When the House adjourned yesterday I was discussing the matter of stamp duties. The Minister expressed the opinion that it was difficult or impossible to increase the stamp duties in such a way that it would lead to a considerable contribution as far as taxation is concerned. I want to point out that the sale and purchase of shares is used in many cases to evade taxable income. There are people who sell their shares at a certain point of time so that they will have no taxable income; in other words, where they sold at a profit and actually made a big income at a certain time of the year, that income is not taxable as ordinary income, nor is there any provision here which imposes a considerable levy on those transactions. A share in a business, a share in a business which possesses property, means that one has a share of that property. A share is a portion of a business, and if it is right to impose a tax of 13s. 4d. in the £ on profit which is made on the purchase and sale of property during the war, our argument is that it is much more imperative to impose a heavy tax on the purchase or sale of shares, in other words a share in a property, a share in a business; and I think that no argument which can be advanced can do away with the fact that it is a matter of right and justice that those who sell a share in a property, who sell a share in a business, should pay at least the same tax as people who sell a property or even a share in a property, if it is in the name of that particular person. We ask ourselves why it should be so. I can see no reason why these transactions should not be made registerable; the Minister stated that it was impossible. Everyone of these transactions could be made registerable. The Minister says that sometimes shares are sold more than once per day. I maintain that there is no reason, even if a share were to be sold four or five times during any one day, why it should not be registerable at every stage, and why the stamp duties should not be so high that it will really mean considerable revenue for the State. I am afraid that this is a case where the Minister is benefiting a certain financial and commercial section in such a way and to such an enormous extent that we cannot agree with it, and we must protest against the Minister’s action in this respect. We have noticed that in relation to other matters where, in the case of estate duty, for example, as soon as it exceeds £110,000, the richest people are let off lightly, and there is no increase in the percentage of taxation. We also find that there is a limit in the case of ordinary income tax, and the interests of the richest people are always looked after and promoted by the Minister. I admit that that was also done perviously, but the reason for this heavy tax on property is that this is war time. We maintain that the Minister ought to make provision whereby the enormous turnover in shares and stocks will be taxed in such a manner that it will mean considerable revenue for the State.

The Minister stated yesterday during the course of his explanation in connection with the stamp duty on the transfer of shares, that land was not frequently sold and that when a land transaction did take place, it was necessary to “catch” the seller by levying a tax of 13s. 4d. on the profit he makes. The Minister’s reply was that shares were continually being transferred from one owner to another, and that he was highly satisfied with the stamp duties imposed on brokers’ notes. Usually those shares are transferred at an increased speculation price; and I want to remind the hon. Minister of this fact. When he imposed the tax on the sale of land he stated that he wanted to stop speculation in land with a view of preventing inflation. But I want to tell the Minister that speculation in land has become almost a “racket” today. If the object of the Minister’s tax is to gain revenue, and every transaction means a profit, I cannot see why the Minister cannot levy a tax of 13s. 4d. in the £ on shares as well. The argument is advanced that there are many poor people who have shares. I personally would not advise any salaried man to buy shares, but rather to buy land. Speculation in shares is taking place on an enormous scale. Even if shares were bought and sold four or five times in the course of a day, the Government would still be justified in levying a tax on the profits.

What happens when the man loses?

What happens when a man sells land and he has to sell at a loss? That is my reply to that. If a man has to sell his farm at a loss, the Government does not meet him in any way. Let me say that it frequently happens that a man has to sell his land at a loss. He gets no relief. If the object of this tax is to obtain revenue, here is a chance. I am one of those who have always asked the Minister to spend more money on social welfare and social security. Here the Minister has an opportunity to take a portion of the profits which are made on the share market. The Minister said the other day in connection with the tax on cigarettes and wine that it depends entirely on the smoker or the drinker whether he is going to pay that tax. But the same applies in the case of shares. It also depends on the person concerned whether or not he is going to buy shares. It is also subject to his own will. I cannot see why we should encourage speculation in shares. May I just remind hon. members of “Black Friday,” and of the fact that the small salaried man who is foolish enough to invest his savings in shares in the hope of making a profit, is simply gambling with his money, because the small man who invest a few hundred pounds in shares runs the risk of losing it, on the other hand he may make a profit. But the man who buys shares to the value of hundreds of thousands of pounds does not lose a penny, because he is the man who makes or breaks the market, and he will always make or break the market for his own benefit. He will let the market fall at a time when the shares are perhaps held by poor people. Once he has broken the market he will buy, and then he will again drive up the market, and so he goes on. I say that here we have a chance to “catch” the big man, and at the same time we can discourage the small man from buying shares. Let the State take a portion of the profit every time shares are transferred from one person to another. If we do not do that we are engaged in encouraging speculation. Let it be part of our policy to prevent speculation on the part of the small salaried man, for his own protection. Where speculation takes place on a large scale let the state intervene and take a portion of the profits. Do not impose that tax only on the man who sells land. Let us also do it in the case of shares, and if we do not do it we are not doing justice to the small man. I know that even in the case of land there is speculation on a reckless scale. There are people who buy land at a prairie value of £2 10s. per morgen, and later sell it at £150 per morgen. That is reckless speculation, but unfortunately this tax is not only confined to those people; it also hits the man who has only one piece of land and who has to sell it for some reason or other. It may be a civil servant who is transferred from Pretoria to Cape Town. He sells his land in Pretoria at a profit, and then he has to buy a piece of land in Cape Town at an inflated price. What right have we to tax any of those people; what right have we to take 13s. 4d. in the £ from them while we allow the share speculator to go free? If we can catch the speculative element we must do so. I want to make an appeal to the Minister when he revises his taxation system in the future, so to alter the levy that he will tax those people who speculate in shares. I hope that the Minister will set himself this ideal that there should be no speculation in connection with mining shares.

Order, order! I think the hon. member should come back to the details of this proposal.

I am sorry. The question which is under discussion at the moment is that of stamp duties …

The hon. member is now discussing the principle of the tax. It was in order to discuss the principle on the motion to go into Committee of Ways and Means and it may again be discussed on the Second Reading of the Bill to give effect to the resolutions of the Committee, but principles should not be discussed in the Committee of Ways and Means—only the details should be discussed.

I thought I should revert to this matter in order to substantiate my argument. We try to justify our taxation, and for that reason I had to refer to this tax.

It is a matter of principle. We can only discuss the details of the tax in the Committee stage.

But the hon. Minister gave his reasons why the stamp duties on the transfer of shares could not be increased.

That was in reply to a question which was put by the hon. member for George (Mr. Werth).

I want to associate myself heartily with what the last speaker tried to explain here. Share speculation is exclusively controlled by the rich people, and they make the greatest profits; in other words, it is mostly the capitalists who enrich themselves by means of the share market. For that reason it is not clear to me, since the Minister has this opportunity of “catching” that particular class for a contribution to the State revenue in respect of the profits they make, why he does not increase the stamp duties. This particular class make their living out of the share market. They concentrate entirely on the share market. They become rich overnight; they do not put their hands into cold water; they do not exert themselves in the least. They sit at the wine tables and there they put out their cards; they make enormous profits on the share market; and these are nothing but gambling profits. Since the Minister is convinced that this promotes capitalism and in view of the fact that he requires this money and is intent on imposing taxation, we cannot understand why he does not make use of this golden opportunity. As the hon. Minister knows, there are no working costs or expenses connected with these gambling profits. There is not the least expenditure. Those profits are nett profits. There are no production costs at all. These are nett profits which are made by the rich people on the share market. The stamp fee on a transaction of £100 amounts to 2s. 6d. On £1,000 the stamp duty is £1 10s. How does that sound? On a profit of £1,000 the duty is only £1 10s.

It is not a profit of £1,000.

I cannot understand how the Minister can say that it is not profit. When the capitalist gambles on the share market and he makes £20,000, what do the stamp duties amount to?

The stamp duties are not on the profits. The duty is payable on the compensation.

What does the Minister get on £20,000?

He does not get anything on the profits; only on the shares which are sold.

Yes, but the capitalist pockets those profits.

Does the Minister want to suggest that a man would sell shares in order to lose?

He puts those profits into his pocket without having had any expenses in connection with the transaction. We cannot understand the Minister’s motive. Surely this is not a party matter; it is a national matter; it is a question of taxation.

But these are his friends, the capitalists.

We cannot understand why the people who belong to this particular group and who live an easy life should not be required to pay more.

May I point out to the hon. member that the Committee is only dealing with the reduction or the rejection of proposed taxes. The hon. member cannot plead for an increase in the taxation.

On a point of order, we can advocate an increase, but we cannot move it.

No. It is equally out of order in the Committee of Ways and Means to advocate or to move an amendment for the increase of a tax.

We are only pleading for an increase, and we want to persuade the Minister to consider this matter seriously, even if it is not for today, then for the future. The country is not unwilling to pay taxes, but let us feel that there is an even burden on every type of income. We feel that this burden is not an even one. There is discrimination in this case. Mercy is being shown here to a certain group. We do not know what is at the back of it, and the Minister must not hold it against us if we say that we view it with suspicion. We feel that there can be no justification in this case for not taxing this special group more heavily, this group which makes profits, and tremendous profits, out of enormous national assets. We trust that the Minister will consider this very seriously. We know that he has a sense of justice, and we therefore make an appeal to him as Minister of Finance to satisfy not only this side but also members on his own side, and not to spare a certain element which is systematically engaged in filling their pockets. We want the Minister to take a wider view, and not to let this group off so lightly; these people who are now living in luxury, who do not know what to do with their money and who are the main instigators of this war. That is the very group which must be hit, and we make an urgent appeal to the Minister to round up this group and not to force those people who have to live from hand to mouth to make a heavier contribution. They find it very difficult to make their contribution. It seems unreasonable to tax this group so heavily, these people who find it so difficult to make ends meet, while the other people who live in luxury are not affected by this measure. That is all we want to say and all we want to do; and, in conclusion, we want to try to persuade the Minister to look at the matter in that light.

I want to assure the Minister that the public outside is following this debate with very considerable interest, particularly the attitude which the Minister is adopting in regard to this type of speculator. That is clear from the number of letters which I have been receiving yesterday and today on this particular subject. These letters come from people who occupy responsible positions in the community. They, like ourselves, are concerned to find that the Minister of Finance has no sympathy whatsoever for the man with a small income, for the man earning less than £400 who has to struggle to keep his family going; for those people he has no heart and no sympathy. The Minister knows that there are people who are making thousands and tens of thousands every year on the share market and he is very concerned about them. Let me read a few extracts from those letters.

I am sorry but the hon. member is out of order. He is now discussing a question of principle which could have been discussed on the motion to go into Committee, and which can again be discussed on the second reading of the Bill. In Committee of Ways and Means, however, only the particular matters before the Committee can be discussed. The hon. member is not discussing the detailed matters now.

I am in favour of a stamp duty and I voted for that, but I am dissatisfied with the details in regard to the stamp duty, and I therefore ask your permission to proceed.

You want to put a tax on profits?

No, that is not the question I am dealing with at the moment. I am in favour of stamp duties and I am prepared to vote for such duties but I am not satisfied with the particular details of this proposal, and I want to discuss those details further.

The hon. member cannot in Committee of Ways and Means propose an increase of taxation or an alternative tax.

I do not intend moving an increase.

In terms of the Standing Rules the hon. member cannot elaborate the question of an increase either.

The Minister was kind enough to ask us for an alternative proposal.

That was in reply to a question which the hon. member asked the Minister.

Will you be kind enough then to tell us what we are allowed to discuss?

The détails of the taxation proposal can be discussed. That is in terms of the rules of the House.

The Minister was kind enough to invite us to submit an alternative proposal to him if we were not satisfied with the scale of the tax he is imposing.

No, there is a misunderstanding there.

May I point out to the hon. member that this question can be discussed when the motion for the second reading of the Bill is before the House. He will then have every opportunity to discuss the question. In terms of Rule 115 of the Standing Rules the Committee of Ways and Means is restricted to the consideration of a reduction in the proposed items, or to the rejection thereof. The discussion is definitely restricted, and the principle of such a proposal cannot be discussed in Committee of Ways and Means.

I hope you will allow me, Mr. Chairman, in spite of your ruling to my hon. friend, to assure the House that it is not correct to say that I am not concerned about the speculators; on the contrary I am very anxious to tax their profits as well. I can assure my hon. friend that I myself and my department have devoted a lot of time to this question and have made attempts to tax speculators’ profits, but we have not succeeded. We cannot go into that question at the moment; I have indicated the reasons on previous occasions. On a previous occasion, in my reply to the Budget debate, I said that if concrete proposals were submitted I would look into them. I did not say so yesterday, nor did I ask advice in regard to these scales. I extended that invitation when I dealt in my reply to the Budget debate with the question of the tax on profits from speculations, and I am still prepared to go into it. In the meantime all we have before us is the question of a possible increase in the stamp duties on transactions on the share market.

Why cannot you increase those?

I have already said that what we are proposing here amounts to an increase of about 150 per cent.

Why don’t you say that it is 600 per cent., because 1d. is increased to 6d.?

I am speaking about the bigger transactions and I believe that those are the transactions which my hon. friend is thinking of. There is no obligation on people to transact their business by means of brokers’ notes, and where we are taking in new ground we want to see first of all how these proposals are going to work before we go any further.

As the member who represents the Johannesburg Stock Exchange …

Only geographically I suppose.

I believe we are now in the process of getting two stock exchanges in Johannesburg; one apparently is not sufficient. However, I am pleased to hear the Minister is now trying to stop speculation. Any other form of speculation in South Africa is taxed. If you win money on horse racing—which is an unusual experience to some of us—you are taxed on your winnings. If the bookmaker wins money he is taxed and the tax is fairly heavy. Now, the speculation on the Stock Exchange today—and I am not referring now to the big patrons of the Stock Exchange—has become a farflung business in Johannesburg, and I am afraid a great many people who indulge in what is colloquially known in Johannesburg as investing in rats and mice shares, are fleeced of their money. Of course, some people make a little money, but the great majority don’t. These people are not investors, they are speculators, and they risk their money in these rats and mice schemes. I have not been in the Stock Exchange itself—it is one of the few places in my constituency which I have not been made an honorary member of.

I suppose you are still hoping.

I don’t know. It is one of the few places—another one is the Rand Club, which incidentally I also represent, and I am never quite sure when I go through my constituency which is the Rand Club and which is the Stock Exchange because you see the same people going into both of them. Anyhow, that is not the point. The man in Johannesburg who has a small amount of money to invest is considerably stumped. The gold mining industry and the Stock Exchange are two different things, and let me say this, that the Stock Exchange is certainly not doing the gold mining industry any good.

May I ask the hon. member to come back to the details of the proposals?

Yes, I am coming to that if you will allow me to develop my argument. I understand that your ruling is that we cannot increase the amount.

I believe the hon. member was not present when I gave my ruling. My ruling was that hon. members can only discuss the details of the taxation proposals before the Committee with a view to reducing or rejecting them.

My suggestion is that the Minister withdraws the whole of this clause, because he is not adequately dealing with the situation. Obviously the Minister has embarked on this method as a method of raising revenue, but there is another aspect. It is possible in other ways to raise a great deal more revenue, and at the same time to take steps to put an end to a very growing and a very unnecessary, evil.

The hon. member is now discussing the question of principle of the tax which he could appropriately discuss on the motion to go into Committee of Ways and Means, or on the second reading of the Bill to give effect to it.

I do not wish to argue your ruling.

I want to point out that the discussions in Ways and Means Committee are very restricted under the rules I have quoted.

Yes, that’s quite alright. I only want to say that I am pleased to hear from the Minister that something will be done to tax the profits on speculation. I hope the investigation into the question will be proceeded with as early as possible, and that in the next Budget we shall have extensive proposals in regard to the taxation of speculative profits, because after all this stamp duty business will not give the Minister much money, and it certainly will not cope with the growing evil.

I want to express my sympathy with the hon. member for Fordsburg (Mr. Burnside) when he savs that he does not know which is the Rand Club and which is the Stock Exchange. It is rather embarrassing for a person to be in a position where instead of seeing one thing he sees two, or where he sees a certain thing but does not know that it is not something else. I have every sympathy with the hon. member. Whether that is the question at issue I do not know. In regard to this stamp duty, without going into the principle, I understand that the Minister’s reason in restricting the tax to 6d. on small transactions, and not increasing the stamp duties in other respects, is that the share transactions do not always take place by means of brokers’ notes, so that there is no record of such transactions. That, according to what he said, is the main reason why the stamp duty is not made higher. May I put this forward for his consideration, that with a view to collecting this tax, it be provided that no transfer of shares shall take place by means of a blank transfer, that every transfer of shares must take place by means of a document of transfer to be signed by the owner of the shares; whether that transfer is done on the share market or whether it is done privately, it will be illegal if a transfer form is not signed. If such steps are taken I am sure there will be no difficulty. The Minister’s difficulty is that in dozens of cases the transfer takes place without there being any document of transfer. The position today is that if “A” wants to sell any shares he signs a blank form and the shares are perhaps sold several times without the sale being registered in the books of the company concerned. If that practice is prohibited and if it is laid down that the owner cannot sign a blank deed of transfer but that the owner and the purchaser must both sign the transfer these things cannot happen, and we shall then be able to claim stamp duties and make them as high as we want to because no buyer will accept an illegal document. The Minister will then have no excuse for the restriction of the tax. I put this forward for his consideration and when the Minister replies I should like to hear what objection he has to such a system of transfers. I want to point out that these documents must be signed by the buyer and by the seller.

It will be very difficult to carry out.

I don’t think so because the buyer will not accept a transfer if it is not signed by the seller.

In regard to the particulars of this tax I want to point out that the Minister has apparently misunderstood our proposal of 1 per cent. and that his calculation was wrong. He proposes 2s. 6d. on a turnover of £100 which will mean 5s. on £100, because there are two brokers’ notes. Our suggestion was 1 per cent., which on £100 would be four times more, even though it is only paid once. The Minister also doubted the figure of £2,000,000 which I mentioned yesterday, and he mentioned a different ratio. If he looks at his own scale he will see that he is very much mistaken. I am not referring to transactions of £5 to £25. I am taking transactions of £25 to £50, where the tax is 1s. on every broker’s note. One per cent. on £25 will be 5s. It is five times as much as his on £25, but if the transaction is £50, the 1 per cent. tax will mean 10s., while the Minister’s tax is only s. Even if the Minister gets that tax from both sides the 1 per cent. still means five times as much. If we take transactions of from £50 to £100 the Minister will get 5s. on £100 whereas 1 per cent. would give him £1.

Yes, but on the first £ over £100 another 2s. 6d. will be payable by each party.

That will mean 10s. then if the tax is payable by both parties, whereas the 1 per cent. will be more than £1. But assuming now that the amount involved is £200, in the Minister’s case it will only be 10s. if the tax is paid by both parties, whereas if it is 1 per cent. it will be £2.

But in between the two my tax rises more rapidly.

Up to a point. The figure which the Minister has estimated as his revenue from this tax is calculated on a turnover of £250,000,000. Now, I am reducing that amount by £50,000,000 because the tax may possibly have the effect of reducing the turnover. The Minister spoke about the law of diminishing returns. It is a strange thing that the Minister does not apply that law in other directions as well. When he speaks of turnover on the share market he speaks of the law of diminishing returns when the tax is increased, but when he comes to tobacco and wine he tells us that even if a tax is increased by 300 per cent. it will not affect the consumption.

The hon. member cannot make an alternative proposal.

I have no intention of doing so. I am only trying to correct the Minister’s figures. On the basis of the Minister’s estimate of the turnover I have calculated that the tax at 1 per cent. will yield £2,000,000.

But where do you get the figure of £250,000,000?

Your department told me that that is the basis of their calculation.

If that is so then we shall get a great deal more than £200,000 under my proposal.

The Minister will have to argue that with his department. I tried to check up the figures and that was the figure which I was given.

On a turnover of £250,000,000 we shall get a great deal more than £300,000.

If that is so the hon. Minister must teach his department arithmetic. It will depend on the number of transactions just above the starting notch.

If we take into account the scale itself we should get about £300,000 on that turnover, and if we take into account the tax payable on the first £1 after the starting notch then it will be a great deal more than £300,000.

It will depend on the number of transfers just above the various steps.

That will make my figure sound even bigger.

The Minister’s logic needs a correspondence course—not only in this respect, but also in regard to another argument which he used in this connection. When last year we discussed the question of the savings fund levy and drew attention to an increase of 50 per cent., that the tax has been increased from £5 to £7 10s., the Minister remarked that on such a small amount we could not base any arguments on percentages. He said that it was a ridiculous sort of argument but now we find there is an increase here of 1s. to 2s. 6d. and the Minister’s main argument is that that is an increase of 150 per cent. He says it is a very great increase. It is one of the debating points which the Minister made with a great show of wisdom, but if we come to analyse it in the cold light of logic it means nothing. Why did he not use the same argument last year? If my argument was wrong last year the Minister’s argument this year is also wrong and he dare not use it. It really looks as if the Minister also needs a correspondence course to refresh his memory. He should remember the argument he used in the House last year, and he should not come here now and use the very opposite argument and imagine that he can catch the birds on this side as easily as all that by his logic. I don’t want to go into the counter proposals because the Chairman has ruled them out of order. I only want to say that the reason why we have made those counter proposals is that the Minister criticised us yesterday and stated that we were attacking the taxation proposals because we wanted to hamper the war effort, and because we did not want to collect any money for war purposes. I want to point out that for every new tax which we have criticised we have put up an alternative method by which the Minister would be able to obtain the same amount as he will obtain under his own proposals. Yesterday that again was one of his debating points. The Minister knows that his own people are not satisfied with his taxation proposals. There was a great deal of dissatisfaction among them and he again had to stir them up with the old cry: “There’s a war on”; that is why he applied his old argument against the Opposition by telling us that we wanted to hamper the war effort. It is not so, because in any case we suggested another way by which the Minister could obtain as much money as he required for the war in which we are engaged today. I have just mentioned these facts. I don’t want to go into any further details. That was the reason why we put up alternative proposals yesterday—we wanted to anticipate the type of argument the Minister would use to revive the languishing enthusiasm on the part of his side of the House for his taxation proposals.

I just want to explain the figures to which my hon. friend has been referring. He has suggested that we should impose a stamp duty of one per cent. which would give us £2,000,000 in revenue according to him. For this calculation he used as his basis a turnover of £250,000,000, which he reduced by £50,000,000. I don’t know where he got that figure from.

I told the Committee where I got it.

If that figure is correct it means that my proposal of 2s. 6d. per £100 or part thereof will bring in a good deal more than £300,000. Even on the basis of 2s. 6d. per £100 it already brings in more but under the proposals to also levy 2s. 6d. on part of £100 it will bring in a good deal more than £300,000.

Then it means that your estimate is wrong.

No, but I do not accept the figure of £250,000,000.

On what figure is this based?

On figures supplied to me by the department. I have not worked out what the turnover is. My figures are based on what the department has supplied to me. If the hon. member says that his proposal will bring in £2,000,000 my reply is that my proposal on that basis, if one bears in mind that both the buyer and the seller will pay stamp duties, will bring in more. The whole difference between the hon. member and myself is that we are basing our arguments on different figures. I base my figures on the information given by the department. What I have here is the estimate which my department has given me.

What is that information? We want to check up and see whether the calculation is correct.

The Minister says that if we can suggest a scheme to tax the profits made on speculation in shares he will be prepared to accept it. Why is the Minister so concerned about putting a tax on profits? When it comes to transfer duties he does not worry about the question whether there is a profit or not. There the man has to pay £3 per £100, and where amounts of over £2,000 are concerned he even has to pay £4 per £100. But, of course, the poor speculator in shares is only to be taxed on profits. And now the Minister tells us that he is proposing an increase from 1d. to 6d., and that that is a terrific increase. I don’t think he takes himself seriously. The position simply is that if you sell shares to the value of £25 at the moment you pay 1s— 6d. each on the two brokers’ notes, but if you buy a piece of land for £25 you have to pay 15s. Why does not the Minister make it the same in both cases? Surely the Minister will agree with us that speculation in shares is a veritable evil, and if it is an evil he will be rendering the country a service if his taxation proposals have the result of restricting speculation in shares. In any case I ask again why a man who buys a bit of land for £25 has to pay 15s. while if he buys shares he only has to pay 1s. on the transaction. The one is as speculative as the other. At the moment the position in regard to land is that people are not going in for speculation in land on account of the tax. The transfer duties, the expenses in connection with such transactions, are so high, that people simply refuse to go in for land transactions, and in addition to that we have the fact that the provincial council has also imposed a further tax. So far as speculation in land is concerned—that has been killed. And the result is that people, if they have £25 now, put it into shares. They are forced to do so. It simply means that the £25 is taken away from them because if you are not very well up in the share market you lose all your money. If you don’t know when to speculate it is hopeless. The result is that people today go in for nothing but gambling—they go in for horse racing and things like that.

The hon. member must now return to the details of the taxation proposals before the Committee.

I am arguing now and putting forward reasons why the Minister should increase the tax.

The hon. member cannot propose an increase under the Standing Rules and Orders, he must confine himself to proposals for a reduction or the rejection of the taxation proposals before the Committee.

I should like to know what the rule is.

Standing Rules 115 and 117.

Cannot I discuss an increase?

Not in Committee: the hon. member had the opportunity of doing so on the motion of the House to go into Committee of Ways and Means.

But surely I am allowed to discuss the question why it is made 2s. 6d. in the one instance and not in the other instance?

The hon. member must confine himself to the details of the proposed tax and must not propose an increase.

Well, that is what I am doing. I am pointing out that the argument which the Minister has used in the one instance does not hold in the other instance, and I want to go into the reasons why these cases should be treated alike.

May I point out to the hon. member that he can draw a comparison if he wants to move a reduction.

If that is the case I prefer to say nothing, because I consider it is a scandal.

On a point of order, I think the Standing Rules are very clear. Paragraph 115 says this—

In other words, the Committee of Ways and Means has to reject or accept amendments. And it goes on to say this—

But in regard to the discussion no restriction is imposed.

May I refer the hon. member to Rule 117.

Let us take Rule 115. The question before us is the tax of 6d. proposed by the Minister. The Minister has to give reasons why he is putting it at 6d. and why he is not putting it at 1s. or £1. The other side can then also give reasons why 6d. is wrong. The question is whether 6d. is reasonable or not. In paragraph 115 of the Standing Rules and Orders nothing is said about hon. members not being allowed to adduce reasons why the 6d. is not justified. In regard to paragraph 117, it says this—

The details are this 6d., and it might have been 9d., 10d. or £1. We are now discussing this detail of 6d.—the reasonableness or otherwise thereof.

The intention of the two Standing Orders is clearly to confine the Committee of Ways and Means to discussion and amendments which would result in decreasing or rejectiong the proposals before it. I must repeat that questions dealing with the principles of taxation can only be discussed on the motion to go into Committee of Ways and Means and on the second reading of the Bill to give effect to the resolutions of the Committee.

But the principle is not whether it will be 6d. or £1 but whether a tax of this kind is to be imposed. We are not opposing the principle of having such a tax, we are only concerned here with the detail of 6d. It might have been 1s. If the Minister can explain why it must be 6d., if he gives reasons, the Opposition must also be able to give reasons why 6d. is not the correct amount.

Motion put and agreed to.

The Committee proceeded to consider the proposed war-time surcharge on transfer duty payments.

I move—

1. (1) That, subject to an Act to be passed during the present session of Parliament, there shall be paid for the benefit of the Consolidated Revenue Fund, subject to such definitions, conditions, exceptions and exemptions as may be provided in the said Act, a tax (to be called the War-time Surcharge on Transfer Duty Payments) at the rate provided in paragraph (2), in respect of every payment of transfer duty made by any person on or after the twenty-fifth day of February, 1944, under the laws relating to the payment of transfer duty in any of the provinces of the Union.

I feel that of all the unfair taxes the Minister has imposed this is the worst. We are dealing here with a direct tax on land. It seems that the Minister has made up his mind to impose a land tax in some way or another. First of all he has put an excess profits duty on speculation as a result of which people are prevented from selling land which they have bought. I think that that very effectively has put an end to land speculation—at any rate it has done so to a very large extent. And now the Minister wants to impose a tax on land transactions which have always taken place in the past. In normal times there have always been transactions in land, and if the Minister will have a look at the amounts he has collected in transfer duties from the purchase and sale of land he will find that these transactions always go on in the normal course of things. Now the Minister comes here and imposes an extra 2 per cent. transfer duty on all transactions exceeding £2,000. Take a £10,000 transaction—that is not a very big transactions in land.

The hon. member can discuss that on the next paragraph—paragraph 2.

Let this first paragraph pass; we can discuss this question on the second paragraph.

I want to raise a point in regard to this first paragraph. I have done so before but I want to bring this once more to the notice of the Minister. Provision is made here for certain exemptions, but we do not know what they are going to be.

The Bill will provide for them.

I should like to have an assurance from the Minister that one of the exemptions for instance will be transactions on which transfer duties are payable by settlers on land in connection with which the Government issues a title, or in connection with transactions between one settler and another. I should like to have an assurance on this point. The settler has to struggle and work very hard to make a living. The State has settled these people there to give them an opportunity of getting on to their feet again and it is not fair to expect them to bear this additional tax. The Minister of Lands will agree that there are hundreds of cases where settlers have exercised their option of purchase, but unfortunately they were not familiar with the provisions of the Act and they did not pay within six months. That means that already they have to pay 12 per cent. fine on the transfer duties, but now the Minister increases the transfer duty from 2 per cent. to 4 per cent., and in addition to that they will have to pay the 12 per cent. interest on the transfer duties as a fine. I assume that that is the position because the law provides that transfer duties must be paid within six months from the date of sale. Now, what is the position of the settler who perhaps got his land ten years ago, who has exercised his option of purchase but who has not yet got Crown Land Title and who therefore has not yet paid transfer duties?

They don’t pay the fine.

But they will still have to pay the additional tax. I have always contended that settlers should not pay any transfer duties at all. As a matter of fact they only pay transfer duties in two provinces, viz., in Natal and the Transvaal. Those unfortunate settlers in the Transvaal will now have to pay this double tax of 4 per cent. I cannot believe that it is the Minister’s intention to make the settler who has been placed on a bit of Government land pay this additional tax. I shall be glad to learn from the Minister whether he is prepared to consider this because if not we shall have to move an amendment. If the Minister tells us that he will consider it I shall be satisfied. I hope we can also depend on the support of hon. members opposite, especially of those who represent settlers. They will feel as we feel, that it is an injustice to make the settlers pay a double tax on applications which were sent in years ago. They may now perhaps get land which was allotted to them ten years ago. They have made application they have exercised their option to purchase, and now the Minister comes down on them and makes them pay extra taxation. I don’t think that can be the intention—if it is the Minister’s intention I protest against it most emphatically.

I want to express some views in regard to the transfer duties which settlers have to pay. This affects my constituency in particular. I also feel it is not fair for the Minister to tax this particular class of poor person in this way. The Minister knows that on the Olifants River it affects a few hundred poor people, people who have made a start and who are working very hard. The Minister is now making this tax retrospective. Originally there was no idea of making them pay transfer duties for the transfer of the land; then this duty was imposed on them and that in itseelf is a heavy burden. But now the Minister wants to make that burden still heavier. It particularly affects this class of poor man. I also feel that the Minister is going to hamper the sale of land by the prosposal he is now making. Where otherwise ten farms might perhaps have been sold, from which he would have obtained transfer duties, I am sure that today not even five farms will be sold. This is a most undesirable measure. I have already been told about numerous people who were on the point of buying but who have now cancelled their purchases. In my area there are any number of cases of that kind—and if that is so how many will there not be throughout the country? The Minister by imposing this tax is going to bring the sale of land to a standstill to a very large extent. People are already taxed very heavily, and they are not prepared to give the Minister all this extra money. It is very definitely going to put a stop to the sale of fixed property which will mean a serious loss to the Minister. I feel very strongly that the settler should be exempted. The Minister of Lands knows the hardships these people have to endure, and they should not have these additional transfer duties imposed on them. I shall be glad if the Minister of Lands will stand up for these settlers.

This tax is not proposed with the object of hampering the sale of land. It may possibly to a certain extent exercise a restricting effect, although to my mind, in view of the fact that money is ample, and in view also of the fact that this is only a war measure, the result will not be very great. The object of this proposal, as was clearly indicated in my Budget speech, is to obtain additional funds, and I think we are going to get such additional funds. What we are asked to approve of in this proposal is the imposition of the tax as from a certain date, but it is then provided that it will be subject to such exemptions as may be determined in the Act. If the hon. member for Pietersburg (Mr. Naudé) therefore wants to move a special exemption I think he can best do so when the Bill is before us. In regard, however, to the general matters raised by him I must say that my view is that where transactions are subject to transfer duties in accordance with legislation in force in a particular province those transactions should also be subject to the extra levy. As soon as a transaction is subject to transfer duties it should be subject to this tax.

We are opposed to the whole of this tax and we intend to try to wreck the whole of this proposal. But unfortunately we have to vote on the tax itself under paragraph (2) and on the coming into operation of the tax under paragraph (1). In view of the fact that we are not sure that we shall succeed in regard to (2) I want to move the following amendment in regard to (1)—

Why don’t you just vote against the proposal? What is the use of shifting the date? It is an admission that you are not opposed to the tax, but only to the date.

We are going to vote against the whole of the tax.

The hon. member in all probability does not expect me to accept the amendment. Even if the House accepts the amendment it still means that the House is satisfied with the tax but not satisfied with the date. I am sure the hon. member does not mean it that way.

We are opposed to the whole tax.

Well, then the hon. member can just vote against the paragraph. In any case I am not prepared to accept the amendment. By altering the date we would get less revenue. I cannot accept it.

In regard to the date there is another difficulty I want to bring to the Minister’s notice, and it is this, that there are quite a number of perfectly honest transactions which have been concluded, where people have bought or sold land but where owing to circumstances over which they have no control they have not been able to pay the transfer duties. Let me mention a case in point. There have been sales of land to natives; they have bought certain farms, but the Governor-General’s consent is required before the transaction comes into force. He has not yet given his consent and the transfer duties cannot be paid. Some of these transactions have been going on for six months but the people cannot pay transfer duties and they now come under this additional tax. I do not think that that is fair. There are instances in respect of which provision should be made. These transactions have actually been completed. Then there are instances where the land has not yet been surveyed. There is a shortage of surveyors.

They can pay transfer duties.

No; you have to give a description of the property on which the transfer duties have to be paid. If it is an undivided share the position is different. Where transfer duties have not been paid— but not as a result of neglect or something of that kind—the Minister should make provision for such cases to come under the old transfer duties, because otherwise it will be most unfair. In the instance which I have mentioned, where the GovernorGeneral’s consent has to be obtained, it is nobody’s fault and yet those people now have to pay double tax. I am not satisfied with the Minister’s reply so far as the settlers are concerned. We have the Miniser’s statement now that he considers that on any transaction on which transfer duties are payable this tax must also be paid. I fail to follow his argument. This is a war taxation measure. Is it fair now to so oppress these unfortunate settlers and to make them pay for the war? They got their land years ago and they have exercised their option of purchase, but they have not yet paid transfer duties. Is it fair now to call on them to pay this additional tax. I therefore want to move—

In other words, no settler will pay the additional transfer duties. I think this is a very reasonable amendment. A doubly unreasonable act is being committed here because the transfer duties are in force in only two of the provinces, Natal and the Transvaal. Why must the settler in the Transvaal be singled out to pay this additional war tax? I fail to understand it, and I am convinced that it is the feeling of this House that these people should not be called upon to pay that tax.

As I have already tried to explain it is not possible for me to accept this amendment. I still maintain that the right time for the House to discuss this question of exemptions is when it has the Bill before it. In regard to the first point mentioned by the hon. member for Pietersburg (Mr. Naudé) I just want to say, as has already been announced that it is our intention to make provision for exemption where sales have taken place before the 25th February, and where tranfer duties have been paid before the 15th March, 1944. The hon. member may perhaps say that in doing so we did not go far enough. Well, that is a matter which he can raise when the Bill is before the House; the Bill will contain these provisions which I have already referred to. I therefore think that the concession is going quite far enough. It is a reasonable concession and I feel that we have adequately conceded the requests made by these people. This point can be further discussed when the actual provisions of the Bill are before us.

I want to give my hearty support to the proposal of the hon. member for Pietersburg (Mr. Naudé). I cannot associate myself with the Minister where he says we must wait until the Bill is before us. We must now bring to the Minister’s notice the fact that there are poor settlers, people belonging to the poorer section of the population, who are affected by this proposal. Those people have struggled hard to get hold of a bit of land and when they succeeded in doing so, with the assistance of the State, they are told that they have to pay these increased transfer duties. I am glad the Minister of Lands is here. The hon. member for Pietersburg mentioned instances of transactions entered into in regard to native land. Those transactions have been concluded but there is no chance of taking transfer and of paying the transfer duty before the 15th March. I know of instances in my constituency where people have applied for Crown Land Title Deeds. I don’t want to say that the Minister of Lands is the cause of the delay, or is responsible for it. Maybe there is a shortage of staff, and other difficulties in the department, but those people have applied for Crown Land Title Deeds which have not yet reached them. It is not their fault that we were unable to pay before the 15th March. The fault lies with the Government and with the department. I say again that I do not want to blame the department for the delay. There may be a shortage of staff, but in spite of that it means that these settlers did not have the opportunity of paying their transfer duties before the 15th March, because Crown Land Title Deeds were not issued.

These were only the settlers who were not entitled to get Crown Land Title.

I can tell the Minister of Lands that I am talking of people who were entitled to get Crown Land Title Deeds— people who made application after ten years. It takes months before they get a reply and some of them have not even yet had a reply.

Sometimes it takes six months before they get their Crown Land Title Deeds.

What the hon. member is saying is perfectly true, and now they are being penalised by having to pay this “see the war through tax” imposed by the Minister. These are people who may be regarded as being among the poorest in the country, settlers who want to get hold of a little bit of land, and they should not be called on to pay this increased tax. What justification is there for imposing this tax on these people in the Transvaal? The Transvaal already has to pay heavy taxes, and that also applies to Natal. This tax is nothing but a plague germ which will permeate the whole nation, and the Minister will rue the day—he will yet be sorry for his stubbornness in refusing to accept the motion of the hon. member for Pietersburg. To come back to the proposal of the hon. member for George (Mr. Werth), to change the date to the 1st July, it is no more than fair that people who have completed transactions and who have not had the opportunity of paying transfer duties before a certain date should get the advantage of the date being changed to the 1st July. Not that I am afraid of this tax, I am very definitely opposed to it, but we know that the Minister with his “voting cattle” behind him will push this tax through; that is why it is our duty to try and help these people as far as possible. I am making this appeal to the Minister of Finance. The public are going to have the opportunity of expressing their judgment on this tax—and in some cases they are going to judge very soon.

I rise to support the amendment of the hon. member for George (Mr. Werth) and I want to explain to the Minister of Finance what a serious injustice he has done to these people by only giving them a month to pay these transfer duties. There are large numbers of estates which have to give transfer to the children and their heirs. It often takes three months and longer to have land surveyed and to get the maps and deeds approved of by the Registrar of Deeds.

They can pay their transfer duties in accordance with the description.

I know that, but where estates have to give transfer the heirs often have to be found and it is difficult to get all the declarations signed and the transfer duties paid within a month. These increased transfer duties therefore mean an additional tax on heirs inheriting land. They cannot get it all done in a month, and consequently a concession is made here to only a few privileged people who have the necessary money and paid at once. I say that this is an additional tax on estates and on heirs.

Children do not pay transfer duties on their share in an inheritance.

The hon. member is now referring to estates in which every child gets an equal share of the land. He is an attorney and he should know that it is only in one case in a thousand where that happens. How many farmers leave their farms to their sons and daughters in equal shares? As a rule the farm is bequeathed to one or two sons and transfer duties then have to be paid. An injustice is done to those people because they are only given one month in which to pay. I should like the Minister to change this tax in such a way that it will only apply to transactions entered into since the announcement of the tax and not to people who only pay afterwards. The tax as it now stands is not a fair one. The man sold his land on the understanding that the transfer duty would be 2 per cent., and now he finds that it is going to be more. It is going to be very difficult for poor people who have to find money to pay the transfer duties. If this tax were only applicable to transactions started after the announcement of the tax then there might perhaps be some reason for it. Then there is a provision that people can tender the transfer duties before all the documents have been completed. Provision is made that if it takes longer than six months—because after that 12 per cent. interest has to be paid on transfer duties—the transfer duties can be tendered in order to avoid the necessity of paying interest. I want to move that where the word “payment” is used in connection with this tax it will include “tendered payment.”

That will be done when the Bill is introduced; I give that assurance.

Well, then the Minister can have no objection to accepting it now.

It is not necessary to insert it here.

I think it is necessary. I have been had before.

I give my hon. friend the assurance that it will be in the Bill.

None the less I feel that I should move my amendment because I do not want to find myself in trouble again when the Bill is before the House.

May I just point out to the hon. member that the correct time for the hon. member to move this amendment is when the Bill is before the House.

But I am also allowed to move it here.

The hon. the Minister has given the assurance that such a provision will appear in the Bill.

My hon. friends round about me here tell me to accept the assurance, and I do not want to offend the Minister by casting doubt on his word.

I understand that it is the usual practice to make such proposals when the Bill is before the House.

Yes, but it is not a rule. I have looked up the rules and according to the rules I can make this proposal now. I don’t want to insult the Minister, however, by giving the impression that I am not prepared to accept his word.

He won’t break his word.

No, there are too many witnesses here; he cannot do it. Now, as the Minister has given us an undertaking to make provision in this respect I also want to ask him to make provision at the same time for the point which I have raised in regard to estates. I can assure the Minister that he is doing an injustice to these people. He is not giving them the advantages and the benefits which he is giving private individuals, because these matters cannot be fixed up within the time. Then I also want to know whether this tax is going to lapse when the war is over; must this tax be levied every year, or shall we still have to pay it after the war?

I want to associate myself with the speech of the hon. member for Wolmaransstad (Gen. Kemp) on the subject of increased transfer duties. That group to which hon. members have referred—that of the settlers—is the poorest among the poor. The Minister of Lands knows that before an individual becomes entitled to a holding he has to fill in certain documents to the effect that he has nothing at all. It is the poorest among the poor who get land under the Settlement Act, and I ask whether it is fair and just to tax them in that way. Now, there is another aspect of the matter to which I want to draw the Minister’s attention. At the moment no holdings are given out, and the intention of the Government is to give these holdings to returned soldiers. Now, is it fair and is it just to treat those men who have offered their lives, many of whom have sacrificed their health, and who are now returning to the Union—is it fair to treat them in this way? And that is almost the only way in which we can help those people—by giving them a holding, land; yet now they are going to find themselves burdened with this additional transfer duty. The Minister may argue that these people are only going to be assisted after peace has been concluded, but we don’t know how long this war is going to last. It may last another five years. It is not for us to say when the war will be over. In the meantime men are coming back to this country, many of whom have partly lost their health, and they must be aided. They have given their blood for the country; for years they have been on the field of war. They are returning, and the State must help them. They have to go and work like slaves to make a living and why should we now set out to increase their debt by applying these additional duties to them? The Minister of Lands has certain responsibilities in regard to a measure of this kind.

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

When business was suspended I was pleading for the exemption of the settlements from this proposal in connection with transfer duties. I particularly want to appeal to the Minister to exempt these settlers because they are among the poorest people in this country. The Minister of Lands knows that when these people apply for a holding there is a rule which requires them to say how many children they have, and the family with the largest number of children is given preference. Consequently it is mostly parents with big families whom we find on these settlements. Let hon. members realise the difficulties these people have to contend with in order to make a living. They find it very hard to provide for their families, and if we also bear in mind the fact that these plotholders on an average have to pay from £700 to £800 for their holdings, and that practically speaking the State is committing an act of charity in assisting them in the way it is doing— although these people have to repay the State this money—if we remember that these people have to pay £700 or £800 for ten morgen of land, and that they have not got a single pound to put down, it means that these transfer duties must be added to their debt.

They don’t pay the extra tax on anything below £1,000.

I say that the transfer duty amounting to £25 is added to the £700 or £800 which is the purchase price, because these poor people have not got a penny to put down. Now, is it fair, is it just, to tax these people all their lives to the extent of an additional £25 on which they have to pay interest? We must bear in mind how hard these people have to work to maintain their children and their families. I don’t blame the Minister of Finance. He has never been on these settlements. He would really be startled if he saw how hard these people had to work and how difficult they find it to make ends meet. The Minister of Lands, however, knows it, and I think he should be fair and should plead the cause of the settlers because he knows that they are poor and living under conditions of misery. It is most unfair to tax these people now by increasing their transfer duties, especially if one remembers that even at this stage they cannot put down anything on the purchase price. The other question I want to raise is in connection with the proposal of the hon. member for Pietersburg (Mr. Naudé). His proposal is that the date should be shifted from February to July. I hope the Minister will be generous enough not only to accept that proposal but to shift it even to the 1st January, 1945. It is most essential that he should do so. I know that the Minister of Finance will realise the fairness of the amendment and I know that he will be only too pleased to accept it.

The hon. member for Swellendam (Mr. S. E. Warren) has raised two points, and asked me two questions. The first is in connection with the duration of this new legislation. It is definitely regarded as a war tax, and as a matter of fact it is called that, it is called the “Wartime Extra Levy on Transfer Duty.” That does not mean that we have to impose this tax from year to year, but the name shows what the intention is. May I in this connection also point to the fact that we are dealing here with a matter which affects our relations with the provinces, and when a question of the financial relations with the provinces is at issue we do not consider it right to regard this measure as anything but a war measure. It is on that basis that it has been introduced. The hon. member also raised a point in connection with estates, especially in the Cape Province. That is a matter which we can discuss further and in respect of which representations can be made to me on the Bill which will be introduced. My attitude, generally speaking, however, still is, as I have already said, that I do not think it desirable to depart from the principle that where transfer duties are payable the extra levy should also be payable.

I also want to say a few words about the transfer duties. My front benchers have been ruled out of order so often that I don’t know how things will go with me, but if you rule me out of order, Mr. Chairman, I shall submit to your ruling. According to the speech which the Minister of Finance made in introducing his budget these increased transfer duties have been proposed in order to prevent the capitalists in the towns evading taxation when they go in for farming, and when they start buying land and cattle.

No, that is a different matter.

If that is not the case then I fail to understand why the Minister has proposed these increased transfer duties. Not all the farmers have academic accomplishments. Many of us were born and bred for farming; a good farmer has only one ideal and that is to see to it that he leaves his children as much land as possible, because a sub-division of farms has made the amount of land held by individuals so small that the children are compelled to go to the towns, where they become a burden on the State. I understood the position to be this: That the Minister, for the reason I mentioned, had proposed this increased tax. So far as the Free State is concerned we know that these transfer duties, amounting to 2 per cent. go to the Provincial Administration, and as the Free State Provincial Administration is comparatively poor I feel that it is unfair on the part of the Minister of Finance to step in and impose this additional levy on transfer duties—practically doubling the transfer duties, and then to take the money, to put it into the Exchequer for war purposes, and particularly to take it away from the Free State where we have a poor administration. We also feel that in the Free State at least we can only get a small piece of land for £2,000. Two thousand pounds in the Free State will only buy about 200 morgen; and if a man spends £2,000 on buying land it means that he has to pay double transfer duties. Now I want to ask the Minister of Finance whether he cannot do something like this. I cannot tell him what to do—I cannot dictate to him, but I should like him to consider this question and see whether he cannot withdraw his proposal in regard to transfer duties. This proposal affects the young farmers, and the super tax also hits them. I don’t know whether I shall be out of order if I speak about the other taxes, but this is the time for people to buy land. We cannot buy land in times of depression because there is no market then. The farmer who wants to expand his farming operations has to buy land now and if he buys land he has to pay these increased transfer duties. If he produces a lot and sells his products he has to pay out a large proportion of his earnings in the form of taxation and super tax to the Government. We do not pay only one tax, we pay the Provincial taxes, the ordinary income tax and also the super tax. I therefore want to know whether the Minister could not differentiate between speculators and the practising farmers.

In regard to this doubling of the tax on land transactions I do not understand on what grounds the Minister can justify this extra tax today if we compare it with other taxes already in force. I remarked the other day in this connection that the majority of properties, especially urban properties, which were sold today, were sold at amounts in excess of £2,000. In no decent residential area in Pretoria and Johannesburg— and I think that also applies to Cape Town— can a house be bought today for less than £2,000. Take your officials and Railway workers, of whom there are thousands in my constituency—and that is why I speak on the subject …

The hon. member can discuss that on the next paragraph.

Question put: That the words “twentyfifth day of February,” proposed to be omitted, stand part of the motion.

Upon which the Committee divided:

Ayes—76:

Abbott, C. B. M.

Abrahamson, H.

Acutt, F. H.

Alexander, M.

Allen, F. B.

Barlow, A. G.

Bekker, H. J.

Bell, R. E.

Bodenstein, H. A. S.

Bosman, J. C.

Bosman, L. P.

Bowker, T. B.

Butters, W. R.

Christie, J.

Christopher, R. M.

Cilliers, H. J.

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.

Fawcett, R. M.

Fourie, J. P.

Goldberg, A.

Gray, T. P.

Hare, W. D.

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.

Madeley, W. B.

Maré, F. J.

Miles-Cadman, C. F.

Moll, A. M.

Molteno, D. B.

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.

Shearer, O. L.

Solomon, B.

Solomon, V. G. F.

Steenkamp, L. S.

Steyn, C. F.

Steytler, L. J.

Sutter, G. J.

Tighy, S. J.

Tothill, H. A.

Ueckermann, K.

Van den Berg, M. J.

Van der Merwe, H.

Van Niekerk, H. J. L.

Van Onselen, W. S.

Waring, F. W.

Warren, C. M.

Williams, H. J.

Wolmarans, J. B.

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

Noes—31:

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.

Kemp, J. C. G.

Le Roux, J. N.

Louw, E. H.

Ludick, A. I.

Luttig, P. J. H.

Malan, D. F.

Mentz, F. E.

Naudé, J. F. T.

Olivier, P. J.

Potgieter, J. E.

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 proposed by Mr. Werth dropped.

Amendment proposed by Mr. Naudé put and the Committee divided:

Ayes—33:

Booysen, W. A.

Bekker, 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.

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.

Noes—81:

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.

Bowker, T. B.

Butters, W. R.

Christie, J.

Christopher, R. M.

Cilliers, H. J.

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.

Fawcett, R. M.

Fourie, J. P.

Goldberg, A.

Gray, T. P.

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.

Jackson, D.

Johnson, H. A.

Kentridge, M.

Latimer, A.

Lawrence, H. G.

McLean, J.

Madeley, W. B.

Maré, F. J.

Miles-Cadman, C. F.

Moll, A. Μ.

Molteno, D. B.

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.

Shearer, O. L.

Shearer, V. L.

Solomon, B.

Solomon, V. G. F.

Steenkamp, L. S.

Steytler, L. J.

Stratford, J. R. F.

Strauss, J. G. N.

Sutter, G. J.

Tighy, S. J.

Tothill, H. A.

Ueckermann, K.

Van der Merwe, H.

Van Niekerk, H. J. L.

Van Onselen, W. S.

Waring, F. W.

Warren, C. M.

Williams, H. J.

Wolmarans, J. B.

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

Amendment accordingly negatived.

Original motion put and the Committee divided:

Ayes—82 :

Abbott, C. B. M.

Abrahamson, H.

Acutt, F. 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.

Bowker, T. B.

Butters, W. R.

Christie, J.

Christopher. R. M.

Cilliers, H. J.

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.

Eksteen, H. O.

Fawcett, R. M.

Goldberg, A.

Gray, T. P.

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.

Jackson, D.

Johnson, H. A.

Kentridge, M.

Latimer, A.

Lawrence, H. G.

McLean, J.

Madeley, W. B.

Maré, F. J.

Miles-Cadman, C. F.

Moll, A. M.

Molteno, D. B.

Mushet, J. W.

Neate, C.

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.

Shearer, O. L.

Shearer, V. L.

Solomon, B.

Solomon, V. G. F.

Steenkamp, L. S.

Steytler, L. J.

Stratford, J. R. F.

Strauss, J. G. N.

Sutter, G. J.

Tighy, S. J.

Tothill, H. A.

Ueckermann, K.

Van den Berg, M. J.

Van der Merwe, H.

Van Niekerk. H. J. L.

Van Onselen, W. S.

Waring, F. W.

Warren, C. M.

Williams, H. J.

Wolmarans, J. B.

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

Noes—33:

Booyen, 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.

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.

I move—

1. (2) That the rate of the surcharge shall be—
   1. (i) if the amount on which the transfer duty is chargeable exceeds £1,000 but does not exceed £2,000— 1 per cent. of the amount on which transfer duty is chargeable.
   2. (ii) if the amount on which the transfer duty is chargeable exceeds £2,000— 2 per cent. of the amount on which transfer duty is chargeable.

I want to ask the Minister whether he really wants to put a stop to all transactions in land. I want to emphasise that this is a direct tax, as direct as anyone can get, and it is a very stiff tax in addition. The Minister, by the legislation he has passed, has put a stop to speculation in land, but there is one thing he cannot stop and that is ordinary transactions which will always take place whatever the price of land may be. The Minister should remember that the value of land is high, yet now he comes here and imposes an extra 2 per cent. tax on transfer duties. Just let me tell the Minister how that affects the whole position. If a farmer buys land today for £10,000 it is not a very big transaction, but he will now have to pay £400 to the Government under this proposal. Is not that very stiff? Is it not asking too much of the farmer? Then we should also remember this, that the farmer has not always got the cash to pay for that land. Sometimes he has to take up a bond and this at once leads to over-capitalisation. If we take account of the costs involved in the purchase of land the Minister must realise that if a man buys a farm for £10,000 and he already has to take up a bond and on top of that he has to pay this 4 per cent. tax in respect of transfer duties, it means that a very heavy direct tax is imposed on him. It is most unfair. As I have said, a man who buys a farm does not always have the necessary cash to pay for it. People who go in for a transaction like that often have to take up a bond and if these people now have to pay this £400 in taxation, we can well imagine what it will mean—look at the improvements he could have effected with that £400. Now he is specially singled out to pay this stiff tax. It is a direct tax which he is forced to pay for the war. I have already said that very few transactions in land are taking place with a view to speculation. Speculation has already been stopped by the Minister. The Minister knows that he is going to receive a certain amount of money every year in respect of transfer duty—in the ordinary course of business transactions in land will always go on—and where people buy land in the ordinary course of business and do not do so for speculative purposes this tax is going to hit them very hard, and they will find it very difficult to pay these increased transfer duties. The Minister knows it, and if he has any conscience at all we feel that we are entitled to appeal to him to exempt all transactions in land from the 4 per cent. tax up to £5,000. If he insists on imposing this tax, well, let him apply it to transactions in excess of £5,000. It falls very hard on the man who buys land, particularly if he has no cash to pay for land, and he will have the greatest difficulty to find this extra money he will now be called upon to pay. It will immediately lead to over-capitalisation and in the circumstances we want to express the hope that the Minister will seriously reconsider the whole position.

I was ruled out of order this morning but now I would like to say a few words on this subject of increased transfer duties on fixed property. As we notice in this proposal transfer duties on properties of £1,000 to £2,000 are to be increased to 3 per cent., and in excess of £2,000 to 4 per cent. As I said before, this relates to the types of property which in my constituency are sold and bought by Government officials, Railway officials and so on, and this tax is a direct burden on these people. We try to encourage these people to buy their own properties. It is the only way an official can get something tangible and concrete, something which may provide him with an income, because he will have his own house in which he can live. This tax appears to me to particularly affect that type of person. They are the people particularly who are caught by it. I know that the Minister’s object is to prevent speculation in fixed property, but I absolutely fail to understand why he should specially select land when he speaks about speculation. The big capitalist does not speculate in land. The big speculators in land—I can mention their names, and the Minister knows who they are—the people who have invested large amounts of money in land did so long before the war, and they are today selling their land at huge profits without any special tax being imposed on them. The Minister’s tax to prevent speculation does not affect them. I repeats—it is the officials and the Railway men who are caught by this proposal of the Minister’s. I say it is unfair to these people, and I want to appeal to the Minister, as the hon. member for Somerset East (Mr. Vosloo) has already done, if he does not see his way to abolish this tax altogether at any rate to increase the amount of £2,000 to £5,000. It is not clear to me why it should be looked upon as speculation if a man buys a property and sells it at a later date at a higher price. But if a company is formed and that company puts shares on the market—that company’s biggest possession is fixed property which is so in most cases—then it is not speculation if those shares are sold at a premium. If we take the Minister’s taxes, and there is a turnover of shares to an amount of £3,000, the tax amounts to £7 10s. whereas this increased tax on property means that £120 has to be paid on a £3,000 transaction.

How much?

I am talking of the increased tax. The total where land is concerned is £120 on £3,000, whereas it is £7 10s. on £3,000 where shares are concerned. I simply fail to understand why there is this differentiation. It is inexplicable to me how it is that this type of speculation which is the easiest and the most dangerous, especially to the middle class man, this type of speculation which has already ruined large numbers of middle class people, is only taxed to the extent of £7 10s. on £3,000 while the sale of land is taxed at the rate of £120. I know men drawing big salaries who will have to pay interest all their lives on their losses on Black Friday. That speculation is the most dangerous kind of speculation, and it is not the man who buys a house and then sells it again who indulges in dangerous speculation. Take the case of an official who is transferred at short notice. He usually has to sell his house at a loss; there is no deduction in tax so far as he is concerned, but if he makes a profit he has to give up two-thirds of his profit to the State. If 100 people club together and buy a piece of land and sell it at a profit they have to pay the Government 13s. 4d. out of every pound profit they make. They have to pay the stamp duty plus this 4 per cent. on top of which they have to pay excess profits tax if they are classified as dealers in fixed property. The percentage is tremendous. But if these people form a company and sell shares, even though the 2s. 6d. is paid by both parties, they only pay 5s. on every £100 and it only amounts to ¼ per cent. I cannot see how that tax can have any proper basis; I cannot see on what basis this tax can be justified and I would appreciate it very much if the Minister would take notice of me as a back bencher and explain to me on what grounds he can justify a tax in the one instance going up to 80 per cent. while in the other instance—in the case of shares which constitute the biggest speculation of all—the tax is only about ¼ per cent. That is not at all clear to me. If 100 people club together they have to pay this high tax, but if they are shareholders they only pay ¼ per cent.

They have to pay the profits tax.

If the land is part of the company’s property they only pay the per cent. I want to make an earnest appeal to the Minister. The middle class man who buys a house, the Railway official and the wage earner, and the man drawing a salary, constitute the core of the population. They produce nearly everything and we look upon them as the core of the nation. This tax hits those people. They don’t buy property with the intention of speculating. The Minister has already stopped speculation in property by his tax of 13s. 4d. in the pound. I therefore want to make a final appeal to the Minister: If he refuses to give up this tax let him at any rate change it in such a way that the middle class man who has to buy his own property in the ordinary course of things and who has to sell that property perhaps is not unnecessarily hampered as a result of these new proposals.

I should like to move an amendment to this paragraph as follows—

In this amendment I particularly have in mind the farmers who start farming, the men who want to buy their own land. We have the tenant of the land and the bywoner and we have the foreman—people who by their own labours hope to be able one day to buy their own bit of land. But with this tax which is now being increased on properties above £2,000 I am afraid that these young farmers are going to be very severely handicapped. We should remember that the price of land has gone up considerably. Land which the farmer used to buy at £2,000 has gone up so that now he has to pay about £4,000 for it. The transfer duties on £2,000 used to be £40. On £4,000 they used to be £80, but now they will be double that, that is to say £160. I am afraid the Minister has been in too great a hurry in introducing this tax. First of all he made that date retrospective. Afterwards he realised that he had not considered the question carefully and so he altered the date. In this case, too, he has acted very hurriedly and I think I am fully entitled to appeal to the Minister to substitute the £2.000 by £4,000. When I think of the young farmers I must also think of these classes of people referred to by the hon. member for Gezina (Dr. Swanepoel), the public servants and Railway servants who want to buy their own properties. In the past we used to think that a man could buy a very fine house if he paid £2,500 for it. Now-a-days we cannot get much for that and we have to try and meet these people. And in cases of this kind, the young farmer, too, when he starts, who wants his own land, has to give very serious thought to extra expenses of this kind. Then there is another danger. We are reminded daily of the fact that there is a tendency to overcapitalise farms. Our farming community often contends that our farms are overcapitalised, and we want to ask the Government to take steps to assist us to place our farming industry on a sound footing in that respect, but I am afraid that with these high taxes we are actually fostering overcapitalisation. That is why I have moved this amendment, and I hope it will have the Minister’s serious attention.

The hon. member for Somerset East (Mr. Vosloo) asked me whether it was my intention to put a stop to all transactions in land. My reply is “no”, because if I did so I would lose more than £1,000,000 in revenue. It is perfectly clear that the Minister does not expect the adoption of this proposal to result in the stopping of all transactions in land. As a matter of fact I made it perfectly clear on a previous occasion that in introducing this proposal I was not influenced by the question of speculation. I do not think that this increase in transfer duties will make much difference to speculation in a time like the present when money is plentiful. What I have in view with this is the revenue which I expect to get, so my reply is that I do not want to stop all transactions in land because if such transactions were stopped it would have a very serious setback on the country’s revenue. And then I come to the further question, whether the adoption of this proposal will have the effect of stopping all land transactions. Now I want to point out that at any rate so far as the Cape Province is concerned, up till 1919, transfer duties were on the basis of 4 per cent. Were there no land transactions in those days?

Well, in those days there was no 13s. 4d. tax on profits.

No, there is nothing new in having transfer duties at 4 per cent.

But that is not all we have now.

That is all so far as most of the transactions are concerned. There are other transactions which come under the profit tax on fixed property, and in certain cases also under the Excess Profits Tax. But the ordinary transactions will only be subject to this proposal, and the transfer duties will be round about 4 per cent. if the transaction is in excess of £2,000. We approached this question primarily from the point of view of a general increase of 2 per cent. We considered that, as part of the Union had been accustomed for some time to 4 per cent., it would not be unreasonable, in view of prevailing conditions, to fix the scale at 4 per cent., but I did feel that we should do something for the small man, and with the very object to make some concession to the small man we altered this proposal in the sense that this increase will not apply to transactions under £1,000 and that on transactions between £1,000 and £2,000 the increase will only be 1 per cent. That will, of course, affect a large proportion of the transactions. In quite a large proportion of the transactions the purchase price is below £2,000. That also involves a considerable reduction in the revenue which we expect from this source. The concession already contained in the proposal involves an amount of between £300,000 and £400,000. I am sorry therefore that I do not consider it possible to surrender further revenue and to accept this amendment.

Of all the taxes the Minister has proposed we regard this one as the most harmful to the people. It does not merely affect the individual who has to pay the tax. If that were the case it would have been of a temporary and passing nature, but it affects the price of property, not only today, but for the whole future. And not only that, but it also affects the renting of property. The country will suffer as a result of this tax, long after the present Minister has ceased to be Minister. I regard this measure as the most inflationary measure the Minister has ever proposed. He started with this tax on land transactions and we warned him, but he wanted revenue and he went on. What was the result? The price of propertly went up high, and it is the taxation brought in by the Minister which has contributed to that.

That is not what your colleague said this morning.

In those days we warned the Minister of Finance that that would be the effect, and that as a matter of fact is the effect now. I know of a case where a house was recently sold for £2,500. Generally the owner would have been satisfied with a profit of £200 or £300. He had to take into account, however, the fact that he would have to surrender a large amount to the Minister of Finance, with the result that he added that to the purchase price of the house. Because of the Rents Act and because he could not eject the tenant he had to pay the man £100 or £200 to induce him to leave the house. Now, we have this additional tax on every item mentioned here. Now, let us take a transaction of £4,000. A man bought a house last year for £4,000, and he now sells it for £6,000. The Minister takes 13s. 4d. in the £ of the profits, that means £1,333. Then there are the increased transfer duties which now amount to £240. That means that in connection with this transaction altogether £1,573 goes to the State, and indirectly the value of the property is thus raised for the future. I have in my hand a document which emanates from the Government itself, viz: from the Department of Labour, in which instances are cited of the way the price of property has gone up during the past two or three years. They attribute this partly to the measures for which the Minister of Finance is responsible. The first instance is that of a part of a farm which in 1935 was bought for £500. In 1936 it was sold for £1,000. The Minister is not responsible for that. In 1941 it was sold for £3,000; in 1942 it was sold for £13,000, and in 1944 for £22,000.

Were there any improvements?

They say certain improvements were effected, but that by no means explains the increase in price. Then another example is this: In December, 1943, a municipality sold land by public auction for £2,800. That land has since been sold for £16,000.

What a windfall for the Exchequer !

In December, 1942, two building lots were sold for £2,500 each. In 1943 they were sold for £8,500 and £8,750 respectively.

Only the building lots, or with buildings on them?

No, only the erven; and here we have another instance. A piece of land was cut up into 1,000 building lots; the land was valued at £4,000. After two of the building lots had been sold the whole lot was sold for £10,000, next for £15,000 in 1938 and the present valuation is not less than £100,000. These instances go to show how land prices have gone up, and one of the contributory reasons is this proposal of the Minister of Finance. Somebody has to bear these taxes, and these properties are going to bear the taxes in future. It is the Minister of Finance who is driving up the price of property, he is responsible for it.

Prices started going up before my taxes were there.

But the biggest increase in prices took place in the years 1942 and 1943.

You are now pleading for the capitalists.

We say that it is the Minister who has driven the price of property up. Does not the Minister think that South Africa has suffered enough from over-capitalisation? We know that as a result of over-capitalisation in the past the Government has been compelled to pay an interest subsidy. If the Minister goes on in this way the time will come when a rent subsidy will also have to be instituted in South Africa, and one thing the Minister is losing sight of is this: Not all land transactions in South Africa are speculative. A large section of the population is compelled to buy land—it simply has to do so. It is ordinary and legitimate business. The hon. member for Gezina (Dr. Swanepoel) told us about officials who are transferred, who are compelled to sell their houses and to buy again. Imagine the burden which the Minister is imposing on these people. Before they can buy new property they first of all have to pay all the burden of the taxation which the Minister has imposed. It is the Railway official, the Public Service, and people like that who have to pay these taxes. That is why we are in favour of the whole of this clause being deleted, and let me tell the Minister that we are going to vote against this clause, but if the Minister refuses to do what we ask him, if he refuses to abandon this proposal, then we shall vote for the amendment of the hon. member for Klerksdorp (Mr. Wilkens) which says that we shall at least increase the figure of £2,000 to £4,000. If the Minister does that he will exempt most of the ordinary legitimate land transactions which take place. He will then be making a concession to those people who want to buy a bit of land in times like the present. They may perhaps, as a result of war conditions, have succeeded in getting hold of a bit of money. Their ambition is to own a bit of land, and they are perhaps able to do so if they are not called upon to pay these special taxes which the Minister is now introducing. If the Minister persists with these taxes he may perhaps get millions in revenue, but he will be doing irreparable damage to our national economy in days to come. I look upon this as a stupid tax.

What sort of a tax?

A stupid tax. The Minister tells us he wants to do all he can to combat inflation, and the next moment he does his very best to promote inflation by forcing up prices. If you force prices up, it is nothing but promoting inflation. I hope the Minister will accept the amendment.

The basis of my hon. friend’s criticism is that this resolution is inflationary, just as the profit tax on fixed property was inflationary. But perhaps the best argument which can be advanced in favour of this profit tax on fixed property was advanced this afternoon by my hon. friend. The figures which he quoted clearly showed that there were big increases in price before this tax was imposed. Does he want to allege that it is not right that the State should get a portion of those colossal profits? Of course, it is right. The State took the right step in imposing this tax. But what was the effect of it? The hon. member who sits next to the hon. member for George (Mr. Werth) said this afternoon that that tax was a success in preventing speculation. It was a success. I want to concede that there may have been cases where it may have led to price increases to a certain extent, but generally speaking that tax was a great success, and my hon. friend has therefore advanced no sufficient ground for rejecting the tax entirely. With regard to the further general question which was raised, I just want to say this. Generally speaking I would prefer a low rate of transfer duty in preference to a high rate, but in times such as these, when we require money for the Treasury on the one hand and when money is plentiful on the other hand, when there is a boom in the fixed property market, I think it is perfectly reasonable that we should attempt to obtain a portion of that money in this way.

One cannot suggest anything to the Minister, because he is a sort of super-man. It seems to me that when he has not got an overseas model to go on, we get no constructive legislation from him, we get no original legislation. All suggestions which are made by this side of the House are simply ignored and treated with contempt. Let me tell him that he need not adopt such a high-handed manner. We make these proposals in connection with the development of the country, and especially in the interests of that section of the people who require assistance. He comes here and tells us that the position in Australia or England is this, that or the other, but have we ever had anything original from him? Never. He merely follows the example of other countries. I represent a portion of the country where there are many poor people, more particularly settlers. The Minister stated that he was prepared to assist this type of man. Section 2 (1) reads as follows—

I now want to move—

That will mean that in the future, when a settler ….

I am sorry, but that amendment has already been rejected.

This amendment has not yet been rejected—not in connection with this clause.

Is it not the same amendment which was put by the hon. member for Pietersburg (Mr. Naudé)?

My amendment was that they should not pay anything.

I move that the duty shall be one per cent., whatever the amount is. The hon. Minister stated that he would like to meet these people, and we on this side feel—especially I who represent a number of settlers—that when they attempt to obtain their own piece of land, they should not be required to pay more than one per cent. in respect of transfer dues. Then there is another matter which the Minister must take into consideration, and that is in connection with civil servants. It frequently happens that civil servants are transferred. They buy a house; they live in it for a certain time and then they may be transferred. They then have to buy a house again at their new place of residence at a very high price, and I have already mentioned cases of this nature. Yesterday an official at Pinelands again approached me and told me that his transfer to Pretoria is costing him at least £1,000 and that he is no better off than he was. Here we have a civil servant who is forced by the State to transfer from one place to the other. Why cannot some concession be made to such an official? This tax levied by the Minister was intended to prevent speculation in land. I want to make an appeal to the Minister, where officials are transferred by the State, to grant relief to those officials. An official may buy a house in Cape Town, for example; he is transferred to Pretoria and he sells his house here. He is now required to hand over to the State two-thirds of the profit he makes and to buy another house in Pretoria. He has to pay a very high price for that house. If ever there was an unfair tax which hits particularly a certain section of the people, it is this tax. The Minister ought to come to the assistance of these civil servants. Perhaps we shall again raise this matter on another occasion. Then I want to make an appeal to the Minister to come to the assistance of the settlers. These are the people whom we want to rehabilitate. These people have been practically pampered by the State, and through their own industry they have eventually succeeded in obtaining a piece of land. Take this case. The settler may now want to sell this land and buy another piece of land. He is required, however, to hand over two-thirds of the profit he makes to the State. We feel that the settlers should not be treated on the same basis as other people in this respect. They should not have to pay more than one per cent., irrespective of the amount of the transaction.

May I just say this. I do not know whether the hon. member for Gordonia (Mr. J. H. Conradie) expects me to accept this amendment.

No, I do not expect it of you.

Well, apparently the hon. member does not expect anything of me, and I shall not accept it.

If the hon. member for Houghton (Mr. Bell) had moved it, you would have accepted it.

The House has already voted against the amendment of the hon. member for Pietersburg (Mr. Naudé), that there should be no discrimination, and I think the same applies in this case.

I cannot understand the Minister. A few minutes ago he said that he would discriminate; he discriminates as between the small man and the big man.

According to the amount involved.

I know that where transfer dues are payable to the Government—take the case of a settler, for example, who buys land for say £3,000—the settler gets an advance in respect of the full purchase price, minus his contribution of, say, £500. Transfer dues are payable on the full amount of £3,000, i.e. the full purchase price. In the majority of cases therefore the actual amount which is involved is not in the neighbourhood of £1,000 in the case of settlers, but they still have to pay on the full amount.

It is not in the neighbourhood of £1,000 and he does not pay anything therefore.

Assuming that land is bought for a settler at £3,000. Of that £3,000 he borrows £2,500 from the Department of Lands. He pays £500. He has to pay transfer dues on £3,000, but the actual amount he has is only £500. The high transfer dues make the position impossible for such a man. I should prefer the Minister to go a little further into this matter. This amendment may have been introduced somewhat hastily, and perhaps he replied somewhat hastily. I am convinced that the Minister will reconsider this matter since it is the intention to come to the assistance of the small farmer, the settler who really finds himself in a very critical position. I hope he will accept the amendment of the hon. member for Gordonia (Mr. J. H. Conradie). We are altogether opposed to the principle that transfer dues should be payable by settlers, and we are particularly opposed to the payment of these extra transfer dues. We do not want settlers especially to be called upon to pay these transfer dues. But if the Minister is not prepared to take into review the whole question of transfer dues, we hope that he will accept this amendment.

I think this matter has been so well advocated and discussed that it is hardly necessary at this stage to make an appeal to the Minister. If words could influence the Minister, he would by this time have agreed to abandon this unfair tax. The hon. Minister practically made a present of £1,800,000 to the mining magnates who are certainly not poor people, with a view to assisting them. The Minister said a moment ago that he would lose £1,000,000 if he abandoned these taxes. Would it not have been better, since this tax is being imposed on the less privileged people, to withhold that £1,000,000 from the mines and not to levy this tax? I think it would have been much better if he done that. But it seems to me that the Minister is so proud of the majority which he has on his side, that he practically takes no notice of the amendments of this side of the House. We are doing everything in our power to protect the less privileged people, but not the slightest notice is taken of the pleas of this side. Yesterday the hon. Minister stated that in spite of all the taxes which he imposed he still obtained a greater majority than any Minister of Finance had ever obtained. That may be true, but he obtained that majority before this tax was proposed. I am convinced that if the public in the country, even in the Minister’s own constituency, had known that the Minister proposed to impose these taxes, he would not have otbained that majority. I think if he were to return to his constituency today to contest an election, he would not obtain the same majority. I want to associate myself with hon. members on this side who pleaded and practically begged the Minister to accept this amendment and to abandon this tax. If he is not prepared to withdraw this tax, we hope that he will at least accept the amendment of the hon. member for Klerksdorp (Mr. Wilkens). When one wants to buy a house or a farm which is worth £2,000 or £3,000, one already feels that there is a great deal of expense to be met before the purchase price has to be paid. When one buys one always thinks of the transfer dues which have to be paid. Now the Minister is doubling them. I think that is very unreasonable, and I want to give the Minister the assurance that if he talks to the people outside, they will tell him that these transfer dues are unreasonable. Wherever we go we are asked to do everything in our power to persuade the Minister to abandon this tax. I have received numerous letters from my constituents in which the people say that “Jan Taks”—as the people in the country call him—is going too far. I want to make an appeal to the Minister to accept this amendment, if he is not prepared to withdraw the entire tax.

When the hon. Minister replied a moment ago to what has just been said, he stated that he himself did not like to increase this tax, but that he was doing so in an attempt to obtain revenue. When I spoke on a previous occasion I said that if the Minister was seeking revenue, there was a source just next door, a source which has not as yet been tapped. I refer to the share market. Other countries of the world have adopted systems whereby they tax the transactions on the stock exchange. Why cannot we do it? This money which the Minister wants can be obtained from the stock exchange—and much more than the Minister wants. The Minister spoke of the tremendous increases in the price of property, and he stated that that had been referred to by the hon. member for George (Mr. Werth). He stated that the prices had increased even before the imposition of this tax. But the hon. Minister must bear in mind that there has been a general increase in the price of properties during the past 25 years or nearly 35 years, and that applies not only to properties, but to all other goods in the Union of South Africa. Our price index has risen by 110 per cent. since 1914. It must be clear therefore that during the past 30 years the value of our money has declined, and declined steadily, to about 45 per cent., and that decline has taken place more rapidly since the outbreak of the war. It is obvious that the prices of all commodities have risen. If that is the case, why do we single out land, the birthright of our people, for heavy taxation while there are other big sources of income which have not as yet been tapped by the Minister. I can produce figures to show what price increases have taken place in other directions, much higher than the most extravagant increases in the price of land. It is not that there has been such a tremendous increase in land values only; prices have risen generally. The Minister may say that I am interested in land transactions; that is true, but I can give him the assurance that mine are not affected by his taxation. In making this plea, I do so because I feel that it is only right and fair towards the civil servants and Railway officials and all other officials who are liable to be transferred from place to place. Assuming a person bought a property in Pretoria since this tax came into operation. He is now transferred and he sells the property at a profit of £600. He pays £2,000 for the house and sells it for £2,600, which represents the normal price increase during this time. He is now required to pay a tax of £400. When this man arrives in Cape Town he has to buy another place at an inflated price. He may be re-transferred to Pretoria and have to buy another house. In this way the man is robbed. He is not a speculator. It is not his fault that we were plunged into this war and that we follow a financial policy which must necessarily promote inflation to a certain extent. It is for those people whom we plead, and we feel that it is no more than fair. If more money has to be obtained for the Treasury, do not seek to obtain it from these people; obtain it from that great source which has not yet been tapped. The Minister himself stated the other day that there had been an increase in price in the greatest majority of industrial shares. In other countries the prices of industrial shares have hardly risen. There have been price increases in every direction. Why should we tax the people so heavily in this one instance? It is the last straw which breaks the camel’s back, and in this case the camel is the civil servant. We hear the same complaint every day. I have hundreds of cases in my constituency where this tax deprives the people of their savings for which they worked hard for many years. I am speaking from bitter experience. It is not every official who has the fortune to come from a family where all his educational fees are paid for him, as in the case of the Minister of Finance. The majority of officials have to work hard today and they study at the same time. But when that individual gets an opportunity to save something concrete and to put it into a house, he is deprived of his savings by means of this tax. This is nothing but robbery, and we are going further and further on this course, while there are great sources of income which have not been touched at all. Once again I make an appeal to the Minister. It is only human to make mistakes. We would not like him to adopt the attitude that everything he says is final. We, too have our constituents to represent. We also have our interests to guard, and it is possible that we come into contact with the people much more than the Minister himself and we therefore plead on their behalf. The cost of living has increased by more than the cost of living allowance. The value of money has fallen very considerably. This tax is being applied today in every direction to income which in terms of monetary value, is worth very much less than it was previously. When a man has an income of £400 today, that £400 has less purchasing power than £200 in 1914. The burden is therefore becoming heavier in actual fact. If we were to place these facts before the country, I would still like to see the result of an election in South Africa. If we have to obtain more money by way of taxation, let us obtain it from those people who can comfortably afford to pay. One of the great canons which Adam Smith laid down in the 16th century was equality of taxation, and I want to make an appeal to the Minister not to continue to impose heavier burdens on this one willing camel which cannot protest.

The Minister is distinguishing himself; he is distinguishing himself as a tyrant of taxation and, above all, a tyrant of taxation on poverty. Those people who can least afford it are made to pay most heavily. If he finds any pleasure in doing so, it is his own concern. It is not only this side which protests against these taxes, but his own side is dissatisfied, because it also hits the people whom they represent, and I am absolutely convinced that the Minister will have to abandon this tax if he wants to have any future in this country. The speculators speculated on an enormous scale with small farms and houses before this tax was introduced, but today the Minister is not only taxing the speculators. I want to concede that the first tax on profits was a good tax, because it put a stop to large-scale speculation. But in taxing the small farmer further by imposing an extra tax in respect of transfer dues, the Minister is going too far. He deprives the small farmer of all his initiative. The poor man, the middle class man and the beginner strive to obtain a property which is registered in their own names. That is what they strive for. The Minister must understand that South Africa is a poor man’s land, and when he taxes the poor man with the object of benefiting the capitalist, he is playing with fire. The capitalist has no future in South Africa. After this war the Minister will see that his friends are the middle class people, the poor people and the beginners. The small number of capitalists in South Africa have seen their day. The Minister is making an enemy of the people and he is squeezing the poor man and the middle class man and the beginner to death by imposing these taxes. The transactions which are below £400 are transactions which are not entered into by the rich man or by the man who does not know what to do with his money. These transactions under £400 are entered into by beginners, by people who would like to make a living in South Africa, who want to buy a little farm, or who want to buy a small house. The civil servants throughout the country want to save something but the Minister, in introducing this tax, is making it almost impossible for them. Why not tax the rich man, the big capitalist? Why do you tax the beginners? If they have not yet been taxed, one might have been able to understand it, but all the taxes which have been levied up to the present, are taxes which for the greater part hit the poorer group. If the Minister makes investigations he will find that 75 per cent. of the transactions under £4,000 do not take place on a cash basis but on bond. Bonds are taken in 75 per cent. of the transactions in regard to the purchase of farms and houses. The people buy these properties in order to possess something concrete, in order to be able to live decently, and they have to take mortgage bonds. When a transaction of £4,000 takes place, a bond of approximately £2,000 to £3,000 is taken. Why should these industrious workers, the backbone of the State, comprising the greater majority of the people of the country, be taxed so heavily? We do not know what the Minister has up his sleeve. We are afraid that next year he may come along with additional taxation which will make the position of these people completely untenable, while the capitalist goes scot free. The Minister’s taxes are concentrated on the working class, the breadwinners, the beginners, the middle class people and the officials of the State. I want to make an appeal to the hon. Minister. He will not only give relief to a large section of the people but he will render himself a service if he accepts this amendment and levies this tax only in the case of transactions exceeding £4,000 and if he exempts those transactions which are below £4,000. If the Minister accepts this amendment, we will feel that he has conquered himself to some extent. And anyone who conquers himself achieves something worth while. In order to conquer himself, the Minister must come to the conclusion that what he does and what he thinks is not necessarily always right and fair. We will appreciate it if he will meet us in this respect for the sake of 75 per cent. of the people of South Africa.

There are two aspects of this tax which I want to bring to the Minister’s notice. The first is that he will naturally realise that it is a peculiar position that if I buy a place for £2,000 my transfer duty is only 2 per cent., but if I buy a place for £2,001 I have to pay 3 per cent. People will, of course, see to it that they keep under £2,000—they will see that they keep the transaction below £2,000. It is true that the transfer duty itself today is 2 per cent., and that that is levied on the whole amount, that every man pays according to the amount of his purchase, but here the Minister is making it 2 per cent. for £1,000, 3 per cent. for £2,000 and 4 per cent. for anything in excess of £2,000. It is a bad form of taxation. If he wants to raise the tax let him do so gradually. Even if a man would like to pay £2,050 for a place he is not going to pay more than £2,000 and he is making some other arrangement about the £50. Why should such an obligation be imposed on people? But apart from that it is unfair that if a man buys a place for £1,000 he has to pay 2 per cent., if he buys a place for £2,000 he pays 3 per cent., but if he buys a place for £2,001 he has to pay 4 per cent. That aspect of the tax is unfair. Then there is another aspect which I want to bring to the Minister’s notice and which I do not believe has been brought to his notice so far, and it is this, that this tax is a heavier tax on the farmer than on the townsman, on the business men. If a man buys a farm for £5,000 or even £10,000, a farm on which he can produce crops, he will perhaps only need a few hundred pounds to buy a wagon, shovels, a car and other implements. Now, he has to pay 4 per cent. transfer duty on the £5,000 or on the £10,000. If a man buys for £5,000, as a rule he only has £2,500 and the balance he gets on first mortgage. Comparatively speaking he is a poor man, and with money at today’s value, and the increased prices of land, you can only get a small property for £3,000 or even for £5,000. On the other hand a business man buys a shop for £5,000, and he puts £15,000 or £20,000 worth of goods into that shop. That is his enterprise. But he only pays the 4 per cent. transfer duty on the £5,000. The farmer pays on the whole capital which he invests in his enterprise—he pays a tax on the whole, but the business man only pays the tax on the building; he pays nothing on his merchandise which he puts into the building. It is an injustice to the farmer and that is a further reason why to my mind this form of taxation is very unreasonable. It falls much more heavily on the farmer than on the business man. The business man makes his profits and is able to pay the tax, but he does not pay to the same degree. It falls more heavily on the farming population. And it is exactly the same in regard to the land tax. The argument has always been used that the tax on land is not a tax on the value of the land but on the value of the farmer’s whole business. Business men, however, only pay on the value of the building. I don’t know whether this argument impresses the Minister at all; he, of course, has made up his mind to get this tax passed, but I would be failing in my duty if I did not protest against this tax. I feel the Minister must be careful in what he does, and I would therefore appreciate it if he would reconsider the whole question. He can withdraw it and propose this tax in a different form. The exemption of £1,000 is not sufficient with money at today’s value. If he wants to help the poor man he should make it at least £2,000. The prices of houses and land are so high today that what you pay £2,000 for today is under ordinary conditions only worth £1,000. Therefore, if he makes it £1,000 he does not help the poor man while the rich man evades his tax in some other way. You cannot buy a place for £1,000 today because no farmer can make a living on it. In the towns you cannot buy a house for less than £1,000 and live there with your family. Even £1,500 would be better than £1,000. We hear a lot about social security. We hear a lot about helping people to live decently and become useful citizens, but by this sort of taxation we deprive people of these opportunities. Has the Minister ever thought what it costs to get a place transferred into your name if you buy it for £5,000? If you buy a farm for £10,000 you have to pay 4 per cent. transfer duties, and an additional 2½ per cent., because the owner will put that on—that is is the provincial tax. The buyer has to pay that. Where otherwise he would have paid £5,000, he now pays £5,000 plus 2½ per cent. Then usually there is 2½ per cent. auctioneer’s commission; 5 per cent. plus 4 per cent. makes 9 per cent. By the time you have transfer you have 10 per cent. and that on £10,000 is £1,000 to get the place transferred to your name. If you take £5,000 on bond you have to pay interest on the balance and people are put into such a position that after the war the State will have to help them with interest subsidy and other things. This form of taxation will only cause trouble in future.

There is one small point which I wish to bring to the Minister’s notice, arising out of the speech of the hon. member for Swellendam (Mr. S. E. Warren); it also arises out of the increased taxation and it is this: If a man disposes of a property for £1,000 he does not pay, but as soon as the amount gets to £1,250 he pays 3 per cent. on the full £1,250. Then as soon as he gets over the £2,000 he pays the full 4 per cent. Is that fair? It is fair to exempt the first £1,000? But let the Minister introduce a gradually rising scale from that point and not just raise the tax at every £1,000 notch. If the Minister acts on that suggestion he will also avoid what the hon. member for Swellendam has referred to, because if a property is sold for £1,100, the buyer will see to it that he does not pay 3 per cent. or £30 but will keep it down to just under £1,000. I as a solicitor know what goes on. A cow will be sold together with a property and the cow will be sold for £100 and the property for £1,000. It is not fair to put these temptations in people’s way and induce them to break the law all the time. I therefore want to suggest that the first £1,000 should be exempt and that the transfer duties from there on be gradually increased.

What the hon. member has just said is perfectly true, that when you come to £1,000 the scale of taxation goes up and that if the amount is above £1,000 you have to pay on the full amount of the purchase price, but the hon. member should also look at the other side of the question. We approached this question from the point of view of a general taxation scale of 2 per cent. and then we made certain concessions. If we had made the scale of taxation 2 per cent. throughout hon. members opposite would naturally have urged us to make concessions in respect of small transactions, and they would then have approached the question from that point of view. We first of all had a general scale of 2 per cent. in mind, but we thereupon said that we would make a concession to people on transactions between £1,000 and £2,000 and especially on transactions below £1,000. I am afraid we cannot go any further than that unless we are to surrender a considerable proportion of our revenue, and consequently, as we are dealing here with a temporary measure, I hope hon. members will agree to it.

Mr. Chairman, it is on this particular point that I feel dissatisfied with this paragraph. I think it is quite wrong that the percentage should be calculated in this manner, where the tax rate is graduated and raised with the increase in the amount of the tax. I think it is wrong that the increased rate of tax should be based upon the whole of the amount. It would be preferable to arrange it in a similar way to the succession duty, that is that the particular percentage is applicable only to the amount in excess. In the paragraph we have under consideration it would be a simple matter to provide that the rate of the surcharge shall be upon so much of the amount on which the transfer duty is chargeable as exceeds £1,000. One would then get a more even graduation in the incidence of the tax and a definitely improved state of affairs. I have raised my voice on other occasions in connection with taxation this year when I criticised the method which the department employs in calculating taxation. Those methods leave a great deal to be desired, and I feel it is time that some protest was raised against the methods employed. In the present case it virtually means that up to £2,000 there is an abatement of £1,000 which abatement disappears completely and entirely immediately the purchase price exceeds £1,000. I want to urge upon the Minister the advisability of considering this matter, and if possible at an appropriate stage when the Bill is passing through this House an amendment may be moved to give effect to a more even graduation in the incidence of calculation than is applicable under this paragraph.

Question put: That the amount “£2,000,” where it occurs in paragraphs (i) and (ii) proposed to be omitted, stand part of the motion.

Upon which the Committee divided:

Ayes—81:

Abbott, C. B. M.

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.

De Kock, P. H.

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.

Gray, T. P.

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.

Jackson, D.

Johnson, H. A.

Kentridge, M.

Latimer, A.

McLean, J.

Madeley, W. B.

Maré, F. J.

Miles-Cadman, C. F.

Mushet, J. W.

Neate, C.

Payn, A. O. B.

Payne, A. C.

Pieterse, E. P.

Pocock, P. V.

Prinsloo, W. B. J.

Raubenheimer, L. J.

Robertson, R. B.

Shearer, O. L.

Shearer, V. L.

Solomon, B.

Solomon, V. G. F.

Sonnenberg, M.

Steenkamp, L. S.

Steytler, L. J.

Stratford, J. R. F.

Sutter, G. J.

Tighy, S. J.

Tothill, H. A.

Ueckermann, K.

Van den Berg, M. J.

Van der Merwe, H.

Van Niekerk, H. J. L.

Van Onselen, W. S.

Wanless, A. T.

Waring, F. W.

Warren, C. M.

Williams, H. J.

Wolmarans, J. B.

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

Noes—32:

Booysen, W. A.

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.

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 proposed by Mr. Wilkens dropped.

Amendment proposed by Mr. J. H. Conradie put and the Committee divided:

Ayes—33:

Booysen, W. A.

Brink, W. D.

Conradie, J. H.

Dohne, J. L. B.

Dönges, T. E.

Erasmus, F. C.

Erasmus, H. S.

Fouché, J. J.

Grobler, D. C. S.

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.

Wanless, A. T.

Warren, S. E.

Werth, A. J.

Wessels, C. J. O.

Wilkens, J.

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

Noes—81:

Abbott, C. B. M.

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.

De Kock, P. H.

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.

Gray, T. P.

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.

Jackson, D.

Johnson, H. A.

Kentridge, M.

Latimer, A.

McLean, J.

Madeley, W. B.

Maré, F. J.

Miles-Cadman, C. F.

Mushet, J. W.

Neate, C.

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.

Shearer, O. L.

Shearer, V. L.

Solomon, B.

Solomon, V. G. F.

Sonnenberg, M.

Steenkamp, L. S.

Steytler, L. J.

Stratford, J. R. F.

Sturrock, F. C.

Sutter, G. J.

Tighy, S. J.

Tothill, H. A.

Ueckermann, K.

Van der Merwe, H.

Van Niekerk, H. J. L.

Van Onselen, W. S.

Waring F. W.

Warren, C. M.

Williams, H. J.

Wolmarans, J. B.

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

Amendment accordingly negatived.

Original motion put and the Committee divided:

Ayes—80:

Abbott, C. B. M.

Abrahamson, H.

Acutt, F. 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.

Bowker, T. B.

Burnside, D. C.

Butters, W. R.

Christie, J.

Christopher, R. M.

Cilliers, S. A.

Connan, J. M.

Conradie, J. N.

Davis, A.

De Kock, P. H.

De Wet, H. C.

De Wet, P. J.

Dolley, G.

Du Toit, A. G.

Du Toit, R. J.

Eksteen, H. O.

Faure, J. C.

Fawcett, R. M.

Fourie, J. P.

Goldberg, A.

Gray, T. P.

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.

Jackson, D.

Johnson, H. A.

Kentridge, M.

Latimer, A.

McLean, J.

Madeley, W. B.

Maré, F. J.

Miles-Cadman, C. F.

Mushet, J. W.

Neate, C.

Payn, A. O. B.

Payne, A. C.

Pocock, P. V.

Prinsloo, W. B. J.

Raubenheimer, L. J.

Robertson, R. B.

Rood, K.

Shearer, O. L.

Shearer, V. L.

Solomon, B.

Solomon, V. G. F.

Sonnenberg, M.

Steenkamp, L. S.

Steytler, L. J.

Stratford, J. R. F.

Tighy, S. J.

Tothill, H. A.

Ueckermann, K.

Van der Merwe, H.

Van Niekerk, H. J. L.

Van Onselen, W. S.

Wanless, A. T.

Waring, F. W.

Warren, C. M.

Williams, H. J.

Wolmarans, J. B.

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

Noes—31:

Booysen, W. A.

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.

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.

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 en P. O. Sauer.

Motion accordingly agreed to.

Before you put the next paragraph I should like to point out that paragraph 5 as a whole has not yet been put. We were under the impression that you only put sub-paragraph (2).

No; I put sub-paragraph (2) of paragraph 5; after that I put the whole paragraph 2, and then the whole paragraph.

And we now come to the whole of paragraph 5?

No, I put the whole of the paragraph.

If anyone is against the first part and in favour of the second part, how is he to vote if the whole thing is put? I think the separate clauses should be put.

That is exactly what I have done.

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

Excise and Customs Duties.

I move—

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

This item deals with the proposed increased excise on matches, cigarettes and pipe tobacco. I want to explain again, as I have done before, this increased excise duty on pipe tobacco. An increase of from 1s. to 2s. per lb. is proposed here but it will be subject to an abatement for which provision will be made in the Act. At the moment there is an abatement on cheap pipe tobacco of 4d. on 1s. which means that the duty is 8d. per pound. We are now proposing an abatement of 1s. 4d. on the 2s., so that the duty will remain at 8d. Then, in regard to the medium priced tobacco which on the 25th March was sold at 1s. or less per quater lb. we are proposing an abatement of 1s. on the 2s. There, too, the duty remains unchanged. So actually there will only be an increase of 1s. in the case of types of tobacco which on that date were sold at more than 1s. per quarter lb. I am making this statement to explain that provision will be made for this abatement, and these proposals must be judged in the light of these abatements.

I want to move the following amendment—

In this connection I want to explain that I personally, and all the other members, representing tobacco growing districts have received telegrams from various districts and from the Tobacco Co-operative Societies, and the Minister of Finance himself, or the Minister of Agriculture has received a telegram from the Central Tobacco Co-operative Society.

I did not get one.

Fortunately the hon. member for Middelburg (Dr. Eksteen) did not get one because the tobacco farmers know how he is going to vote, telegram or no telegram. Those of us who enjoy the confidence of the tobacco farmers have had telegrams asking us to protest against this increase in the tax, and even though the hon. member for Middelburg has had no telegram I know that he, as a good representative of Middelburg, which he hopes to be, will also voice his protest against this increased tax on tobacco. Now, in view of the fact that these various bodies have protested I want to point out that the Central Co-operative Tobacco Society has no fewer than eleven co-operative societies under it. It represents the tobacco industry in the country—it represents practically all the tobacco growers in South Africa and they are protesting like one body against this increased tobacco tax. I therefore say that the Minister should take notice of this protest because the tobacco farmers are unanimous in their decision to object to this proposed tax. If one looks into the question and sees the way the tobacco tax has developed, one must be astounded at the increased amount the Minister has taken from the industry year after year. In 1939, after the outbreak of the war, the Minister started taking money from the industry, and he collected £1,500,000 that year. That was in the first year of the war, but year after year this particular tax has gone up, so that the Minister this year is expecting to get £8,500,000 from it. Over five years the yield from this tax has increased fivefold. Now, just let me show what that means to the tobacco farmer. We are told here very often that the farmer does not pay this tax. We know, however, that in the long run it amounts to this, that the farmer is detrimentally affected by it. The product is not bought to the same extent as would otherwise have been the case. There is another important point so far as the farmer is concerned and it is this, that with this tax being as high as it is it is made impossible for the tobacco farmer to get a higher price for his product. The price of his product would have gone up just as other prices have gone up during the war; but this tax makes it impossible. Everything has gone up. Some articles have gone up more than others, but this tax has had the effect of the farmers not getting the benefit of an increase in price in the same way as other sections of the community have done. The tobacco farmer would have been able to get a higher price now, but as soon as he has an opportunity of getting a better price the Minister steps in and strangles him with this increased taxation. The Minister simply says he cannot allow it and it is made impossible for the tobacco farmer to make a decent living. This year the Minister—in one single year—expects an increase of no less than £1,425,000 out of the excise receipts from the product of the tobacco farmer. Now, on the other hand let us look at what the farmer gets out of this industry. The farmer for the whole of his production does not even get £2,000,000. His net income out of his products is less than £1,000,000. Taking the country as a whole, including all the tobacco districts, the farmer does not get £1,000,000 net income out of his industry. But the Minister of Finance gets more than £8,000,000 out of the tax on that self same product. Is it fair for the Minister to do this? No, it definitely is not, because it is made impossible for the tobacco farmer to make a decent living. His product has not gone up in price; it has remained practically where it was, but on the other hand we know that everything he has to use has gone up in price. The cost of living to the farmer has gone up; normal expenditure in connection with farming has gone up tremendously, and now the Minister steps in and wants to apply the Wage Act to the tobacco industry. We have already had protests, we have already had objections from the tobacco farmers in which we are asked to protest against the application of the Wage Act to tobacco co-operative societies. We know that in all likelihood the provision to apply the Wage Act will go through, so how can we expect this industry to pay the increased tax if in addition the Wage Act is to be applied to it, so that the industry will also have to pay these increased wages to the natives. Natives are employed in the co-operative societies, and no matter what class of work they do there they will have to get these enormous wages. The farmers alone have to pay it and that is another reason why it is unfair to come here with such a heavy tax which in one year is being raised by £1,425,000. We are told so often that tobacco is a luxury article and that it can stand the tax. We are told that tobacco is not a necessary commodity. Well, we know that. When petrol is taxed we cannot object very strongly. But we should bear this in mind, that tobocco is not merely a luxury article but it is also an agricultural product in this country. It is an agricultural product on which a very large proportion of our farmers have to depend. We know that the planting and the cultivation of tobacco are enterprises in which the farmer—the man who is poor—can employ the whole of his family to help him. We find that tobacco is produced with the assistance of the wife and children, and that is the way the poor tobacco farmer finds it possible to make a living. If we go to the small places we find that that is the way tobacco is being produced. It is the type of farming in which even the small children help in taking off the tobacco leaves and all that sort of thing. But if the Government goes on in this way, it will become impossible for these people to make a living. Of course some of our richest farmers are also engaged in tobacco farming. At Potgietersrust we have the Schoemans who are perhaps the biggest tobacco farmers in the whole of the Union, but they are exceptions. The tobacco industry is an industry out of which the poor man can make a decent living, but the Government by this tax is detrimentally affecting the indsutry, and let me say that it will be a serious setback to the country if the industry is destroyed. It is an industry which gives a livelihood to men, women and children. We have already drawn attention to the fact that the demand today is smaller than it was before these taxes were imposed. Take the poor man’s consolation, pipe tobacco. As the hon. member for Potchefstroom (Mr. Van der Merwe) has shown, the consumption of pipe tobacco has already dropped by 25 per cent., and now we find that in some respects this tax is being perpetuated while in other instances the tax on pipe tobacco is increased from 1s. to 2s. per lb. The Minister has told us that certain abatements are to be made on the poorer types of tobacco, but, after all, the tax is still going to be the same as it was before, because on other types of tobacco the tax is actually being increased and even doubled.

On the poorer class of tobacco the tax is exactly the same.

That is the point. The tax remains on these types of tobacco; and then we come to the other types where the tax has been increased from 1s. to 2s., and that particularly is the class of tobacco which the poor farmer produces. It is the type of tobacco which is smoked by other poor people, and I should like to know why an increase should be put on a product which particularly affects that class. If there is one type of tobacco which should be exempt from taxation it is this pipe tobacco. Under no circumstances can we agree, or give our consent, to that tax being doubled. We know the difficulties with which the tobacco farmers have to contend. If there is one product which has to be cared for and looked after from the moment the seed is put into the soil it is tobacco. More than any other product it is subject to climatic conditions, to drought, to cold, to hail, and now we find that the commando worm is also having a go at it. I say therefore that tobacco is a difficult product to grow. If lucerne is damaged in any way it will grow again afterwards, and the farmer does not have to sow again. But so far as tobacco is concerned, if there is a setback the whole of the crop is ruined and everything has to be replanted. Even though a farmer has a decent crop now and then it is not fair to tax him in such a way that it is made impossible for him to get a decent price for his product, but what beats me is that while the Minister increases the tax on South African cigarettes and tobacco, the tax on imported cigarettes is raised in the same clause by exactly the same amount, viz: ½d. per packet of 10. The imported cigarettes today are the expensive cigarettes. They are smoked by the people who are not Afrikaners yet and who want to smoke imported cigarettes. Why does not the Minister place an ad valorem tax on them? If ½d. is put on locally made cigarettes the Minister could put at least 3d. on imported cigarettes. But that is not all. Why do we allow cigarettes to be imported at all? We can manufacture as many cigarettes as are wanted in this country and we can manufacture them just as well as any other country can. What need is there for a single cigarette to be imported? If the Minister had done his duty he would have taxed imported cigarettes, cigarettes like “Craven A” and others, so heavily that they would not come in at all. I think we are entitled to appeal to any Afrikaner or to anyone who is well disposed towards this country, not to smoke imported cigarettes or tobacco, because we can produce just as good cigarettes in this country as can be imported. But the increase in the tax on imported cigarettes is identical to that on cigarettes made locally. It should have been much higher. We know, of course, that money is plentiful today. People who in the past never used to smoke cigarettes, smoke them today; convoys pass here and consume large quantities of cigarettes. Cigarettes are sent up North, and while there is such a big demand today, the farmers should have been given the opportunity to pay off their debts so that when the depression comes, and it will come as sure as day follows night, and the demand is not as big as it is today, the tobacco farmers will be able to face the setback. There will be over production again and the Minister makes it impossible for the farmers to get onto their feet. I want to emphasise again that the increased tax makes it impossible for the producers to raise the prices of their producte, and if there is one tax to which we must object it is this increased tax on tobacco. That is why I move this amendment.

As the hon. member knows I regard this as a tax which does not fall on the producer but on the consumer. It is the consumer who will pay it, but no objections have reached us from the consumer. We have, however, had expressions of apprehension—the same as we have had from the hon. member for Pietersburg (Mr. Naudé) that the tax may affect the producer in that it may lead to a drop in the demand for his product. I do not think that can be said about the increase in the tax on cigarettes. It is perfectly clear that the increases in the tax have so far not affected the demand for the farmer’s products. In this respect, too, there is a considerable margin insofar as we import tobacco from Rhodesia for the manufacture of cigarettes, so there is very little danger of the farmers’ interests being detrimentally affected by the increased tax on cigarettes. In regard to cigarettes imported from outside the Union we propose leaving the protective margin, which is a considerable one, unchanged. I therefore fail to see that there is any danger that as a result of the fact of our proposing the same increase on imported cigarettes as on locally manufactured cigarettes, this may lead to a reduced consumption of locally manufactured cigarettes. In regard to pipe tobacco it is true that there has recently been a drop in consumption, but I have already explained that this is mainly due to other circumstances of which the hon. member is fully aware. All we are proposing in regard to pipe tobacco is an increase in the tax on the more expensive types of tobacco. I think that the people who smoke the more expensive types of tobacco are well able to bear the extra tax and that it will make no difference in their consumption of tobacco. In any case it is perfectly clear that there is not the slightest danger of the farmers not being able to dispose of their tobacco crop this year. I can therefore not agree to the suggestion that the tax is going to have any effect on the farmer.

Mr. Chairman, I feel that I must once again protest against this taxation on cigarettes. The Minister seems to think that he can continue to tax cigarettes until such time as there is some popular outcry in the country against it, and he advances the rather remarkable argument—I think it is a remarkable argument—that this is a permissive form of taxation in the sense that people need not smoke cigarettes. In that respect the hon. Minister sets a very bad example. It is no small thing, because it is an additional tax of ½d. on ten cigarettes, and incidentally there are no sales of packets of ten cigarettes today. From this extra ½d. the hon. Minister actually gets £1,250,000, almost sufficient to pay the interest on £50,000,000. That is the position we have got to. It is a completely unfair tax, because it does not operate fairly. It takes out of the pockets of the poorest of the South African population almost as much as it takes out of the pockets of the rich. A very large number of cigarettes is bought by our natives in the Union, and there is no particular reason why cigarettes should not be smoked by the natives. Cigarettes, particularly in war time, are not a luxury at all. As the Minister has emphasised, the fact is that taxation has not reduced the consumption of cigarettes, and that is not to be wondered at; but what I venture to suggest to him is that this consistent increase of the taxation on cigarettes has prevented a very large increase in consumption which might have occurred. There would, I am satisfied, have been a very considerable increase had the Minister not for the last two years decided to place this additional burden on the smokers, and it is quite possible the Minister might have got the same amount of money through an increase in the consumption of cigarettes as he is now getting through this increased taxation. I believe the nett result of this imposition has been actually to reduce the number of cigarettes bought by people who are less fortunately placed in reference to the world’s goods. There are people who smoke 25 to 30 cigarettes a day, and you get a position where the native who smokes 25 to 36 cigarettes a day is contributing as much towards this £1,500,000 as is the mining magnate or the sugar baron who is earning anything from £10,000 to £15,000 a year. As I pointed out before, the typiste or the shop girl is possibly contributing as much to this taxation as her boss is contributing. The Minister, in seeking for fresh avenues of taxation might, on this occasion, have placed more of the burden on the shoulders best able to bear it in the form of considerably increased taxation of the higher incomes, but he has fallen back on the line of least economic resistance by placing another ½d. on ten cigarettes, which will be borne equally by all the people of the Union who smoke cigarettes, by the native and the low paid European equally with those who are earning high salaries, and even those who pay super income tax. Cigarettes, I believe, in war time are a necessity. In South Africa we have nervous affections and nicotine is a well-known remedy for that kind of thing. People are probably smoking more today than they would in ordinary peace time, and there is no particular reason why they should be taxed from year to year. I believe that a very great deal of this burden of additional taxation is being placed upon the shoulders of men and women who have been sufficiently conscious of their duty to join up in the army and are prepared to fight for this country. I think probably the consumption of cigarettes has gone up much more within the armed forces in the Union than amongst the civilian population, and this particular tax falls heavily on them. Remember it is no mean tax. If one smokes an average of 50 cigarettes a day, which is not unusual …

Or give them away.

Whether you smoke them or give them away, and there are people who are always hovering about when one takes out cigarettes. But however one gets rid of the 50 a day, one is contributing 2½d. a day, which is a very considerable amount. It is said that one need not smoke, but if we all decided to go on a smoke strike, and that might quite easily be organised …

Not so easily.

… the Minister would be £1,250,000 short in his revenue.

A lot more.

Yes, if we took his advice, and it appears that he means that as advice. One is never quite sure when the Minister is a moralist and when not, but one gathers when speaking of cigarettes he is something of a moralist, and the implied advice is to the people, “Well, if you are going to smoke I am jolly well going to tax you every year ½d. extra.” That, I think is a particularly wrong attitude, and I feel that the cigarette tax is a thoroughly bad tax. I object to it for another reason. I have an idea that it is going to be very difficult indeed in the post-war years to get any reduction of this cigarette tax. I have an idea that this tax is meant to stay, and we are going to be told that whatever other taxes are reduced cigarettes are not to be reduced. This is a tobacco-growing country; I believe South Africa can be developed into a much larger tobacco-producing country. I myself from some investigations in Britain some years ago, am satisfied that South Africa can probably export a very considerable amount of her tobacco overseas. I am satisfied there is a market there, and as a tobacco-producing country, I do not think we should set out to do as some other countries have done, that is to tax the cigarettes to a very large extent. One final point. I have emphasised many times in this House that this additional taxation on cigarettes increases if anything disparity between what is paid by the cigarette smoker and what is paid by the pipe smoker. The pipe smoker is a particularly fortunate individual; he gets his pipe tobacco at a very cheap rate indeed and pays very little taxation, and it is only on the better class of pipe tobacco that the tax bears. I do not know anybody in the country who really smokes the better class of pipe tobacco. My experience is that they blow out fumes that would make one believe that one was in the back yard of a sealing factory. The taxation on pipe tobacco is so negligible that one doubts whether it can even be passed on to the consumer, but the extra 2½d. on fifty cigarettes is still further widening the breach between the pipe smoker and the cigarette smoker. I am not pleading for an increase on pipe tobacco. I would not do so in the interest of the farmer and of my leader, who is himself a pipe smoker. I am pleading with the Minister to stop this business of year after year putting an extra tax on cigarettes. We have now gone, I believe, to the very limit of the taxation which can be imposed on cigarettes. There are some cigarettes for which today we are actually paying 3s. 0½d. for 50. The average price for popular brands is 2s. 2½d. and there are cheaper ones, but not very much cheaper. In addition to that, it is not possible to buy packets of ten; you have to buy fifty, and that bears very heavily on the non-European section of the population, who are just as much entitled to the comforts to be derived from My Lady Nicotine as any other section of the community. I am quite sure that the hon. Minister in that instance, is reducing the number of cigarettes smoked. At the end of the year he will probably find there has been no reduction in the consumption, but what has really happened is that a very large expansion which would have benefited his revenue, has been retarded. I hope this is going to be the last occasion on which this House will be called upon to approve additional taxes on cigarettes. I can assure the hon. Minister that although there has been no popular outcry, people are getting tired of having to pay this extra tax, which we feel is unjust and bears hardly on the poorer section of the population. It is a tax which is used by the Government to allow the better-off sections to evade that additional contribution which they should be called upon to pay.

[Inaudible.]

I do not know, I have never been within the portals of the Rand Club, but I believe the members there smoke cigars, which are not taxed at all. Whether they are Natal cigars I do not know. The fact of the matter is that it is from the pockets of the people who are deplorably poor that most of this £1,250,000 is being taken, and I feel we should tell the Minister that we have come to the end of taxation in that respect. I don’t propose to move an amendment, but I would like to register my protest against this tax, and I can assure the Minister that if next year he attempts any additional burden on cigarette smokers, I shall see to it that a very considerable amount of vocal objection is raised by the people of the country.

The hon. member who has just sat down has a peculiar manner of criticising a tax and then being unwilling to vote against it. It seems to me that the hon. member has developed political lockjaw. He is opposed to the tax on tobacco but he is not going to vote against it. As far as the tobacco farmers are concerned it seems to me that we cannot expect much from the other side of the House. The Minister of Labour is in his seat. As far as the Minister of Labour is concerned, too, the tobacco industry is in great danger. The hon. member for Pietersburg (Mr. Naudé) has already drawn our attention to the fact that the Minister of Labour with his wage laws, is engaged in giving the tobacco industry a death blow in this sense, that he wants the wage determinations to be applicable to tobacco co-operative societies. The Minister of Finance gave us the assurance that he did not want to kill the tobacco industry. If he wants to intervene on behalf of the tobacco farmers, let him have an interview with his colleague and persuade him not to apply this law to the tobacco industry, because with the Minister’s tax together with that legislation, they are engaged in giving a death blow to the tobacco industry of South Africa. It is remarkable that as far as the tobacco industry is concerned, we are practically getting no support from the other side. Where is the hon. member for Rustenburg (Mr. J. N. Conradie) today who is so proud of the fact that he represents the biggest tobacco-producing district in this country? Where is the hon. member for Lydenburg (Mr. Maré)? He is at the moment enjoying a nap while I have to plead against this increased tobacco tax. He is smiling. He is silent. But the time has arrived when he must protest. The Minister of Finance says that it is not the producer who pays this tax but the consumer. The Minister cannot deny that this tobacco tax has a direct effect on the tobacco industry as such. There are 40,000 tobacco farmers and we are also smokers; we are also consumers. The producers themselves have to assist in paying the increased tax. But what is more, if it had not been for the tremendous burden of taxation the farmers would have had an opportunity of getting a better price for their tobacco. Today there are approximately 40,000 tobacco farmers in South Africa, and as the hon. member for Pietersburg told the House the producers derive an income of approximately £2,000,000 from tobacco. That means an average income of approximately £50 for the tobacco farmer. Having regard to the fact that the tobacco farmers enjoy a meagre average income of £50 I think the Minister of Finance will realise why the tobacco farmers feel that an injustice is being done to them if the Minister of Finance comes along and squeezes something like £8,000,000 out of the industry. Some years ago, or some time ago, when the poor tobacco producer through the organised tobacco industry, asked the factories for an increase of only ½d. it was said that the tobacco industry could not bear it. But today the tobacco industry, this industry which the Minister is milking, has to bear this tax; the 40,000 tobacco farmers get something like £2,000,000 and the Minister gets approximately £8,500,000 in taxation. Do not forget that today you have to pay 2s. 1d. for a packet of 50 cigarettes. The Minister gets 10d. out of that in the form of taxation. The farmer only gets approximately 2d. for the two ounces of tobacco which go into 50 cigarettes. The farmer receives an average of 16d. only for a lb. of tobacco; 2d., therefore for two ounces. But the middleman and the Minister get 1s. 11d. In view of the fact that the farmer only gets 9 per cent. out of the industry while the middleman and the Minister get practically 91 per cent., one can well understand that the farmers are protesting. The hon. member for Rustenburg recently stated that he did not know whether or not we should protest, because he did not know whether the M.K.T.V. had already protested. The hon. member for Pietersburg has referred to telegrams which he received.

We have also received letters, and the Minister of Finance has received telegrams. The M.K.T.V. is protesting and other tobacco organisations are protesting. The Minister ought to take heed when the tobacco farmers protest so strongly. I think it is only right to draw the Minister’s attention to the fact that the tobacco taxes which were imposed by a previous Minister of Finance, Mr. Burton, brought about the downfall of that Minister. In 1923 he also levied high tobacco taxes, shortly before Wakkerstroom. I want to predict that we will have a repetition of Wakkerstroom. We shall tell the farmers at Piet Retief how we have to intervene on behalf of the tobacco farmers, while members on the Government side do not protest against the imposition of this tax. We shall inform the people at Wakkerstroom of these enormous taxes on this product. The Minister says that the tobacco farmers will be able to sell their whole crop this year. That is poor consolation. Is that all we can look forward to? Here we have an industry which was faced with a big surplus production before the war. The tobacco farmers thought that the psychological moment had now arrived to strengthen the tobacco industry, but the Minister is preventing that by means of these increased taxes. As a result of the overproduction before the war, climatic conditions and other circumstances, the tobacco industry suffered a great deal. The tobacco farmers are poor people. They thought that they would now be able to strengthen their position, but the Minister taxes this product and offers the poor consolation that we will be able to sell our tobacco crop this year. We expected, as the result of good prices, to be able to strengthen our position, so that we would be able to hold our heads above water when the setback comes. It is no use justifying the increased taxation on the ground that we are engaged in war. We have also been told that it is for the sake of social security. If the Minister will give us the assurance that this tax will not be of a permanent nature, but only of a temporary nature, and that it will disappear after the war, it will be of some consolation.

I should like to give the Minister the other side of the picture. I have in my pocket a packet of cigarettes for which I paid 2s. 1d.

Send it over here.

What brand is it?

It has come to my notice that these cigarettes are being sold to the Defence Department at 9s. per 1,000. At the price at which it is being sold at the moment, the tobacco companies get something like £2 2s. 6d. per 1,000; in other words, they are making millions of pounds profit on these cigarettes. Why does the Minister not see to it that these cigarettes are sold more cheaply?

I shall bring it to the notice of the Price Controller.

I was surprised when I discovered what price was being paid by the Defence Force; and then the tobacco companies are still making a profit of 10 per cent. The Government laid down that they were not going to allow a profit of more than 10 per cent. to the tobacco companies. They are therefore making enormous profits. If the Minister taxes the smokers he must also protect them. The people who smoke cigarettes are poor people, for the greater part. This tax ought to come out of the pockets of the manufacturers of cigarettes if they make an unreasonable profit.

I also want to associate myself with the amendment of the hon. member for Pietersburg (Mr. Naudé). I think this tax operates very unfairly. The hon. Minister will agree with me that the burden of taxation on the poor man is particularly heavy. That is the first point I want to make. The second point I want to mention is the tax on matches. May I discuss that?

Yes.

The hon. Minister stated that the tax which he is levying is largely on luxury articles, but I want to put it to him that matches can surely not be regarded as an item of luxury.

There is no increase in price.

In the towns one has electricity, but on the platteland one cannot do without matches.

This tax is not bringing about any price increases.

Why not?

Because the Price Controller will prevent any increase in price. It will not make any difference in price.

I want to associate myself with what the hon. member for Swellendam (Mr. S. E. Warren) said here. May I advise the Minister, in case he is still Minister of Finance next year, to read the evidence which was given before the Select Committee on Public Accounts before he comes to Parliament. Let him go into the huge profits which are being made by the United Tobacco Company. Unfortunately I cannot say what the evidence is because it has not yet been published. I can only tell the Minister that he will be surprised if he reads that evidence. I want to ask him to work out a system whereby this tax will fall, not on the consumer but on the company which makes these enormous profits.

I just want to put this question in connection with the matter which was raised by the hon. member for Swellendam (Mr. S. E. Warren). I do not know anything about the circumstances. I take it that cigarettes are being sold to the Defence Department at 9s. per 1,000, and that they are being sold to the public at £2 2s. 6d. per 1,000. I want to ask the Minister whether it is not possible for members of the public to buy cigarettes at the same price? We are told that at a price of 9s. per 1,000 provision is still made for a profit of 10 per cent.

May I at once explain the position. The position is that this tax is paid by the people who manufacture the cigarettes. We collect the tax from them, but the retail price which they receive for cigarettes is laid down by the Price Controller. The Price Controller was prepared to allow them an increase in the price, which is equivalent to the increased tax. But since the hon. member has drawn my attention to the evidence which was given before the Select Committee on Public Accounts, I shall bring it to the notice of the Price Controller.

It has come to my notice that the House has not yet discussed the difficulties of the tobacco producers. Various people have bold me that they are experiencing great difficulty in connection with non-European labour. The tobacco planter is experiencing great difficulties in obtaining labourers and he cannot proceed with his work. People have approached me who have had to travel about for days in an attempt to obtain coloured labourers. These people have to incur great expenditure, and now the Minister is imposing this tax on them. They have not got non-European labour and they are unable to do their work properly. Another heavy item of expenditure is the cost of transport. We all know that there is a great shortage of petrol today and that it is very expensive. It is not every farmer who has some means of transport for the conveyance of his products to the factories. He has to have it conveyed by other persons, and this results in extra expense. We feel, therefore, that in those parts where we live this tax will bear very heavily on the tobacco farmers. I want to ask the hon. Minister to make this tax somewhat lighter, or to abolish it altogether. I am referring to the new tax. The people who produce tobacco in those parts have to go without rest very often; they have to work from early morning till late at night. I have already visited farms where the wife and the children as well as the husband have to work at night. As has already been said, it is not the rich man who plants tobacco. It is the poor man. If the taxation burden is very heavy, the man will become discouraged and try to find some other refuge. We therefore ask the Minister to see to it that the burden of taxation is reduced in this case. The labour factor causes the greatest trouble as far as these people are concerned. I hope the Minister will heed this appeal.

Before this vote is put through, I want to emphasise the scandalous position which exists, namely, the fact that the farmer has to develop the tobacco with all the attendant production costs, pay all his interest and process the tobacco to a certain stage, so that the only thing which is left is the final processing by the tobacco factories. Notwithstanding that the farmer only gets 2d. for two ounces of tobacco. The Government levies a tax on 10d. on those two ounces. The unfairness of the position is not in the fact that the Government takes 10d. while the farmer only gets 2d., but the fact that the factories are allowed to make these colossal profits. One can hardly find words to describe the position. It is extremely scandalous. The farmer has to sweat to produce that tobacco for 2d.; the Government gets 10d. and then the companies make these huge profits. It is out of all proportion. The Government gets 10d. as against the farmer’s 2d. and the Minister can at least see to it that the factories are allowed a smaller margin of profit. See to it that the farmer gets at least 3d. or 4d. per ounce. The Government must think of the farmer and see to it that he gets at least half of the profits. The poor man has to pay this heavy tax today. The poor man’s only consolation is his pipe or his cigarettes; he has to pay a heavy tax on his tobacco or his cigarettes, while the farmer derives very little benefit from it.

Question put: That items 16 and 20 (d), proposed to be omitted, stand part of the motion.

Upon which the Committee divided;

Ayes—79 :

Abbott, C. B. M.

Acutt, F. 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.

Bowen, R. W.

Bowker, T. B.

Burnside, D. C.

Butters, W. R.

Christie, J.

Cilliers, H. J.

Cilliers, S. A.

Connan, J. M.

Davis, A.

De Kock, P. H.

Derbyshire, J. G.

De Wet, H. C.

De Wet, P. J.

Dolley, G.

Du Toit, A. C.

Du Toit, R. J.

Faure, J. C.

Fawcett, R. M.

Gluckman, H.

Goldberg, A.

Gray, T. P.

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.

Jackson, D.

Johnson, H. A.

Kentridge, M.

Latimer, A.

Lawrence, H. G.

McLean, J.

Madeley, W. B.

Maré, F. J.

Miles-Cadman, C. F.

Molteno, D. B.

Mushet, J. W.

Neate, C.

Payn, A. O. B.

Payne, A. C.

Pieterse, E. P.

Pocock, P. V.

Prinsloo, W. B. J.

Robertson, R. B.

Shearer, O. L.

Shearer, V. L.

Sonnenberg, M.

Stallard, C. F.

Steytler, L. J.

Stratford, J. R. F.

Sturrock, F. C.

Sullivan, J. R.

Sutter, G. J.

Tighy, S. J.

Ueckermann, K.

Van den Berg, M. J.

Van der Merwe, H.

Van Niekerk, H. J. L.

Van Onselen, W. S.

Waring, F. W.

Warren, C. M.

Williams, H. J.

Wolmarans, J. B.

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

Noes—30:

Booysen, W. A.

Brink, W. D.

Conradie. J. H.

Dohne, J. L. B.

Dönges, T. E.

Erasmus, F. C.

Erasmus, H. S.

Fouché, J. J.

Grobler, D. C. S.

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.

Potgieter, J. E.

Serfontein, J. J.

Steyn, A.

Strauss, E. R.

Strydom, G. H. F.

Strydom, J. G.

Swanepoel, S. 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 negatived.

Original motion put and the Committee divided:

Ayes—79:

Abbott, C. B. M.

Abrahàmson, 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.

Bowen, R. W.

Bowker, T. B.

Butters, W. R.

Christie J.

Cilliers, H. J.

Cilliers, S. A.

Connan, J. M.

Davis, A.

De Kock, P. H.

Derbyshire, J. G.

De Wet H. C.

De Wet, P. J.

Dolley, G.

Du Toit, A. C.

Du Toit, R. J.

Faure, J. C.

Fawcett, R. M.

Gluckman, H.

Goldberg, A.

Gray, T. P.

Hare, W. D.

Hayward, G. N.

Hemming, G. K.

Henny, G. E. J.

Heyns, G. G. S.

Hofmeyr, J. H.

Hopf, F.

Howarth, F. T.

Jackson, D.

Johnson, H. A.

Kentridge, M.

Latimer A.

Lawrence, H. G.

McLean, J.

Madeley, W. B.

Maré, F. J.

Miles-Cadman, C. F.

Mushet, J. W.

Neate, C.

Payn, A. O. B.

Payne, A. C.

Pieterse, E. P.

Pocock, P. V.

Prinsloo, W. B. J.

Robertson, R. B.

Shearer, O. L.

Shearer, V. L.

Sonnenberg, M.

Stallard, C. F.

Steytler, L. J.

Stratford, J. R. F.

Sturrock, F. C.

Sullivan, J. R.

Sutter, G. J.

Tighy, S. J.

Ueckermann, K.

Van den Berg, M. J.

Van der Merwe, H.

Van Niekerk, H. J. L.

Van Onselen, W. S.

Wanless, A. T.

Waring, F. W.

Warren, C. Μ.

Waterson, S. F.

Williams, H. J.

Wolmarans, J. B.

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

Noes—29 :

Booysen, W. A.

Brink, W. D.

Conradie, J. H.

Dohne, J. L. B.

Dönges, T. E.

Erasmus, F. C.

Erasmus, H. S.

Grobler, D. C. S.

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.

Potgieter, J. E.

Serfontein, J. J.

Steyn, A.

Strauss, E. R.

Strydom, G. H. F.

Strydom, J. G.

Swanepoel, S. 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.

I move—

1. (2) That the following new excise duties be imposed on wine produced in the Union:

[In terms of section nine of the Excise Act No. 45 of 1942 the above-mentioned increased excise duties on matches, cigarettes and pipe tobacco are payable on all such matches, cigarettes and pipe tobacco which were not delivered from the stocks of manufacturers or wholesalers before the 25th February, 1944, as well as upon any subsequent additions to such stocks. The new excise duties on wines are payable on all such wines which were not delivered from the stocks of producers, wholesalers or retailers before the 25th February, 1944, as well as upon any subsequent additions to such stocks.]

In the first place we want to object to the whole of this paragraph 2, and in the second place if we are not successful in our objection to paragraph 2, we want to move certain amendments to it. The reasons why we oppose paragraph 2 are that it is generally felt by the wine farmers, in spite of what has been said by the hon. member for Hottentots-Holland (Mr. Carinus) and the hon. member for Paarl (Mr. Faure) that this tax cannot be justified.

They don’t say so.

The hon. member was present at the meeting of wine farmers where such a motion was unanimously passed and he did not vote against that motion. He kept dead quiet there. When he was amongst the wine farmers he was in favour of a protest against the tax, but now the hon. member says something different. It was the hon. member for Malmesbury (Mr. J. C. Bosnian) or the hon. member for Paarl—I don’t know—who interjected …

It was neither of them.

Then it was someone who spoke on their behalf. In any case, whether they interjected or not I know that although these two members protested together with the wine farmers, they are going to vote today in the very opposite way to how they voted when they were among their fellow wine farmers.

What do the wine farmers themselves say?

The wine farmers will certainly be very pleased to hear that the hon. members for Paarl and Malmesbury who represent the wine farmers, sneer at members who attempt to obtain something for the wine farmers. The reason why the wine farmers object to this tax is because this is a tax which cannot be justified. It is out of all proportion to what the wine industry can stand. I can quite understand that if you want to get revenue you will turn to a prosperous enterprise to get the money you need out of that enterprise. You will go and tax a flourishing industry or a class of person who is flourishing. That is the principle which is generally applied. If we tax a person who can afford to pay, your tax is justifiable; but let us see whether that is so in regard to this tax on the wine farmers. The wine farmers’ product is not even sold in its entirety. If the product could find a market where it could be sold without difficulty at a good profitable price one would have no objection to the industry bearing its legitimate tax. But we have this position in regard to the wine farmer, than 63 per cent. of his product can be sold and 37 per cent. of his product is a surplus over what can be sold. That surplus has to be disposed of in some way or another without any profit. And now the Minister comes along and selects this industry—an industry which finds it impossible to dispose of one-third of its profit—and he taxes that industry in this way. I wonder what would be said if that happened to any other agricultural product where 37 per cent. could not be sold. Assuming he taxed the product of his good friends up North—the mining magnates and the diamond magnates—assuming he taxed their product at a time when they could not sell it, what an outcry would not there be. They would object so strongly that the Minister would never even dream of putting on such a tax. Now, let me also say this— there is only one other country in the world which has ever taxed its wine. We are the escond country to do so. The other country which taxes wine is Australia. But the money collected from that tax on wine does not go into the Exchequer, it goes back to the wine industry, because they have the same trouble there as we have here in South Africa, that they cannot find a market for the whole of the wine farmer’s output. They want to encourage export there, and the tax which is imposed on spirits and sweet wine, is returned to the industry in the form of a bonus on export, to enable the industry to get rid of its surplus. We can say therefore that so far as I know and also so far as the Minister knows, South Africa is the only country which taxes its wine. Now the Minister will perhaps say that it is all very well to level this criticism, but that it is not the wine farmer who pays the tax, but that the consumer has to pay it. I agree that that is so in the first instance. The consumer pays in the first instance, but the Minister knows as well as anyone that if you raise the price of an article, whether it is by taxing it or by simply raising the price, you are going to sell less of that article than you would otherwise have done. You cannot get away from it. It is no use saying that more wine and more brandy are sold today than before. It is true that more is sold today. These are prosperity times; the Government is creating inflation in South Africa, inflation which is making it possible for many people who could not afford to do so in the past, to buy the product of the wine farmer. But the Minister cannot get away from the fact that if the price is raised, the sale must go down as compared with what it would have been if the price had not been raised. If the price of the product of the vine had not been increased it would have contributed very greatly in these days of false prosperity to get rid of the accumulated surplus of the industry, and to get the industry back on a sound basis. There is another point in this connection. The wine farmer has been taxed repeatedly. But there is one thing he knows, and that is that once a tax is put on it is never reduced. He has never had a tax taken off, except in one instance years ago when a small amount was taken off. But taxes have been increased from time to time. When this question was discussed in this House on a previous occasion we said to the Minister: “Look here, if you are going to put on this tax we want you to give us a promise that it will only be regarded as a temporary war measure.” The hon. member for Paarl said in this House, and the hon. member for Hottentots-Holland also said here: “Yes, in the circumstances we do not think the tax justified but we shall get the Minister to give us an assurance that it is only a temporary war measure, and that it will be taken off as soon as possible after the war.” We then put a pertinent question whether it was going to be a temporary war tax, and the Minister’s reply was: “No, I cannot say so.” He explained that he could not bind a future Minister of Finance, and he could not give any promise which might make things difficult for a Minister of Finance coming after him. He could not give a promise which a future Minister might find it difficult to give effect to. While he takes up this attitude, it is most illuminating to notice that only today we passed the extra transfer duties in respect of which the Minister said that they were only a temporary war tax.

They would only last as long as the war lasted. If the Minister can say that in regard to transfer duties, why cannot he give us a similar promise in regard to wine? If he could give us a promise, the wine farmers would know that this tax would be levied from year to year only for the duration of the war, only so long as the Minister needed the money. Why can he make a promise in regard to transfer duties and not in regard to wine? Let me tell the House why. It is because the Minister of Finance has not brought this tax in as a temporary tax but as a permanent tax which he wants to keep. If he had meant it to be a temporary tax he would have done the same thing as he did in regard to transfer duties. The fact that he did not do so when he was pertinently asked to do so by members on this side of the House, and also by members on his own side, goes to prove that this tax has been introduced with the object of keeping it there for always. And the farmers object to that. Now, I want to explain my objection to this tax very briefly, because I think that most people do not realise how much the wine industry is really paying in taxation. The tax which years ago was placed on the product of the wine farmer was comparatively low. The tax on wine and spirits really started in 1919. Until that year the tax on brandy was 3s. per proof gallon. That year, after the war, when the country was faced with financial difficulties the tax was practically doubled, and it was raised to 6s. per imperial gallon. It remained at that figure until 1929. In 1929 the tax on the product on the wine farmer was more than doubled. It was suddenly raised from 6s. to 12s. 6d. per gallon. In 1942 it was raised to 15s. and in 1943 it was raised to 25s. per imperial gallon. On brandy the tax therefore went up between 1919 and 1943 from 3s. per proof gallon to 25s. per imperial gallon. I don’t know whether people know what that means. Let me put it this way: If a wine farmer sells wine to make brandy and he gets 10d. for it, the State imposes a tax of 4s. 2d. on that 10d. worth of wine. If a transaction in brandy takes place involving £1,000 the dealer or the manufacturer of the brandy gets about £400. The Government gets £510 and the wine farmer gets £90. On a product for which the farmer gets £90 the Government gets £510 in tax. Many people outside this House and even inside this position, that on an ordinary dry wine high the tax is. If a tax of that kind is imposed it cannot but hamper the sale of the product to a very great extent. That tax was there already, and now the Government comes along this year and imposes a tax on fortified wines and on sparkling wines. This is the first country in the world to impose a tax on wine because the tax in Australia goes back to the wine farmer. We now have the position, that on an ordinary dry wine of the canteen type, the type of wine bought by the ordinary man in the canteen and in the bottle store, for which the farmer gets 1s. 2d. per gallon, 1s. 10d. is paid to the State. The tax is 1s. 10d. on a product for which the producer gets 1s. 2d. In regard to sparkling wines it is even much worse. If the farmer sells wine which is turned into sparkling wine he gets 1s. 2d. to 1s. 6d. per gallon for it, and then the Government gets 7s. 6d. on that gallon of wine by way of tax. In other words, if I as a wine farmer sell wine in the trade which is turned into sparkling wine, I get from £9 to £10 per leaguer for that wine, and I have to handle it very carefully and pay a lot of attention to it, to get a good quality, and say the transaction amounts to £100, the Minister of Finance comes in and on that wine for which the farmer gets £100 he imposes a tax of no less than £500. [Time limit.]

I want to congratulate the hon. member for Humansdorp (Mr. Sauer) on the able manner in which he put this matter before the House. He has no wine farmers in his constituency, but he lives among wine farmers and is a wine farmer, and if anyone is entitled and is able to speak on this subject he 1s. I want to congratulate him on the able manner in which he explained the position and on the way he pleaded the cause of the wine farmer. Unfortunately the time limit stopped him, but I hope he will have the opportunity of speaking on the subject again at some later stage. This tax was discussed by the wine farmers at two meetings—at one meeting at Robertson and at one in Paarl. The one held at Robertson was held for the farmers behind the mountain and the other for the farmers in front of the mountain. At both meetings the whole matter was very thoroughly explained. There was no question of making party capital out of it. It was discussed by farmers without any question of party. It was only discussed on its merits. Not a single farmer who attended those meetings voted against the protest. The hon. members representing Paarl and Malmesbury were present and they confirm the fact that the whole question at those meetings was discussed on its merits and that nobody tried to make party capital out of it. I want to draw attention to the fact that abstainers in this House on previous occasions have proposed an excise on wine. The Minister levies a higher tax on brandy and representatives of the abstainers suggested that an excise duty should be put on wine. The Minister replied that he was not going to do so and that there was a good reason for it. He said that the wine farmers were also brandy farmers. I don’t know of a single farmer who makes table wine and who does not also produce distilling wine. Farmers produce both wine and brandy, they cannot do anything else. The market for table wine is restricted. In ordinary times the market will only take about 40,000 leaguers. In times like the present the quantity of table wine sold has gone up to 60,000 leaguers, but there are hundreds of farmers who go to the expense of making table wine and who are afterwards compelled to turn it into distilling wine and to sell it at a reduced price. I live among those people. I am a wine farmer myself and I know what they think and what they say, and they are not all Nationalists. There are S.A.P. men among them and they feel very heartsore about this, because they feel the Government is doing something which is harming them. They feel very strongly on it. Those who speak their minds and who condemn the Minister for the step he has taken say that we should try and talk nicely to him and we should ask him to give us a promise that he will take this tax off after the war is over. We all realise that with this fictitious prosperity in this country at the moment there is a lot of money in circulation, and there are people who drink wine and brandy because they have money to spare. But experience has taught the wine farmer that if he is taxed once, the tax is never taken off again. I make this prophecy, that as long as this Government remains in power this tax will not be taken off but will be increased from year to year until the wine farmer’s back is broken. The Minister has grown up in the “Boland” but he has never had anything to do with the wine farmers. Does he realise what type of pepole he has to do with when he deals with the wine farmers? Does he realise that the whole of the Boland and the whole of the Western districts depend on this industry? Raisins are made, fruit is produced, beans, peas and potatoes are grown, but the wine industry is the backbone of these parts. Now, just let me tell the Minister this, that the extent to which the price of wine has gone up during this war does not justify the tax on wine and brandy. I am going to give the Minister figures from beginning to end just now so that he can see what the position is. And then we find the Minister of Native Affairs going round his constituency and telling the people at numerous meetings that Gen. Smuts is the father of the K.W.V. But when he was criticised in his own constituency on account of a farmer having been compelled to pull out his vineyards because of the excise law which we passed in this House, he told the people that it was not this Government’s act which was responsible, but that it was Mr. Warren’s Act. He did not know that it was an exicse law brought in by the present Minister of Finance, a law which the Nationalists had opposed and on which they had divided the House. A man in the constituency of the Minister of Native Affairs who had distilled wine and who had made a few pennies had been compelled to pull out his vineyard. The wine farmers are engaged in this industry because they get a stable price for their product and not because they make such a lot of money out of it. All other products in the country have gone up more than wine so far as prices are concerned. The wine farmers who also produce other commodities tell us that their dairy farming, their vegetable farming and their fruit farming make it possible for them to lead a decent life now. I have a return before me of the distilling wine prices, and I want to put those prices before the Minister and before the House. Let me start with the year 1924. The Minister knows that the Control Act was passed in 1924. It is true that the present Prime Minister did introduce that Act originally. It was introduced in the last year of the Smuts Government and the Prime Minister introduced the Bill. But the Minister of Native Affairs should know that it was an agreed Bill and that it was Gen. Hertzog’s influence which made it possible for the Prime Minister to get the law on to the Statute Book, and then he travels round the country and tells the people that the Prime Minister is the father of the K.W.V. He is the stepfather, and now is murdering his child. The year 1924 was not a prosperous year. That was the time when the Nationalist Party had to take over the Government of the country because the S.A.P. had landed it in such a mess that they could not carry on. That was when Wakkerstroom fell. I would not be a bit surprised if it fell again. The prices of wine were as follows:

In those days the Nationalist Party was at the head of affairs:

Do hon. members know that a leaguer of distilling wine means a ton of grapes?

Why don’t you sell the grapes?

It means that the farmer has to grow 2,000 lbs. of grapes, has to gather them off the vines and process them, and then he has to supply his leaguer of wine to the K.W.V. for which he gets about £4. Hon. member can work out for themselves how much he gets for a lb. of grapes. It means that he sells 20 lbs. for 1s.

How many grapes do you grow?

Oh, please keep quiet, we are dealing with serious matters now. This is not a circus. In 1943 we got up to £5 per ton. We got as much as that by putting up the price which the merchants had to pay. But we have now got to the end of that price. We cannot put up prices any more. The merchant’s price stood at £7 18s. 9d. and during last year we raised it by 10 per cent. It is a little over £9 now. And while the merchant pays that, the farmer only gets £5 0s. 6d. In 1943 there was a surplus of 47-3/7 per cent. After the outbreak of war the price of distilling wine dropped. In 1941 it was £3 11s. 10d. and next year it was £4 2s. I don’t think hon. members in this House realise what the position is. The co-operative society which represents the wine farmers is an ordinary co-operative society like any other co-operative society. The 1924 Act gave the co-operative society the right to fix the price which the wholesale trade had to pay the farmer. But in return for that privilege the co-operative society is compelled to take the surplus from the market every year. If it fixes the price and if the merchants are not satisfied with that price they can go to arbitration and actually they have already done so. Those are the circumstances under which the organisation has been able to carry on, and by following a sensible policy we have always succeded in getting a price at which the farmers have been able to make a living—more or less. The price is not a high one. In 1920 we got £25 against which we are now getting £4 5s. By means of our organisation we have stabilised the industry but if the organisation were to drop out today we would have to fall back to the position which prevailed in the olden days when the best quality table wine was sold at from £2 to £2 10s. per leaguer. I want the Minister of Finance to realise that those times, times such as the wine farmer has already experienced, will come back, and possibly they will come very soon. We as wine farmers realise that people can get on without wine and brandy while they have to buy mealies to live … [Time limit.]

Mr. Chairman, I think the majority of members of this House and the overwhelming body of public opinion will be in favour of this tax, and will regard it as something that should have been done years ago. I personally welcome it. I admit that there are differing points of view in regard to the use of liquor. One has also to remember that the country has not adopted nor is in favour of a policy of prohibition or anything of that kind. We, who hold definite views in this matter, consider that from the standpoint of the best interests of the country as a whole and not of a particular industry, there is no reason why wine, and especially this fortified wine, should be protected from taxation any longer.

Do you know what fortified wine is?

The tax, after, all, will be paid by the consumer, and a large proportion of the consumers are already suffering heavily from the excessive consumption of fortified wine. I want to point out that this tax will ensure that the industry itself, in respect of the wine, shall now make its contribution towards the cost to the country of the economic and social casualties arising from the operations of the liquor trade in South Africa, and from the abuses which occur in connection with the consumption of liquor. I wish to say, Sir, that it is only right that some contribution should be made towards the expenditure incurred in dealing with those who suffer from those abuses. I have taken out the figures of convictions for drunkenness for the year 1943. It is perfectly obvious that the official figures do not indicate in any measure the total amount of drunkenness in South Africa. The total number of convictions for 1943 was 51,830 as compared with 40,843 for the year 1938. But a significant feature of these figures is that the coloured people who are largely the sufferers from fortified wine number 23,943 of the 51,830 convictions for drunkenness.

Out of 51,000?

Yes. I have indicated to the House that these results cause a considerable expenditure from the Government exchequer in dealing with convictions, rehabilitation and other matters connected with the social welfare of victims of the drink evil. I have in my possession a record from “The Tribune” of June, 1943, that in 1936, during the session of the Synod of the Dutch Reformed Church at Cape Town, a petition was handed in signed by 618 coloured teachers, which included the statement—

At a social survey conference held in Cape Town last year, Dr. T. Shadick Higgins, Medical Officer of Health for the City of Cape Town and Professor of Public Health, University of Cape Town, said—

I think I have given sufficient information to indicate that the abuse of liquor is reflecting not only upon the industry itself but very seriously affecting the social and economic welfare particularly of the coloured people in the Western Province. I am very glad the Minister has discovered this fresh source of taxation. Before the war there was not sufficient money to carry out certain measures of social reform. Now we are finding this money, and I hope that this taxation will be a permanent feature in our fiscal system and that businesses which induce vices such as gambling and intemperance of any kind shall be subject to such taxation as will enable the Government to deal with the casualties arising from these weaknesses in human nature.

In regard to this tax I just want to touch on a few points. In reply to the hon. member for Roodepoort (Mr. Allen) I want to say this, that if this tax could possibly have the effect of putting an end to drunkenness we would all vote for it, but the hon. member knows perfectly well that taxation is not going to do that and that it is not going to have any effect on drunkenness. I agree that everything possible should be done to counteract drunkenness, and in that respect the hon. member can depend upon the co-operation of this side of the House, but it cannot be done by means of a tax on the farmer’s product. But I just want to say that in regard to this question the same argument applies as in regard to tobacco, namely, that there is no doubt that higher taxation must lead to a drop in consumption. Now that the Minister has told us that provision has been made by the price controller against the price of matches going up as a result of the additional tax on matches, I want to ask the Minister to make the same provision in regard to wine, if he insists on putting on further taxation. Let me tell the Minister why. You find right throughout the Union that unheard of prices are charged for local products, especially for wine. I myself have had to pay 6s. in a hotel in Johannesburg for ordinary light wine— Witzenberg. It is scandalous but you have to pay it. As the tax is now being raised the argument will perhaps be used that the price must be raised even higher than 6s.

At 6.40 p.m. the Chairman stated that, in accordance with the Sessional Order adopted on the 25th 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 20th April.