SECOND-CLASS LANDS

Press, Volume LXXXIII, Issue 25363, 10 December 1947, Page 2

SECOND-CLASS LANDS

DEVELOPMENT BY TOP-DRESSING

RELIEF FROM TAXATION URGED (P.A.) WELLINGTON, December 9. The present cost of superphosphate which has risen in price from £3 16s a ton to £lO 2s 6d a ton in less than 10 years put it beyond the reach of marginal land, said Mr James Andrew, a representative of Federated Farmers, giving evidence before the Royal Commission on Sheepfarming. The effect would be disastrous, he said, unless early steps were taken. Top-dressing and the use of clovers were the key to increased production, and every artifice known to man should be brought to bear to put dustings of phosphates and suitable grass seed on to the hills. He urged the commission to look into the matter of aerial top-dressing. Mr R. Eddy, a member of the commission, said he did not think suitable aircraft were yet available for the work in New Zealand.

A change in the method of taxing and rating second-class land was essential if confidence whs to be restored in the farming of poorer country, said Mr Andrew. With Mr J. Soler (Hawke’s Bay), he gave evidence on behalf of the North Island hill-country committee of Federated Farmers. At present, said Mr Andrew, any farmer on such land who embarked with limited capital on an extensive farm improvement policy was deliberately facing a lengthy period of hard work, long hours, and the lowest standard of living for himself and his family. Instead of receiving encouragement and reasonable assistance in the creation of what was a truly national asset, a fanner was hampered by the State in every possible way. His committee considered that land tax, graduating land tax, income tax, and death and estate duties were inequitable as they related to farmers, partitfularly'those on second-class land. Land taxes were fixed annual charges which operated whether land provided income or not. They were inaugurated to force sub-division of large holdings of first-class land, and retained solely for revenue-producing purposes. They now operated unfairly against larger holders of second-class land whose properties were unsuitable for sub-division. Price Fluctuations

Because of the fluctuations of farming, produce prices, and varying seasonal conditions there was a definite need for the adoption of a five-year average or longer term for the assessment of income tax. In past slump years which quickly followed periods of high prices farmers generally were financially embarrassed when forced to pay the tax on the previous year’s income. “While income is the most equitable base for taxation, the existing interpretation of what constitutes farming income has strongly and adversely affected the development of land,” he said. When money from farming returns was spent on allegedly permanent improvements which should result in an increased carrying capacity, the amount so spent was defined as assessable income. If his increase of stock was provided by returns from the farm it was also defined as income.

“A purely technical interpretation may justify this practice,” he added, “but there can be no doubt that it has resulted in retarding and discouraging many farmers from embarking on a farm improvement policy.” The high death and estate duties were also considered very discouraging factors in the long-term welfare and sound farming of second-class lands. In many cases, the only available method of obtaining the necessary funds was by heavily mortgaging the land. Taxes Amounted to -confiscation by the State of a considerable part of the capital invested in the industry, and were responsible for a widespread conviction among farmers of economic frustration. They were also a determining factor in influencing farmers to educate their children for professions and for commercial careers in the cities. The extent of such loss of farming personnel was made painfully evident in his organisation’s-most recent census return.

Both witriesSfes urged the commission to consider seriously the standard of farming taxation in. its relation to economic development and the maintenance of second-class land. They considered that relief through any other method might hot be of any value unless it was protected against reabsorption by the State in the form of taxation.