When the House adjourned yesterday I was drawing attention to the fact that the profits tax Act on fixed property, Act No. 40 of 1942, also applied to mineral rights on land bought since 1st October, 1939, and I want to draw the attention of the House to this, that when the Bill was drafted the idea of the draftsman was to control land; but what they principally had in mind was the surface of the land. The framers of the Act had no intention of controlling the mineral rights. As the Act stands today, however, it also affects the farmer’s mineral rights. The Act affects the farmer so seriously that if he sells his mineral rights for £15,000 he has to hand over £10,000 to the State. I regard that as discrimination because that Act does not apply to all the provinces. That is my first complaint against the Act, that it only applies to the three Northern Provincies, viz: The Free State. Transvaal and Natal, and that it does not apply to the Cape. And now the Minister of Finance comes along and says that he has no intention of amending this Act. I feel this is an instance of serious discrimination, that this Act only affects three of the provinces.

Do you want us to put the Cape on an equal footing with the other three provinces?

No; I want to make an appeal to the Minister of Finance to amend the Act in such a manner that it also includes the other three provinces. In other words, that it does not apply to the other three provinces. The second irregularity in the Act to my mind is that there is discrimination as between the farmer and the company. The farmer has to pay a tax to the State on the amount of money he gets; he has to hand over to the State two thirds of his profit by way of tax, but when the mineral rights have been bought from the farmer the purchaser can float a company. And that, as a matter of fact, is what is usually done. The purchasers float a company and they sell those mineral rights to some other company. Where the farmer deals in hundreds of pounds the company deals in hundreds of thousands of pounds. The farmer has to give up two-thirds of his profit to the State, but the people who have formed the company can sell those mineral rights to some other company for hundreds of thousands of pounds, and the provisions of the 1942 Act are not applicable to them. Why should the farmer be discriminated against in this fashion? Why should the farmer pay taxation when he sells his mineral rights while the company does not come under this profits tax? That is my second charge against the Government, that there is discrimination between the poor man and the rich man. Hon. members in this House have complained that the burden of taxation is so heavy that we find it impossible to live. They pointed out that the tobacco tax is so heavy that although the farmers don’t even get £1,000,000 out of tobacco the Government draws more than £7,000,0000 in the form of tax. The wine farmers have shown that although they only get 10d. per bottle for brandy the Government gets 4s. tax on a bottle of brandy, and the position has apparently become so serious that the representatives of the Chamber of Mines have complained that if the Government does not give in the mines will close down. We are in a precarious position. I think it is the duty of the State to encourage new industries, and I think we are entitled to have an explicit statement from the Minister in this regard. In the Free State there are big goldfields which are waiting to be exploited. The mineral rights have already been bought by a company and the land has been fully prospected. Boreholes have been sunk, and so on. It has already been proved that there are rich goldfields there but the companies are not developing the land. When conditions are so precarious and when there is a great opportunity for development to be undertaken the Government should compel such a company to develop the land. If it is not done an injustice will be committed to thousands of people who are unemployed. If these goldfields are developed they will create a big source of employment and the taxation burden generally will be relieved. That development, however, is not taking place, and the country wants to know from the Government why it does not have those sources developed so that they may become a great asset to the country.

This question of taxation is naturally related to the national income of the country, and in that regard I would refer to the figure which I gave to the House some weeks ago and which was quoted yesterday by the hon. member for Fauresmith (Dr. Dönges). I feel that in fairness to the House and to the hon. member the figure which I then gave should be corrected. On that occasion—I think it is as well that we have the actual facts—I stated that 136,000 of our income taxpayers were in reecipt of an income of £174,000,000 per annum, and that the companies were in receipt of an additional £64,000,000 per annum, and I treated the two as separate figures, indicating that as the people who paid the income tax were virtually the people who were interested in the companies, it meant that these 136,000 people were in receipt of something like £238,000,000 out of the total national income. Now I want to correct that impression because the £64,000,000 to which I referred is included in that £174,000,000. So that the figure is that 136,000 of our income taxpayers are in receipt of an annual income of £174,000,000; that is, less than 2 per cent. of our total population, including the native population are in receipt of more than 2/5ths of our national income, and the balance of more than 98 per cent. of our population are in receipt of less than 3/5ths of our national income, that being based on a figure given recently by the Planning Council, which showed that for 1941-’42 our total national income was £420,000,000. In fact, there they state—and it may be of interest to the hon. member for George (Mr. Werth)—that some £50,000,000 of the total national income of £420,000,000 was kept back for re-investment purposes. At any rate the position is that less than 2 per cent. of our total population are in receipt of more than 2/5ths of our national income, and more than 98 per cent. of our population are in receipt of less than 3/5ths of ournational income, and therefore for the purposes of argument there is very little difference between the figure I gave originally and this corrected figure because that still shows a startling gap between the well-to-do and the poor classes of our community, and that gap will have to be bridged more and more. The three methods of bridging them is by increased social services, among the poorer sections, more particularly, the non-European population by increased wages and by taxation. Taxation is one of the methods of redistributing our wealth, and I do express the hope that the Minister of Finance and the Government will be a little more courageous and have more vision in dealing with the matter, because the sooner we bridge at least to a considerable extent the gap the sooner shall we be able to have an increase in our national income and the sooner shall we be able to secure a better state of affairs than exists today. Now, one of the methods of taxation—I have said it before—which the Minister should take into consideration, especially as he is concerned with the considerable amount of speculation which has been going on in land, is the principle of imposing a tax on unimproved land, land that is lying idle, which is not used— whether it belongs to big corporations or to big farmers; that land should be taxed so as to give an inducement for the use of that land, and such a taxation measure would not prejudice the farmer who has land and is using it advantageously. That would at any rate have a greater effect on the stopping of the over-capitalisation of farming, and in addition it would have a greater effect on checking the speculation that is going on, than the small percentage of increase in the transfer duty which the Minister is applying. I agree with the principle of an increase in the transfer duty, but it is not an adequate means of checking the speculation. Now, the discussion yesterday centred round the gold mines—I don’t want to deal with this question in any detail. It is a matter about which there are very strong differences of opinion, but the mere fact that at present it is possible to sell gold in India and in South America at a higher price than we are getting from the Bank of England, is no indication that the policy of a free market for gold would be advantageous to South Africa. The fact that there is a higher price for gold in itself shows up the old bogy that gold has a stable and fixed price which cannot be passed on—that bogy has been blown to the wind—it is a bogy which the mining companies themselves used to indulge in. But at the same time we should recognise that the mere fact that present conditions in India—whether it be hoarding or blackmarketing—and the present conditions in South America which have brought about a state of affairs under which they are paying higher prices than we get from the Bank of England for our gold, is not in itself of any value from the point of view of stabilising our price of gold. I take the case of India. Neither India nor South America could regularly become the purchasers of the whole of our gold output. We have to remember this as well. In the case of India I can visualise the position—and members of the Dominion Party might be interested in this—of the Indian Government suddenly saying—and with some justification : “We are going to stop the purchase of South African gold altogether”, and that would, in itself, bring about a very serious state of affairs, because it would mean a reduction of sales by the Bank of England. Besides as we are not ourselves dominating the sale of gold today, although we produce it, I can visualise a state of affairs under which the United States, with its coffers bulging with gold, saying : “For the time being we are going to stop the purchase of gold,” and if that should happen our position would deteriorate very materially if we did not continue our agreement with the Bank of England for the sale of our gold as a whole. I say that there is a great similarity between our policy of selling our gold to the Bank of England at a fixed price, and our selling our whole output of wool to England under a fixed agreement. I do not think the wool farmers would for the sake of a small temporary benefit be willing to do away with the benefits they have under an agreement under which we hand over our whole wool clip at a fixed price.

Let us try it.

I am saying that from a South African point of view it would be a dangerous thing to break our agreement with the Bank of England in order to get a little bit of a higher price—temporarily—for our gold. That brings me to the other point which I want to touch upon. It is this question of wages. Already the Government has arranged with the Chamber of Mines an agreement for increased wages to the mine natives under which the Government is utilising the gold realisation fund to help the mining industry to meet the cost of the increased wages. It may be said that that is a wrong principle because the Government is using revenue to which it is entitled in order to subsidise the mines.

It is a direct present to the mines.

It is a Christmas Box.

Who pays?

Well, in principle that may be wrong, but I see no difference in principle between that and the subsidy which we are paying say to the wheat farmers in order to stabilise the price of bread.

You are raiding the loan funds.

It was essential that the natives should get an increase in wages. I think the increase they get is inadequate. In the circumstances I am not concerned with how that increase is met.

Why raid the loan funds?

The point is this, that we have adopted the principle in the case of the wheat farmers, and I do not see why we should differentiate between one industry and another, more particularly if we realise that South Africa is a substantial shareholder in the mining industry. We are receiving not only by taxation but under the mines’ leases arrangement a very substantial revenue from the mines, and therefore there is a responsibility on the Government to see that the men working in the mines shall be able to get better conditions than they do get.

Only the black man.

So far as the European miners are concerned I do hope that the Minister and the Government will not be deterred by the clamour which is going on about the closing of low grade mines— that they will not be deterred from bringing pressure to bear on the mining industry to see that the request put forward by the European miners will also be adjusted and seen to. In that regard I want to remind the House that last year the mining industry paid away £19,000,000 by way of dividends, and therefore it is unreasonable to suggest that the demand which is made, and I think rightly made by the European miners, is one which should not be acceded to. In that regard also I want to touch upon a point which I hope the Minister will consider and that is this—and it applies more particularly to the subsidy which has been given to enable the mines to pay for the increase in native wages—that we are going on a wrong principle, whether it be as far as the mines are concerned or as far as the farmers are concerned in subsidising, irrespective of whether a proposition is a payable proposition or an unpayable proposition. We should adopt the principle which as far as agriculture is concerned has been adopted in Britain, of paying on marginal land. Where unsuitable land has been put into use and is not on a paying basis, then those farmers should be subsidised, but not the farmer who is already working good land and making good profits. And the same principle should be applied to the mining industry. I see no reason why the Government after deciding on a policy of subsidisation should simply pay a mine, irrespective of whether that mine is a rich or poor one. The subsidy should only go in respect of low grade propositions, that is in respect of propositions which cannot afford to pay an increase of wages. And in that connection I agree with the hon. member for George (Mr. Werth) that where mines are threatening to close down, as in the case at present, the Government should make a rigid investigation. It is true, it has a committee to investigate the position, but it should rigidly investigate the justification for the closing down of mines because our experience in the past has been that mines have closed down—low grade mines have closed down, and thereafter they have been sold by the companies to private individuals, and in many cases these mines are still working at a profit, and that being so the Government should see to it that they go into the whole expenditure—overhead expenditure, huge directorate fees, management fees and all these things, before they agree to a mine being close down, and discourage threats of closing down having any effect on public opinion. And if they come to the conclusion that a mine is not payable then instead of allowing the mining company to sell that mine afterwards to someone who may work it at a profit, the Government should consider even from a pure point of preventing unemployment, whether they should not take over that mine and work it themselves. I hope the Government will take that into account. They may perhaps take over such a mine at a consideration. I hope all these points will be carefully considered and I hope the Government will not be bluffed by the companies’ threats of closing down.

I want to draw a comparison this morning between the gold mining industry and the farming industry. The gold mining industry has been in existence in this country for years, and people have always contended that the gold mining industry is the backbone of the country. We as farmers have always contradicted that contention and we have preached the doctrine that South Africa will have to come back to agriculture and to farming. Now, what has actually happened? It appears from speeches made by hon. members opposite, and especially from the speech of the hon. member for Houghton (Mr. Bell) that they can no longer justify the doctrine and the contention about the goose which lays the golden eggs. Another section of the population is now being called upon to pay. In days gone by the assets of the State were used to give those people the opportunity of making big profits. They have always had the benefit of being able to buy the farmer’s products at ridiculously low prices. They have all been able to avail themselves of these opportunities to make profits out of the exploitation of the gold mine, but a new phase has developed now so that today they are no longer asking the public indirectly to make sacrifices to fill the pockets of the mining magnates, but the Minister of Finance has now come forward openly and taken money out of the country’s loan funds to hand over to the gold mining magnates. We are reminded that there was a reference in the Minister’s Budget speech last year to an amount of £10,000,000 having to be found. The Minister on that occasion saw his way to take only £900,000 from the gold mines while the general taxpayer had to contribute £9,000,000. But it is perfectly clear to me that from that stage the mining magnates started obstructing, and they induced the Minister to return to them that contribution plus interest—not only the £900,000 but an additional £900,000 as well. That puts us in the position that we have to ask the Minister of Finance this: “Does the Minister hold out the prospect of this step having to be regarded as a precedent, and does he hold out the prospect of the gold mining industry coming back to the State to ask for a further subsidy?” Imagine, Mr. Speaker, what the position would be if the farming community were to approach the Minister of Finance and ask him for a subsidy on farm labour. The farmers are today paying double and more than double for their labour. The farmer has to continue producing. Now, let the farmers go to the Minister of Finance and ask him to subsidise them in regard to their labour. What would the farmer get from the Minister?

The farmers get it in their prices.

We have heard a lot of talk about subsidies here. The hon. member who has just sat down referred to subsidies to farmers. The farmers do not need a subsidy from the State if they get a fair price for their products. Now let us go a little further and see what the farming community gets from the Minister as compared with the gold mines. The Minister knows that during the past year, and before that too, the farmers came along individually and through their organisations, and asked the Minister to make it possible for them to rehabilitate themselves so that they might be in a strong position to face post-war conditions. The farmers asked: “Give us the opportunity, now that we are able to get ahead a bit, to redeem our bonds and don’t tax us in respect of these amounts which we are paying off on our bonds.” And what reply did we get? The Minister did not listen to us. We got nothing at all. The system of interest subsidies was changed but it certainly did not achieve the object which we had in mind. It did not make it possible for the farmers, it did not encourage them to redeem their bonds and so be put in a strong position so that when times go against them they will be able to face adverse conditions. On the other hand we find that the Minister gives £1,800,000 to the mines, and in that way he is creating a precedent. Let me continue my comparison. If the Minister of Finance had been prepared to meet the farmers in regard to the redemption of their mortgages—what effect would not it have had on the revenue the Minister would have collected, even if it had applied to mortgage bonds contracted before 1939? It would not have amounted to anything like £1,800,000 if the Minister had met the farmers in this way, and if by doing so he had made it possible for them after the war to stand on their own feet. What did the farming community get? They asked for relief but they did not get any relief. They got the very opposite—an increased estate duty, increased transfer duty, increased wine tax and an increased tobacco tax.

Who pays for that?

The hon. member over there will never understand the farmer’s psychology, nor will he ever understand the inner workings of farming.

I am a better farmer than you are.

That is what the farmer got. Who will have to bear this burden of £1,800,000? The poor people will have to bear it. Under the system which we have today a man may be as poor as a church mouse but he has to make his contribution, and he is not let off anything. The Minister goes further and he even taxes people who cannot afford to have bread, butter or meat every day of the week—the hon. member for Bloemfontein (District) (Mr. Haywood) has proved that a man with an income of £26 per month has to pay £7 10s. per year by way of taxation. They are forced to bear this heavy tax at the expense of their family. I feel that where the Minister is giving the mines £1,800,000 to pay their natives a higher wage it is the rest of the country which will have to pay for that. We should remember that that money is not only paid to natives recruited in South Africa but also to natives brought here from elsewhere—to natives who take that money away with them across our borders. This action on the Minister’s part will be a black mark on his record. Now, I want to say a few words about the burden of taxation on the farmers. Can the farmer today still afford to buy a bit of land, can he still afford to pay off his bond? Do hon. members know what happens? As soon as a farmer redeems his bond the Minister’s office is informed by the Deeds Office; and I wonder whether hon. members are aware of the fact that immediately afterwards people are sent to the man’s farm— they go into his house and insist on his accounting for everything—he has to tell him where he gets his lights from, his dining room suite and all the rest of it. It is a scandal. Under the rule of the present Minister of Finance the reputation of the farmer, in the opinion of the Minister, has dropped to such an extent that it is considered necessary to send detectives of this type to find out what is going on in the farmer’s house.

Where did that happen?

That happened in Kroonstad and I can give you the names of the people. The farmers today are being humiliated in the most scandalous way. A farmer’s banking transactions are no longer his private concern. An order is made against him and his banking transactions are enquired into. That is what the farmers have got from this Minister—from the Minister who is willing to give the mines £1,800,000. But these taxes which the Minister is now proposing go a bit further. If I as a farmer incur expenses to buy machinery, if I buy a cutting machine, a plough or some implement of that kind, I am not allowed any abatement on my income tax. I have to be satisfied with the ordinary abatement of 10 per cent. for wear and tear. The capital which I invest in the machinery which I need to produce is taxed.

I think it would be better if the hon. member were to discuss these matters when the Bill is before the House.

I am discussing a tax here, and I want to point out that the farmer as such is taxed even where his assets are concerned—and I am comparing the position of the farmer with that of the mines. The farmer who is on a cattle basis and not on a cash basis is in such a position that when he sells his cattle the whole of his income becomes taxable. That brings about this inequality in our taxation system. What has become very clear to me since yesterday is that members opposite get up and try to defend the Minister and things like that. They try to defend and protect the mines, but in the long run they agree with us that there is something radically wrong with our taxation system. Well, will those hon. members—especially the farming members—be prepared to go to their constituencies and try and put up a case in defence of the action of the Minister of Finance?

Oh, yes.

The hon. member may perhaps do so but not farming members. I can assure them that their supporters throughout the country are much more sensitive and concerned about the taxation system than we are. You get more complaints from them than from the Nationalists.

That’s because your constituents are rich.

No, we are the poor. The hon. member does not even try to defend his case. Go to the platteland and try to defend what the Minister of Finance has done, and then you will see what will happen in your constituency.

Mr. Speaker, the hon. member who has just sat down is a geological curiosity in politics. If it were not for the gold mines of South Africa there would be precious little farming in this country.

That is an old story.

If the golden stream did not irrigate the wheat and maize lands and everything else, there would be little farming in South Africa. We know what happened before there were any gold mines; there was no money, no farming and no population. If my hon. friends would only recognise that, it would be an advantage. They will do everything for the poor except get off their backs. But, Mr. Speaker, I want to get onto the gold question, and in regard to that I am rather interested in the Cabinet, because I find that the Minister of Mines has been telling the people that we are going to have a free market for gold all over the world. I am sure the Minister of Finance, the Deputy-Prime Minister, is not going to be so foolish as to say that. It would be rather amusing to see these two Ministers feeding out of the one trough, but we should not have a Cabinet of all the talents speaking with two voices on the question of gold. We have to be extremely careful in South Africa in regard to the gold mines. It is nothing to laugh about, because I would remind our friends on the other side that the gold mines may be a wasting asset. Our sales of gold in 1940 amounted to 14,047,000 ounces, which fell in 1943 to 12,800,000 ounces. The Minister of Finance and the Minister of Mines know what that means. And the United States’ enormous hoarding of gold is also slowly decreasing. The nett loss last year was 1,000,000,000 dollars. Now the United States has ability to export a large volume of goods which the world wants, while she has little real need for equivalent imports, and we must not forget that the last few years has seen a great deal of refugee capital bringing an influx of gold into the United States. This has amounted to over 10,000,000 dollars between 1935 and 1941. The front benchers on the Opposition side wish us to sell gold in South África as we sell wool and maize, but who will take it? Who is going to buy our gold? I raised the question of the sale of gold in quite a different way, because I wanted to point out that now is the time for our Minister to get into India and buy rice and calico and sasny bags which he can get at a cheap price. The Bombay bullion market reflects to a large extent Japanese penetration, and this has led to great hoarding. The military outlook in Burma suggests that the news will soon be bullish for the rupee, and the bullion market trend will then be reversed. I do wish before our friends over there talk so freely about gold that they would find out what it means.

Are you not expecting rather too much from them?

Well, I have a kindly nature. Our friends over there get up and talk about gold, upon which the whole of South Africa rests, and say: “Open the markets of the world and send our gold all over the world, because all sorts of people are willing to buy it.” Well, Sir, as I said, the news today is rather bullish for the rupee and the bullion market may return to normal. It is quite true that gold has been shipped to China, the Middle East and to Latin America, but since 1940 Brazil’s gold reserve has increased by over 200,000,000 dollars; Switzerland’s by 500,000,000 dollars; Sweden’s by 250,000,000 dollars; and Turkey’s by 173,000,000 dollars. These countries have sold more goods than they buy. The United States have already turned round and said to Russia: “We want no more gold; we are not taking gold for goods any more.” My hon. friend the member for Swellendam (Mr. S. E. Warren) laughs. Well, he knows as much about gold as he does …

A cat may laugh at a King.

I want to say to this House that we have to be extremely careful about what we say as to the sale of gold in the world. We are not yet certain that our currency is going to be based on gold, or international trade either, and South Africa has to do all she can to hang on to this agreement with the Bank of England. I hope my hon. friend the Minister will teach the hon. Minister of Mines that, so that he will no longer say we have a free gold market; because there is not a free market in gold. The people who will suffer most will be the farmers if the world breaks with us on gold. If that happens we can throw up our hands, and we will not be able to trade; we shall be absolutely finished, hopeless and helpless. If I had my way I would not have allowed this discussion to take place, because the Americans are watching us closely. I had a letter from New York yesterday, and it appears the United States do not want to supply us with goods because we are digging gold. If a prominent citizen of America, a very big man, said that America is not going to buy gold, you would see the biggest crack-up you have ever seen in South Africa, and when members on the Opposition side get up and talk lightly about South Africa selling gold in a free market, they should remember the possibility of a crash bigger than any before.

[Inaudible.]

The Opposition may be the government one day, and when they are the government they won’t talk the sort of nonsense they do today.

Like you.

It is not nonsense I am talking, and you will not put me off by remarks of that type. I warn the Opposition that if they keep on talking about the free sale of gold and keep on attacking the gold mines, as they are doing, they are making a great mistake. I owe the gold mines nothing, there is nobody in South Africa who has been hit by gold mining men as I have been, they have destroyed newspapers that I have made, and on two accasions they have thrown me into the dust when I had a wife and family to bring up without any money. But this is not a personal matter, Mr. Speaker; it is a question of the economics of this country, and if you attack the gold mines of this country you are heading for ruin. My friends over there forget one thing. We are selling our gold to Great Britain, and what do we get in return; or rather what does Great Britain get in return from us? Canada has given Great Britain £500,000,000 because they recognise what Great Britain has done for them. But what have we done here in South Africa? Great Britain takes our gold, she has always helped us, she is protecting our shores here with her fleet. We know that submarines today are close round our coasts, and we know our shipping is in great danger. For the first time submarines menace our shipping close to our own shores, and we are protected by the British Fleet, for which we give Great Britain nothing, not a single penny. Canada has done it; we have done nothing. Now I want to come to this question of the £400. I represent a working class constituency, and let me tell my friends on the Opposition side that the people in my constituency are proud to pay this tax on incomes of £400 a year. They are proud because they are paying for the war. My friends of course, want to get away with everything, because the farmers have never been better off in their lives than they are today and the working classes have never been better off. But these latter are paying for the war. I would like to make a large section of the Nationalists pay for the war. We who are on the war side are not only paying very high taxes but we are collecting millions and millions of pounds out of our own pockets for the Governor-General’s Fund and other war funds, and we are not going to the Government and saying, during war time: “Lessen the taxation on South Africa.” We congratulate the Minister on putting on these taxes, these men and women in working class constituencies congratulate the Minister, because they know they are paying for the war and they are proud and pleased to do it. They know that the more they pay the sooner the war will be over. I know the Minister of Finance is a strong Minister, and I also know as a newspaper man, that when any newspaper in South Africa is short of an article and a leader writer comes along and says he does not know what to write about, the answer always is: “Give Hofmeyr hell.” That is the answer in every newspaper office. The Minister has stood up to it, and there is one thing we have to thank him for, and that is that he has stopped an enormous amount of inflation in South Africa. People generally do not know what inflation will mean in South Africa, and we have to thank the Minister for stopping a great deal of it. I am very much afraid of inflation in South Africa, and I am very much afraid of this 2s. increase for maize. That is inflation; that is going to cost the country £1,000,000, and I doubt whether the agricultural and economic experts are behind that. The higher you send up the price of food the harder you make it for the gold mines to work and the people to live.

I had not intended taking part in the debate on these taxation proposals, but things have been happening which have made me feel rather uneasy. I am sorry the Minister of Mines is not here because I put certain questions to him a little while ago. I asked him whether during this session he had received a delegation of mine-workers from the Witwatersrand and whether he had met a delegation of gold producers, also whether he had received another delegation representing the mineworkers. I asked him what representation they made to him and to what extent he was able to meet their requests. Now, at this very time the Minister of Finance comes along and presents the mines with nearly £2,000,000 to subsidise the wages of the native mineworkers. In replying to me the Minister of Mines admitted that various delegations had met him but in regard to our request for information about the representations made to him he was not prepared to answer that part of my question. I only want to say that at a time like the present when everything seems to be in a state of chaos, the Minister should take the House into his confidence. We know that a delegation from the gold producers has been to see the Minister. I myself saw them with the Minister. They were here for quite a few years before the delegation from the mineworkers was received by the Minister. Things do not look too good to me, and they fill me with a sense of suspicion. If we look back a little in our history we find that throughout the history of the mines they always used the same old tactics. When we come to a period such as we are passing through today, when the question of taxes is under discussion, they come here suddenly, they run to the Minister, they tell the Minister that their mines are working a low grade of ore, that their production costs have gone up tremendously and that the Government must help— otherwise they will be forced to close down. In the past the mines followed similar tactics. What did we find during the last war and after the last war? We had the same threats and the Government time and again give way to the Chamber of Mines. The Government adopted the policy of allowing things to develop, and who were the victims?

The white miners. And did the mines which had threatened to close, close down? Has the hon. the Minister forgotten that those very same mines which came here, and said they would have to close down—mines like the Kleinfontein for instance—within one or two years made big profits, that their shares went up tremendously and that they are still working today? I hope the Minister is not going to allow himself to be influenced by those threats. The policy in those days was to employ as few white workers and as many natives as possible. And now the Government steps in, and without the natives really having asked for it, takes money out of loan funds to attract natives to the mines. It is a very dangerous principle. We have the same position again today. I have before me the S.A. Mining and Engineering Journal which contains the quarterly reports of a series of mines. It gives the returns for two quarters, one of which was the quarter ending on the 30th September, 1943, and the other was the quarter ending 31st December of last year. If we study the groups we find that many of the mines shown in this report during the last quarter made tremendous profits? Not only did they make big profits but some of them even made record profits in this last quarter. There is Blyvooruitzicht for instance, City Deep, Daggafontein and many others, which made big profits. And then the hon. member for Houghton (Mr. Bell) comes here and wants to tell the House that the mines will go bankrupt, and the hon. member went even further and said that this £1,850,000, actually speaking, belonged to the mines, and that that was the money which was now being used to pay the subsidy. I don’t think he can be so ignorant as not to realise that this £1,850,000 would never have gone to the mines but to the Bank of England if it had not gone into our Exchequer. If he does not know it he should study the position. This money does not belong to the mines, yet the Government steps in and takes the money out of loan funds for the benefit of the mines. This attitude of the Government’s scares me, and makes me feel nervous in regard to what is going to happen to the miners in other respects. We had a commison to go into the question of Miner’s Phthisis and no matter whether one reads the majority or the minority report, one thing is clear, and that is that there are certain things which the mineworkers must get, which they are entitled to; and one of the recommendations is that sufferers from occupational diseases should be treated in the same way as sufferers from silicosis. Pressure is now brought to bear on the Government and we are told that the mines are on the verge of bankruptcy. I hope the Government will not allow itself to be misled. The mines now say that they cannot afford to increase the wages of the white miners. How then are the miners in future to get these concessions in regard to occupational diseases? I am afraid the Government is now shutting the door so far as these questions are concerned. I should like to say something about that question because at the present moment the Government is again discussing the subject with a delegation from the Mineworkers Union. The mineworkers a short while ago asked for an increase of 30 per cent. because of prevailing war conditions. The Government turned a deaf ear to these requests. One conference after the other has been held, and if we ask what the Government is going to do we get no answer. As negotiations are again going on I want to say most emphatically that the demands made by the miners are fair. Every white miner today is doing the work done by four or five white men before the war. They are using up all their energy. I have letters here which only reached me yesterday from the Witwatersrand letters from miners suffering from occupational diseases, miners who are near the end of their lives. Are those people not going to get any compensation? The Minister cannot shut the door; he cannot give way to the Chamber of Mines. I want to express the hope that the Government will have the courage to put its foot down and take up a strong and deliberate attitude. The Government owes it to the miners, and if they again threaten to close down let the Government step in and tell them it will work the mines itself. That is why we feel so strongly that so far as the mining industry—the country’s great key industry—is concerned, we should have a certain degree of State control, and the time will come when we will have to accept such a policy. I therefore want to plead again on behalf of the mineworkers, and I want to ask that whatever the Government does it should not ignore the representations made by the miners. There is a very strong feeling among the miners. My constituency consists principally of miners and these people are astounded—they are aggrieved at the fact that the Government is giving this £1,850,000 as a subsidy for native wages while the white workers who have asked for an increase can get nothing done. Now, let me go a little further. The hon. member for Houghton said this to the Minister yesterday : “Look, there is an agreement with the Bank of England, we cannot get away, from that because we cannot amend it.” And the Minister of Finance also referred to that agreement. The Minister of Mines, however, stated in this House that we should have an open market for our gold. Now, where do we stand? We are anxious to know what the Government’s policy is. If I have an agreement with someone and I see that it is going to be detrimental to me surely I can try to get it amended? That is why I support the amendment proposed by the hon. member for George (Mr. Werth) and I say that a revision of the agreement should be seriously considered by the Government. I have not got much time left but I again want to plead on behalf of the lowly paid people. If we look at the hon. member for Hospital (Mr. Barlow) who tells us that the people drawing less than £400 per year applaud the fact that they have to pay taxes, we feel that the hon. member should go back to his constituency and consult a brain specialist. When the Minister read out the taxation proposals I listened very carefully, and it struck me that if the Minister were a married man and had children in the high school, and perhaps one or two at the university, and if he had an income of £300 or £400— instead of living in a glass house—I wonder whether his patriotism would have been as great as it is today, and whether he would have been prepared to put a tax on the lower paid section of the community? I doubt it. I say that a man whose income is less than £400 per year lives below the breadline, especially if he has a family. I know what I am talking about when I say that a man who earns £400 and less, and who has children, cannot educate them properly or cannot send them to the university. I am pleading on behalf of the lower paid section, and when I speak of the lower paid section I have in mind the enquiry which was held in Johannesburg in regard to dog races—one of the greatest evils in this country. I do not believe the Minister can mention one authoritative person who gave evidence in favour of the continuation of dog racing. And what is the Minister doing about a tax on racing which is ruinous to the people? If the Minister were to tax racing so that it could no longer exist his action would be appreciated by the nation as a whole, but the Minister is doing nothing there. The poor man is being taxed more and more heavily. Brokers’ notes are taxed by a trivial amount, but the lower paid people are suffering ever increasing hardships. I again want to ask the Minister not to worry about the stories told by the Chamber of Mines. Remember that we have had those yarns before. In the past we were always told : “Don’t kill the goose that laid the golden eggs.”

Very good advice.

Well, we know how much there was in that story. The mines did not close down. On the contrary, within a year after they had made their representations, their shares in many instances went up tremendously. If we take the years 1936 to 1942 we find that £131,200,000 was paid out in dividends. Now, how far does the patriotism of those people go. They make millions of profits and then they come here at this stage and threaten us that they are going to close the mines; even if they only make a small profit in one year—they threaten us that they are going to close down if the Government does not come to their assistance. Of this amount I have mentioned £72,000,000 was paid out to foreign shareholders and only £28,000,000 to shareholders in this country. Why all this special concern for the shareholders? What interest have these people in South Africa. They are good Afrikaners until trouble crops up and then they shake South Africa’s dust off their feet and go “home.” I am not opposed to the payment of dividends, but if all these millions have gone into the pockets of the shareholders they should not, immediately there is a setback, hold a pistol to the Minister’s head and tell him they are going to close their mines. I want to conclude with an appeal to the Minister by asking him to meet the lower paid section of the community. They cannot manage today. People earning between £240 and £400 find it impossible to pay taxes. Rather let the Government tax the dog races and the horse races and other capitalistic concerns; if they do so they will render a great service to the people.

I should certainly be failing in my duty if I did not protest against the taxes now proposed by the Minister of Finance. Now, first of all let me ask him a question. Has he forgotten that there are 450,000 whites in South Africa living below the breadline? And who are those people who are living below the breadline? Those people who are living below the breadline are now being threatened with having to pay taxes. Let us see what the position is in regard to the sale of land—let us deal with the estate duty.

Do the people living below the breadline pay the estate duty?

I am first of all dealing with the estate duty where the Minister has now brought the exemption down from £15,000 to £10,000. It is the middle class man who is hit by that. With the price of land being as high as it is today, it does not take much land to produce £15,000—one has to pay £15,000 for a relatively small piece of land. Assuming there are six or seven children in a family, the tax is going to weigh very heavily on them. The Minister asked whether those people were living below the breadline. Let me tell him who are living below the breadline It is the middle class farmer who is living below the breadline. Unfortunately there is an idea in this country that a man who has a bit of land is not living below the breadline, but that bit of land is often heavily mortgaged—the cattle for all practical purposes, belong to the Land Bank. The cost of living has gone up and the Minister knows whether these people are living below the breadline or not. The products which this man sells have to be produced at considerable expense, and the prices are low in comparison with the cost of production. Is not that man living below the breadline? And what about the tenant of land? These people used to be able to look after themselves in the past, and by dint of hard work they succeeded in getting a few head of cattle together. They hire land but the rent they have to pay has gone up to such an extent now that they find it practically impossible to make a living. Some of them have taxable incomes. They have to pay taxes. But what is the position in regard to the families of these people? They cannot afford to send their children to the university, and they cannot make any headway. If we talk talk about living below the breadline we should not think of food only. There is a greater hunger than that—people are suffering today because they cannot look after their families in the way they want to; they cannot give their children an education which will enable them to look after themselves and to carve out a career for themselves. Then there is another serious evil in this country, and that is the position of the bywoner. They are in a very precarious position as a result of the increase in prices. Some of them have incomes of from £250 to £400. They are the people who suffer, and it is their cause that we plead. We want to ask the Minister not to be hard on these people. They are the people who are carrying the country on their backs. They are the people who produce, and they constitute the section who are suffering most hardships today, and the great masses of our population consist of that type of person. I also want to ask the Minister to have some sympathy with the lowly paid officials. We know that they have to work very hard in times like the present; they are required in times like the present to use their best efforts, but in spite of that their pay is very small. They are an asset to the State and we must not forget them.

†The MINISTER OF FINANCE; For some time now I have followed the custom in replying to the Budget debate of using one language only, that being the language other than the one I used in introducing the Budget.

On a point of order, Mr. Speaker, I was on my feet to address the House.

That is incorrect. When the last speaker sat down and no one stood up, I said: “I shall now proceed to put the question,” and as no one else stood up I saw the hon. the Minister who was on his feet. The Minister is in order and may proceed.

In view of the growing importance of the debate on this taxation motion I think it is desirable to follow the same procedure here. The position arises that you have members dealing with the same subject, very often a very important subject, some of them in English and some of them in Afrikaans. And it becomes most awkward if you have to reply to each in the language in which he has spoken. I therefore propose in future to follow the same procedure in regard to the debate on the taxation motion. This year I introduced the motion in Afrikaans, and I shall therefore reply in English. Now, I propose mainly to confine my remarks to the amendment proposed by the hon. member for George (Mr. Werth). The hon. member for George has moved an amendment which asks for the substitution for all the words after “that” of certain words refusing to go into Committee of Ways and Means until the Government had undertaken to do five things which are specified in paragraphs 1 to 5 of his amendment. I shall deal with these five clauses of the amendment in turn. The first and most important of the clauses of the amendment deals with gold and the gold mines. There are really two parts of that first clause. The first part of that clause deals with the question of the selling price of gold—the price at which we sell gold to the Bank of England; the second deals with the question raised by the Government’s recent announcement in regard to the increase in mine native wages and the use of the gold realisation charges in connection therewith. The first point then, and that is the most important point raised in this debate, is in regard to the sale of our gold to the Bank of England. Roughly, what has been said on the opposite side comes to this: We are today selling our gold production to the Bank of England at 168s.

No …

I am simply putting it as stated by my hon. friends opposite. The Bank of England sells our gold in the United States at 174s. and makes a profit thereon. The Bank of England sells our gold in South America at 220s.; the Bank of England sells our gold in neutral countries—we are not told at what price but apparently the House and the country were intended to believe that there, also, a profit was made; and the Bank of England sells our gold in India at rates up to 320s. The hon. member for Fauresmith (Dr. Dönges) produced globular figures indicating the extent of the Bank of England’s profits in respect of our gold sales in India. I have no means of controlling these figures of his, which at any rate are based on inferences and estimates, but I will say this, that I have no doubt whatever that the amount of our South African gold sold by the Bank of England in India is nothing near the figure which the hon. member mentioned.

How do you know that?

That is the statement made on the opposite side of the House, and then the question is asked: “Seeing the Bank of England is getting all this profit, why should we not get this profit?” I think that is a fair statement of the case as put up. Well, the answer is in the first place that we have an agreement with the Bank of England. The question has been asked what is the nature of that agreement? The agreement is a perfectly simple one. The agreement is that for the duration of the war the Reserve Bank shall give the Bank of England the first call on our gold over and above what is required by the Government for its purposes, and the Bank of England will then pay for the gold which it acquires from the Reserve Bank at the London official price, although we deliver that gold in Cape Town or Durban. That is the agreement. Before we entered into that agreement, of course, we consulted the Reserve Bank, and the Reserve Bank advised us that that was an advantageous agreement to enter into. Up to that time we were, in respect of the gold which we sold, liable for what are usually called realisation charges, which amounted to 3s. 2d. roughly. It was pointed out that if we had no such agreement as that with the Bank of England we could have no assurance that we would in fact be able to dispose of our gold and we would have no assurance that the realisation charges would not in time exceed that figure of 3s. 2d. We were advised, that it would be to our advantage to accept that offer, and we did accept that offer. Now that offer has been to our advantage. It has meant that we have had no longer to pay anything for the realisation of our gold. That has meant that we have put aside into what is called the Gold Realisation Charges Account an amount of roughly 3s. 2d. per ounce of gold, and that has meant a figure of some £10,000,000 to us. But it has meant more than that. It has meant also this, that if we had not accepted that offer, in view of the course which the war took subsequently to that offer being accepted, it is perfectly clear that we would at certain periods at least have had to pay more than 3s. 2d. to get our gold realised. That arrangement therefore has very definitely worked to our advantage, and it is hardly in accord with the honour of South Africa that having derived benefit from the agreement we should seek to get out of it as soon as we think we can derive some advantage from doing so.

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

I was speaking when the House rose about the question which was raised in the first part of the amendment of the hon. member for George in regard to the sale of our gold, and I referred to the statement which had been made during the debate on the other side of the House suggesting that the Bank of England was making a substantial profit on gold acquired by it from South Africa and asking why we should not get those profits. I had explained the agreement with the Bank of England, in terms of which we have been acting, and indicating that this agreement has definitely worked to our advantage. I now propose to set aside any consideration in regard to the agreement and look at the matter quite independently of such considerations. Let us consider for a moment this profit which the Bank of England is supposed to be making and which we might have but are not getting. In the first place I do not suppose there is any ground for suggesting that the Bank of England sells gold in neutral countries in Europe, at what my hon. friend is pleased to call a profit, in other words at prices in excess of the exchange rate which would be comparable with the rates payable for our gold. There is therefore no such profit. I think I am perfectly correct in saying too, that none of our gold is sold by the Bank of England in South America. That therefore also falls away.

Who is selling gold in South America?

We are not the only people who have gold to sell— the Bank of England is not the only holder of gold. I am merely telling the hon. member that the Bank of England is not selling our gold in South America. Then there is the question of the sale of our gold to the United States. My hon. friend suggests that that sale takes place at 174s. whereas the Bank of England pays 168s. for it. Well, of course, the Bank of England pays 168s, for that gold in Cape Town or in Durban. The Bank of England gets not 174s. in New York but 174s. less in the first instance one quarter per cent. commission for assaying, and less a deduction for handling charges. It therefore gets less than 174s. And the Bank of England has to provide for the transfer of that gold from Cape Town or Durban to London, and from there to New York or direct from Cape Town or Durban to New York.

Who takes the risk?

Naturally, the Bank of England has to take the risk. If we had to transport that gold we would not only have to pay for the freight but for the insurance as well and those insurance rates have been very high. They are lower now than they have been. But even at the present rate of insurance, and even assuming that that gold were transported direct from Cape Town to New York, it would cost more to get that gold there than the difference between the amount which the Bank of England pays and which it receives in New York. If we had to sell our gold direct in New York, we would have been a loser and not a gainer.

That is a tall statement.

So much for that part of the profit. Now we come to the question of gold sales in India, and this is really the most important aspect of this matter. The British Government advised us a few months ago of its intention to sell gold in India. It must be remembered that the British and Indian Governments are maintaining the rupee sterling exchange rate as it was before the war, despite the very considerable amount of inflation in India. Because of that the British Government has to pay very much more for its requirements in India than it would otherwise do. And the British Government therefore felt that in so far as it was appropriate for it to sell gold in India at a higher price in rupees, it should get the benefit of that in relation to its purchases in rupees in India, Even so, the extent to which the British rupee purchases are covered by gold sales in India, is relatively a small percentage of the total amount of the British purchases in India.

What is the rise in the cost of living in India?

I am afraid I do not carry all these figures in my mind. At any rate the inflation in India is considerable, but in spite of that the rupee sterling rate has been maintained. In other words, insofar as the British Government could sell gold in India it wished to cancel out the effect of that high exchange rate.

Why not change the rupee sterling rate?

That is their business, but if the rate were changed then all these prospects of our getting a profit from the higher gold price would disappear. They, however, wish to cancel out the effect of high prices by selling gold at a certain point, and at the same time by selling gold they wished to combat the inflation in India. We then pointed out to them that we also as a Government made certain purchases in India. We bought sasny bags and ground nuts in India. Private trade has come to an end in these and other commodities but the Government does the purchasing. We have to buy and pay at these inflated rupee prices, and to that extent we are importing into South Africa the Indian inflation, and we therefore pointed cut that it was reasonable that we should also get the benefit of this higher gold price in India as far as wè made purchases in India. It was to those negotiations that the Prime Minister referred when he spoke in another place recently and on that point I am glad to say agreement has been reached. Agreement has been reached on the basis that the British Government will give the Union Government facilities for sharing in its sales of gold on the Indian market to the extent that it requires rupees to meet its own commitments in India. That is the present position. Now my hon. friends will probably say : “Why have not we asked for more?” Why are we not attempting to get the inflated price of gold for all our gold purchases in India?

No.

What about the supplies to our troops in the Mediterranean?

We made a very good bargain at £1,000,000 per year, and only a small proportion of the British Government’s purchases come from India.

It is £1,000,000 per month, not per year.

Do my hon. friends wish to suggest that aeroplanes and parts of aeroplanes come from India? Half a million of that million per month is in respect of the Air Force—how much of that comes from India? And even insofar as some of those goods do come from, India the amount of British purchases in India covered by the gold sold in India is still a small percentage. There is nothing in it. Now, the hon. member for Fauresmith (Dr. Dönges) admitted in effect that there would be difficulties in the way of our selling our whole gold output in India. He admitted the difficulty of our buying rupees substantially in excess of our imports from India. And we are not proposing to use our gold to buy rupees for our own gold in India in excess of our imports. If we went further than that, if we sold gold in India beyond the amount of our imports from India, it would simply mean that we would be acquiring overvalued rupees, rupees which are overvalued because of the present policy of the British and Indian Governments in maintaining the present exchange rates. The hon. member for George (Mr. Werth) may not admit it now, but he certainly did suggest that we might quite well get rid of our whole gold output in India. I am afraid, Mr. Speaker, that the hon. member often gets so carried away by his eloquence that he says at times more than he intended. Certainly, this impression has been created that there is no reason whatever why we should not sell all our gold production in India. My hon. friend the member for Fauresmith (Dr. Dönges) appreciates the point I have made perfectly well, but there are several other members on the opposite side of the House who are definitely under the impression that there is no reason why we should not sell all our gold in India. Suppose we did. In the first place I would like to be told how we are going to get the shipping to take all our gold to India; I would like to be told how we are going to get the insurance for gold exported to India so substantial in amount. I would like to be told what we are to do with these rupees when we have got them. I would like also to be told why, if it would be so advantageous to South Africa to sell all this gold in India, why if we are now throwing away this tremendous possibility of gain, America which holds 70 per cent. of the gold reserves of the world, does not take this opportunity to make some little profit for itself. Mr. Speaker, it seems to me that the point has not been sufficiently appreciated that the Union and India and other States to which reference has been made are not on the gold standard. If they were still on the gold standard, then I suppose it would be clear to everyone, as apparently it is not clear to the hon. member for George, that the high price of gold in India simply means that the paper rupee has depreciated seriously in relation to gold. That is what it means. Now, to arrive at the price of 320s. per ounce which the hon. member for George quoted, he has to start with tolas and rupees and then convert those tolas and rupees into ounces and shillings to get at that price of 320s., and he has of course had to use the official exchange rate of 1s. 6d. per rupee.

What else would he use?

My hon. friend is quite correct in saying that, but that happens to be the price at which the rupee has been pegged by the United Kingdom and India. Remove that pegging, and the rupee would immediately drop in value.

It would then be perfectly clear that the high price is essentially a hoarder’s price. The hon. member for Hospital (Mr. Barlow) was perfectly correct in his analysis when he referred to the events on the Burma frontier as having had a very definite influence on the recent rise in the price of gold in Bombay. But suppose that we did sell all our gold in India, one of two things would happen. Either because of the large supplies of gold flowing into India the premium would disappear, or the exchange rate would have to be reconsidered, and it certainly would be reconsidered. In other words, we would have the rupees reduced in value and would have to convert them back into sterling in such a way that the advantage which we gained would be completely wiped out. All that my hon. friends therefore would secure, assuming they could get the gold to India and they have not told us how they will do that, assuming they could get the insurance cover, all thev would do would be to secure a transient advantage which would disappear almost immediately. The hon. member for Fauresmith (Dr. Dönges) has rightly emphasised South Africa’s interest in the stability of the world’s price of gold. But, Sir, one cannot reconcile that interest of South Africa with the pressure now coming from the Opposition that South Africa should in fact become a speculator in gold. South Africa does stand to gain from stability in the price of gold. The fixed price of gold has been to South Africa’s advantage in the past, and that fixed price will be to South Africa’s advantage in the future, but it is not to South Africa’s advantage to try and cash in on passing fluctuations in the price of gold in certain countries. There was a time during the war when gold seemingly was not particularly in demand, when the United States closed down its gold mines, but none the less went on purchasing our gold at a fixed price. At that time we had to count on the goodwill of our Allies to get supplies and machinery to keep our gold mines going. I tremble to think what would have happened to South Africa if we had at that time been compelled to close down our gold mines. Mr. Speaker, we cannot have it both ways; times will change just as they have changed in the past; there will not always be a hoarder’s premium on gold. Let us hold substantially to the principle of South Africa’s interest in a fixed price for gold. Certainly, Mr. Speaker, it would not be to our advantage to go any further than we have gone in terms of this arrangement which we have recently come to with the British Government. The hon. member for George asked a very interesting question. He asked whether the time has not come to sell gold to our own people, whether that would not help us to curb inflation. That is very sound in theory; it is not so easy to apply in practice. I asked the hon. member across the floor at what price he would sell gold to our own people, and that is the real crux.

You want our advice free?

My friend is free with his advice while in a position of complete irresponsibility. He makes completely irresponsible suggestions, and when he is asked what they mean he throws up his arms. Let me put it to him that perhaps when he sees the difficulty he may be more willing to give us some of his free advice. At what price are we to sell; are we to sell at a price above the existing price of 168s., the present fixed price? My hon. friend would rather not answer that. In that event we would not be fighting inflation, but simply confirming inflation. The alternative is to sell at 168s. Well, Sir, I would not like to be the Minister when gold is being sold by the Reserve Bank at 168s. to all and sundry; I would not like to be in the position of preventing the smuggling of that gold from South Africa. And does my hon. friend further appreciate the fact that in so far as that gold is not smuggled out of South Africa, everybody who holds that gold bought at 168s. would have an interest in securing an appreciation in the price of gold and a depreciation of our currency. Does he realise that danger? No, Mr. Speaker, it sounds all right, but when you come to look at these things in practice they don’t work out quite so well. Now I come to the second part of the first clause in the amendment. The Government is asked to abandon its intention of utilising loan funds for subsidising a particular industry in respect of the wages of its native workers. The loan funds to which my hon. friends refer are the so-called gold realisation charges. Now, of course, the gold realisation charges are not a normal part of our loan income. There is no permanent statutory provision which makes them part of it. The hon. member for Houghton (Mr. Bell) is quite correct in describing the position in regard to these gold realisation charges— they are charges which do not happen to be charged, in fact they are a book entry. When the British Government through the Bank of England undertook to pay us the full London price of gold at Cape Town or Durban, it meant in fact that we were no longer required to pay for freight and insurance and the smaller charges in respect of the transport of our gold from here to London, and we simply credited our loan account with that amount.

[Inaudible.]

We do not send it there; that is a matter for the Bank of England. This has in fact been a book entry with which we have credited our account. The hon. member for Houghton has suggested that we might quite well have passed that on to the mines. Of course, if we had done so we would simply have had to increase the taxation on the mines; in other words I do not think the mines would necessarily have been any better off on that account. But because it was a temporary measure, we felt that regarding it as such we should temporarily take advantage of this windfall and put it to the credit of loan account.

You acted as highwayman.

Of course, all that the highwayman ever does is to tax his victims. Moreover, this was in the form of a levy on the products of the gold mines, and not on their profits, and therefore it was in complete accord with a good many other levies to which we have grown accustomed in South Africa.

On whom?

On agriculturists.

They impose a levy on themselves. Well, Sir, the Government then was faced with an emergency, we will say faced with a serious difficulty. A commission had been appointed, it had reported, and that report put up a very strong case for an increase of native wages on the mines. It was clear that something had to be done about it; it was clear also that if these recommendations were carried out, and indeed the commission envisaged that, the consequences would be serious for the mines, and indeed for the country as a whole. There was therefore a very obvious way out of the difficulty. There we had this revenue in the nature of a windfall levied on the product of the mines, something which would in any case disappear in time, and so as the hon. member for Vasco has said, we made an emergency plan and for a period of one year we have allowed the industry to use that levy on its product for the benefit of its employees. That, therefore, is an emergency plan, but let us look at what it signifies, let us look at it in the light of what has been said by the hon. member for George. He said that we proposed to spend £1,800,000 per year to keep 2,000 Europeans at work and to keep four mines going. Now what is my answer to that? In the first place, this does not cost us £1,800,000. We have heard so much of this gift of £1,800,000 to the Chamber of Mines and to the mining magnates that I want to ask who are the people who own the mines in South Africa, who are the shareholders in the mines? The State, to the extent of 70 per cent. is the owner of the mines in South Africa, the State gets the benefit through its taxation to the extent of 70 per cent. and more, and the effect of making available this £1,800,000 is that while that amount disappears from our loan account, we save roughly £1,400,000 on our revenue account.

No, no.

That is absolutely correct. If that £1,800,000 had not been found by us the working costs of the mines would have gone up to that extent and our taxation would have suffered. Does my hon. friend realise that? Has he not learnt that yet? The sooner he starts taking the correspondence course which his party proposes to organise in South Africa, the better. In the second place, I would like to suggest that it is not correct to say that this money is to be made available merely to keep 2,000 Europeans at work. Surely it has been made abundantly clear time and again that the advantage which the State gets from the gold mines, the benefit which the community gets is not merely a direct benefit, but also an indirect benefit, and the loss that will be involved in the mines closing down is far greater than the loss of employment to the European workers on those mines. Thirdly, I would point out to the hon. member for George, and with him I must now associate my other hon. friend, the member for Troyeville (Mr. Kentridge) that this is not a matter of four low grade mines alone; it is not a matter of saving four low grade mines. If it were so, my hon. friends, the members for George and Troyeville, might rightly ask why not only help the low grade mines, why not only help mines that might otherwise close down? This is a matter of making it possible to go on mining low grade ore in every mine on the Reef. Every mine on the Reef has an interest, and we as a nation have an interest in the low grade ore in every mine on the Reef being mined. This is not just a matter of keeping four mines going. It is a matter, we said it perfectly clearly in our statement when we announced this fact, I have that statement here, we made it perfectly clear, and this is what we said; perhaps my hon. friend did not read it—

Of course we said it, and if my hon. friend did not read it, it is his misfortune. You see, Mr. Speaker, we have to look at this from the point of view of the continued existence of our principal asset, of our principal economic standby in South Africa. Surely from the point of view of South Africa’s future it is one of the essentials that we should be able to mine as much low grade ore as possible, and that the mining industry should be able to continue for as long as possible. We would be simply playing the fool with the future of South Africa if we did not realise that fact. The hon. member for Bloemfontein (District) (Mr. Haywood) talked to us at great length of the taxation of mines generally. It was really very difficult to know what all his figures pointed to. I suppose the idea was to suggest that we are wrong in not increasing our taxation of the gold mines this year. We are not increasing that taxation. That is true; and may I just point out as I have already said, that we are getting 70 per cent. of the profits of the industry at least.

I thought it was 77½ per cent.?

My hon. friend may get this thing put right in his mind when that correspondence course starts. We are getting 70 per cent. of the profits of the industry, and that is apart from what we get by way of super tax on dividends, and if hon. members on the opposite side of the House suppose that every person who receives profits from the mining industry is a Hoggenheimer, and therefore a super-taxpayer, if that assumption were correct we would I suppose be getting 90 per cent. But that is not correct, because a great number of the recipients of dividends from mines are not super-taxpayers. I wish they were, from my point of view. The other point to which I wish to draw attention in connection with my hon. friend’s statement and his implied complaint that we have no increased taxation on the gold mines is just again to remind him of the simple fact that in 1941 the working profits of the industry were £8,000,000 more than they were last year. I would like to suggest that he might think for a moment what that figure implies.

Why don’t you take his figures and show where they are wrong?

I have done that so often that it is no use attempting it again. I am quite content to deal with his conclusions. Now I come to the rest of the amendment, Paragraphs 2 to 5. All these are requests for the reduction of taxation. I could not help, as I listened to the hon. member for George, recalling the biblical saying that : “Verily the net is spread in the sight of the bird.” There are a lot of people on this side of the House who would like taxation reduced, but there is no member on this side of the House who is not prepared to see this war through, cost what it will, and there is no member on this side who wants to see the volume of taxation reduced. But what is the attitude of my hon. friends opposite?

What about your constituents?

You leave my constituents to me. They gave me a pretty good majority at the last election. They gave me, Minister of Finance, though I am, a bigger majority than any other Minister got, in spite of the fact that some of them sometimes may act as what the hon. member for Hospital suggested is the practice of the newspapers in leading articles, of “giving Hofmeyr hell.” What is the attitude of hon. members opposite? The hon. member for George last year made it perfectly clear that he did not want us to win this war. The hon. member for Waterberg (Mr. J. G. Strydom) made it perfectly clear this year that he regards every penny spent on the war as unnecessary, and therefore we have a right to infer, when they attack our taxation measures, that their real object is to see that there is less money available for expenditure on the war.

Less money wasted.

The net is spread, but the bird does not walk in; the Vasco bird does not walk into the net. The Houghton bird does not walk in. There is a fundamental difference of approach in this matter on the part of those who would like to see changes in our taxation. There can be no real community in regard to this particular question, because while my hon. friends over there condemn every penny of expenditure on the war, hon. members on this side are prepared to find the money. Now I come to these clauses one by one. First of all, we are asked to appoint immediately a commission to review the whole system of taxation in the country. I admit of course, Sir, that the hon. member for Vasco rather smiled on that suggestion. He was good enough to pay me a compliment in relation to my reply to the Budget debate, but he referred to a friend of his and admitted that he could not challenge my logic, but said that the walls had not fallen down. I am afraid there are some people who will still stand exactly where they did even if we were to appoint a commission, like the woman who was “convinced against her will and remained of the same opinion still.”

Unless and until I am shown where my arguments in my reply to the budget debate are wrong. I must not be expected to budge from my position. In supporting this plea for a commission the hon. member for Fauresmith tried to suggest that we really do not knew enough about our taxation system and we really ought to get more information about it. He said we did not know anything about the taxation structure of the Union, about the way in which the national income is distributed, and the extent to which the burden is borne by the various sections of the community. I know my hon. friend reads the “South African Journal of Economics,” and perhaps he missed the June, 1943, article. If he read it he would have seen there a very excellent article dealing with this particular subject.

It is not full enough.

If my hon. friend read that, I wonder how much he understood of it; I admit quite frankly I did not understand a good deal of it. This was that article on income distribution in the Union of South Africa, and the effect of taxation on the different groups. The hon. member went on further to say that he would like a commission to tell us whether we had not reached the Plimsoll line in regard to taxation, whether the percentage of taxation in relation to our national income is not already too high. Well, the latest available figures for the national income are still those for 1941-’42. The amount raised by taxation in that year was less this 15 per cent. of the national income. Let us assume that it is now 20 per cent. I can only say that if we have now reached the Plimsoll line. I doubt whether there are many countries in the world that could still expect to keep afloat, I should think they would all have been sunk.

[Inaudible.]

That, Sir, is typical of the way in which the hon. member’s somewhat confused mind works. I ask what is this commission going to investigate? Is it going to investigate war time taxation, or our peace time system of taxation? Presumably it will be the war time system.

Why not both?

Well, I can only say that if it is the war time system then I think by the time the commission reports, according to the hopes of all of us the commission’s report will be cut of date.

Another confused mind on your side.

If, on the other hand, it is the peace time system that has to be investigated, I have very grave doubts, having regard to the uncertainties of the future, as to whether this is the correct procedure at this time. Apparently all hon. members except the member for Houghton, have forgotten that a few months ago in this House I made a suggestion to the interested bodies that they should appoint a standing committee on taxation, primarily with the object of making their suggestions in regard to the peace time system of taxation, but not of course excluding the possibility of raising specific points in regard to the present system. The hon. member for Houghton would now like me to withdraw that suggestion. That invitation has however already been accepted, and I could not now withdraw if I wanted to. Commerce and industry have accepted that invitation, they have been to see me, and I welcome sincerely the decision they have come to.

What about other sections?

I am perfectly prepared to hear what the farmers have to say, but these others are the people who have taken this step. They have taken a special interest in taxation in the past, and I shall be very glad of their assistance.

Why not get experts to do it?

In the meantime I would like to assure the House that my department and I are going on with our own examination of the broader taxation Questions which are fundamental in relation to our peace time system. There is the question, for instance, of our system of taxation of companies. There is also the question of our two-fold system of normal and super tax and the possibility of replacing that by a single system. The fact that we have these two taxes today, each rising somewhat steeply to a point where it flattens out, is responsible for the sad case of the two bachelors to whom the hon. member for Houghton referred; and may I say that neither the hon. member for Gordonia (Mr. J. H. Conradie) nor I, bachelors though we are, are disposed to take too tragic a view of that. Then we come to paragraph 3 of the amendment, and there we again have our old friend, the excess profits duty which we have dealt with so often. Well, the hon. member for George quoted Dr. Van der Bijl as having said: “Dat die belasting maak die stigting van nuwe nywerhede onmoontlik.” I wonder when Dr. Van der Bijl said that?

The hon. member for Fauresmith read it.

The hon. member read nothing of the kind. He read a statement by Dr. Van der Bijl at the annual meeting of the Industrial Development Corporation, but there is nothing there which said that no new industries can be established because of our taxation systems. He did not say there that our taxation system made the creation of new industries impossible. He never said that. He would certainly not say anything as foolish as that.

What did he say?

People who misquoted him might say that.

Why did you go for him last time?

Not because he said that.

What did he say?

You are evading the issue.

I would repeat what I have said so often, that the excess profits duty is a tax which we have got and are going to keep while the war lasts, but I am also going to say this, that the effect of the excess profits duty of industries has been very greatly exaggerated. I dealt with the matter in my reply to the Budget debate and I would like to quote again what I quoted then from the very highly recognised overseas paper “The Statist”—

You will see the post-war effects.

I am dealing with the statement put into the mouth of Dr. Van der Bijl that the excess profits duty makes it impossible to start new industries.

Makes it very difficult.

You know very well what he says.

Of course the hon. member is referring to his notes, but as usual he said much more than is in his notes. In that same Budget reply I refer to actual facts in regard to the registration of new companies, and I referred also to the evidence as to the public assessment of the value of investments in industry. And in the light of those facts—I am not going to repeat them now—to say that the establishment of new industries has been made impossible is simply ridiculous, and Dr. Van der Bijl does not make ridiculous statements.

Well, what did he say?

If I am told that the excess profits duty has been a factor in limiting industrial development I would not deny it, although I would qualify it very considerably. There has been quite a number of other factors limiting industrial development which might otherwise have been possible under war circumstances. For instance, there has been a shortage of manpower. There has been a shortage of material.

Remember there is a war on.

The excess profits duty has been a factor, but to a much more limited extent than is probably appreciated, but to that small extent it has been a factor in limiting industrial development; but that is part of the price which we have to pay for our participation in the war, and we are prepared to pay it.

Of course.

Then I come to the fourth point : the abolition of taxation on small incomes. One would have thought from the appeal made to me that we are proposing to increase the taxation on small incomes. What the hon. member apparently meant to convey was that he thought the present rate of taxation was too high. Now, the hon. member for George always supplies me with the answer to his own criticism, and here, again, he quoted Mr. Curtin who is now his authority. Mr. Curtin, he says, disapproves of high direct taxation on small incomes. Now, just let us test that. Of course, Mr. Curtin is a very high authority, but I prefer the authority of a man’s deeds to the authority of a man’s words.

And so do we.

In Australia the man with an income of £150 per year pays £11 in direct taxation.

And how much does he pay in indirect taxation?

I am talking of an unmarried person who is entitled to no allowance in respect of dependants.

How much does he pay in indirect taxation?

I have not got those figures here but I am quite convinced that the indirect taxation in Australia is higher than ours. I have said a man with an income of £150 per year pays £11 in direct taxation. In South Africa he pays, having regard to the rate of Provincial Taxation in the province where it is highest, £1 15s. In Australia a man with an income of £200 pays £22; in South Africa he pays £2 10s. In Australia a man with £250 pays £37. In South Africa he pays £7. In Australia a man with £300 pays £55; in South Africa he pays £7 15s. In Australia a man with £400 pays £95, and in South he pays £23 11s. 5d. Perhaps the hon. member for George will be relieved, having quoted Mr. Curtin as his authority, to hear that I do not intend to follow him to the bitter end in the matter of taxation.

And in spite of what you say he will still tell them the same thing in George.

The hon. member for Fauresmith talks about indirect taxation. But I have no hesitation in saying that our indirect taxation in South Africa is lower than it is in other parts of the British Commonwealth.

Are you quite sure of that?

We would all like to reduce taxation, especially on the small man, but if we take our participation in this war seriously, if we take the combating of inflation seriously, it just cannot be done.

Why don’t you stop wastage?

There has been a good deal of discussion on the question whether the standard of living has been raised or not. I am not going into that. It is a matter of opinion from many points of view. I just want to say that the small man in South Africa happily today has a great deal of money to save. If they are all below the breadline I wonder where they get the money to save from, and let me say that I stand in admiration at the fact that last year’s deposits in the post office savings bank and in Union Loan Certificates, amounted to more than £22,000,000. We have had several statements about the inaccuracy of the cost of living index figures by the Department of Census and Statistics. It is simply futile to criticise these figures by giving instances of how certain particular items have gone up. Hon. members never mention the items where there has been no increase in price, or where there has only been a negligible increase.

Tell us a couple?

Bread, sugar, rent.

What ! Did you say rent? Surely not.

Rent has not gone up to the same extent as the general index figures; the figures do not show it but if you want to challenge these figures you must take the figures overall.

A man cannot live by bread alone.

Quite so but people cannot live without bread. Some hon. members seem to think that people only live on meat. If you want to challenge these figures you must take them over the whole range of items. Then the fifth clause of the amendment deals with the question of exemptions of medical and hospital charges for income tax purposes. This was spoken of by the hon. member for Gordonia (Mr. J. H. Conradie). He was correct in saying that this matter was raised last year. I then said that something similar had been done in Canada, and that I would study the position. Well, in Canada where medical and hospital charges exceed 5 per cent. of the person’s income, the excess can be claimed as a deduction for taxation purposes. Now, let us take a man with an income of £600. He incurs medical expenses amounting to £40. He can then get his taxable income reduced by £10 which at our rate of taxation would mean that he would save 15s. in income tax. In Canada it would be a great deal more because the rates of taxation at that stage are about four times ours. In Canada it may be well worth doing, but the crucial point is that the rates of taxation in South Africa relatively are much lower than in those other countries. Mr. Illsley, the Canadian Minister of Finance, in referring to this matter, definitely mentioned the fact that these allowances were provided when the tax rates were raised steeply. It might fairly be suggested that if we were to raise our tax rates steeply, too, anywhere near the Canadian basis, it might be worth while considering the question, but at present it seems just not worth while, and the correct approach to the problem of giving relief to the people is rather on the lines of national health and hospital services. Apart from substantial increases in taxation rates, it is not worth while burdening our already coinplicated taxation system.any further. So much for the amendment. Now, just let me deal with one or two points raised in the course of the debate. The hon. member for George and other hon. members who followed him, talked about our discrimination against the producer and the consumer of wine and tobacco. The hon. member asked: “Do we intend to kill these industries”? Well, the figures show that although we have raised the taxation considerably during the last few years, these industries are very far from dead. Of course we don’t intend to kill these industries. The Treasury is far too big a shareholder in wine and tobacco to want to see its interests disappear. I am not, as hon. members have pointed out ad nauseam, ä smoker or a drinker, but as Minister of Finance I have a very real interest in the consumption of cigarettes, tobacco and wine. The hon. member has asked why we tax these industries. I shall tell him why. In the first place we do not tax the producer but the consumer. And secondly it is entirely in the option of the taxpaper—that is the consumer—whether he pays that tax or not. In the third place, this tax is perhaps the most effective method we have for limiting the amount of money in circulation in South Africa. Now, what is the argument we got from hon. members opposite? They say we have raised £7,500,000 in taxation on tobacco, and the producers have only received £850,000. But the producers do not pay that £7,500,000, although they provide the means for us to raise that taxation. But we don’t pay the people who provide the means to collect a tax in proportion to the amount collected. If that were the position the Commissioner of Inland Revenue would have a very good income. The hon. member for Brits (Mr. Potgieter) is very worried about the tobacco industry. Let me assure him that taxation or no taxation that industry will have no difficulty this year in disposing of its crop, and the hon. member knows it.

Then there are questions about stamp duties on brokers’ notes. It was suggested during the Budget debate that we should impose a tax on profits on Stock Exchange transactions. I note that that suggestion was not made again during this debate. The difficulties in that regard are perhaps more fully appreciated, but the hon. member for Fauresmith suggested a sale tax of 1 percent. which might be a stamp duty. Well, what we have today is something of the same kind, except that the stamp duty, the 1 per cent. suggested by him would be higher. I think the hon. member is not correct in his assumption that the result of this 1 per cent. sales tax would be what he suggests it would be. Under our proposals the tax on each transaction is not at the rate of 2s. 6d. per £100. Both the buyer and the seller pay. So we actually collect 5s., and so on the £ basis suggested by the hon. member for Fauresmith we would not collect ten times as much as we do now but four times as much.

You base your figures on a turnover of £250,000,000.

No, I base my figures on the fact that the buyer and the seller pay 2s. 6d. each. On my basis on each transaction there is paid 5s. The result would therefore be that on the hon. member’s suggestion of £1 there would be collected four times as much.

Quite wrong.

Perhaps it might be desirable that we should put the tax at a higher rate, but the hon. member himself suggested that a high rate would have a restrictive effect on the sale of shares, in other words the amount of the taxation received would be decreased. There is such a thing as the law of diminishing returns in taxation.

Apparently not in regard to tobacco.

We have never increased the tax on tobacco by 1,000 per cent. at once. What we are proposing to do is an increase of tax of 15 per cent. Now, that is a pretty good increase to start with. I propose to go slowly in starting.

Would it not be a good thing if you stopped these share transactions?

Good for whom?

I don’t think I should go into that question because there are various ways of looking at the matter Certainly I would like to see all gambling done away with, but while there is gambling, as Minister of Finance I want to get what I can out of it. Then I come to the estate duty. Hon. members do not want to see this drop in the minimum figure for duty from £15,000 to £10,000. The hon. member for George was a supporter of the Government which fixed the exemption rate not at £10,000 but at £7,500. I would have thought that he would have regarded me as being generous in fixing the figure at £10,000. Now he would like us to start not at £10,000 but at £15,000, and then go on to 50 per cent at the top. May I point out that in an average year we have only 13 estates over £110,000 and 190 estates between £10,000 and £15,000. And the hon. member’s suggestion would very detrimentally affect the whole position. The amount of money which we would lose would be very much more than what we would gain by raising the rates. The hon. member for Houghton (Mr. Bell) is not entirely pleased that the succession duty £100 rebate is to be a diminishing rebate. He does not like the fact that the estate of £100,001 pays £30 more than the estate of £100,000. Well, that is the kind of thing which will happen only once in a century. I think the hon. member for Houghton is setting us too high a mathematical standard and I do not think the world is run on such strict mathematical lines. Then the hon. member for South Peninsula (Mr. Sonnenberg) raised an important matter in regard to mergers of business concerns which have been going on to a marked extent of late. He has raised the question of the effect of such mergers on the cost of production, and he mentioned the desirability of control. May I suggest that that is rather a matter for the Minister of Economic Development. He has said that such mergers may have an effect on taxation. Well, that might happen sometimes. Normally, when a company disappears, its pre-war standard also disappears, and one of Dr. Van der Bijl’s criticisms of our taxation system was the exact opposite point to that which my hon. friend now makes. In other words, Dr. Van der Bijl urged that we should, when a new concern emerges, not require it to take the statutory percentage as its pre-war basis, but allow it to inherit the pre-war standard of the old concern. Well, so far as the Treasury is concerned, on balance, I don’t think this practice has worked out detrimentally. It may do so in certain cases but I think my hon. friend will appreciate the force of my point, that this is not primarily a taxation issue. It is largely an issue of commercial policy. I must apologise to the House for having kept it so long, but I think it will be appreciated that especially so far as the first part of the amendment is concerned very important issues were raised which had to be dealt with fully. I think I should also express my appreciation of the manner in which the hon. member raised these issues. I do not agree, of course, with all he has said, but they are issues of importance to the country, and I am glad he has given me the opportunity of making a full statement in regard thereto.

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

Upon which the House divided:

Ayes—83 :

Abbott, C. B. M.

Abrahamson, H.

Acutt, F. H.

Alexander, M.

Allen, F. B.

Ballinger, V. M. L.

Barlow, A. G.

Bawden, W.

Bell, R. E.

Bodenstein, H. A. S.

Bosman, J. C.

Bosman, L. P.

Bowen, R. W.

Bowker, T. B.

Burnside, D. C.

Butters, W. R.

Christie, J.

Christopher, R. M.

Cilliers, S. A.

Connan, J. M.

Conradie, J. M.

Davis, A.

Derbyshire, J. G.

De Wet, H. C.

De Wet, P. J.

Dolley, G.

Du Toit, A. C.

Du Toit, R. J.

Eksteen, H. O.

Faure, J. C.

Fawcett, R. M.

Fourie, J. P.

Gluckman, H.

Gray, T. P.

Hare, W. D.

Hayward, G. N.

Henny, G. E. J.

Heyns, G. C. S.

Hofmeyr, J. H.

Hopf, F.

Howarth, F. T.

Kentridge, M.

Latimer, A.

McLean, J.

Maré, F. J.

Miles-Cadman, C. F.

Morris, J. W. H.

Mushet, J. W.

Payn, A. O. B.

Payne, A. C.

Pieterse, E. P.

Pocock, P. V.

Prinsloo, W. B. J.

Raubenheimer, L. J.

Robertson, R. B.

Rood, K.

Russell, J. H.

Shearer, O. L.

Solomon, B.

Solomon, V. G. F.

Sonnenberg, M.

Steenkamp, L. S.

Steytler, L. J.

Stratford, J. R. F.

Strauss, J. G. N.

Sturrock, F. C.

Sutter, G. J.

Tighy, S. J.

Trollip, A. E.

Ueckermann, K.

Van den Berg, M. J.

Van Niekerk, H. J. L.

Van Onselen, W. S.

Wanless, A. T.

Wares, A. P. J.

Waring, F. W.

Warren, C. M.

Waterson, S. P.

Williams, H. J.

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

Noes—34 :

Booysen, W. A.

Bremer, K.

Brink, W. D.

Conradie, J. H.

Döhne, J. L. B.

Dönges, T. E.

Erasmus, P. C.

Erasmus, H. S.

Fouché, J. J.

Grobler, D. C. S.

Haywood, J. J.

Kemp, J. C. G.

Le Roux, J. N.

Louw, E. H.

Ludick, A. I.

Luttig, P. J. H.

Malan, D. F.

Mentz, F. E.

Olivier, P. J.

Pieterse, P. W. A.

Potgieter, J. E.

Serfontein, J. J.

Steyn, A.

Strauss, E. R.

Strydom, G. H. F.

Strydom, J. G.

Swanepoel, S. J.

Vosloo, L. J.

Warren, S. E.

Werth, A. J.

Wessels, C. J. O.

Wilkens, J.

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

Question accordingly affirmed and the amendment dropped.

Original motion put and the House divided :

Ayes—86 :

Abbott, C. B. M.

Abrahamson, H.

Alexander, M.

Allen, F. B.

Ballinger, V. M. L.

Barlow, A. G.

Bawden, W.

Bekker, H. J.

Bell, R. E.

Bodenstein, H. A. S.

Bosman, J. C.

Bosman, L. P.

Bowen, R. W.

Bowker, T. B.

Burnside, D. C.

Butters, W. R.

Christie, J.

Christopher, R. M.

Cilliers, S. A.

Connan, J. M.

Conradie, J. M.

Davis, A.

Derbyshire, J. G.

De Wet, H. C.

De Wet, P. J.

Dolley, G.

Du Toit, A. C.

Du Toit, R. J.

Eksteen, H. O.

Faure, J. C.

Fawcett, R. M.

Fourie, J. P.

Gluckman, H.

Gray, T. P.

Hare, W. D.

Hayward, G. N.

Henny, G. E. J.

Heyns, G. C. S.

Hofmeyr, J. H.

Hopf, F.

Howarth, F. T.

Jackson, D.

Johnson, H. A.

Kentridge, M.

Latimer, A.

McLean, J.

Maré, F. J.

Miles-Cadman, C. F.

Morris, J. W. H.

Mushet., J. W.

Neate, C.

Payn, A. O. B.

Payne, A. G.

Pieterse, E. P.

Pocock, P. V.

Prinsloo, W. B. J.

Raubenheimer, L. J.

Robertson, R. B.

Rood, K.

Russell, J. H.

Shearer, O. L.

Shearer, V. L.

Solomon, B.

Solomon, V. G. F.

Sonnenberg, M.

Steenkamp, L. S.

Steytler, L. J,

Stratford, J. R. F.

Strauss, J. G. N.

Sturrock, F. C.

Sutter, G. J.

Tighy, S. J.

Trollip, A. E.

Ueckermann, K.

Van den Berg, M. J.

Van Niekerk, H. J. L.

Van Onselen, W. S.

Wanless, A. T.

Wares, A. P. J.

Waring, F. W.

Warren, C. M.

Waterson, S. F.

Williams, H. J.

Wolmarans, J. B.

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

Noes—34 :

Booysen, W. A.

Bremer, K.

Brink, W. D.

Conradie, J. H.

Döhne, J. L. B.

Dönges, T. E.

Erasmus, F. C.

Erasmus, H. S.

Fouché, J. J.

Grobler, D. C. S.

Haywood, J. J.

Kemp, J. C. G.

Le Roux, J. N.

Louw, E. H.

Ludick, A. I.

Luttig, P. J. H.

Malan, D. F.

Mentz, F. E.

Olivier, P. J.

Pieterse, P. W. A.

Potgieter, J. E.

Serfontein, J. J.

Steyn, A.

Strauss, E. R.

Strydom, G. H. F.

Strydom, J. G.

Swanepoel, S. J.

Vosloo, L. J.

Warren, S. E.

Werth, A. J.

Wessels, C. J. O.

Wilkens. J.

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

Motion accordingly agreed to.

HOUSE IN COMMITTEE :

The Committee has to consider the taxation proposals on income tax, diamond mines special contribution, death duties, stamp duties, war-time surcharge on transfer duty payments, and excise and customs duties; the Committee has leave to bring up a report forthwith instead of on a future day.

I move—

1. (1) That, subject to the provisions of Act No. 31 of 1941 (as amended) and of an Act to be passed during the present Session of Parliament amending that Act, there shall be paid as from the first day of July, 1944, 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, 1944, 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 15 per cent. of the net amount arrived at after deducting the rebates provided for in Section thirteen of Act No. 31 of 1941 from the amount of the tax so calculated;
      5. (v) in the case of any company or person other than a company who derives any portion of his income from mining in the Union for gold, in respect of each pound of the taxable amount so derived, a percentage determined in accord ance 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, 1944, shall be—
      For each pound of the income subject to Super Tax two shillings increased by one four-hundredth of a penny for each pound of such income in excess of one pound, subject to a maximum rate of seven shillings and sixpence in every pound: Provided that there shall be added to the amount of tax calculated in accordance with the preceding provisions of this sub-paragraph a sum equal to fifteen per cent. of the net amount arrived at after deducting from the amount of the tax so calculated, a rebate of two hundred and ten pounds.

I should like to congratulate the hon. Minister heartily on the amusing speech with which he has just regaled us.

He has to compete with you.

Por a few moments he gave us cause for hearty laughter. Unfortunately the matters concerning these taxes are not a joke, and I think the feeling which prevails in the country today is that if the Minister’s practical knowledge and experience of commerce and industry in this country had been as sharp as his sense of humour, the country would have been in a much better position. In regard to the Minister’s statement in connection with the sale of our gold, I am afraid that the greatest portion of his remarks to us were not relevant. The point which this side of the House wants to make is this. We are selling our gold to England at a fixed price. England is selling that gold …

May I point out to the hon. member that we are now discussing income tax.

Am I not allowed to raise this point at all under sub-paragraph (1)?

No, the hon. member can only propose a reduction or a rejection of the tax before the Committee.

In the case of companies whose only business is the mining of gold …

The hon. member is discussing the question of the sale of gold which he properly raised on the motion to go into Committee of Ways and Means. He must now confine himself to the reduction or rejection of the taxation proposals before the Committee.

Under sub-paragraph (1) we are dealing with the income derived from gold mining, and I want to advance the argument that the Minister is in a position to obtain more money for the Treasury from our gold mines and the handling of our gold. Am I not allowed to do that?

The hon. member must now confine himself to the details of the proposed tax before the Committee. He cannot now discuss the administrative action of the Government in regard to the sale of gold.

On a point or order; the position is this, that if South Africa can obtain a better price for its gold, there is a possibility that there may be some relief from taxation for the mines, and that is the connection with the mining tax. It may be that instead of making a raid on loans, it will be possible to impose a reduced tax on the mines if we get a higher price for our gold, and my submission is therefore that the whole question of the sale of gold is relevant.

May I point out to the hon. member that Sections 115 and 117 of the Standing Rules and Orders lay down the procedure in Committee of Ways and Means, and it is very limited. The Committee of Ways and Means can only discuss the question of a reduction of the taxation proposals or the rejection thereof, and members must strictly confine themselves to the particular question only until it has been disposed of.

That is my submission.

If we are successful there is a possibility that there may be a reduction of taxation. If the State gets a portion of that gold price, the Minister may be able to grant a reduction of taxation to the mines. But before we do so, we must know what the position is in connection with gold, and it is entirely dependent on that. Here we are dealing with an administrative matter in connection with the tax.

This Committee is not concerned with the administrative actions of the Government. The hon. member for George (Mr. Werth) might possibly be in order if he could move an amendment reducing the tax on gold mining companies related to the sale of gold.

May I point out that if this argument is accepted, it would mean that before we can consider any taxation proposal, hon. members will have the right to discuss any administrative questions in connection with which a possible saving might be effected, and in connection with which increased revenue might be obtained. That would surely be going too far.

The position is as the hon. Minister explained.

If that is your ruling, I want to move that the yield be reduced by £1 per annum. I shall still have to work out the formula, but I shall move that there be a reduction of taxation under sub-paragraph 1 (a) (i) amounting to £1 per annum for the mines.

Before I can allow any discussion, I shall first have to decide whether the proposed amendment is in order.

May I now continue?

†*The CHAIRMAN : The hon. member may proceed, but he cannot now discuss that subject.

Then I would like to deal with the tax which is provided for in the second paragraph, namely, a tax of 4s. 6d. on every £ of the taxable income which is imposed on companies whose only and most important business in the Union is the mining of diamonds. I should like the hon. Minister to explain to us why he makes such a tremendous difference between the war profits made by the diamond companies and the war profits of any other industry in our country. We know that before the war broke out the diamond market in the world was very slack. There was not a great sale of diamonds. Today the diamond market has again become brisk. I think the Minister will agree with me that that is the result of war conditions.

The diamond market has become more brisk, and it has become more brisk as a result of war circumstances, and we must therefore regard the profits of the diamond companies as war profits. I should like to ask the Minister why he imposes a tax of only 4s. 6d. plus the special contribution of 4s. on the war profits made by the diamond companies, while he imposes a tax of 15s. in the £ on war profits made in any other industry? I have certain figures here in connection with the diamond industry. For a series of years from 1938, 1939 and 1940, the annual sale of diamonds amounted to not more than £6,000,000—the sales of all the companies in South Africa. It remained at approximately £6,000,000 during 1939 and 1940. In 1941 there was a slight increase. It then rose from £6,000,000 to £7,000,000. In 1942 the sale of diamonds suddenly went up to £10,000,000, and I believe the sale of diamonds in the year 1943 reached the record figure of £20,000,000. The remarkable thing is that the diamond companies did not produce those diamonds. All they were doing in 1942 and 1943 was to sell the diamonds which were accumulated in the past. The production of diamonds hardly rose at all. To give an idea; here, for example, I have the balance sheet of the Consolidated Diamonds. The value of the diamonds which the company sold last year was £1,900,000. The production costs were only £120,000, i.e. the diamond mine hardly produced at all. In other words, here the diamond mine made an excess profit of approximately £1,800,000. The tax which the Minister imposed on £1,800,000 last year was £300,000. How does that compare with the war tax which the Minister imposes on every other undertaking in commerce and industry?

We are not dealing here with war taxation. It would be better to deal with it under that heading.

That is correct, but what seems strange to me is this. Here we are dealing with something—I think the Minister will have to admit it—which can only be regarded as war income.

Not here.

We are discussing the tax on the diamond mines; it is part of the taxes. This is nothing but war income, and what seems remarkable to me is this. Last year the Minister imposed a tax of £300,000 on £1,800,000, i.e. one-sixth. Compare that with the tax of 15s. which the farmer has to pay. In my constituency, for example, there is a farmer who invested a great deal of capital in the establishment of a plantation twelve years ago, and for twelve years no trees were cut, with the result that the farmer did not receive a penny interest. The plantation has now reached the production stage, but instead of this man now being asked to pay ordinary income or supertax, the Minister regards practically the whole of the income from! that plantation as excess profits, and the owner has to hand over 15s. in the £ to the State. Here we have diamond mines which could not sell their diamonds for a certain period but locked them up in a safe. Today as a result of the war circumstances, diamonds are fetching a good price, just as the trees in the plantation are today fetching a good price. But just look at the difference between the treatment of the plantation owner and the treatment of the diamond companies. I think we have the right to know from the Minister why that big difference is being made between the diamond companies and any other person in trade and commerce—in the case of the plantation, for example. I think we have the right to know that from the Minister.

I now move—

In connection with the reply which the Minister of Finance gave us, namely, that we can sell our gold in India only to the extent that we import from India herself, I want to ask the Minister whether it is not possible to arrange for a similar sale of our gold to the South American States. We notice that the Argentine’s sterling rate of exchange i.e. its peso sterling rate of exchange decreased from 15 pesos per £ to 13 pesos. The result of that is that in terms of sterling we now have to pay much more for our imports from the Argentine than was the case before they changed their rate of exchange. The hon. member for South Peninsula (Mr. Sonnenberg) yesterday pointed out that our imports from South America amounted to £15,000,000 last year. If instead of paying the amount which we owe in respect of these imports, in terms of sterling, which is now only 13 pesos per £1, we could pay for it with gold at the increased price at which it is being sold by the United States to the South America States, we could obviously get £15,000,000 worth of goods in this country for £10,000,000, and we could make a big profit on it without buying an unnecessary number of rupees in India. I must say that the Minister of Finance, as usual, has put up his own skittles only to knock them down himself. Not one of us suggested that we should sell our total gold yield in India for rupees, but the suggestion which was made—and we should like to hear the Minister’s remarks in that connection—had a different effect. Let the Minister rather try to knock down our skittles and not the skittles which he himself puts up for his own amusement and which can be knocked down very easily. As one of his own newspapers recently said in reference to another reply of the Minister’s: “The fault with the Minister of Finance is that he is too clever.” It may be very fitting to score a few debating points in a school debating society, but it does not become a man in the position of the Minister of Finance. The Minister himself admitted that we were dealing here with very important national matters, and he thanked the Opposition for raising these matters. In that case one does not expect him only to score a few debating points which would be a credit to a schoolboy of sixteen, but which are not becoming in this House, and which do not become a man in the position of the Minister of Finance. Let the Minister reply to us on our arguments, but in heaven’s name let him learn not to put up his own skittles and then knock them down for his own amusement. Let him reply to the substance of our statements and let him show the necessary respect for the position which he occupies and for the dignity of this House. We know that it is difficult to suffer from the tremendous handicap of being a superman. It is sometimes difficult for a such a person to descend to the level of ordinary people, but if the Minister wants to act in this capacity, it will be much more becoming on his part, as one of his English friends recently put it, to leave his intellectual arrogance and to come here and reply in a reasonable manner to the points and the subjects we raise. I just want to point out that as far as the sale of gold is concerned, it is quite clear that in Buenos Aires, in South America therefore, bar gold is sold at a price ranging from 37 to 44 dollars per ounce. We notice that in Egypt they are selling particularly small bars of about two ounces, and in India even as small as three-eights of an ounce. Our question is whether, as far as our imports from South America are concerned, we cannot pay in the same way as we do in connection with India. I also want to ask whether the Minister can tell us what our obligations are in connection with our army in Egypt. What do we have to pay there in terms of Egyptian money? Cannot we pay that with gold? The Minister says that it does not behove South Africa to “cash in” on a temporary increase in the price of gold. Apparently he wants us to be satisfied if those advantages are cashed in by the Bank of England. The Bank of England can derive these benefits, but not South Africa, not the gold producers in South Africa and not our Treasury. We must not “cash in.” And then the Minister advances an argument which is certainly not worthy of his intelligence, namely, that we have a stable price for gold if we sell it at a fixed price and our buyer sells it at a more advantageous price than the 35 dollars which America pays. I want to point out that a stable price does not mean that only the producer must take a stable price If you want a stable price, you must see to it that the gold is sold from hand to hand at a stable price. Only then can you get a stable world price. Otherwise a stable world price is a hallucination. How can one say that there is a stable world price if America buys the gold at 35 dollars and sells it to South America at 44 dollars, and if England buys gold at 168 shillings and sells it to India at 320 shillings. Is that stability? I also feel that it is desirable to have a stable world price, but then it must not only be applicable to South Africa; it must also be applicable to the other countries which bought the gold from South Africa. I just want to come to another point, and that is the raid which is being made here on loan funds. I want to remind the Minister of the fact that this is not the first time in our history that a Minister of Finance makes an invasion on loan funds. I think it was Mr. Burton, one of his predecessors who, as Minister of Finance, also made a raid on the redemption fund. The result was that he lost his seat at the next election.

I think I should at this stage point out that the remarks of the hon. member on the sale of gold do not appear to be covered by the amendment he moved.

With all due respect, I submit that these remarks are relevant, because if we take this £1,850,000 from loan funds, it means that we will have to borrow an additional £1,850,000 for our capital expenditure, and on that loan we will have to pay 5 per cent. or a figure in that neighbourhood—say £54,000 per annum. It is therefore related to a reduction. If we do not pay this money, we can save £54,000 per annum on our revenue account, and we shall then be able to give a reduction of £1 to the mines. That is the point I want to make. The Minister’s argument is that we talk such a great deal about this £1,850,000, but that we as a State already have to pay 77½ per cent of that sum in respect of production costs, i.e. £1,400,000.

Correct.

Assuming that is correct, why then increase this 77½ per cent. to 100 per cent? They are already deriving this benefit; why still pay this additional money? Under the formula the State is already paying 77½ per cent. according to the statement of the Minister; why then must we make it 100 per cent.? If the State is already subsidising the increase in the wages of natives to the extent of 77½ per cent., why must the State pay 100 per cent.? Let the mines be satisfied with 77½ per cent. And this does not apply to any particular mine. The Minister said in his statement that this concession would conduce to the development of low grade ore. What is the position? What assurance has the Minister that if he gives this subsidy to the mines they will not mine high grade ore and leave the low grade ore? The mines which only have low grade ore, will of course, only be able to develop ore of a low grade, but what about the rich mines which are able to develop ore of a high grade and leave the other ore? In actual fact we are engaged in taking money from loan funds and giving it to the shareholders of rich mines which make enormously big profits and declare big dividends, and then go along and pay a subsidy in order to augment the dividends of the shareholders in the big mines. But the main fundamental objection against the procedure is that the money is taken from loan funds—and I am surprised at the Minister who, in other respects, has a fair public finance conscience. How he can do that and reconcile it with his conscience, I cannot understand. If he wants to give a subsidy to the mines, why is it not placed on the estimates and paid out of revenue. He is creating an iniquitous precedent from the standpoint of public finance, and if it is going to be followed up it will have a disastrous effect on our public finances. I can only express my surprise that a man like the Minister of Finance should make a proposal such as this, to take money out of loan funds for something which is intended as a temporary measure of relief. But there is another question which I should like to raise. The Minister said that an agreement was entered into and that we would recover from the Bank of England to the extent that we bought goods from India during the past year. Is this of retrospective effect?

No.

Now we have this wonderful agreement. It means then that the Bank of England walks off with this £17,500,00 and we do not get a penny of it back. This agreement only applies to the future. Now that it is too late, we enter into an agreement. We now have the statement that the profit which was made during the past eight months will not benefit South Africa. But we will now get a small drop, a crumb which will fall from the table of the Bank of England. We will now derive this benefit in connection with our purchases in India in the future. I would like the Minister to tell us to whose advantage it will be? Will it benefit the Treasury or the mining companies, the producers of gold? Can he tell us whether that has been arranged, or is it perhaps a secret? Or must the Government still decide this? If we now get this crumb which falls from the table of the Bank of England, will it go to the Treasury?

I shall reply to that.

Very well, then I shall await the reply. If it goes to the Treasury, the Minister must state that clearly so that there will not be any rise in shares in the hope of getting back a portion of this amount. I shall be glad if the Minister will give us more details in regard to this agreement. Is it for a fixed period? Is it only confined to India? [Time limit.]

I have considered the amendment of the hon. member for Fauresmith (Dr. Dönges) and it would seem that the effect of it is to reduce the tax to £1. I should like the Minister to say what the effect of the amendment is.

May I just point out that my amendment is to reduce the tax by £1, not to £1.

The hon. member moves to insert after the words, “three shillings” in Paragraph 1 (a) (i) the words “less a percentage of such three shillings which will reduce the amount recoverable from this source by £1.” I am of opinion that as the amendment reads it is a frivolous amendment, and as such I cannot accept it.

May I know at what stage the reduction will no longer be frivolous, because in that case I should like to amend my amendment accordingly. As far as I am concerned, it is not frivolous at all, but I should like to know from you at what amount I should put it, so that, according to your standard, it will no longer be frivolous.

May I just point out that we have many such cases on our ordinary estimates, where it is moved, for example, to reduce the Prime Minister’s vote by £1, in order to be able to discuss certain things. It is a generally accepted rule that one can move a reduction of £1 in order to be able to discuss a matter, and no one has ever described it as frivolous. I do not know why it should be described as frivolous when it is moved to reduce the amount by £1 in order to bring under discussion a matter which is related to it.

The rules governing the proceedings in Committee of Supply and the proceedings in Committee of Ways and Means are different. In Committee of Supply a formal motion to reduce the salary of a Minister has been permitted in order to criticise the administrative actions of a Minister. In Committee of Ways and Means the administrative actions of a Minister are not open to discussion. Amendments and discussions are restricted to a reduction or rejection of the taxation proposals before the Committee. The Government’s action on the sale of gold was criticised on the motion to go into Committee of Ways and Means and can again be raised on the second reading of the Bill to give effect to the taxation proposals now before the Committee.

Then there may have been other developments to which I want to draw the attention of the House. You stated that we must introduce an amendment on which we can conduct this debate. I reacted to that.

Yes, I suggested that it might be in order to discuss the price of gold if an amendment could be moved which reduced the proposed tax in relation to the price of gold. May I suggest that the hon. member should alter his proposed amendment, omitting the amount of three shillings and substituting two shillings?

But I do not want to move such an alteration. I must take into account the Minister of Finance. It would completely upset his estimates.

But you want us to make a profit of millions of pounds. That is the object of your amendment.

The object of our amendment, in the first place, is to be able to bring this matter under discussion. Thereafter we may move a further amendment. But at the moment I think it is out of place to move such a big reduction in the revenue of the Minister of Finance, and, in consideration of his feelings we did not place it at such a high figure.

I have no objection to your moving it. I shall, of course, refuse to accept it.

As the amendment now reads, I cannot accept it. I would suggest that the hon. member alter his amendment on the lines suggested by me.

In what sense? What is the amount I must insert? I must say that in principle I cannot see what difference there is whether it is £100 or £1,000.

The amendment must not be of a frivolous nature.

But surely my whole speech shows that I am not being frivolous.

No, I do not say for a moment that the speech of the hon. member was frivolous. I say that the amendment must be such as will permit the speech in Committee of Ways and Means.

As the hon. member for Piketberg (Dr. Malan) showed, this is a customary way of bringing a subject under discussion, by moving a small reduction, a sort of token reduction.

As I pointed out, the rules governing discussion in Committee of Supply are not the same as the rules governning discussion in Commitee of Ways and Means. The rules governing discussion in Committee of Ways and Means are far more restrictive.

If you rule that the amendment is frivolous, I should like to know to what amount I must increase the £1 so that it may fall outside the limits of frivolity. Will you be satisfied if I make it £5?

I have given my ruling.

I want to discuss the Minister’s taxation proposals and I want to consider them, as recorded in the Minutes, from the point of view of the contribution made by the mines. The Minister of Finance said that the taxation contribution made by the mines is £27,500,000.

I did not say that.

The attitude which the Minister adopted was that the country would this year get £27,500,000 in taxation from the gold mines. I want to point out to the Minister that in this amount millions of pounds in the form of lease monies, and shares of profits belonging to the State are included. The Minister takes up the peculiar attitude that lease monies and shares of profits are also taxes. He says that it is a different form of taxation on the mines which pay rent to the State. In the past some people contended that the money received out of mining leases should be looked upon as taxation. Let me draw the attention to a speech which the Minister of Mines made in 1933 when the present Minister of Mines, with Sir Robert Kotze, adopted the attitude that the mines in actual fact paid £13,500,000 in taxation, and in that amount they included lease monies and the Government’s share of the profits, and they took everything together and said that that was taxation. The Minister of Finance replied to that argument and this is what he said—

Now that is really what the hon. member said. And the Minister went on to say this—

That is the attitude which the Minister adopted and that is the attitude which I and other hon. members here have adopted. And then the Minister went on to say this—

The Minister described it as a “misconception.” The then hon. member for Roodepoort, who is now Minister of Mines, and Sir Robert Kotze, too, regarded lease monies as taxation, but the present Minister of Finance described that as a misconception. Now, we on this side of the House say that the £27,500,000 which now comes from the mines cannot be described as taxation either—the whole amount cannot be described as taxation. We take up exactly the same attitude as the Minister took up in those days. But the Minister of Finance has changed his attitude entirely now and today he pleads the cause of the mining magnates and says that lease monies are also taxation. He went further in those days and said this—

The Minister at that time said that it was a misconception, that it was wrong to regard those amounts as taxation. That was the attitude he took up in 1933, but what does he say now? Today he prides himself on the fact that he has obtained such a big majority in his constituency that he is safe. Certainly. But when he took up the attitude to which I have just referred he was not safe. Members of this House told him at the time that he would not be reelected. Now he has given way to the mining magnates, and now he may be re-elected to this House. He has given up the attitude he adopted in the past, and that is why his seat is safe today. I want to refer to something else to show how the Minister has changed his outlook. In 1933 he took up a very strong stand in regard to the taxation proposals. He then said that it was not the Government’s object to enrich the shareholder, but to protect the people and to assist in the development of the low grade mines. That, he said, was the object of the taxation. Sir Robert Kotze, and the present Minister of Mines, on that occasion pleaded the cause of the poor shareholders. They asked: “What was to become of them?” and what did the Minister say then: The present Minister of Mines and Sir Robert Kotze pointed cut to him that the tax affected the shareholders, and the Minister on that occasion expressed himself in very strong terms about them. He said that the speculators should “not come and cry now because they had made fat profits.” He said he had no sympathy with them—

Because, he said—

That was the strong attitude which the Minister adopted in those days. I also want to point out that the Minister in those days further adopted a point of view which he has also surrendered today, because he said this among other things—

And now listen to what he said—

And he further said this—

Now, what has happened in regard to the dividends? The dividends used to amount to about £9,250,000 per year. Today they are about £17,750,000 per year. The shareholders have benefits. Since South Africa went off the gold standard, for the last ten years, they have got £94,000,000 more in dividends on their shares than they got in the previous ten years period. The very thing which the Minister said he wanted to prevent—the very thing the Minister wanted to prevent actually occurred. The Minister further said that in one year we had got as much as £27,500,000 from the mines in taxation. That is a serious statement which was made on the floor of this House, and tomorrow or the day after the story will be told on the platteland that the Minister of Finance has stated that the mines in one year paid £27,500,000 in taxation to the State. It is absolute nonsence. The Minister’s own words in this House years ago repudiate the very attitude he is adopting here today. I want to ask the Minister what has come over him; why he has undergone this radical change in reard to his attitude towards the mines? Why is he so sympathetically disposed towards them now, and why does he not look after the country’s other interests? In a responsible Government report it is stated that the mines in one year had contributed £27,500,000 in taxation and the Minister says that that is so. His own speeches repudiate it. I can only say that we are very disappointed that the Minister of Finance has changed.

I really do not think it is necessary for us to fence with words. The hon. member has quoted from the Commission’s report and has asked me whether I agree with those figures. I have not taken very careful note of the words used in the report. We get our receipts from the mines mainly from four sources. First of all we get our receipts from two sources under the taxation laws—the ordinary tax and the special levy. That is all that comes on Revenue Account, and in the strict sense of the word that is all that can be called taxation. If my hon. friend here says that we did not receive £27,500,000 out of taxation, then in the strict sense of the word he is quite correct. In the strict sense of the word we have only two sources of taxation. Further, we receive money from the mines under lease agreements—not under the ordinary taxation legislation, but from lease agreements. Then we also get money from the Gold Realisation Fund.

That is not a tax either.

No, in the strict sense of the word it is not a tax either. It is difficult to say what it is.

Then why do you say it is a form of taxation.

It takes the place of a tax. If my hon. friend is not prepared to take it in that sense, well, we are not going to fence with words. The point is that the direct receipts from the mines in that year very probably amounted to £27,500,000. This year they will probably not be as much. It is a question of direct revenue and if my hon. friend does not want to call it taxation in the strict sense of the word, well, he is quite correct. The hon. member also quoted what I said in 1933. He should not lose sight of the fact that in those days we were dealing with taxes at a much lower scale than today. As a result of our going off the gold standard there was a tremendous rise on the share market and we did not have a drop in profits such as we have had now. The hon. member for George (Mr. Werth) dealt with the question of the diamond mining taxation. I don’t know whether this is the correct place to deal with the tax on war profits from diamond mines. Here we are only dealing with the normal tax, and the tax on war profits will be dealt with under the special contribution from the diamond mines. May I be allowed, however, to explain the position. The ordinary normal tax on diamond mines for many years was 6d. more than the ordinary tax on public companies. When war broke out the tax on mining companies was 3s. in the £. On three occasions we have increased the tax on public companies, and subsequently the tax on diamond mines has also been raised three times. Since last year that tax stands at 4s. 6d. In addition to that we have the special contribution. When war broke out we brought in a war profits tax. It was perfectly clear that it was not desirable and that it was not in our interest to levy the excess profits tax on the gold mining industry. On the contrary; we took everything from the gold mines by way of additional profits, resulting from the increased price of gold, less the additional costs, and later on we took a great deal more than that. In regard to the diamond mines the position was that according to expectations the profit would not increase but would go down as a result of the war, and that an excess profits duty would not have brought in any money from that source. For that reason we imposed a special levy of 2s. in their case which we now want to increase to 4s.

What was the increase in prices?

I cannot answer that question now. If we had made the diamond mines subject to the excess profits duty we would have got nothing in the first instance, and we would not have had to compare this year’s profits with the prepared to take it in that sense well, we the pre-war standard.

Which was nil.

No, in the year before the war they made fairly large profits, but when war broke out the diamond mines closed. I have not got the figures at the moment, but my hon. friend’s comparison is not with the profits for the last two years but before the war. The tax on diamond mines now is 4s. 6d., and if this House agrees the special levy will be increased to 4s. so that the tax altogether will be 8s. 6d. I think in view of all the circumstances this tax is not unfair or unreasonable.

I listened very attentively to this discussion and it has become clear to me that the Minister of Finance, so far as the gold mines are concerned, is no longer the man he was. Why is he so terribly concerned about the gold mines now? He helps, protects, defends them wherever he can. He cannot argue away the figures which have been given here. During the ten years since we have gone off gold, the gold mines have paid out dividends to an amount of £177,861,000. During the ten years prior to our leaving the gold standard they paid out £83,154,000. That means that in the last ten years they paid out £94,000,000 more in dividends than during the previous period of ten years. The Minister cannot get away from those figures. The gold mines did not earn that extra money. Their labour costs have not gone up. Their commodity did not increase in value on its own, but as the Minister himself stated on a previous occasion, the price of gold went up because the Minister by a stroke of the pen caused South Africa to go off the gold standard. Why then is he so concerned about the gold mines now? They produce about £200,000,000 worth of gold per year and the contribution which they specifically make to the war effort is not more than £3,000,000. The Minister has not contradicted that figure and I assume it is correct. Now I want to ask the Minister this: In 1938, the year before the war, the revenue from excise on liquor was £823,000. Today according to the estimates in the Budget, the Minister takes no less than £4,100,000 from that source. That is more than the gold mines pay for the war effort out of the tremendous amount of money they earn and which they pay out to their shareholders. When I look at these figures, and when I listen to the hon. member for Bloemfontein (District) (Mr. Haywood), when he reads what the Minister himself told us in the past, it is perfectly clear that the Minister has entirely departed from the attitude he used to take up in the past. He now says that conditions have changed. We know that The gold mines have a huge organisation; the industry has millions at its disposal and it uses those millions also to make propaganda. We have got a whole book here about the gold mining industry—it has been supplied to us—and we also have a copy of a cheque which is intended to show us how much they are paying the State by way of taxation. They come here and tell us, as the hon. member for Hospital (Mr. Barlow) also said, that the farmers could not exist if it were not for the gold mines. Well, here in the Cape Province the diamond mines have been our masters ever since the day they were discovered. And now the gold mines have become our masters. Here we find that the mines make millions of money, and out of those millions—out of an amount of more than £100,000,000, they only contribute £3,000,0000 more—and that is the money we can regard as a war contribution, but the wine farmer who gets hardly £1,500,000 for his products has to make a contribution of £4,100,000. If the Minister had not been so greatly influenced by the gold mines, if he had not been the servant of those people who have caused all the trouble in this country, the Boer War, the Jameson Raid, and all these other things, he would never have done a thing like that. He bears the name of Jan Hendrik Hofmeyr, but there cannot be the slightest doubt, if we scrutinise these figures, that he is serving these people and that there is something wrong. The Minister was very much concerned about our knowing so little about gold. In reply to interjections he remarked that it was not to be wondered at that we knew nothing about it. It is a pity the Minister did so, and that he indulged in such personalities. The Minister on one occasion spoke of drunken talk. Just let me say this to him: that one need not drink to get drunk. Conceit and an exaggerated opinion of oneself can also make one drunk. Now, the Minister can draw his own conclusions and make up his own mind what his attitude is due to. We have pointed out that some of the State’s money is being handed over to the mines to enable them to pay their natives more. The white workers have not yet got anything extra. They are now having a congress, and when the war is over we will have a repetition of what happened in 1922 when people were shot down because the mines would not pay. If the Minister had not paid the mines this £1,000,000 it would not have been necessary for him to impose this additional tax on the farmers. The Minister says that the shareholders, not the mines, get the money. Well, the shareholders are not poor. We heard a lot of laughter when the hon. member for Hospital said that the Nationalists held a lot of shares. That kind of story is now being told by a responsible Minister. I walked out because to me it seemed that the debate was becoming ridiculous. I can make a joke in this House because I am not a Minister, but a man in a Minister’s position must be more careful. So far as the position in regard to the gold mines is concerned the Minister cannot expect us to accept it. He says the mines are how working a low grade ore. We know that the mining magnates in the past used to work low grade ore when they wanted to bring down the price of their shares, and as soon as they—the magnates— bought up the shares cheaply they started working high grade ore again and the shares went up. So if the Minister comes along with that story he must not blame us if we do not take much notice of it. I don’t believe that one solitary mine will be kept going by this £1,800,000. The Minister also says that if those wages are paid for the mines their income will be higher, and we will get our money back in the form of taxation. Whenever a subsidy is paid to the farmers we hear the townspeople and the gold mines raising objection. On the other hand we know that that subsidy assists the farmers to supply their products more cheaply to the mines and to the workers in the mines. But the point is this: such a subsidy also causes the farmer’s income to go up and because his receipts are bigger, he is compelled to pay more by way of taxation. Have we ever heard the Minister of Finance use that argument to justify the payment of subsidies to the farmer? I want to put a pertinent question to the Minister. Why is he so up against the farmer? Why does he always favour the mining magnates? And then I also want to ask him this: Why does he try to get the last penny out of the people who are drawing small salaries? Rather let him take the money from the people earning £10,000 and £20,000 per year because they can afford to pay. My intelligence tells me that there is something wrong. I don’t want to come and put up a lot of clever talk here, but so far as the facts are concerned I have generally felt that preference is given to the mines and that they are protected although they have the money and although enormous additional amounts are paid out to the shareholders. They have been getting additional income, not because they have produced something better but simply because we went off the gold standard. We are now told that the mines are working a lower grade of ore and that they will last longer and that in that way the country will benefit. Let me say here that a mining company has no soul. It has no feeling for the country or for the people. We had the example of the copper mines in Namaqualand. While the company was paying they were getting the copper out, but the day after the last war was over they simply closed down the copper mines and told their employees to go. The Provincial Council of the Cape had to get these people here and find work for them among the wine farmers. I say they have no soul and no feeling. They are only out to make every possible penny and they do not care how the country is affected. They use money for their own benefit, and now we have this position, that the Government of the country is in their power. The Government is simply compelled to do what the mines tell them to do. The Minister of Finance talked about the big majority. Well, they are now getting paid for it. I want to assure the Minister of Finance that we realise he is a very clever man.

You needn’t tell him that, he knows it.

Yes, he boasts of it. He has been praising himself up to such an extent that one would think the whole world belongs to him. But I just want to tell him this: that no matter how clever he is there will always be somebody who is more clever. I may be stupid; I am not very clever. My brain cannot stand up against his, but I as an older man, as a man who has been more in touch with people than he has been, I want to give him this advice, that nobody can become big by talking in the way he does. That sort of talk simply makes an individual smaller than he should be. As Afrikaners we are proud of him because we are glad to have a man who is clever and competent, and therefore I feel the Minister should realise that he must not go on in this way. His own side may perhaps laugh about the things he says. Well, they will laugh as long as things go well, but when they don’t go well they will cast him aside.

As they have already done on one occasion.

And then he will have to go back to his own people. Rather let him look to his fellow Afrikaners; let him look to the farmer and to the platteland. Let him help those people—the unemployed. Let him help the poor and make provision for them. Don’t let the Minister stand up for those people who in the past have been the cause of all the trouble we have had here. I don’t mean the mines themselves, but I say that the people who control the mines have been the cause of all the trouble we have had here.

There is another point I want to mention in connection with income tax. The Minister in his Budget speech told us that he was concerned about tax evasions and that he intended introducing legislation to try and stop such evasions. He particularly had his eye on business men and professional men who bought farms and who made use of the methods by which a farmer could make his returns on a cash basis to evade paying income tax. The Minister is very much concerned about the possible tax evasion in the farming industry. Now, I want to ask him whether he imagines that is the only kind of tax evasion that goes on? I want to ask the Minister whether he is aware of the fact that in certain commercial circles in South Africa tax evasion takes place on a very much larger scale, than those things which the Minister wants to stop. And if the Minister is so anxious to put an end to tax evasion so far as farming is concerned, why is he not concerned, and why does he ignore the evasions which take place in trade and commerce?

I am by no means unconcerned about them.

It seems so. Has the Minister ever heard of this—I am sure it is happening in Johannesburg on a larger scale and of course it also happens here in Cape Town—that in the small dorps in South Africa many business men are in the habit of selling goods and doing business, but only on a cash basis.

Yes; and a number of them are now being dealt with.

Well, that is the sort of thing that goes on.

I think it would be better if the hon. member raised this question in Committee of the whole House on the Bill to give effect to the resolution before the Committee. It is a matter which affects the machinery of taxation.

I am dealing here with a point which can give the Minister more revenue.

The machinery of taxation is dealt with in the Bill giving effect to the taxes agreed to in Committee of Ways and Means. The details can be dealt with in Committee of the whole House on the Bill.

Then I want to associate myself with what has been said by the hon. member for Swellendam (Mr. S. E. Warren) and the hon. member for Bloemfontein (District) (Mr. Haywood). It seems that the Minister of Finance has of late become very tender hearted towards the mining industry in Johannesburg. I have the figures before me. The last figures we have, according to the returns by the Department of Inland Revenue, show that the Minister expects an amount of £10,000,000 from the normal tax on the gold mines. He expects £7,450,000 from the special contribution by the gold mines; altogether an amount of £17,670,000. That is the total direct contribution of the mining industry under these headings. The rest, of course, as the hon. member for Bloemfontein (District) (Mr. Haywood) has explained, is revenue from lease moneys and from the Gold Realisation Fund. These are our mines which are leased to the mining companies.

The gold in all the mines belongs to us.

Yes; but in the other instances we have to a certain extent surrendered our rights; but where these leases are concerned we have not done so. These are our mines. In the one instance we have surrendered our rights, and in the other instance we lease the mines to them and they exploit them. The taxation yield from these mines undoubtedly shows that the mines of the Witwatersrand are up against high costs of production. That we readily admit. But the point which the Minister has not explained—and which I think is indefensible—is that even if a case can be made out for assistance to certain mines, how there can be a case for helping mines which require no assistance whatsoever from us, which are making such profits today that they can work low grade ore without the subsidy? The Minister will pardon us but we cannot understand that. Assuming a case can be made out to assist certain mines, personally I do not think the Government should take that step. There are other ways of doing it. But assuming a case can be made out to assist certain mines, on what grounds does the Minister justify the use of public money to assist mines which require no assistance at all? The Minister says that he will get part of that money back in the form of taxation, but he himself admits that he only gets 70 per cent. of it. He is therefore making a present of £30 in every £100 to mines which do not need it at all. To my mind it is indefensible and I thoroughly agree with other members that the Minister should not treat this as a joke. Here we are dealing with a proposal more far-reaching than any proposal ever laid before Parliament, and I think, as other speakers have already said, that the Minister is displaying a lack of a sense of responsibility when he treats this matter as a joke. On what grounds can he defend it?

I shall do so. I have already tried to do so but I shall try again. The position is that in every mine there is ore of different grades. In every mine one can calculate what the pay limit is on the basis of costs at a certain amount. Let me put it this way: If the costs in a certain mine are 20s. per ton, then it may perhaps mean that it will not pay to work a grade of ore of let me say more than 4.1 dwts. As soon as the costs rise to 21s. per ton, the pay limit rises. Then it may perhaps not pay to work ore in that mine of more than 4.2 dwts. Consequently an increase of cost brings with it an increase of the pay limit. In that case it means perhaps that the ore between 4.1 and 4.2 dwts. becomes unpayable. That is what I mean. I am sorry if in my reply to the debate I was not able to make that clear, but my speech had to cover a wide field. What we aim at, of course, is not only the maintenance of certain low grade mines but also the maintenance for exploitation of a large quantity of low grade ore in all the mines. The rise in cost would mean that a certain series of ores would become unpayable. The fact that the rise in cost is being prevented—and that is what we are aiming at—means that that low grade ore is still payable. In regard to tax evasions I just want to mention that my Department in March imposed £100,000 in taxation fines. That shows that we are not quite as neglectful, and not as much asleep, as the hon. member may perhaps think.

The Government’s taxation proposals on the gold mines eleven years ago had the object of enabling the mines to take out low grade ore. The formula tax is framed in such a manner that to the extent the profit of a mine is used to mine low grade ore, to that extent will the State take a smaller amount of taxation. The Government allows all capital expenditure made in the mine for that purpose. That capital expenditure may be deducted for taxation purposes. I put a question to the Minister and it appears from his reply that in the past four years alone the mines have used an amount of £36,000,000 in that way.

Not in the past four years.

No; since 1936.

For the past four years it was not more than £10,000,000.

I shall give the amounts. Since 1934 it has been permissible to deduct capital investments in mines from the profits for taxation purposes. No other company is allowed to do so as far as I know. From 1936 to 1943 they have deducted an amount of £36,000,000.

What was the amount deducted last year?

£1,439,000.

And the year before?

£1,970,000.

The amounts are fairly small now.

Yes, they are getting smaller because less money is being put into the mines for development purposes. I put another question to the Minister and it appears from the reply that before 1933 the gold mines in no single year paid out more in dividends than £9,250,000. Since that time, however, they have been paying out on an average, in dividends, an amount of £17,750,000. The Minister cannot deny it. He refuses to say anything about the figures and he refuses to deal with the facts. I am not talking about profits now but about dividends the major part of which goes overseas.

No longer.

In 1933 that still was the case; in any case a very large proportion goes overseas. Today twice as much is paid out in dividends than was paid before 1933. It is true that the mines are struggling with increased production costs, but did not they have to struggle in the same way when they were paying out £9,250,000 in dividends? They are now paying twice as much in dividends and the capital has remained more or less the same, because the capital comes out of profits. No capital is brought in. If additional capital were put into the mines one would be able to say that interest has to be paid, but these are profits which are put in and not fresh capital. Why did not they have to struggle ten years ago, when they were only paying out half these dividends? We hear about mines which will have to close down. The fact of the matter is that this threat about mines having to close down is a pure game of bluff. As the hon. member of the Labour Party said just now, twenty to thirty years ago already some mines threatened to close down because they could not keep going, but they are still working today and they are still making profits. And all the mines are coupled up. There are certain mines which can be called poor mines in the sense that they are not as rich as other mines, but one finds that there are a certain lot of people, the same lot of people, who are directors of both the rich and the poor mines. Mr. John Martin is chairman of a number of mines and Sir Robert Kotze is chairman of another lot. The control of the mines is in the hands of a small lot of mining magnates. They control the mines and if the one mine does not make a big profit they make the profit out of another one. We say this, that despite the fact that the dividends have doubled themselves the Government comes along with a further concession and subsidises native labour on behalf of the mines. Was there any call before 1933 to subsidise the wages of the natives working in the mines? No, there was no need for it then. Then why is it necessary to do so today, now that the dividends of the mining magnates have been more than doubled? I should like the Minister to reply to that point. Let him take the facts. Let him get up and explain why it was not necessary in those days whereas now, when the dividends have doubled themselves, a subsidy must be paid? The real truth of the matter is that the mines are getting a bigger hold on the Government Party. At one time we thought that the Minister of Finance would stand up against the mining magnates. At one time he fought the mines when they wanted too much—he fought them just as I myself and other members do; but now the Minister has capitulated. I do not want the statement to go out from this House that the Minister of Finance has declared that lease moneys, and that part of the profits paid to the State for the right to work the mines, constitute taxation. That is not what the mines said in the past, and I don’t want the Minister to take up that attitude. I just want to point out that when I emphasised that the amount of £27,500,000 was partly obtained from lease moneys paid by the mines, the Minister’s reply was: “In the cases of leases, the lease moneys are the way in which we tax them.” He said that that was the system of taxation in regard to those mines. That was a clear statement, that lease moneys constituted a tax. When the late Mr. Duncan, as Minister of Mines, spoke about this question, he definitely took up the attitude that lease moneys were not a tax. And in those days that was the definite attitude adopted by the Minister of Finance. The money paid for the leases is money paid for the right to take out the gold. I have already quoted what the Minister said in 1933. Now that was the attitude which we are adopting here today, and we again want a clear statement from the Minister that these lease moneys have nothing to do with taxation. We don’t want a wrong impression to be created. The Minister of Finance should not take up an ambiguous attitude but should state clearly that the lease proceeds and the profits which the State gets for the right to extract the gold are not taxes. I don’t want the Minister to take part in the propaganda campaign of the mining magnates who say that these are taxes.

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 five and sub-section (2) of section 23 of Act No. 31 of 1941, respectively.

Agreed to.

I move—

I must say that I am not at all satisfied with the reply the Minister has given in this connection. I think he will agree with me that although the diamond mines were for some time faced with considerable difficulties, they are today facing a period of unprecedented prosperity. I think the Minister has to admit that the figures I have quoted go to prove that fact. Year after year the diamond sales have gone up until last year they reached their highest point of £20,000,000 and there is every reason to expect that the figure will not only be just as high this year but in all probability it will be still higher.

No, I expect it to be less.

That is not the information which has been conveyed to us—very confidentially. It is expected that diamonds this year will do just as well as in 1943. That is to say, that diamond sales may again be expected to be in the neighbourhood of £20,000,000. The Minister should also remember that they have now sold practically all the diamonds which had been stored away over a considerable number of years. They have made tremendous profits on those diamonds.

That probably is the reason why they reached £20,000,000 last year.

Let us compare the way the Minister wants to treat the diamond mines with the way he wants to treat public companies : we find that our public companies in the first place have to pay 4s. ordinary tax; then if they do fairly good business, they have to pay the special levy on trade profits of 6s. 8d.; that is 10s. 8d. and if a public company does anything as well as the diamond mines did last year it comes in at the same time for excess profits tax of 15s. in the pound. The diamond companies last year did particularly well. Consolidated Diamonds for instance in 1942 made a profit of a little over £1,000,000 and in 1943 they made a profit of £1,800,000. The total amount of tax which the Minister collected last year on this £1,800,000 profit was £300,000. I want to ask the Minister how that compares with his tax on public companies? What does a public company pay if it makes a profit of £1,800,000? Take the case of this company which had an income of £1,900,000, whose working costs were £120,000 and whose profit was £1,800,000. That is an enormous profit on working costs. The Minister takes only £300,000 from Consolidated Diamonds. How does that compare with this tax on public companies? How can the Minister justify a mining company which does such good business, making such a small contribution to the Exchequer? I think we are entitled to learn a little more in that connection. The Minister is so very keen on winning the war. When war broke out the Minister imposed a tax, a special contribution by the diamond mines, of 2s. Afterwards he increased that to 3s. No objection was raised on this side of the House because we felt that the diamond mines in the circumstances could not pay more, but the position has changed completely and the diamond companies are probably doing better than any other company in South Africa, and they are asked on a net profit of £1,800,000 to contribute only £300,000 to the Exchequer in times like the present. I must honestly say that while the Minister does not expect these good times to continue ….

I did not say that; I said that the sales would not be so big.

Our information is that they can expect to sell more carats to an amount of at least £20,000,000.

I cannot take this question any further than I have done. First of all I want to say that in levying the Excess Profits Duty we took up the attitude that that tax should not really apply to gold and diamond mines, and that is why we applied a special system. I further want to say that it is impossible for me to make a comparison between the tax on the companies to which the hon. member referred, without knowing what the prewar standard of those companies was. You cannot compare last year’s income with the income for the year immediately preceding. You have to go into the question of what the income before the war was, what the prewar standard was.

I want to ask the Minister whether this tax also applies to the alluvial diggings.

No.

Is the Hon. the Minister aware of the fact that some of the diggers have to dig very deep and have to have mining certificates. Some of them go as deep as 60 or 70 feet under ground. I should like to know whether they also come under this tax.

No. Motion put and agreed to.

I move—

1. (1) the rate of estate duty chargeable upon each pound of the dutiable amount of the estates of persons who die on or after the first day of April, 1944, shall be three ten-thousandths of a pound for every completed one hundred pounds or part thereof contained in the dutiable amount, subject to a maximum rate of six shillings and eight pence upon each pound : Provided that there shall be deducted from the amount of duty determined at the rate so calculated a rebate of three hundred pounds ;

I would like to move the following amendment here—

The effect of that is just this, that we do not bring down the exemption figure, the existing figure of £15,000 to £10,000, but that it remains at £15,000. I must say that I obtained my information from officials of the Minister. They give me the assurance that if the £300 is altered to £675, the figure will remain at £15,000 and it will not be reduced to £10,000. The hon. Minister reproached me for having voted in 1925 to make estate duty payable on estates of £7,500, He forgets—and it is not reasonable on the part of the Minister to suppress it—that during that year I voted for the increase of the commencing figure from £1,000 to £7,500.

You were then satisfied with £7,500.

But why does the Minister suppress that? At that time that was the only thing that could be done. The Government to which I belonged later increased the exemption to £15,000. The Nationalist Party, when it came into power, found that estate duty was payable on estates of £1,000. That was an inheritance which was left to us by the Smuts Government. The Smuts Government taxed every estate of £1,000 and the Nationalist Party immediately excluded all estates up to £7,500, and naturally I therefore voted with both hands for that, and when the Nationalist Party Government later decided to increase it to £15,000, I also voted for it. I have here the figures in regard to the history of estate duty. When the Minister came into power the estate duty on an estate of £16,000 was only £10; on an estate of £20,000 a duty of £185 was payable; on an estate of £30,000 a duty of £1,200 was payable. The Minister then amended the scale in 1942. He then increased it. Now the position is that on an estate of £12,000 an estate duty of £132 will be payable. On an estate of £13,000 an estate duty of £207 will be payable. On an estate of £15,000 a duty of £375 is payable, and on an estate of £20,000 a duty of £900 is payable. Assuming it is an estate of £20,000, which has to be divided amongst ten heirs; it seems to me then that a duty of £900 on that estate is too heavy. We must remember that estate duty is nothing but a capital levy, and to impose a duty of £900 on an estate of £20,000 where it may have to be divided amongst a large number of heirs, is very heavy. This duty will hit the farming community most heavily. The estates of farmers consist mostly of fixed property. There is no cash in the estate to pay the duty, with the result that a mortgage bond will have to be taken on the farm in order to pay that duty. And where there are a number of heirs, it makes the position extremely difficult. I think that the farmers in this House ought to stand together to persuade the Minister to accept our amendment. If the Minister thereafter proposes to increase the maximum from 334 per cent. to 50 per cent., this side of the House will raise no objections. In my opinion the Minister’s scale is not a reasonable one. Take an estate of £120,000. On that estate a duty of £40,000 is now payable. If the estate is £300,000 there is still only 6s. 8d. in the £ payable. The State therefore receives £100,000, but the heirs still retain £200,000. There still remains £200,000 in the estate. I believe the scale in England is completely different. I think the hon. member for Fauresmith (Dr. Dönges) is in a position to tell the Minister what the scale is in England. I think there they take up to 67 per cent. from the estate. I think in the case of certain estates they take nearly 70 per cent. I think in a young country like South Africa the capital levy which the Minister imposes by way of estate duty should not be so heavy in the case of small estates. In every industry, especially in the farming industry, it is necessary to build up a little reserve fund. If a farmer does succeed in building up a reserve, the Minister takes away that reserve by means of this estate duty. I think the Minister ought to make a greater concession in this respect. If he wants to do so, he can increase the maximum scale. We on this side of the House will not object to that.

I should like to support the amendment of the hon. member for George (Mr. Werth). I think that our desire, namely, that the starting point of the estates duty should remain where it is, namely, at £15,000, is a reasonable one. We know that not only is it proposed to reduce that amount to £10,000, but we also know that with the increased prices which are being paid for land, many estates which would have been under £15,000 normally, will now be above £15,000. We know, however, that that is largely due to the extent to which inflation has set in in this country, the extent to which the purchasing power of the £ has decreased. The purchasing power of our £ in terms of gold is only 50.7 per cent. today, while it stood at 100 per cent in 1932 when we were still on the gold standard. In other words, the actual purchasing power of our £ sterling in terms of gold is now a little more than 10s. In comparison with the position which existed before 1933 it means that an estate which was then worth only £7,500 will now fall within the duty limit of £15,000. On top of that increase in land values, which is not an actual increase but which has been brought about by a reduction of the purchasing power of the £, the Minister still reduces the limit, and I feel therefore that it is reasonable to ask that we should retain the level which previously existed. We are a young developing country. We have not got the large established estates which other countries have; we are largely an agricultural country, and as the hon. member for George said, it is on the farming community that this burden will rest most heavily. We are devoting our attention today to schemes of mortgage redemption. We want to try to reduce the mortgage burden which rests on farms, but by increasing this level we are engaged in increasing the mortagage burdens on farms. There are very few estates which are able to pay the estate duty in cash today. The people are compelled to take a mortgage bond on the farm in order to be able to pay the duty, and by making, this duty limit higher we are engaged in bringing many more estates within the Minister’s net. I feel that in a country such as South Africa with the circumstances which prevail here, this is not a desirable policy. We feel that since estate duty, to a certain extent, is regarded as a retrospective income tax, it may be justified in that sense, but then we say that we must not start at such a low figure. If one takes an amount of £15,000 at the present rate of interest of 3 per cent., it only means an income of £450, and in view of the fact that our normal income tax starts on the £400 notch, it would be better to leave it at that amount, which agrees more or less with the amount of the capitalised value of £400. That is why it must be distinguished from succession duties, because it is not paid by an heir, but because it is a tax which the deceased pays in the form of accumulated income tax. That at any rate, is the scientific justification for that tax. In England, of course, it begins much lower but it also goes much higher. In England it does not go up to 334 per cent. only but in England the estate duty goes up to 65 per cent. We do not want to go as high as that. We want to start higher than England and we want to stop sooner than England does. Where England goes up to 65 per cent. we want to place the limit at 50 per cent. The Minister himself admitted to a certain extent that a change should be brought about änd that there should be an increase of the duty by increasing the existing 25 per cent. notch to 334 per cent.; and we feel that if he can meet us on the first point where we ask that the commencing point of the tax should be £15,000, he can make up for any resultant losses by increasing the ceiling from 33⅓ per cent. to 50 per cent., so that we shall not have this anomaly that while there is a rising duty up to £111,000 it thereafter remains on an even duty of 6s. 8d. in the £. We want the scale to rise above the £111,000 mark. The hon. Minister said that there were only thirteen estates of £111,000 in one year. Those thirteen estates may perhaps yield more than 1,300 estates which fall in the lower group. I think therefore that under all these circumstances we should ask the Minister to leave the position where it is, especially in view of the present circumstances and in view of the high tax which is imposed on ordinary income, and in view of the falling purchasing power of the £ sterling. Automatically it is actually reduced to £7,500, because an estate which is worth £15,000 today is an estate which in terms of our monetary unit was only worth £7,500 in 1928, for example. But the enormous increase in land prices and other factors have resulted in the value of that estate being driven up to £15,000. I think therefore that the Minister will be well advised to keep the starting point where it is, and if he wants an extra avenue to raise money let him rather increase the ceiling slightly.

The object of this amendment is, of course, to keep the starting point at £15,000. At the moment, having in mind a starting point of £10,000, we are proposing a rebate of £300 on the duty. With the object of keeping the starting point at £15,000, it is then necessary to increase the rebate by £375. I would have been able to understand this amendment better if it had not been for the fact that we all adopted the principle of social security; one of the indispensible conditions for social security is the redistribution of income, and there is no better method of doing that than by means of an estate duty. If therefore we want to go on in that direction, we must bear in mind the necessity of increased taxes of this nature. What will the effect of this amendment be? It will not only mean that persons with an estate between £10,000 and £15,000 will now be exempted, but it will mean that everyone who has an estate of more than £15,000 will pay £375 less than they would have paid today. My hon. friend will probably concede that. It has that effect. We must therefore take into account the fact that all the taxpayers will pay £375 less as a result of this amendment.

We have no objection to the Minister altering his scale.

It will bring about a loss of revenue of £175,000. My hon. friend stated that that loss could be recovered by increasing the figure to 50 per cent., but I am afraid that is not possible. We have only 11 or 13 estates a year above the £110,000 notch, and the majority of them are in the vicinity of £110,000. We may, therefore, get an extra amount by that means, but we will be left with a considerable deficit.

You will get £35,000 from one estate alone.

But you will not get £35,000 more. It will then mean a reduction of revenue, and I am sorry that I am not prepared to agree to that reduction. We were told that South Africa is a young country, that it is an agricultural country. Well, for that reason I am not going to make a comparison with England. I would rather make a comparison with Australia and New Zealand. In New Zealand estate duty is payable from £200. It is 1 per cent. on £200. Eventually it rises up to 40 per cent. But in New Zealand it starts at £200.

What are the succession duties there?

The succession duties in New Zealand are 2 per cent. for the widow, 3 per cent. for brothers and sisters, 6 per cent. for the other heirs, but in all those cases it rises to higher amounts. It starts at those percentages. In England the succession duties are based on a sliding scale.

Is the estate duty in New Zealand on £200 not merely the same as our estate fees?

That is quite possible, but there are also estate fees payable. The point is, however that all estates above £200 are subject to estate duty.

But the succession duties are less.

No, not at all. A widow may have to pay succession duties up to 13 per cent. if her succession is big enough.

Is that a good method of teaching the people to save?

I am only replying to the questions which have been put to me. I am making a comparison with New Zealand.

Up to what amount does the scale go in New Zealand?

£100,000. In Australia the position is that an estate duty of the Commonwealth is payable, and in addition to that the various states levy an estate duty. With regard to the Commonwealth duty, the estate duty begins at £200 where the whole estate goes to the widow, and where that is not the case, at £1,000. It begins at 1 per. cent. and it goes up to 27 per cent. But then there is also an estate duty in the various States in New Zealand. In New South Wales, for example, the estate duty starts at £1,000. In Australia therefore the position is that all estates from £1,000 are subject to estate duty, and in New Zealand all estates above £200 are subject to estate duty. If therefore we compare the duty in South Africa with the estate duty in Australia and New Zealand, we must admit that the estate duty in South Africa is not unreasonably high. I regret, therefore, that I shall not be able to accept this amendment.

What strikes me in connection with these resolutions is this, that the scale goes up to approximately £100,000, but then it goes no further.

Why does the Minister protect those people who are at the top.

I agree with the Minister that there are not many people who leave such a large estate, but a man who leaves such a large estate ought to pay a greater percentage. Why should the percentage rise from £10,000 to £100,000 and then go no further? To me that does not seem to be fair. If a man leaves an estate of more than £100,000 and he does not bequeath it to charity, the State ought to take it from him. The estate of the middle class man has been taxed, but the rich man, the millionaire goes free. Six shillings and eightpence in the £ in the case of an estate exceeding £100,000 is not a reasonable duty. It seems to me that the scale should rise up to at least 50 per cent. If I had my own way I would take everything after a certain amount. Has the Minister ever thought of this aspect of the matter? Let us take the ordinary farmer who has to work hard throughout his life and who got together an estate of £15,000. It consists of improvements on his farm and other movable assets. The value of his farm rose to approximately £15,000. He possesses a number of head of cattle and things of that kind. He has five or six children or he may even have ten children. This man is dealt with on the same footing as the townsman who has his money invested in mortgage bond or shares or in land in the town, which can easily be sold. But the farmer would like to bequeath the land to his son. Assuming he wants to bequeath that land to his son, in order to be able to pay the estate duty his son will be compelled to take a bond on the farm. I am not referring now to a man whose land is valued at more than £15,000. His heirs may perhaps be able to pay the duty, but it seems to me that we are making it impossible for the farmer to bequeath his farm. He will simply be compelled to stipulate that the place must be sold. It seems to me that the Minister ought to tax estates above £100,000 more heavily. If a man who leaves an esate of £100,000 has six or eight children, or even ten children, he still leaves £10,000 to every child. I think that is not reasonable. The Minister may say that there may only be half a dozen estates every year above £110,000. But it is the principle of the matter. In my opinion it is wrong to say that the levy should increase on a sliding scale up to £110,000, and that thereafter it should remain on the same scale. It is true that the duty is proportionately greater and that the estate is bigger, but the Minister might possibly be able to grant relief at the other end of the scale by taxing the estates above £110,000 more heavily. I should like to know why the scale does not go up in the case of estates which are worth more than £110,000. One of the speakers on the other side also asked the other day why the maximum notch was being fixed at £110,000. A moment ago the Minister spoke of social security. He said that these duties must be levied for that purpose. He pointed out that in New Zealand estate duty was payable on estates above £200. Well, if a man leaves an estate of £200 and an estate duty is payable on that, it is in my opinion almost tantamount to theft. If it is done in other countries, it may be because the conditions there are different. We have a sliding scale here, and I want to know why it stops at £110,000. Let us take 10s. in the £ or at least more than 6s. 8d. It does not seem reasonable to leave it as it is.

The hon. Minister said that we must keep social security in mind. I think the time to talk about that will arrive when once the Government has introduced social security. We can then use the means to which he referred. At the moment there does not seem to be any necessity, during this Session at any rate, to give attention to the means to be adopted to ensure social security in South Africa. With regard to the re-distribution of income and estate duty as a means of obtaining it, I do not know whether the Minister can be correct, because if there is an estate of £20,000 and there is one heir one can see that the capital of the one heir is reduced by a certain amount. But if there are ten heirs amongst whom that estate of £20,000 has to be divided, it means that every heir gets only £2,000, on which estate duty is payable in the first instance. Where, however, someone leaves an esate of £2,000 and there is only one heir, no estate duty is payable on that inheritance. In the one case a duty is payable on an inheritance of £2,000 and in the other case no duty is payable. It would seem that that is the very means which is not the correct means of obtaining a redistribution of income. But now I want to come to the amount which can be obtained by the State. The hon. Minister said that it may be only £50,000 more, but if we take one estate of £200,000 a year and if that sliding scale goes up to 50 per cent., there would be an estate duty of £100,000 payable on that one estate alone, while under the existing arrangement it would only have been £66,000. On that one estate approximately £33,000 more could therefore be obtained. I think therefore that the Minister is perhaps under-estimating the amount which can be obtained by increasing the scale to 10s. in the £, and making it a little higher than £110,000. The comparison with Australia is not quite in order, because it is a well known fact that the greater proportion of the population of Australia is congregated in two or three large cities. There the proportion of land population as against the urban population is not the same. It is but a poor consolation to say that because they did it in other countries we must also do it here. That is not a consolation which is worth very much. Why is Australia particularly mentioned? Has the starting level been decreased there during the last few years? They may be used to it. I do not know when these scales and the starting level was introduced in Australia. In New Zealand it goes as high as 40 per cent. In England it goes up to 60 per cent. It is not an unheard of thing to make the levy on large estates as high as that. There we have heirs who inherit big amounts, and it is justified. Then the argument in regard to distribution of income comes into operation, but not in the case of small estates. I hope, therefore, that the Minister will see his way clear to accept this amendment, so that estates up to £15,000 will be exempted from this duty.

Question put: That the words “three hundred,” proposed to be omitted, stand part of the motion,

Upon which the Committee divided:

Ayes—72:

Abbott, C. B. M.

Abrahamson, H.

Alexander, M.

Allen, F. B.

Bawden, W.

Bekker, H. J.

Bodenstein, H. A. S.

Bosman, L. P.

Bowker, T. B.

Burnside, D. C.

Christie, J.

Christopher, R. M.

Connan, J M.

Conradie, J. M.

Davis, A.

Derbyshire, J. G.

De Wet, H. C.

De Wet, P. J.

Dolley, G.

Du Toit, A. C.

Du Toit, R. J.

Eksteen, H. O.

Fawcett, R. M.

Fourie, J. P.

Gluckman, H.

Hare, W. D.

Hayward, G. N.

Hemming, G. K.

Henny, G. E. J.

Heyns, G. C. S.

Hofmeyr, J. H.

Hopf, F.

Howarth, F. T.

Johnson, H. A.

Kentridge, M.

Latimer, A.

McLean, J.

Maré, F. J.

Miles-Cadman, C. F.

Morris, J. W. H.

Mushet, J. W.

Payn, A. O. B.

Payne, A. C.

Pocock, P. V.

Prinsloo, W. B. J.

Raubenheimer, L. J.

Robertson, R. B.

Rood, K.

Russell, J. H.

Shearer, V. L.

Solomon, B.

Tellers: R. E.

Solomon, V. G. F.

Steenkamp, L. S.

Steytler, L. J.

Stratford, J. R. F.

Strauss, J. G. N.

Sturrock, F. C.

Sullivan, J. R.

Sutter, G. J.

Tighy, S. J.

Ueckermann, K.

Van den Berg, M. J.

Van Niekerk, H. J. L.

Van Onselen, W. S.

Wanless, A. T.

Waring, F. W.

Warren, C. M.

Waterson, S. F.

Williams, H. J.

Wolmarans, J. B.

Bell and J. W. Higgerty.

Noes—30:

Booysen, W. A.

Bremer, K.

Brink, W. D.

Conradie, J. H.

Döhne, J. L. B.

Dönges, T. E.

Erasmus, F. C.

Grobler, D. C. S.

Haywood, J. J.

Kemp, J. C. G.

Le Roux, J. N.

Louw, E. H.

Ludiċk, A. I.

Luttig, P. J. H.

Malan, D. F.

Olivier, P. J.

Pieterse, P. W. A.

Potgieter, J. E.

Steyn, A.

Strauss, E. R.

Strydom, G. H. F.

Strydom, J. G.

Swanepoel, S. J.

Vosloo, L. J.

Warren, S. E.

Werth, A. J.

Wessels, C. J. O.

Wilkens, J.

Tellers: P. O. Sauer and J. J. Serfontein.

Question accordingly affirmed and the amendment dropped.

Original motion put and agreed to.

I move—

1. (2) That the rates of succession duty chargeable upon the dutiable amount of any succession which is deemed to have accrued upon the death of any person who dies on or after the first day of April, 1944, shall be—
   1. (i) where the successor is the direct descendant or ascendant of the predecessor 3 per cent.
   2. (ii) where the successor is the brother or sister of the predecessor 5 per cent.
   3. (iii) where the successor is the descendant of the brother or sister of the predecessor 8 per cent.
   4. (iv) where the successor is otherwise related to the predecessor or is a stranger in blood or is an institution 12 per cent.:

In regard to this tax on inheritances it is increased from 2 per cent. to 3 per cent. in the case of children and no distinction is made between children, grand-children and great-grand-children. Why cannot it be a little less in the one case and a little more in the other case. I should also like to know from the Minister why the highest tax, viz.: 12 per cent., applies to both persons who occupy a definite relationship to the testator, and also to other institutions. I consider a distinction should be made between people who occupy a different relationship from those mentioned, and institutions, so that the institution will have to pay more than the individual who occupies another relationship. I do not know why the percentage is fixed in this way and why no distinction is made.

In this proposal we are following the existing arrangement. Under the existing arrangement we have four classes and the first class contains the grand-children as well as the children.

And the great-grandchildren as well.

The position also prevails in New Zealand. I have not studied the position in other countries, but that is the existing position under our law, and the only change we are making is that we are increasing the succession duties from 2 per cent. to 3 per cent. in the first instance. In regard to the fourth group the succession duty now is 10 per cent. and we are increasing it to 12 per cent. The groups are left as they are and we are simply making proportionate increases.

I want to move an amendment that the estate duty paid on an estate of £12,000 be deducted by way of abatement before the succession duties are paid.

It is always deducted.

If that is so then I need not move it.

We can consider that when we have the Bill before us.

Apparently under the proposal before us there is no abatement at all, and I should like to submit the principle.

All these proposals are subject to whatever abatements are determined in the Act. There is an abatement of £100 and we are not amending that.

Then I would like to move that the abatement be increased somewhat.

The hon. member can move that when the Bill is before the House.

I should like to advocate the principle here, and I want to point out that so far as succession duties are concerned, estates in England are exempt from succession duties up to £15,000, or where the heirs inherit £1,000 or £2,000 according to circumstances. I want the Minister to consider, when moving the Bill and when deciding about the exemptions, making the exemptions higher than the existing £100.

The position in England is that the succession duty of 1 per cent. in respect of widows and widowers is not leviable where the estate is less than £5,000, and where the heirs get less than £1,000. I feel, however, that we should rather go into this question when the Bill is before us.

I am sorry I have asked the hon. Minister to raise the mathematical ability of his department to an unreasonable degree, but I do not understand why the abatement of £100 in the succession duties should continue to be diminished in the manner it is. It is diminished by £1 for every £1 by which the amount exceeds £100, and therefore the successor has to pay double duty upon amounts ranging between £100 and £200. The Minister has criticised this particular aspect himself, and he has just abolished it in the Estate Duty in the preceeding paragraph. I think he would be well advised to carry this out in the case of the succession duty too. Let him abolish the diminishing effect upon the abatement. I would congratulate the Minister on one improvement in the mathematical basis for computation of the duty. It is provided that where a succession exceeds £10,000 there will be an extra 1 per cent. payable, but only to the extent of 1 per cent. on the excess over £10,000, so that the extra 1 per cent. is not payable on the initial £10,000. If that principle were maintained right through taxation measures the mathematical basis would be reasonable. It would obviate the steps, which we have today, even in the estate duty. I hope the Minister will delete the diminishing aspect of the abatement which I have mentioned.

I am not quite satisfied with the answer the Minister has given me, and I should like to put this question: If a man leaves his estate to his wife, will she then have to pay 12 per cent.?

No.

It does not say so here.

It will appear in the Act.

Then there is another point. If the inheritance is more than £10,000, an extra 1 per cent. has to be paid.

On the amount in excess of £10,000.

It remains 1 per cent.

Yes.

If it goes up to £20,000 or £30,000 it still remains at 1 per cent. Why must rich people in a way be exempt in this manner? Why cannot they pay more? If an individual inherits more than £10,000 he has to pay 1 per cent., and if he inherits £100,000 he only pays 1 per cent. more. I think it would be better to treat the small inheritances more leniently and to tax the large inheritances more heavily. At the moment it seems unfair to me. The rich in any case will do down the Government by giving away their possessions before they die. That is what they are doing at the moment. Say we think a man is worth £3,000,000—when he dies we find he is only worth £500,000. He has given away the other £2,500,000. It is the poor man and the honest man who falls under this tax, and I therefore feel that we should treat the small inheritance more leniently than the large inheritance.

Motion put and agreed to.

I move—

If the Minister is prepared to delete Chapter 5 we shall raise no objection at all to Chapter 4.

We are not discussing Chapter 5 now.

If the Minister will give us that assurance, we shall raise no objection to this Chapter. We have no objection to the tax proposed here but what we object to is that this tax is absurdly low compared with the tax on land transactions. Why does the Minister differentiate in the way he is doing? If a man speculates in shares the Minister feels sorry for him.

You people also speculate.

If we do so we have to pay, and quite right too.

Then why make such a fuss?

We are prepared to pay if we speculate in shares; the objection we have is that the man who puts through a land transaction in war time is taxed up to the hilt but the man who speculates in shares gets off very lightly. We have been objecting to this all afternoon. I put forward the following instance. Say a man bought land in 1943 for £1,400. He sells it now and makes a profit of £600. The Minister now taxes him as follows: First of all he takes two-thirds of the profit, viz., £400. But he is not satisfied with this £400. He puts an additional 1 per cent. transfer duty on the £2,000 for which the land has been sold. That is £20. Consequently, on the transation of £2,000 on which the man has made a profit of £600, the Minister exacts a tax of £420. The man who puts through a share transaction and who makes a similar profit, pays 30s. under the new stamp duty as compared with the other man’s £420.

That is not correct.

If it is not correct, let the Minister get up and tell me that it is not correct. If the Minister tells me I am wrong, very well, I shall be satisfied. Our objection is against the differentiation. There is discrimination against the transaction in land. Let me put it to the Minister this way: The Minister says that this tax is a special war tax, and that it will disappear immediately the war is over, although the Minister has told the public that he is not prepared to regard the two-thirds as a war tax. The public has been warned by him that this tax will remain in force for all time. Is not that so?

No, not the tax, but in regard to properties which have been bought in war-time ….

Yes, quite so. The Minister meant the transactions on which the two-thirds tax is now payable. That tax will remain in force. And let me say this to the Minister: We resent his being scared to do anything to interfere with speculative shares. I want to ask the Minister to consider this: Let this be the basic tax but bring in a special extra war levy during this session on speculative shares and let the Minister put on the tax on the basis suggested by the hon. member for Fauresmith (Dr. Dönges)—let it be a sales tax of one per cent. Let him put an extra levy of 17s. 6d. on speculative shares for the duration of the war. You will then have the ordinary tax of 2s. 6d. and on speculative shares you will have a war time tax of 17s. 6d. making a total of £1.

He would not dare to.

No; they say Hoggenheimer is dead, but he has never dominated South Africa as he does today. He has never dominated the Government as he does today. At one time the Minister gave us the impression that he would be able to hold his own with Hoggenheimer, but today he is worshipping at his feet.

Who is he?

He is bending his knee to your party’s master, Hoggenheimer. I said yesterday that millionaires in South Africa were made on the sharemarket. That is where hundreds of thousands of pounds are made today. I know of people in Cape Town who last year made more than £40,000 net profit out of speculation in shares and they did not pay a penny to the State. It is increase of capital, and now the Minister says they will have to pay 2s. 6d. on every £100. It is scandalous. It is absurdly little. I feel inclined to ask the Minister what he has asked us so often. Do you know there is a war on? Dou you know it costs money? We protest against the differentiation between the man who puts through a transaction in land and the man who sells shares. I buy a farm and I make improvements on the farm and I sell my farm at a profit, and the Minister takes 13s. 4d.

Improvements are deducted.

Let me say this to the Minister: When I effect improvements to a farm I create a permanent asset in South Africa, but what does a man who speculates in shares create? To my mind speculation is South Africa’s curse, and if the Minister wants to be true to himself he should get his money there. The Minister is very prone to get into the pulpit and to moralise. Let him be true to himself and say that this sort of thing is a danger to South Africa, and that those who go in for speculation must contribute to the Exchequer. If he does so we shall be more satisfied but otherwise we must refuse to swallow No. 5 and we are going to protest against it most emphatically.

A fresh charge is made against me now—now I am supposed to be afraid. I wonder whether a charge like that can be made with any justification against a Minister of Finance who imposes the taxes which I am imposing and who is taxing the gold mines up to 75 per cent.? Can he be accused of being afraid of Hoggenheimer? Can a Minister of Finance who increases the tax on brokers’ notes by 150 per cent. be accused of being afraid?

Don’t be childish now.

What is the difference between a transaction in land and a share transaction? First of all a transaction in land does not take place so very often, but shares may change hands quite a few times in one day. Consequently there is a great difference when it comes tq a tax of this kind, but what the hon. member apparently wants us to do is to tax the profits on share market transactions. In my reply on the Budget debate I went fully into that question and I pointed to the difficulties in connection with such a scheme. I asked hon. members to help me and show me how I could get over the difficulty. Apparently they are unable to do so because they now come along with a proposal for a sales tax— in other words, increased stamp duties. Hon. members over there have apparently not managed to think out a scheme for taxing share market profits. They cannot work out a good system. I would have liked to have done so, but I have had no more success in working out a scheme than they have had, and now they propose a sales tax, an increase in the stamp duty. The hon. member should not lose sight of the fact that transactions do not take place only by means of brokers’ notes. If you put your tax on brokers’ notes too high you simply encourage people to conduct their transactions without brokers’ notes. We are now proposing an increase of 100 per cent. in the stamp duties, and we have to watch the results. It is not necessarily my last word on the subject. The hon. member apparently wants us to curtail speculation. We are dealing with taxation proposals here. We are now proposing an increase of 150 per cent. and I shall watch the position. It is quite impossible to increase it offhand from 1s. to £1. and that is what the hon. member proposes. We are proposing the correct procedure. Now let us see how that works. It is not my last word on the matter.

The Minister says it will be difficult for him to tax the transactions. He says that shares sometimes change hands two or three times per day. If the Minister wants to tell us that it is impossible to tax these transactions then I want to tell him that it is quite easy to tax the profits.

At 6.40 p.m. the Chairman stated that, in accordance with the Sessional Order adopted on the 25 January, 1944, 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 19th April.