, that the Minister said that the one meal a day was an instalment. I want to add to that, that it is only a promise of something to come. I do not want to go into the details. Even though the children will get a meal that will cost only 3d. per day, I want to point out that this is only a promise, and to me it appears nothing but an election promise.

The hon. member cannot discuss that now.

I am mentioning this merely by way of comparison. Here the Minister now has the opportunity of really contributing an instalment for social security to those people and to extend to them a concession an instalment that will really have intrinsic value. For that reason we are pleading here with the Minister to assist those people. I want to ask the Minister of Finance this. There are parts of our country in which the people have to struggle through bleak winters. Can the Minister imagine what £3 or £5 can be worth to a large family in which each one of the children must have at least a warm bed for the night? We are pleading for those people. I would just like to bring one other matter to the attention of the Minister. I want to say that with the rising tendency in the cost of living it will become more difficult for those people to pay this money. When one day the assessment is made those people will be still less able than they are today to pay. As a result of this war and of the rising cost of living we have the position that the farther we go the more difficult becomes the rise in those living costs, and when those people have to pay one day it will be more difficult for them even than now. The arguments that have come from this side of the House have been sound arguments. The Minister will admit that. We have delivered a warm plea here in the interests of those people. And then what was the reply of the Minister? Throughout this debate the Minister revealed an attitude which gave us the impression that he had prepared himself preliminarily, so that no matter what amendments we may propose, or what arguments we may employ, he is going to play the strong man and is simply going to say “No” to all these things. The one overwhelming reason why the Minister is simply declining one amendment after another is simply that he is headstrong. That is all.

Question put: That the words “two hundred and fifty”, proposed to be omitted, stand part of the motion.

Upon which the Committee divided:

Ayes—63:

Abbott, C. B. M.

Abrahamson, H.

Acutt, F. H.

Alexander, M.

Allen, F. B.

Ballinger, V. M. L.

Bawden, W.

Bell, R. E.

Botha, H. N. W.

Bowker, T. B.

Christopher, R. M.

Clark, C. W.

Conradie, J. M.

Davis, A.

Deane, W. A.

Derbyshire, J. G.

Dolley, G.

Du Toit, R. J.

Fourie, J. P.

Friedlander. A.

Gilson, L. D.

Goldberg, A.

Hemming, G. K.

Henderson, R. H.

Heyns, G. C. S.

Hirsch, J. G.

Hofmeyr, J. H.

Hooper, E. C.

Howarth, F. T.

Humphreys, W. B.

Jackson, D.

Johnson, H. A.

Kentridge, M.

Lawrence, H. G.

Lindhorst, B. H.

Long, B. K.

Madeley, W. B.

Mushet, J. W.

Neate, C.

Payn, A. O. B.

Pocock, P. V.

Quinlan, S. C.

Raubenheimer, L. J.

Reitz, L. A. B.

Robertson, R. B.

Rood, K.

Shearer, V. L.

Smuts, J. C.

Solomon, B.

Solomon, V. G. F.

Sonnenberg, M.

Stallard, C. F.

Steyn, C. F.

Sturrock, F. C.

Sutter, G. J.

Trollip, A. E.

Van der Byl, P. V. G.

Van der Merwe, H.

Wallach, I.

Wares, A, P. J.

Warren, C. M.

Tellers: G. A. Friend and J. W. Higgerty.

Noes—38:

Badenhorst, C. C. E.

Bekker, G.

Bekker, S.

Boltman, F. H.

Booysen, W. A.

Bosman, P. J.

Bremer, K.

Brits, G. P.

Conradie, J. H.

Dönges, T. E.

Du Plessis, P. J.

Fouché, J. J.

Fullard, G. J.

Liebenberg, J. L. V.

Loubser, S. M.

Malan, D. F.

Naudé, S. W.

Olivier, P. J.

Pieterse, P. W. A.

Pirow, O.

Schoeman, B. J.

Serfontein, J. J.

Strauss, E. R.

Strydom, G. H. F.

Strydom, J. G.

Swart, A. P.

Van der Merwe, R. A. T.

Van Nierop, P. J.

Verster, J. D. H.

Viljoen, J. H.

Vosloo, L. J.

Wentzel, J. J.

Werth, A. J.

Wilkens, Jacob

Wilkens, Jan.

Wolfaard, G v. Z.

Tellers: P. O. Sauer and S. E. Warren.

Question accordingly affirmed and the first amendment proposed by Dr. Dönges dropped.

The first part of the amendment having been negatived, I am unable to put the remaining amendment as its effect would be to increase existing taxation.

Original motion put and the Committee divided:

Ayes—63:

Abrahamson, H.

Acutt, F. H.

Alexander, M.

Allen, F. B.

Ballinger, V. M. L.

Bawden, W.

Bell, R. E.

Botha, H. N. W.

Bowker, T. B.

Christopher, R. M.

Clark, C. W.

Collins, W. R.

Conradie, J. M.

Davis, A.

Deane, W. A.

Derbyshire, J. G.

De Wet, H. C.

Dolley, G.

Du Toit, R. J.

Fourie, J. P.

Friedlander, A.

Gilson, L. D.

Goldberg, A.

Hayward, G. N.

Hemming, G. K.

Henderson. R. H.

Heyns, G. C. S.

Higgerty, J. W.

Hirsch, J. G.

Hofmeyr, J. H.

Hooper, E. C.

Howarth, F. T.

Jackson, D.

Johnson, H. A.

Kentridge, M.

Lawrence, H. G.

Lindhorst; B. H.

Long, B. K.

Madeley, W. B.

Neate, C.

Payn, A. O. B.

Pocock, P. V.

Raubenheimer, L. J.

Reitz, L. A. B.

Robertson, R. B.

Rood, K.

Shearer, V. L.

Smuts, J. C.

Solomon, B.

Solomon, V. G. F.

Sonnenberg, M.

Stallard, C. F.

Steyn, C. F.

Sturrock, F. C.

Sutter, G. J.

Trollip, A. E.

Van der Byl, P. V. G.

Van der Merwe, H.

Wallach, I.

Wares, A. P. J.

Warren, C. M.

Tellers: G. A. Friend and W. B. Humphreys.

Noes—40:

Bekker, G.

Bekker, S.

Boltman, F. H.

Booysen, W. A.

Bosman, P. J.

Bremer, K.

Brits, G. P.

Conradie, J. H.

Dönges, T. E.

Du Plessis, P. J.

Fouché, J. J.

Fullard, G. J.

Hugo, P. J.

Liebenberg, J. L. V.

Loubser, S. M.

Malan, D. F.

Naudé, S. W.

Olivier, P. J.

Pieterse, P. W. A.

Pirow, O.

Schoeman, N. J.

Serfontein, J. J.

Strauss, E. R.

Strydom, G. H. F.

Strydom, J. G.

Swart, A. P.

Swart, C. R.

Van der Merwe, R. A. T.

Verster, J. D. H.

Viljoen, D. T. du P.

Viljoen, J. H.

Vosloo, L. J.

Warren, S. E.

Wentzel, J. J.

Werth, A. J.

Wilkens, Jacob.

Wilkens, Jan.

Wolfaard, G. v. Z.

Tellers: P. O. Sauer and P. J. van Nierop.

Motion accordingly agreed to.

Railway Passengers’ Tax.

The Committee proceeded to consider the proposed railway passengers tax.

I move—

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 15 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.

I would like to revert here to an argument that is being employed in support of this tax. It is the argument that the object of the National Convention was that, the Railways should not be used as a “revenue producer.” I would like to know what other idea the National Convention could have had if it was not precisely that the Railways must not be used for the collection of taxation in any manner. That is the idea that lies at the root of Clause 127, namely that we may not tax the Railways and say to the Railways that they must pay so much. The position before Union was simply that one increased the tariffs, and the profits made thereby were paid into the ordinary revenue account, and in that sense the Railways were then a revenue producer. It is playing with words for the Minister of Finance to come here and say that this is not how Clause 127 of the National Convention envisages it. There is no other sense in which one can say that the Railways may not be used as a taxation machine except precisely this. It is precisely on this point, that there may not be an increase of tariffs and passenger tickets for increasing the revenue of the country, that the resolution incorporated in Clause 127 was adopted. The Minister employed the illustration of an amusement tax, but it is precisely that idea of using the Railways for such a tax that was forbidden by the South Africa Act. It is that idea that is now being tampered with. Is there any other way in which the Railways can be taxed, other than through a tax on the users of the Railways? And it is precisely a tax on the users of the Railways which the South Africa Act was designed to forbid, and for that reason we protest against this measure. We say that as a result of the war an onslaught is being made—and the House must understand this—against the principle which underlies Clause 127 of the South Africa Act. The Minister is trying to introduce a new and dangerous principle which was rejected by the formulaters of the Constitution of the Union, when they in their wisdom decided to introduce Clause 127. For this reason I am availing myself of this opportunity, perhaps the last opportunity we shall have, to protest with all power against the use of the Railways as a means of levying taxation. Despite all the excuses which the Minister has made, he is using the Railways to increase the revenue of the country, and whether it is peace-time or war-time, it is a dangerous principle, and a principle in conflict with our Constitution.

I also want to register a strong protest against the increase of 15 per cent. on railway tickets. The Minister said he endorsed what the hon. member for Maitland (Mr. Mushet) said in connection with the matter. That hon. member told us that this was the best plan the Government could make in order to prevent so many people travelling on the Railways. We all know what the position in the country is. There is a shortage of petrol and motor tyres, which are being rationed, and people are obliged to travel by train. Now this taxation is being imposed to decrease the number of passengers. If the Minister and the hon. member for Maitland cannot make a better plan than this to decrease travelling by train then it does not say much for them. Generally the people travel because they are obliged to travel and owing to the lack of other means of transport. Then I also want to register protest against the fact that the third class is being exempted from this increase. Why does he then not also exempt the second class? Surely he cannot want the less privileged Europeans to be compelled to travel third class? What provision does the Minister make for less privileged Europeans who are obliged to travel by train. Concessions are made only to the coloureds, but the poorer Europeans are taxed. It is unfair, and the tax will not achieve the object invisaged by the Minister and the hon. member for Maitland.

What surprises me most in connection with the tax, is the argument that the Minister has now to impose the tax in order to reduce the number of passengers on the trains. I do not want to say that it is a dishonest argument, for then you will call me to order, but I may call it a sophisticated argument. If the Railways have too many passengers it is for the Railways themselves to decide how to reduce the number. They can put up the tariffs to keep the passengers away, but must we now understand that the Minister of Railways is completely powerless and has to call in the assistance of the Minister of Finance so as to discourage passengers from travelling by train? It is a ridiculous argument. It is also dishonest. The real object is to impose taxation, and that has nothing to do with the Railways. The object is simply to obtain money, not to ensure that fewer passengers travel on the Railways. But why then the argument that this is being done on behalf of the Railways? The Minister is now acting as the protector of the Railways, and this patronage will cost the Railways £500,000 per year. It is a protection for which the Minister of Railways did not ask. This sort of thing is unknown in South Africa, but not unknown in other countries. It is not unknown in America and in the underworld of Chicago. There they call it racketeering. If you have a shop there they come to you and say: “I shall see to it that your shop-panes are not smashed, but for that protection you must pay me so many dollars per month. If you do not pay it, then there is no protection.” The Minister of Finance is bouncing up here as the master racketeer. He says to the Minister of Railways: “I shall give you protection, but you must pay me £500,000 per year.” The Minister of Railways did not ask for it. It is a racket. Nothing more. But let us be honest. The object of this motion is to obtain money from the public. Let the Minister say honestly: If not in the letter then in the spirit I am going to violate the principle of the Constitution, but it is a time of emergency and I must have money. Then people may not agree with the Minister, but yet have a measure of sympathy for him. But why the sophistic argument that he is doing this to help the Railways? It is not protection, but a looting campaign, that will cost the Railways £500,000 per year. If it is not a looting campaign, then it is racketeering. The Minister himself can choose. He is either a robber or a racketeer.

I admit that the main object is to collect additional money. Naturally. I have never said anything else. It is a tax, and the object of the tax is to obtain money.

The hon. member for Maitland did not say that, and you endorsed what he said.

When you seek sources of additional taxation, then you seek out certain aspects of the national life which can bear additional taxation, and where you have the position that there is a considerable increase in the number of railway passengers, and where the Railways themselves do not approve of this under existing circumstances, there, from the viewpoint of taxation, you have a sound sphere to tax.

They have no other choice.

Of course, the Railways themselves could increase the passenger fees, but that would have increased their surplus still further, and that would apparently conflict with the business principles in accordance with which the Railways are administered, but I admit that the object is to obtain money. The Minister of Railways, however, has welcomed it, because it will help him to achieve what he himself wants to achieve, namely, a reduction in the number of passengers.

The hon. member for Maitland employed that sophistic argument.

I do not know how he put it, but I have always put it thus: The object is to obtain additional money, and then you seek out additional sources that can bear the burden.

I cannot let this taxation pass without registering the strongest protest. What does the Minister do? He imposes a 15 per cent. taxation, but he excludes the third class passengers. The object of course is to exempt the mines which obtain natives from Portuguese East Africa and the native territories. They pay for the tickets of thousands and thousands of natives.

In only one direction, not in both directions.

The mines must be spared, because to them it would mean a good few thousands of pounds. For that reason the third class passengers must be exempted. In the second place the soldiers are exempted who today get a concession on the Railways.

We shall come to the exemptions when the Bill is before the House.

The hon. member will then get full opportunity to discuss the exemptions.

We protest against the tax and the manner in which it is being levied. On the suburban lines here most people travel first class, but on the platteland where the people have to cover long distances, the plattelanders travel second class. It will effect the farmers particularly. They cannot get extra petrol. The business man and the professional man for some reason or other manages to obtain extra petrol, but not the farmer. If he has to cover a long distance he must travel by train. I spoke to an official the other day who told me that it often happens that people have to travel suddenly because of sickness and when they embark at the small station then there is no accommodation, and they have to stand in the passage or wherever they can, perhaps throughout the night. These are the people whom the Minister is going to tax additionally, the people who are obliged to travel. Now the excuse is that the Railways cannot transport all the people. With reference to a question which I put, we learned that the Ministers of this Government are making more use of private coaches than ever before. Every time a Minister comes to Bloemfontein from Pretoria he uses a private coach. Practically every week. The Ministers do not curtail their services. But the poor platteland population must be taxed. It is an extremely unreasonable tax. In the past the party on the other side always spoke about the business lines on which the Railways should be run. Whenever we pleaded for a concession to the European labourers there was the protest that we would then depart from business principles. Here the Minister now comes and departs from those principles in a radical manner. How will he be able in future to disapprove of it when another Government departs from business principles? These principles are now being violated. The Railways are being used as a taxation machine to see the war through. Where is it going to end? Tomorrow or the next day this will be carried further. This is the thin end of the wedge. After the previous depression the Railway revenue fell by millions of pounds, down to £24,500,000. Today the revenue stands at £50,000,000. In those days the Railway Administration paid less in wages, fewer hours were worked and people were kicked out of the service, because they could not obtain assistance from the Treasury. What right has the Minister of Finance now to use the Railways, which are making great profits, as a taxing machine? All the money the Railways can make should be used to strengthen their funds for the time of depression that will come. Rolling stock is in a sad condition. The excuse is that they cannot import locomotives, etc. But even coaches and trucks that can be manufactured here are not being manufactured. Everything has to wait until after the war. Then the Railway revenue will fall, and the Treasury will not help the Railways. We have to protest against the way in which the Minister is using the Railways as a taxing machine.

I must really say that I was surprised when I read in the newspaper that the Minister of Finance had decided to levy this tax on the Railways, and when I saw that third class passengers were excluded I also came to the conclusion to which the hon. member for Bloemfontein, District (Mr. Haywood) came, viz. that it is being done to protect the mines. But apart from that, why must the coloureds who travel in the platteland be exempted from the tax? It is only fair then that second class passengers also be exempted. The people on the platteland are compelled to travel by train, and they travel second class, and then the Minister taxes them. Do you know what the position is today? If you arrive by car at another place, like Bloemfontein or Cape Town, the police stop you and ask you what you have come to do there, and if you cannot show a declaration by the local magistrate that you got the petrol for a certain purpose, they take your car and send it back by train. The other day people at Clanwilliam told me that things are so strict there that they cannot risk going over to the Calvinia district in their car. They have the petrol but they do not risk going, because they are held up. In certain parts they are very strict. It is of course to save petrol and tyres, but the only alternative for these people is to travel by train, and if a family of three or four persons is involved, it means great additional expense. At first you compel the people to go by train, and then you tax them. I want to move as an amendment—

This will mean that the poor white man will at least be placed on an equal footing with the coloured man. I have often noticed that when you look who travel first class and who second class, it is with concern that you have to determine that it is Afrikaans-speaking people who travel second class. I want to cast no reflection on the one or other class, but it is a fact that the persons who travel in the second class over long distances, are Afrikaans-speaking. Only by way of exception do you find an Afrikaans-speaking person who is in such a good position that he can travel first class. This additional money is, of course, going for war purposes. But what do you find on the Railways? That people who are acting in a temporary capacity act as such for months and years without getting the remuneration which is attached to the higher post. The regulations say that when a man acts in a higher post for three months, he must get the remuneration of the higher official, but this does not happen.

This has nothing to do with the proposal.

I say that the money which is being found by taxing the Railways must be used in the interests of the Railways or of the Railway Staff. It is, for instance, necessary to repair locomotives.

The Minister has clearly stated that it is a tax on persons using the Railway, and not a tax on the Railways as such.

It is slightly Greek to me to hear now that it is not a tax on the Railways. My intelligence is too limited for that. My intelligence does not allow me to follow it. Let me put it this way: After the war the income of the Railways will fall tremendously, and then the money which is now being levied as taxation will be required to repair the trucks and the permanent way and everything. The money is now being spent on the war and as a result of that the salaries of the Railway Staff will have to be lowered. The money ought to be put aside. People will be dismissed. We know how this Government has previously dismissed European labourers and engaged cheaper native and coloured labour. Therefore, we protest against this proposal.

I just want to refresh the Minister’s memory. The Minister has said that the Minister of Railways does not at all mind him taking £500,000 out of Railway passengers. On the contrary, the Minister of Railways has welcomed it. Why then doesn’t he make it £1,000,000?

It is additional money that we have to get from the public.

In 1912 there was a crisis in the Cabinet when the late Mr. Sauer was Minister of Railways. The late Mr. Hull, Minister of Finance at the time, also wanted to use the money of the Railways, wanted to get certain of the monies under his control. The result of the crisis was that the then Minister of Finance had to resign. Now the present-day Minister of Finance says that this is merely a bagatelle. But a Cabinet crisis is surely not caused by a bagatelle. I think the Minister must in any case accept the amendment of the hon. member for Colesberg (Mr. Boltman). A large proportion of the population of the platteland travel second class. It is the poor man and the middle-class man and they make use of the train. It is only fair that they also should be exempted.

Question put: That the words “or second”, proposed be omitted, stand part of the motion.

Upon which the Committee divided:

Ayes—63:

Abbott. C. B. M.

Abrahamson, H.

Acutt, F. H.

Alexander, M.

Allen, F. B.

Ballinger, V. M. L.

Bell, R. E.

Botha, H. N. W.

Bowker, T. B.

Christopher, R. M.

Clark, C. W.

Collins, W. R.

Conradie, J. M.

Davis, A.

Deane, W. A.

Derbyshire, J. G.

De Wet, H. C.

Dolley, G.

Du Toit, R. J.

Fourie, J. P.

Friedlander, A.

Gluckman, H.

Goldberg, A.

Hayward, G. N.

Hemming, G. K.

Henderson, R. H.

Higgerty, J. W.

Hirsch, J. G.

Hofmeyr, J. H.

Hooper, E. C.

Jackson, D.

Johnson, H. A.

Kentridge, M.

Lindhorst, B. H.

Long, B. K.

Madeley, W. B.

Moll, A. M.

Molteno, D. B.

Mushet, J. W.

Neate, C.

Payn, A. O. B.

Pocock, P. V.

Raubenheimer, L. J.

Reitz, L. A. B.

Robertson, R. B.

Rood, K.

Shearer, V. L.

Smuts, J. C,

Solomon, B.

Solomon, V. G. F.

Sonnenberg, M.

Stallard, C. F.

Steyn, C. F.

Sturrock, F. C.

Sutter, G. J.

Trollip, A. E.

Van der Byl, P. V. G.

Van der Merwe, H.

Wallach, I.

Wares, A. P. J.

Warren, C. M.

Tellers: G. A. Friend and W. B. Humphreys.

Noes—40:

Badenhorst, C. C. E.

Bekker, G.

Boltman, F. H.

Booysen, W. A.

Bosman, P. J.

Brits, G. P.

Conradie, J. H.

Dönges, T. E.

Du Plessis, P. J.

Fouché, J. J.

Fullard, G. J.

Haywood, J. J.

Hugo, P. J.

Liebenberg, J. L. V.

Loubser, S. M.

Malan, D. F.

Olivier, P. J.

Pieterse, P. W. A.

Schoeman, B. J.

Serfontein, J. J.

Steyn, G. P.

Strauss, E. R.

Strydom, G. H. F.

Strydom, J. G.

Swart, A. P.

Swart, C. R.

Van den Berg, C. J.

Van der Merwe, R. A. T.

Van Nierop, P. J.

Verster, J. D. H.

Viljoen, D. T. du P.

Viljoen, J. H.

Vosloo, L. J.

Warren, S. E.

Wentzel, J. J.

Werth, A. J.

Wilkens, Jacob.

Wolfaard, G. v. Z.

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

Question accordingly affirmed and the amendment negatived.

The original motion put and the Committee divided:

Ayes—63:

Abbott, C. B. M.

Abrahamson, H.

Acutt, F. H.

Alexander, M.

Allen, F. B.

Ballinger, V. M. L.

Bawden, W.

Bell, R. E.

Botha, H. N. W.

Bowker, T. B.

Carinus, J. G.

Christopher, R. M.

Clark, C. W.

Collins, W. R.

Conradie, J. M.

Deane, W. A.

Derbyshire, J. G.

De Wet, H. C.

Dolley, G.

Du Toit, R. J.

Fourie, J. P.

Gluckman, H.

Goldberg, A.

Hayward, G. N.

Hemming, G. K.

Henderson, R. H.

Higgerty, J. W.

Hirsch, J. G.

Hofmeyr, J. H,

Hooper, E. C.

Jackson, D.

Johnson, H. A.

Kentridge, M.

Lindhorst, B. H.

Long, B. K.

Madeley, W. B.

Moll, A. M.

Molteno, D. B.

Mushet, J. W.

Neate, C.

Payn, A. O. B.

Pocock, P. V.

Raubenheimer, L. J.

Reitz, L. A. B.

Robertson, R. B.

Rood, K.

Shearer, V. L.

Smuts, J. C.

Solomon, B.

Solomon, V. G. F.

Sonnenberg, M.

Stallard, C. F.

Steyn, C. F.

Sturrock, F. C.

Sutter, G. J.

Trollip, A. E.

Van der Byl, P. V. G.

Van der Merwe, H.

Wallach, I.

Wares, A. P. J.

Warren, C. M.

Tellers: G. A. Friend and W. B. Humphreys.

Noes—39:

Bekker, G.

Boltman, F. H.

Booysen, W. A.

Bosman, P. J.

Brits, G. P.

Conradie, J. H.

Dönges, T. E.

Du Plessis, P. J.

Erasmus, F. C.

Fouché, J. J.

Haywood, J. J.

Hugo, P. J.

Le Roux, P. M. K.

Liebenberg, J. L. V.

Loubser, S. M.

Malan, D. F.

Olivier, P. J.

Pieterse, P. W. A.

Schoeman, B. J.

Serfontein, J. J.

Steyn, G. P.

Strauss, E. R.

Strydom, G. H. F.

Strydom, J. G.

Swart, A. P.

Swart, C. R.

Van den Berg, C. J.

Van der Merwe, R. A. T.

Van Nierop, P. J.

Verster, J. D. H.

Viljoen, J. H.

Vosloo, L. J.

Warren, S. E.

Wentzel, J. J.

Werth, A. J.

Wilkens, Jacob.

Wolfaard, G. v. Z.

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

Motion accordingly agreed to.

V. Excise and Customs Duties.

The Committee proceeded to consider the proposed excise and customs duties.

I move—

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.

I want to move as an amendment—

I do not again want to repeat everything that was said on the Budget. I only want to protest again. I think it is unfair. I want to tell the Minister that after his taxes were announced, I went through the wine districts, and the people are very grieved about it. Stellenbosch wanted to send a deputation to the Minister, but they know the Minister better than I do, and therefore they did not even come. The position is such that even the K.W.V. took a unanimous decision protesting against it. That decision was sent to the Minister. I feel that the tax is not only unfair because it is out of all proportion to the other taxes, but I feel that here you have a product that is produced in the country, and that you are taxing to death. If the Government thinks that the viticulturist has not the right to exist, then they must tell us so; then we can uproot it. The trouble is this: The Minister does not kill the wine industry with this proposal, but he is throttling them more and more until he will eventually kill them. Our wine farmers today realise that when legislation is put forward in this House, they are always worse off; they realise that when Excise is levied, they are always worse off. Today we are sitting with a surplus of 50 per cent. The Government realises that the industry cannot carry the production. Therefore, it has introduced a law to put an end to the production. These are all things which have been done by the Government. They realise that they are gradually killing the industry. The hon. member for Cape Town, Castle (Mr. Alexander), has said here that the whole Western Province realises that they are dependent on viticulture. They realise that if the industry suffers, everyone will suffer. The districts that are affected here form an important part of our country. I do not want to offend the other parts of our country, but we are of opinion that these parts are the most important parts of the country. The article which the Government now taxes is produced in the country. It is realised that if the industry in the South-Western Districts suffers, those districts suffer. The Minister might say that now that money is plentiful the viticulturist will not feel the tax. Our experience is that after a time like this, when bad times arrive, the first persons who suffer are the wine farmers. The tax is out of proportion to the other taxes. The wine farmers are today in the position that they produce £3,500,000 from their product, while they do not even receive £500,000 for the article which is being taxed. I now see that the Minister says when the time becomes bad the wine farmers must come to Parliament and ask for assistance. I want to put it to the hon. Minister. Every time that the Excise was increased, it was in a time such as this, and the promise was always made that if times got worse and the viticulturists were not in a position to make a proper living, the Government would again take the matter into consideration. When the 2s. 6d. before last was imposed, there was a specific promise that immediately times got bad, they would withdraw it, and it was never removed. I do not know whether the Minister will still be here when the bad time comes, but if by accident he still sits in those benches when times become worse, I want to ask him if he would be prepared to withdraw this tax? I only want to say this to him: We who are wine farmers feel very bad about this matter. The wine farmers feel that something is wrong. They feel that there is not the sympathy that there ought to be for them, and therefore, they feel that, as far as this Government is concerned, when they want money they take it out of the pockets of the wine farmers. I do not believe that you can find a better community than the wine farmers. They are cultured, hardworking people. I feel that with these few words I have said enough. I just want to say this to the Minister: Is he willing to rise and tell us that when times get worse he will withdraw the tax? If he gives us that promise it will perhaps help him to get the support of the wine farmers. I am not speaking for myself; I speak on behalf of the whole industry. I speak on behalf of all the people who make their living out of the wine industry. Millions of pounds are invested in the wine industry. The people have done everything within their power for the building up and expansion of the country. They are a first-class farming population. They are people who never cause trouble. The position is this, that those people all feel—even the Government supporters—that they are being done an injustice. One of the Government’s strongest supporters said to me: “The Government is now really going too far.” He comes to me with the cartoon in “Die Burger” showing the Minister squeezing the wine industry to death. He then asked me if it was true that they take so little from the mines? I then said: “Yes.” He then said: “If that is the case, then I honestly do not vote for them again.”

I would like to support the hon. member for Swellendam (Mr. S. E. Warren) and then I also want to move as a further amendment—

Before I come to it, however, I just want to say a few words to support the hon. member for Swellendam. The Minister made much of it earlier in this debate that he is now out to see where he can get money, and if there are signs of classes or businesses which prosper, then they are sources from which he can obtain money. Taken generally it is, of course, a very good principle to start with. But the hon. Minister must ask himself when he places extra taxation on the wine farmers, whether he is now really taxing, an industry which flourishes or whether he is taxing an industry which in reality is finding things very difficult. I would like to ask the Minister whether he thinks that an industry prospers when only half of the products produced by that industry can find a buyer. This is the position in regard to the wine industry today. Only half of the production of the wine farmers is disposed of. The other half is surplus and must be changed into new products or in one way or another be thrown on the market at a loss. But of the products of the industry a market is at present only found for one half of the production and we have to dispose of the other half. A wise Minister would say: If there is a product of which you can sell only half, you must create some means or another to make it easier to sell that product, to extend the sale of that product. I got hold of a paper the other day, the South African Advertiser of 1866.

The Commercial Advertiser?

Yes: and there were advertisements which made one think that those were really glorious times. It made me think, if I have to use the words of the hon. member for Calvinia (Dr. Steenkamp): “Them times that used to be never was”. There was an advertisement of a certain well-known Cape Town wine firm which still exists today. It advertises brandy. It placed two kinds of brandy on the Western Show, in the highest class. But one of the brandies was so good that they placed it separately on the table and hung a gold medal round the neck of the bottle. That brandy one could get for 18s. a dozen. Were those not good days? But the first brandy cost a 1s. a bottle. The best brandy, apart from that brandy that was put aside on a table, cost 9d. a bottle. For the class of brandy which at that time was 1s. per bottle, the price is now 8s. 6d. per bottle. It has now become 8s. 6d. after this tax which the Minister has added. If you are constantly busy chasing up the price of this product, what hope have we then to expand our market so that we can get rid of the surplus? And the tendency is to chase up the price higher through this tax and to further restrict the market, and to make the surplus still greater. In this prosperous time the surplus is 50 per cent. If it is 50 per cent. now, what is it going to be when we have a depression here? It will then in all possibility rise to 70 per cent. or 80 per cent. and when that time comes the Minister will be responsible for it with this tax. Let me now approach the matter from another angle. To make a gallon of brandy you require five gallons of wine. The price of that wine is now £6 6s. per leaguer for A1 wine. It works out at slightly less than 1s. per gallon. I then receive 5s. for my product to make a gallon of brandy. Do you know what the Minister receives for what I receive 5s.? He receives 25s. in tax; in other words from the time that wine leaves me, before it reaches the consumer, the Minister draws 25s. tax on an article for which I get 5s. He makes 500 per cent. more on each product than what I get for it. We have all kinds of taxes, but I ask if you have ever heard of it that the Government takes five times the value of that product in taxation? This is the position in regard to our wine farmers. No wonder that we complain; no, it is a wonder that a lot of wine farmers do not come along and set fire to the Houses of Parliament. It is a totally unheard of thing. There has never been an industry that was taxed like the wine farmers are being taxed. I know the Minister will say that it is indirect taxation, that the buyer pays it. That may be, but what the Minister is doing is to make it impossible for the viticulturist to expand his market with the result that that surplus of 50 per cent. will shoot up further immediately times are not good, and then the wine farmers will find themselves in trouble. I also want to propose that we delete Articles (1), (2), (3) and (4). (1) is cigarettes manufactured in the Union. No, not (2); it must be (1), (3) and (4). (3) is cigarette tobacco manufactured in the Union, and (4) pipe tobacco manufactured in the Union. The tobacco industry is the second industry in South Africa which is being used by the Government as a kind of milch cow. I regret that I have not calculated what percentage of what the farmer receives for it the Government takes in taxation. But I think that it will be found that it does not differ much from the position in regard to wine. But let me now tell the Minister this: The tobacco industry in South Africa, tobacco farming in South Africa, is not in a flourishing position today. It gets along but it is not a flourishing business. It cannot be compared with Railways or with the mines or with many other industrial undertakings in South Africa. The tobacco farmers find things difficult and the tobacco farmers even today still find difficulty in the sale of their products. It is still only recently that there was a very large tobacco surplus here in South Africa. Do you know what the additional taxation is on tobacco? It is a sum of no less than £1,300,000. On tobacco as a whole a taxation is placed of not less than £6,400,000. I would like the Minister to compare that £6,400,000 that he gets from the tobacco industry with what he takes out of mining, and if he looks at the profits of the gold mines in South Africa and the profits which are made by the tobacco industry, he will see that the tobacco industry is not taxed three or four times as heavily in South Africa as the gold mining industry, but surely ten times as heavily. The gold mines are disappearing asset, but the tobacco industry is something which we can build up and that can be permanent. It is a very good industry because it gives an opportunity to the small man to farm with that product. It gives the man with little capital and little land a chance. This is the type that we would like to settle in farming, and want to keep going and that we want to develop. But if we are going to impose this type of taxation, we are going to land those people who cultivate tobacco in the greatest difficulty when a depression comes one day. This £6,400,000 is then going to contribute to bringing that type of small farmer into the greatest difficulty when the price of tobacco drops one day. I do not want to enter into all the details. We made use of other arguments when we dealt with this matter on the second reading. I have only mentioned a few other aspects of the matter and I do not want to repeat the arguments which were already previously used. Those arguments are just as strong as these that we now use. We are here exposing the future of two types of farmers to very great danger. It is not right that we do it. We must look for markets for those people and not try to kill markets. We must give them hope for the future. No man can make a success of life if he has not got courage. I know it. We must enable these people to have courage when a depression comes and not to lose confidence. When the man has confidence that he can progress he will do his best. But we are shaking the confidence of these two types of farmers with this big taxation which is being imposed upon them.

The hon. member for Swellendam (Mr. S. E. Warren) said that he did not want to repeat what he said on a previous occasion. Concerning myself, I am less optimistic. I have already spoken three times on this matter, and I am compelled to repeat what I have already said. I want to mention three points in connection with this matter. The first is that this tax on brandy is being paid by the consumer.

But it restricts the market.

The increase in taxation has so far not reduced the market.

Because it is wartime now.

This is the first point, viz. that the taxation is paid by the consumer. The hon. member for Humansdorp (Mr. Sauer) has asked in which country an industry is taxed with 500 per cent. of the value of the article. We find exactly the same taxes also in other countries, and perhaps even worse taxes than what these are.

But they are not liquor producing countries.

The hon. member did not put it that way.

In any case that is what I meant, and reply to it thus.

The second point is that at the present time competition is reduced.

What with?

With whiksy. My hon. friend cannot get away from it. Competition with whisky has decreased and the consumption of brandy has increased. The third point is this, that we are experiencing a time of increased consumption of liquor. The figures that I mentioned this morning show it. We have exceeded by 25 per cent. the estimate of last year concerning excise on spirits. It is a time of increased liquor consumption and I think that even the hon. member for Swellendam will admit that in the present circumstances this taxation which I propose is fully justified. He has asked what the position is going to be when circumstances change. He must trust the Government or its successor to act fairly and justly when circumstances change. As far as cigarettes are concerned the position is virtually the same. The same three factors are applicable although the point of reduced competition is not so strong. The hon. member for Humansdorp has again made a comparison between the tobacco industry and the mining industry. He was apparently not here this morning when I replied to it. I pointed out that in one case we were concerned with decreasing working profits, and in the other case we are concerned with an increasing demand. In one instance additional taxation is being borne by the industry and that additional taxation must be paid by the shareholders. In the other instance the taxes are paid by the consumer. That comparison, therefore, is not one that impresses. The only point in regard to this position which, in my opinion, does deserve further consideration is in connection with the cheaper types of pipe tobacco, and I have already said that I would consider the possibility of a rebate in connection therewith. That is something which we will deal with when we are confronted with the Bills.

The Minister will agree that this is not a debating society. We would like to deal with the practical side of the matter. He says the excise does not matter because the consumer pays it. I explained during the Budget debate that the wine farmers are 100 per cent. co-operative. As a result of the consumption of today the surplus is somewhat less, but we must keep an eye on the future. If 100 leaguers of brandy are drunk the money from that hundred leaguers must be divided between all the liquor which is produced. Suppose that 200 leaguers are produced and the merchant pays £10 per leaguer, it means that the farmers receive only £5 per leaguer. If the surplus is 75 per cent. they receive only £2 10s. I want to tell the Minister that the wine farmers already know that story of the consumer having to pay, from the beginning. It is not a new argument which is being used. It is the one argument which has always been used. Before the farmers co-operated they paid the excise because the merchant paid them so much less. Now they co-operate and they fix the price, but immediately the price is high, as it is now, we will find that in normal circumstances the consumption drops. It is true that at the moment hundreds of millions of pounds have been put in circulation in the country and that there is today an extraordinary consumption. We know it well. But the position is nevertheless that the consumption would have been much greater had it not been for the price the consumer has to pay today. I would like to ask the Minister of Finance when he thinks the farmers must be enabled to make a proper existence? We have produced these things for years and we barely got more than the cost of production. I have already explained that an arbitration court was appointed in 1924. They went into production costs. That court took statements from all sides and they placed the production costs at £3 per leaguer. For years the farmer did not get more than £3 10s. per leaguer. Before the war it dropped below £4. During the war it rose, dropped a little because the production was higher and now it has again risen a bit. We can stop production, but what is then to become of those farmers? If they have not the right of existence, let the Minister then say so outright, then we know what their idea is. Then we must make another plan or must die of hunger. But I want to say this to the Minister, there will then not only be an over-production of wine, but of potatoes, vegetables, fruit and many other things. What hurts me so is the fact that there is discrimination. The Minister knows that the consumption is extraordinary now. He knows it just as well as I do. He knows to what it is attributable. If the people have not got money, they cannot drink. What is going to happen when these times pass? Does the Minister realise that we produced more than 400,000 leaguers last year? Our market was 200,000 leaguers, and we have not yet reached the peak of our production. I am speaking now of existing vineyards and not of new vineyards. It can rise to 500,000 leaguers. If it comes to that, and we sell 200,000 leaguers, what is going to happen to the farmer’s price if the consumption does not increase? We cannot continue increasing the price to the merchant. The merchants objected to the last increase of 10 per cent., and they wanted to notify the Minister that they would again submit the price of wine to arbitration. They must pay £9 per leaguer today for wine from which they make brandy, and what is the position going to be if it drops to £7? I am not pleading here for people who do not want to work. The Minister knows those people. He knows they are hardworking and sober people. They are people that mean something to our country, and we must not do something here which kills those people and takes away their spirit of independence. The Minister says that the consumer pays. The consumer might pay in the canteen or bar, but eventually it falls back on the farmer. The Minister himself admits that these people are treated harshly, because he says that when times become worse we must trust the Government to withdraw this taxation in those circumstances. Let him explicitly tell me that he will withdraw it if times become worse? No, he can and will not give us that promise, because he knows as well as I do that they will not withdraw it again. We know that this happens. I do not want to make much fuss about it, but I know what is going on, and I also know how much my constituency is dependent on viticulture. I know what will happen when viticulture disappears. It is a dry part, and you cannot produce all the crops there because there is no water. The vine is inured to drought, and it is an article with which they can farm there on a paying basis. They may produce potatoes and vegetables there, but if they do it, the markets will all be flooded. They have themselves limited their own production because they realise that the market is limited. They are a decent type of people, and they can lay claim to protection. The Minister says that it is a flourishing part and that they can, therefore, pay. They are not flourishing. They do not get what they got six or eight years ago. It is true that the prices are better than last year, but when a person takes into consideration the costs of production the prices are not at all wonderful. The cost of labour has risen. We cannot farm with raw natives, but must use coloured people for our work, semi-skilled labourers. Our labour costs much more, our fertilisers cost more, our production costs are constantly rising. I do not want to weary the House with figures, but the position is not so favourable as the Minister alleges. In addition, we also want to encourage the industry. The people are trying to produce a better article, and we can point with pride to the fact that our wine is today drunk in the best places in the world, in the best clubs in America and England, and even in the bar at the Houses of Parliament in England. For the first time it has got so far that our products are drunk there and appreciated. Now the Minister wants to come and wring the neck of the industry. I ask the Minister not to do it. The Minister rose and I understand from his reply that he does not want to meet us. The Minister’s arguments amounted to arguments that you expect in a debating society. I want to ask the Minister in any case to rise and state that if times get worse for the wine farmers, he will personally move to reduce the taxation? The Minister must remember that the whole Western Province as far as Oudtshoorn and Graaff-Reinet has a great interest in viticulture. I cannot stop the Minister. It is only a pity that Providence disposed it that he should be the man who has to take the lead in the financial sphere, and that he has received the power to deal the industry a blow as he is doing today.

This tax reminds one of a tax that a former Minister of Finance also proposed. It was proposed in the old Cape Parliament to levy an excise on the product of the vine, and the wine farmers of the Western Province came to Parliament like one man and Held a big demonstration. They told the Minister that it was impossible for them to bear the tax and they kept on for so long that he abandoned it. I wonder if the present Minister of Finance will not also at this stage soften his heart and meet the farmers. There is one thing which particularly worries the wine farmers—the Minister can tell me if I am wrong—and that is that whenever a tax of this nature is levied it becomes a tax of a permanent nature. A tax on brandy, once it is levied, remains. Many of our friends who are today teetotallers are perhaps rejoicing about it. They are glad that they can shelter behind the wine industry in order to obtain revenue for the country. I want to ask the Minister, however, whether he knows that 70 per cent. of the wine farmers here in the Western Province harvest fewer than 100 leaguers a year. These are figures supplied by the K.W.V. Generally the wine farmers are only small farmers. There are only a few, a small group, who press 1,000 leaguers. And as far as the class of farmers who press over 500 leaguers is concerned, they represent only about 3 per cent. of the wine farmers of the Western Province. About 70 per cent. produce fewer than 100 leaguers. What is the income from that? His gross income is today about £500. And I can give the Minister the assurance that after all expenses are deducted the nett profit is not more than £200. It is my experience and it is the experience of the majority of farmers. But what does the Minister do? I have calculated it. He taxes the product of a man who gets £500 for his harvest with £3,175. This is the tax he places on brandy, if the man converts his harvest into brandy. I am convinced that the Minister will not go to Worcester or other places in the Western Province to justify the tax. I challenge him to address a meeting at Worcester or Robertson and justify the tax before the wine farmer. He will not do it and no one on the Government side will do it. Mention is made of the mines. In the past the mines have always still been the spoilt child of the State. Large concessions have been granted to the mines. Only today as a result of the decrease in labour is there a decrease in revenue as far as the mines are concerned. But, in general, they continually got concessions. As far as the product of the vine is concerned there is always a surplus and great expense has to be incurred to handle the surplus.

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

House Resumed:

The CHAIRMAN reported progress and asked leave to sit again; House to resume in Committee on 7th April.