THE LAND TAX

Ashburton Guardian, Volume 56, Issue 264, 20 August 1936, Page 6

THE LAND TAX

GRADUATED SYSTEM OPPOSED.

THE POSITION OF MORTGAGEES.

DEPUTATION TO MINISTER, .Per Press Association.) WELLINGTON, This Day y A joint deputation stated by Sir William Hunt to be representative of all parts of the Dominion, and consisting of men genuinely disturbed by the graduated land tax., waited on the Iron. W. Nash this morning. Sir William Hunt said the weight of the tax would fall much heavier than the tax condemned in T 924, because there would be no allowance of 5 per cent, on thei taxable value of land. The proportion of unimproved value to capital value varied so enormously in different parts of New Zealand, which meant that the tax would be very unequal in incidence. It would be felt mostly by sheep farmers, also by some of the larger dairy farmers. Sir William Hunt stressed that the position of farmers was bad, causing Mr Nash to ask: “Do you suggest that all farmers’ income is below cost ? Sir William Hunt: I do.

Sir William went on to say that it would be very difficult for them to carry on. The biggest mortgagee of the land was the State, and any loss would have to be borne by the taxpayers. The next biggest were the trustees, such As the Public Trust, Trustee Companies and private trustess, and most of the mortgages were tied up for the benefit of women and children. The third biggest were the life insurance companies, which had enoumous sums representing hundreds of thousands, of insurance policies taken out for the benefit of Avomen and children, and leal? out. Coming to the cities, Sir William Hunt said that if business firms were not given the 5 per cent, allowance many would have to pay out from their earnings 8s 6d to 11s 6d in income tax, that was an excessive burden that would halt the restoration of enterprise. A reduction of 5 per cent, in the taxable value of land would be a great help to the larger farmer and to city businesses. He further suggested" full mortgagee exemption. It applied to £7500, but disappeared at £15,000. People with large mortgages, having to pay the full value in land, tax, were going to have practically no income. He urged that a hardship clause should be included in the Bill because there was going to be some very difficult cases to deal with and some tribunal would have to be set up to handle them. The proposed taxation as it would affect the farming community was stressed by Mr W. W. Mulholland (president of the New Zealand, Farmers’ Union), who appeared on its behalf and presented 12 points in which the tax offended and submitted that the farming community was entitled to the same treatment as other sections of the community; that a man should not be penalised for taking a large block of poor country, and that the tax would press heavily on second-class country not suitable for subdivision and on which partnerships should be encouraged. He also submitted that young men with courage and enterprise should be encouraged to take up areas of poor land and not be penalised by being taxed on debts. A young man without much, capital behind him would be at a, disadvantage compared with a wealthy man who could pay off the place and therefore not be taxed on the mortgage. Mr Mullholland recalled the finding of the 1924 Taxation Committee that the graduated tax was no longer required for breaking up large estates and that it was preventing development. The tax meant that a farmer must reduce his expenditure in other directions. Naturally, maintainance of properties was the first item to be reduced, which not immediately but ultimately lowered production seriously. A similar proposal in 1929 caused so much hardship that a special Royal Commission was set up to deal with applications for relief. In 63 per cent, of cases the tax was remitted in full; in 17 per cent, partially remitted, and no, relief was given in only 20 per cent. There should be no class distinction in the levying of taxation. The contribution of each citizen toward the upkeep of the State should be according to income. Ability to pay, the Union suggested, should be the basis of all taxation. Mr Nash said there were a number of anomalies in connection with land tax procedure. One of the main reasons that actuated the Government in reintroducing the graduated land tax was its operation in 1931, and to the extent of it therein in 1931 those whonow owned land were no worse off by the payment of land tax to-day than in 1931, assuming other things equal. The Government’s objective was to get the community value for the community and, if there were ways and means of doing it they would do it. “If we can get the added value that comes to land by the expenditure of enterprise associated with the activities of the Government and local authorities, we will take it,” said Mr Nash, who drew a- distinction between city land and country land,. The farmers’ profit was totally different from that in the city. It was essential that production must increase if the country were to prosper, and even though millions were added to values, the country could be developed only by increasing production. It would be wrong for the Government to do anything that would stifle the best utilisation of land,. He was prepared to look into every matter raised. He said the Government intended to adjust the position as between mortgagee and mortgagor before the month was out. He said that before the Bill came down he will discuss it with Sir William Hunt, Mr Mullholland and Mr Machin.

THE MINISTER’S FINAL WORDS. WELLINGTON, This Day. A definito statement that it was not tho Government’s intention to amend the land and income tax law this year was made by the Hon. TV. Nash'to the; deputation of farmers and business men. Mr Nash’s last .remark after summing up the position was: “Please go away satisfied that you TTave no promise other than the fact that we will look into every word that lias been said.”

Tho Rt. Hon. G. TV. Forbes introduced the deputation.