RELIEF TAX.

Auckland Star, Volume LXVIII, Issue 127, 31 May 1937, Page 3

RELIEF TAX.

FARMERS' VIEWS.

ASSESSING INCOMES. ACTIVITY OF INSPECTORS. Numerous complaints have been made lately by farmers to their members of Parliament and to local organisations against the activities of energetic taxation inspectors who are carrying out an investigation of farm incomes for employment tax purposes. The inspectors have demanded from farmers receipts and dockets which only the most methowhere the necessary details of expenditure have been unobtainable farmers tuer have been unobtainable farmers have found themselves deprived of the right to make deductions from the amounts assessable for tax. "The inspectors are asking for information which the average farmer is quite unable to give," remarked Mr. A. C. A. Sexton, M.P. for Franklin, this morning, in stating that there was much dissatisfaction in his electorate. He explained that the change made last year under which the administration of the

employment tax was taken from the Labour Department and placed under the control of the Land and Income Tax Department, had resulted in a general tightening up. Compared with the income tax inspectors, the officials of the Labour Department were merely amateurs In the combing of taxation sources, and the vigilance and thoroughness now brought to bear on the task had made farmers more acutely conscious than previously of the peculiarities and unfairness of the method or assessing their incomes. Income Easily Verified. Air. Sexton said the farmer usually had little difficulty in arriving at his iiKome. The cheques for wool and butter were the main items, and these were easily verified. Next were the amounts received frVim the sale of pigs and other live stock, which most farmers could set down without much trouble. On the other side of the balancesheet, however, there was a multiplicity of payments, many of them small and irregular. It was exceptional for a farmer to keep a complete record of these outgoings, and when the time for filling in the taxation form arrived he had to guess to some extent. Possibly the only record existing was that contained in the books of the nearest store, where the farmer habitually cashed his cheques and purchased the requirements for his farm and home. Of course, no shopkeeper could go through the immensely complicated process of drawing up statements for the guidance of his farmer customers at the end of each, year. So the farmer, if he had failed to retain his dockets, was without the information. It was well known to inspectors and others, continued Mr. Sexton, that a considerable part of the expenditure of which farmers possessed no record of any kind was represented by purchases for the farm, that is, in the course of production, but the inspectors were required to check up on all payments. If particular sums could not be verified the farmer lost the right to deduct them from the total when the tax was computed.

A Suggested Remedy. When asked whether this position could be remedied without a complete change in the basis or method of assessing the tax, Mr. Sexton had two suggestions. One was the obvious advice to all farmers to file all dockets and receipts, however small the sums involved. The other was that much information had been recently accumulated in the hands of the mortgage adjustment commissions which should reveal fairly accurately the average expenditure of a farmer on his farm. On the basis of this information, said Mr. Sexton, it should be possible to fix a proportion of deductible income for all farms. If the sums shown in the returns exceeded this proportion the farmers should be called upon to produce documentary proof. "That would save a lot of trouble," concluded Mr. Sexton, "and it would also reduce the cost and annoyance of the tax." Too Many Loopholes. Mr. A. E. Robinson, secretary of the Auckland provincial branch of the Farmers' Union, said the present method of assessing the tax was unfair for a number of reasons. It did not allow the exercise of discretionary authority by the inspectors in the large number of instates where farmers could produce reasonable evidence ' that expenditures had 'been incurred, but could not be proved by dockets. It was particularly hard on the small dairy farmer in the poorer districts of North Auckland, the King Country, Coromandel, Raglan and the pumice areas of the province, whose farm maintenance costs were usually high in proportion to their incomes, and whoso butterfat cheques were generally paid to the local storekeeper in return for goods. It operated against Maoris and others who were often conscientious and industrious farmers, but knew nothing of the keeping of accounts. And it violated some of the most important canons of taxation, in that it was cumbersome, that it contained loopholes which all the vigilance of inspectors could not close, and that its yield of 8d in the £ was comparatively small.