Farmers’ Taxable Incomes

Press, Volume CV, Issue 31030, 9 April 1966, Page 8

Farmers’ Taxable Incomes

“One of the most persistent, damaging, and widespread misconceptions is that a great number of farmers pay the top rate of income tax (13s 6d in the £) and, so the popular fallacy runs, are unwilling to increase production,” says the first issue of the “Bulletin,” issued by the Agricultural Production Council.

“There are many factors limiting increased production, and in same cases the maximum tax rate may be one. but as a general catch-cry it has gained a currency probably far beyond its truth. “A recent seminar arranged by the Whangarei agricultural advisory committee for organisations concerned with farmer finance was given some vivid information about farmers with taxable income exceeding £4OOO a year.

“In Northland, of 5600 farmers, only 25, or 0.4 per cent, had a taxable income of £4OOO or more, and in the Waikato, of 15,000 farmers, only 230, or 1.5 per cent, had such a taxable income. It Should be noted here that the maximum tax rate is met at a taxable income of £3600, and in this particular case the figure of £4OOO was chosen for ease of selection. “The seminar was astonished at this information as have others been since.” continues the “Bulletin.” “It simply runs against the tide of popular talk—but it is a fact.

These figures are of course only for two districts —one developing and the other well settled and developed. There could be substantial variations between districts. “A sample survey for the whole of New Zealand shows that 5 per cent of farmers pay the top tax rate. “The average tax rate for aill farmers is 6s 8d in the £.

“Although comparatively few farmers pay the top tax rate, it does not follow that comparatively few are in the top income class. The tax rate is on taxable income and there have been successive reliefs to farmers which reduce the amount of this taxable income, such as concessions for development expenditure, special or initial depreciation on plant or buildings, investment allowance, provision to spread income over three years, the income equalisation scheme and the like.

“There is a further sobering thought. In Northland, although 250 taxpayers had a taxable income of £4OOO or more only 25 were farmers — that is for each farmer there were nine others. Any relief on top tax rate could scarcely be restricted to farmers only, and yet if such relief were envisaged to assist increased production, its effect would be greatly diminished in Northland where only one out of 10 such taxpayers is a farmer.”