NEW LAND TAX.

Press, Volume LXV, Issue 19732, 24 September 1929, Page 11

NEW LAND TAX.

Amended Proposals.

FARMERS DISSATISFIED.

Further Relief Urged.

Mr B. W. Hawke, M.P., who sent an apology, referred to the hardship clause in the Bill. His letter stated that he felt sure that justice would be done the land-owners. Mr Hawke arrived during the progress of the meeting. Mr Norton Francis (president), who occupied the chair, said the attendance was surprisingly large, in view of the inconvenience occasioned to many of those present by attending. The Chamber of Commerce had pleasure in assisting the farmers in any way it could. Several country land-owners, following the meeting of the Chamber when a protest was voiced against the proposals, had asked whether it really intended to take any action, and he had assured them that the Chamber would do everything possible to have the projected legislation amended. They were present to decide how best to offer constructive criticism of the Land and Income Tax Amendment Bill.. He had hoped that the members of Parliament would be able to attend so that they could understand the feeling of the farmers, and the meeting would be the means of informing them as to their opinion of the proposals. All of the farmers' organisations had already been represented on a deputation to the Prime Minister, and had protested against the increase in the special land tax. In response to the deputation representing the men on the land, Sir Joseph Ward had said that he felt that many land-owners were not bearing their fair share of taxation, he favoured a hardship clause, so as not to cause injustice to anyone, and the Government desired only an enactment, which would ensure fair incidence of taxation, without injury to individuals. Income Tax Favoured. The conference representing the rural interests had adopted a resolution in favour of a graduated income tax as the fairest way in which to raise the revenue required. The new land tax, is many cases, -would be up to twenty times the assessment tinder ordinary income tax. "I ask yon if that is fair!" •aid Mr Francis. The proposals must result in disturbed economic conditions, bringing increased unemployment and farmers' finance would again be difficult, as mortgagees would Decome nervous about their security. The Council of the Chamber was of opinion that there Were other means of forcing subdivision of the large estates. If the Government did want to do this, surely there was some other way of doing it, rather than by inflicting such a grave injustice. The Council thought the fairest way was by the graduated income tax, the same as the various farmers' associations favoured. It considered that the farmers should pay their fair share of taxation, but it was against a payment out of all proportion to their earnings. (Applause.) "What we want to do," said Mr Francis, "is to consider the amending of the Bill, and leave it to be understood that we object to the principles of the Bill, and to suggest how it can be amended so as to avoid hardships. When the Post-master-General (Hon. Mr Donald) had been in Christchurch last week he had received a deputation representative of the Chamber, owing to the inability of the Prime Minister to do so. Many farmers, many solicitors, and farmers' agents had been putting in to the Chamber lists showing how the proposals would affect North Canterbury landowners. It had a list of 180 farmers, and every ease showed that the proposed land tax would be a most unfair imposition, and in many eases would cause ruin to the owners. Mr Donald told them that he thought that when 1 they saw the amendments to the proposals, their objections would disappear. So the amendments were studied closely, and another column was made to show the difference they would make. It was seen that they made very little, I and in some of the worst cases no difj ference at all. Some of the men on the land had made no money at all in recent years, yet under the Bill they were being asked to pay £SOO a year m taxation. A Capital Levy. "If that is not the capital levy, I do not know what It is," said Mr Fran, cis. Some of the land-owners would be Paying 10b in the £, under the proposals, and they all knew that under ordinary income tax they had to go | £B7OO per annum before the tax was j 4s 6d in the &. Mr Francis read the i following extracts from the report of I the 1922 Commission on taxation:—-Con-sideration was given to the fact that ! a number of land-owners have, during | the_ past season, been obliged to pay ! their land tax, or a portion of it, out of capital. There are undoubtedly many I cases of hardship in this respect. The Commonwealth of Australia, and some of the States, make special provision for rebate of the land tax in certain cases of hardship. The Committee considers that where a land-owner can prove conclusively to the Commissioner for Inland ; Revenue that, without deducting interest on borrowed money, he has no profits on which to pay income tax, and this notwithstanding the fact that he has worked his property in a proper and workmanlike manner, the Commissioner for Inland Bevenue should have power to remit that portion of the land tax which is really being paid out of capital. From the evidence put before it the Committee has come to the conclusion that the graduated land tax, which was originally imposed from the point of view of bursting up large landed estates, is now no longer required, and that it now has the effect of preventing the development of muob of our land. . , . The Committee is therefore of opinion that the presenl graduated system of land tax should ultimately be abolished in favour of a flat rate, with a reduction on the smaller holdings, together with safeguards to I ensure that the land is properly worked, [ and not merely held for speculation. "One wonders what members of the Commission would say to the Gfoverni meat's present proposals," he re-

Seven suggestions for lightening the burden of the Government's new land taxation were approved for submission to the Prime Minister (Sir Joseph Ward), at a largelyattended meeting held yesterday afternoon under the auspices of the Canterbury Chamber of Commerce at the request of North Canterbury land-owners for the purpose of considering the effect of the amendments to the Budget proposals as set out in the Finance Bill now before Parliament. The Chamber of Commerce Hall was crowded by a representative attendance of farmers.

marked. "All our time should be devoted to a consideration of how the Bill must be altered if the hardship to individuals is to be avoided." Mr Machln's Address. Mr W. Maehin, chairman of the Economics Committee of the Chamber of Commerce, said that his only reason for moving the motion was that he had been brought in contact with a large number of the 15 per cent, of farmers who would feel the pinch of the shoe of the taxation proposals. He had bees struck by the fact that a great dea 1 of hardship would be imposed by the proposals. He would briefly preface the motion by putting forward three points. The first one was that no one really objected to paying his share of the taxation of the country. No one liked to be taxed, but recognised that the Government had to raise revenue by this means. It was also agreed that the principle of subdivision of land into as many hands as possible was a fair principle, which had made New Zealand what it was to-day. Again he Would like to make it clear that no one was present to make po'itical capital out of the position, but to discuss it as a serious matter affecting the country as a whole. He wanted to say that the proposals Of the Finance Bill we'e thoroughly unjust and inequitable. The Government had stated that those land taxes were not an alternative to ineome tax, or income tax in another form, but were solely for the purpose of promoting sub-division. The Prime Minister had stated that the super tax commencing at £14,000 was doubled at £30,000. He asked why the Government should stop at double the amount. If the offence was such a heinous one, why should the Government stop as the offence Was increased according to the Size of the holding. It had to be remembered, too, that all increases were to be made this year. Some farmers had already made their subdivisions; yet would be mulcted on Super tax to-day. Their apportionments had been made, and everything settled and now came the demand for super tax. No matter what tax was passed on to them, it was a fact that some farmers would be unable to subdivide. "A Fatuous Proposal.'' In some cases the Government had Written to farmers stating that it recognised that their land could not be subdivided. It was surely fatuous, therefore, to impose super land tax if it Wfts admitted that subdivision could not take place. The Chamber had gone into the question and had prepared 180 cases, showing how the farmers concerned would be affected. Of these 24 made losses, paying taxation from £5 to £1269, an average of £BO2 each, or £7244. In 93 cases the average income wai 41000, and the old tax £163, whereas the new and old tat would amount to £3OO. He asked what such an additional burden would mea&f It would mean discouragement, loss, and depression. It would mean in some eases that a boy would have to be taken from school or forego his secondary education, It-was grossly unfair to impose such taxation this year, and he would propose that everybody concerned be given until the year commencing March 31st, 1931, to pay it. The whole method of the super tax was inequitable. The offence got no worse at double tax, and there was na offence at all if a man could make sufficient ineome tax. If he could not, beeause of a bad year with bad prices, he was to be taxed on his losses, thug having misfortune piled upon his misfortune. Assuming that he could pay it, then 85 per cent, would go oft the market together, which could cause the price of land to go down, and create a bad position, as mortgagees would become restive. Mr Maehin said that he had been told that land in the North Island was worth from 18s to 40s per sheep; those present knew what the position was so far as Canterbury was concerned. If it were possible to put the land in the South Island on the same basis as* that in the North Island, those in this Island would not be made to suffer as would be the case in the present circumstances. Mortgage Exemptions. Concetiiing mortgage exemptions, Mr Maehin said that they previously commenced at £IO,OOO and ran out at £15,000, but now it was proposed that they should commence at £7500 and run out at £15,000. The small man was said to be the Dominion's greatest asset, yet it was proposed to increase his taxation enormously. For instance, on £10,250 there would be aa increase of 766 per cent.; on £10,500 of 383 per cent., and on £10,730 of 256 per cent. This would mean that the men con* J cerned would not get the equivalent of j the wages of a good artisan. j Mr Maehin would pTopoie that there should be exemption of all mortgages up to £15,000, and that there should be, no super tax at all on any mortgage. Commercial concerns worked on overdraft b; yet what was a mortgage but aa overdraft T Regarding the Hardships Commission, it was proposed that the Commission "may" grant relief, but in the speaker's opinion the word should be "shall." The Bill was a one-sided one, not touching the case at all, and it would not help farmers out of their difficulties. It was fatuous to impose hardships and then bring down machinery to relieve them. The meeting was not asking for merey, but justice, and considered the Government proposal nothing but a capital levy. Every subject of the State had a right to justice on any ground relevant to the case. Nobody objected to pay his fair share of tax," but he expected from a British Government fair treatment all reund. When the Government was worsted on an injustice to some land-owner, it said that it must have revenue. When urged to make such taxation equitable, it said that there must be subdivision. The Government said that the avoidanee of taxation could not be defended, and it was not being defended. It said that large aggregation could not be defended, and it was not being defended. If an individual was avoiding his obliga-

lions, II vm not aa exeuse for the j Government to perpetual* M injustice. J The meeting was not out to justify either avoidance of taxation, or land aggregation. The Resolution. Mr Maehin moved:— That this meeting considers: — (1) That in many cases the burden of land tax and special tax as proposed by the Government is so inequitably large that similar provisions to those of Sections 30 and 31 of the .Land and Income Assessment Act, 1891, should be re-enacted. (2) That relief in taxation should be granted to tliose taxpayers who own land which, in the opinion of a properly constituted tribunal after hearing evidence, is unsuitable for subdivision. (3) That in order to give landowners the opportunity of acceding to the wishes of the Government in subdividing and Belling portions of their holdings, the penalty of special tax shall not take effect until March 81st, 1931. (4) That the Government be requested to grant full exemption for mortgages in respect to ordinary land tax to those land-owners owning land the tuximproved value of which does not exceed £15,000, and to grant full exemption for mortgages in so far as the special tax is concerned, as it is Considered that while It is right and proper that farmers should be taxed on an income basis, yet it is inequitable that they should be taxed on borrowed mortgage money. (5) That the Commission set up to enquire and report in eases of hardship under Section 3 of the Land and Income Tax Amendment Bill, 1929, should be the Assessment Court constituted undo the Valuation ef l&na Act, 1925. (6) That in considering any taxpayer's appeal under the hardship clause, the earning capacity of the property asd other relevant' circumstances shall be taken into consideration as well as the taxpayer's financial position, and the Commissioner of Taxes shall b$ bound by the finding of the Commission. (7) That in order to secure uniformity in valuations of pastoral lands throughout New Zealand, it be a recommendation to the Government that the Valuation Office be requested to determine their values of lands according to situati6n and stoek-earryiilg MpMlty as the basis of the present system results in Serious inequality. (8) That the Prime Minister he respectfully requested to approve the above recommendations and to hfc*e the necessary amendments to the Land and Income Tax Amendment Bill drafted to give effect to the same. Disastrous Effect Anticipated. Mr A. J. Blakelcy (Waikari) seconded the motion. He thanked the Chamber for calling the meeting. He appreciated the opportunity give* to place before the people the disastrous effect the new taxation would have. He was a working farmer. Endeavours were being made by the Government to place people on the land. Land tax he condemned} it was aot equitable, for it did not bear alike on any two farms, there were so many systems of tenure. He condemned it also because it was a class tax. Before any sU|»er tax such as that proposed was levied all land should be elassifl©<L MaflJ farms worth up to £40,000 and £50,000 were Hot at all suitable for subdivision. Was it just that theee properties should have to pay super tax, because they were not suitable for subdivision 1 The super tax was an injustice to the Wdfxing farmer because it waa a penalty on industry. It would drive more men from the land than the Government would place on it by borrowing £5,000,000. It would destroy owners' equity ] in their holdings, and would take away : mortgagees' security. Eventually the Government would thus become the sole landowner. The method was wrong. It did not matter whether a man was working a property worth £IO,OOO, or one worth £40,000, So long as it was producing to its full Capacity. These proposals were going to drive such men off the land. A farmer working this class of property had done aa modi as anybody else for the community, because he started as a small man usually. and because ho tackled a big proposition, and was foroed thereby to undertake heavy liabilities he had to produce every ounce which hlf fftftt capable. Many men had failed nader the burden. Now that those who eueeeeded had produced the egirity, it was to be taken from them. Sla property by the land tax and super tax would be penalised to the extent of MSSfiOO, Income tax was the only fair tax to cause the breaking-Bp of big estates. frnft Vitas if IMBA. Ths only true value of land wae its producing value. Income tax waa the only way in which the Goveranwat would achieve its purpose, and if more could not he produced oa certain bloekl by closer settlement, subdivision achieved nothing and the GoverattiSt failed to gain its object. The new taxation amounted to confiscation. Ilea with mortgages of £IO,OOO, £12,000, me more might not have any mow equity in their land than the man with a hsortgage of £7500- It was taxing ate* am their debts. The super tax on his own land would be £7OO to £BOO, and if he was paying iaeome tax, he would be unlucky if it amounted to more than £l5O. Therefore the Government waa taklßg from him five times as much as it should be taking* It was asking; far more from heavily mortgaged land than from that Which was absolutely free. Not only that, but it waa coll«eting income tax from the mortgagee. That was an extra, and it all: came off the same land. "Is that justt" he asked. He was prepared to sell his farm to the Government at its producing value taken over a period of years, but he did object to a confiscatory tax. This year they would have the rope put round their neeks, and in another year or two they would be ehoked. (Applause.) Mr O. T. Evans (Hawarden) main* tained they were not taxed «n the unimproved value of their land, and that was where the hardship eame in. Bis Unimproved value bad gone up by pounds per acre, through his own efforts. Mr 3. K. Cullen (Darfield) said he did not know what could have been in the Government's mind. Had the farmers' books been examined it would have been ascertained they could not pay their own bills, let alone the Government's. It appeared to be a move to get stamp duty. He was prepared to allow the Government to take his land at valuation or below it, but it could not be subdivided, for there was no water on it. The whole of the proposals should be abolished- If did not come into operation for a year, the farmers would be given an opportunity to subdivide. Mr Wolf (Horrelville) said the question of exemption for children from the land tax should be considered. Hardship Clause Hot Worth Much. ! Mr A. C. Brethcrton said the hardship clause did not seem to be worth much. It had been in previous legislation for years, and it was not workable. It was well-known to mortgagees that interference with equities made it very difficult for farmers to get finance. Capital was going to Australia and a reduction in taxation was urgently needed. _ Mr E. P. H. Burbury (Waiau) said the new taxation would restrict the schooling of farmers' sons, and would drive many into the cities. He felt convinced that he would not bo able to induce his boys to go on the land if they are going to be faced with such taacat,f>Mr W. W- Mulhollaad (Darfield) said methods of farming had been revolu-

tionised, making a very big maehiaery neoeesary. farmer# ha< •ponded well to the err for inesa production. Increased taxation, aad ticularly penal taxation, was bad. la creased mechanisation- ideas of constituted an ideal farjn had ehai and the politicians did aot undera this. The question of what eonstit the best-sixed farm for the eon should be the subject of a thoroug vestigation. Ideas as to area ha be revised. A bad feeling was t created by branding as miadem&ai people whe owned above a oortasa of land. This was kerpiftg good off the land. (Applause.) The resolution waa carried « measly. Mr S. Hay (Pigwn Bar) V*o\ that Mr Trancis, Mr 1. W. Hawke, and Mr H. B. S. Kyle, MP, fm the resolutions to the Prime Ma to-d*y. Mr Maehia seconded the motiea. personal touch would do geod» ke Mr Hawke stated that he woul in Christchurch to-day, so hit nam« not included, and the motion was ried.