GRADUATED LAND TAX

Dominion, Volume 8, Issue 2557, 3 September 1915, Page 6

GRADUATED LAND TAX

THE NEW IMPOST

DISCUSSION IN THE HOUSE

COUNTRY MEMBERS PROTEST

A lively discussion occurred in the House o£ Representatives yesterday afternoon on tho presentation by the Minister of Finance of a return setting out ■tho amounts of tax paid by persons in business in towns oi com pared with tho amounts payable by persons using land of the same unimproved value for farming: The amounts wero computed. l under tho existing taxation rates. The following specimen cases will 6how tho nature of the return:— i A: Unimproved value of land, .£7860; business man pays income tax ',£252 165., ■land. tux' (ordinary and graduated .£3O 145., total tax Ji2B9 10s. Parmer, pays a total tax of .£3O 14?. C: Unimproved value of land, ,£53,601; business man pays income tax J52828, land taxes J.'54G, total .£3374: farmer pays ,£625. ~ It: Unimproved value of land, .£16,568: business man pays income tax .£455, land taxes ,CB4, total ,£539; farmer pays I': Unimproved value of .land ,£108,441. Business man pays income tax land taxes J;IG94, total .43080; farmer pays .£2Oll. • Sir Joseph Ward (Minister'of Finance) said that the object of the presentation of; the return wai to show. Teasons why the additional graduated tax should not be, mado applicable to town, lands. As a niatteT of fact, if the tax wore applied to town lands it must increase toe cost of living, because the business man who had to pay higher taxes would pass them on. In actual fact the new taxes would be very light in their incidence on farmers. It' would surprise honourable gentlemen to know that there were only two members of the present House who would be charged income tax under the new proposal to levy 1 income tax on farmers' incomes. He mould remind honourable members that the country must have large sums of money from some sources, and these ..outcries by sections. of tho people were futile. He as Minister of Finance would not,be put in a false position by anyboily,; and - he ,would,, insist upon, i getting • sufficient money. In the present Budget not a single proposal was laid' down on party lines. yet be necessary to levy more taxes. No man living could say how heavy a burden, would have to be borne next year,* or how it would have to be spread. ■ He laid the return on the table because a number of members in the Houso sincerely believed- that the Government ought to apply the increased graduated land tax ; . indiscriminately to town lands $nd country lands. The Case fop the Farmer. Mr. G. V, Pearce (Patea) said he wished to point out that the return Was wide of the mark. A man might have an offico in tonn worth say in which he made, an income of XoOut) a year. Tho statement did* - not make any allowance for this. The man in the country had no exemption like the man in the town, lino farmer did not pay income tax, but he> paid land, tax, and he had to pay it whether he made a profit or not: If a farmer had a bad year, such as some ot those in - Hawke's Bay had. had last wsuv he might not only not make a proht, .but make an actual loss. The. man "J SHIP hatl an incon *'. tax exemption or ,£3OO a year, equal at 5 par cent, .'to a capital exemption of 'JC6OOO. He disagreed with tne application of the graduated tax for war purposes. It would hit the small- farmer in his , district, very ha ™- „I n Taranaki there' were farmers 'Tin .i n acrcs ' valued"at from *40 to, £050 an acre. Most of-' these. men had heavy, mortgages, - and-; if they had toipay the graduated land tax they would be paying it on, their, debts. It would .surely be unwise- to. compel dairy farmers to. sell out of; their' farms to avoid' this iniquitous tax. He was in-favour ratlher of raising the land tax or • the. mortgage £vk= >® S" 13 , P re P r ar<: 4. even to see these taxes doubled. He disapproved of the proposal ;,to- tax farmers'- incomes, '-and : he was sure it would bo verv difficult to discover what ■ a farmer's Income wm ? . In practice the honest man would make a correct return and would pay and the shirker, who .would not inake a trul-re-Betorning-to tho graduated land tax 'question,- he said that t-® proposal to increase this tax to Taise' ■j!L r ? vetlUo "'as unstatesiuanlike and likely to injure -the oountry. After" Hip land >f. Jn hon. member: We shall not; want it Mr Pearce: "No, wo'shall'not want the our' JnW 4 11 nt the money to pay to lw n ?' Heal 'S u «l that" there ought to be a tax on war. profits, and not oulv on the war profits of farmers, but of mordants us well,: for merchants had mado war "Si "f ybod J" ols ° of the i , Aleichants • importing- - iron Wl .found that it hero_ tn ico as much .as they' paid for it No faimers made any profits like that Ho could not understand the set dgainst farmers from the other side' of thoHoua. • ?- llnere I , n New Zealand were most ; patriotic and had done more for the Empire than any other class of peo-" £f -k IS , country. Tho: frozen , meat ot New-Zealand had been comniarideered at much - lower prices than could have been obtained and were being obtained in tlie Home markets in free competition tT£ wa ? 1«ot«l in London at 9d. por lb It had been commandeered in New Zealand at -lid. per lb. ... . 5r 1 '" : jolly good price, too. Mr. Pearce: "I am not saying, it is not a good- price." He went on to say that tho result of the commandeering of riieat was that the .farmers of Nqw Zealand had given a million and a half to the Mother Country. The merchant .had always got the market price for his goods. Even the farmers of-England had not been asked 'to'make''.; the'-sacrifices, demanded of the New Zealand farmers. And he had not henrd one 'Now Zealand hummer complain.' He. did not complain himself. Ho thought it was a very good thing that we had been, able to . help the Empire in this way. • Could Not Be Passed On.' Mr.'G. "'Witty (Riccarton) said the paper laid on the tablo was "not worth a rap " A farmer paying land tax could not pass it on,' Tho man in business could pass on his taxation, and invariably did so What the House really wanted was somo much more comprehensive statement, making duo allowances for circumstances. A man in town paid tax on the incomo he earned, but tho farmer paid tax on his land whether he made'a profit or not ■ Mr. Payne; The town man pays iand tax. '. • ••_' - : ' ' ■; Mr. Witty. "How much land tax does ho pay? :_He said that t.h% amount-was mconsiderablc by comparison. ' He would like; to see: war 1 profits" taxed, arid he be-lieved-that war profits could be ascertain, fed with reasonable certainty if the Government set about'it properly. ' A Labour Member. ' . K Hindmarslr (Wellington .South) said uc Oitid notictttl. n, curious change in tho political health of the honourable member for Riccarton during the last three weeks, and ho. was at a loss to understand it.. .Mr.'- Hindmarsh said that the member for Patea wiis' ready- to call for the organisation of flesh and blood, but he. would not organise property, would not make sacrifices himself; A man who did this, who refused to make sacrifices, was a traitor to his country. He did not believe the member for Patea' represented the farmers. The : farmers xwMild not-own him. . ' • •" • • Mr. Pearce: You represent Labour? Mr. Hindmarsh: Yes, I - represent Labour. ' "y- . Biiick: The kind - of labour that won t work. : '.-' _ Mr. Pearce:Ton ncveWdid a day's work in your life. To look at you anyone can see that. You represent Labour! ' Mr. Hindmarsh: I don't think l am as good.a iudge of whisky as yon are. Mr. Pearce: You look as if you wero, sometimes. Mr. nindmarsh gave up this duel, and said ho would got back to the debate. .-Mr. Buick mado some interaction. ' Mr. Hindmarsh: I would ask tho mem. bar tor Palmerston North to restrain himself, otherwise I shall'have to make one or two pointed remarks. _Mlv Buick: Make them straight away, .uvijuy:,] I call upon this honourable

gentleman 'to make' remarks' he ' wishes to make. There was loud conversation and noise, W'hich caused Mr. Speaker to to tho House for better order, - Mr. Hindmarsh, returning to the point, said it was admitted that the large sheepfarmer was an obstaole to progress. H9 said it was clear no'iv that the-pa'rty truce: was a sham, so far as certain memburs of tho House were concerned. : He argued that the land tax was a : good tax, the only. ' tax that was' not a tax on production." - . Mr. Pearce, in. personal explanation/ said ho had been represented as an opponent of the land tax. As a matter of fact he had said that he was prepared "to see tlie land tax doubled. The member , for Wellington South, evidently did-not know the difference between the land tax and the graduated land tax. He had. .always been'in favour of the graduited land tax for bursting up estates, btcauto ho was in favour of small freeholds and had said so hundreds o£-times. But he was opposed to tho imposition of the graduated tax on a man's debts, and this was -what -would happen. . '' K "Point of Comparison Wrong." ; Mr. E. P. Lee (Oamaiu) said that tho'return did not reveal much of value. He defended countiy members from the im-. putation that they were, unpatriotic because they .were opposed to this method' of levying war tax. They were not endeavouring to reduce i2ie burden ,to bo put upon them, but were endeavouring to. show the Government that there were 1 fairer methods of imposing it. He argued' strongly that the increased graduated tax should be imposed on city land as well as on country land. • Mr. H. G. Eli. (Christchuroh South) said : .that the progi*essivo land- tax; was paid 1 by very tepeople, and-; it \vas absurd to say that it would l burdensome. Mr. J. Anstey (Waitaki) repeated his argument of tho previous evening .that the fairest way to raise more ..revenue ■out of land-would be to impose a mod-, erate increase in land and mortage taxes. The very fact, as stated by Sir Joseph .Ward,, that only two members of the House would pay this extra income tax on fanners, showed that " the ■ Govern-' ment's proposals ,w;ero ineffective.•Mr. J. M'Combs (Lyttelton): lam going r to .ypto against this, paper being printed.: It is not. worth'the paper it .is written on. The point of comparison is utterly wrong. In Defcnce of Town Men. ■ Mr. C. J. Parr (Eden) said that the return .was not valueless, but was. worthy of the consideration of the House. The new incomo taxes would take from the city .business man twice as much in some 1 cases as ho paid formerly. By comparison with this the increase of graduated land tax'that-might be put upon, him : would be inconsiderable. He did not argue that country men wero paying less than they should, but he wished to say that the -city man- was entitled to fair play, and the city man was. going to pay a. great deal in income tax. Mr. L. M. Isitt (Christchurch North) said that the House had heard "a wail from the poor pauperised member . for Patea as if his last shilling was beingwrung out of him." For his own part lie believed that tho extra taxes he would have to pay would take,about onc-fift'a of his entire income. Mr. Anstey: Who is growling about the tax ..now? • . Mr., Isitt said he was not grumbling,' He recognised that overy man: m the community.should pay up to the limit of ■ his capacity to help ";his country. ■ Butevery; time any proposal was, made to tax the farmer- there.' was : an - ontcry. ■Fanners invariably sought .to- safeguard ■ their own interests I whatever happened. Mr. E. Newman : (Bangitike:) . said he thought the member, for Patea had been most unfairly attacked. The member,for . Patea was one ofHlie most patriotic men', in the House, as ready as anvone to pay. lids fair share of tho cost o"f defending the Empire. .The member for Patea had not argued that the farmer should bear ft; less vshare than was apportioned to'! ;him, but he had argued that the method; of imposing the added tax was. unfair be- ~ oause the graduated tax-was not' subject to', an exemption; for mortgages; and it .was unfair, to increase the. tax on debts,' in order to raise war revenue. Was it fair that a man should'be taxed on- his debts? Mr. Pearce had urged not 'that the,- tax on the' fanner should be reduced,. but ,that,. it should bo imposed in somo other way'. -He'thought that>city people should be askod in exactly the same way Us country people to pay graduated tax as part-of their contribution to tho cost' ; of the war. ..' Mr.:. D. Buick (Palmerston) said that ; the laying of the return on the table had raised the issue of town versus country,' and lie . was sorry that this, issue, which would, keep the :'House agitated for the whole of the session, had been raised.' The Commandeerino of Meal. The-Et- 1 Hon." W: P. Massey said' ho; could see no';feason for, the amount of heat that had been imported into tho debate. AOne would never have that there was a.party - truce',, in . the) House. deprecated tho town versua, country ; issuo -beingJraised.' 'There were good men in the towns and good-men in.. ' the and'both were equally patriotic.- ;It was impossible/to get a perfect Budget, but tho present proposals were an honest attempt to spread the bur- . .den as evenly_and as fairly as possible. It had been said that the : hew- taxes would - not affect the wage-earner,'but. this was not so. . Whatever : tax; wyis imposed it ■ must affect the wage-earner. ' Beferrinff to the price paid'to farmers for meat for, the Imperial Government he said that the figures mentioned by Mr. Pearce were misleading, because they took 110 account of the fact that the hides and' offal of all animals'belonged to the producer and not to the Government. The Government bought only tho dressed carcass. He-bo---lioved .that tho prices paid to tho New . Zealand farmers were fair, but iot_ ex- . cessive. Wo should, remember that bilk, for the Navy , guarding tlie trade routes, but for the Imperial Board of Trade commandeering ships- and paying the extra freight to be charged,. we:should- not have 1 -' been able to get , our produce, out of th« country. He had not heard one complaint against tho main featnres of the j, taxation proposals. He-had heard com-, plaints about the duty on mineral oils and ; on beer, but these were minor matters. Ho had been surprised -and gratified at the willingness of . many people he. had : met to pay, the increased taxes.' He did riot for. a moment suppose that many of the people who would be called upon to pay the increased ' graduated land tax would.object'to it very much. . The proposal was to tax the -,war profits earned, and ho thought it right that we should tax the very largo profits earned during the'trying time we had. .experienced, -v Finance Minister Replies. Sir Joseph' Ward (Minister of Finance) said 110 had had valuable suggestions from unexpected quarters. . For instance, tho • member for Patea. had-advocated the increase of the land 1 tax and the mortgage 1 tax. ' This would press heavily • on the'' 6mair farmer, and to that;he was opposed very strongly.' His opinion was that to vaiso war revenueiby taxing the land just;, now would be a mistake. Referring to the return he had presented, he", said hs; did' not contend that it supplied all the information possible, but it was intended' to show, and it did; show, that; the appli- • .cation of higher ,gradiuited_ land tax to : tojvn lands would not bo fair. ' Members might be interested - to know that of-the ! total of '£262,000 of -graduated land tax collected .last; year- the towns provided some. ,£BO,OOO. Under the. Budget proposals the income tax upon-the farmers'.... Was easier, than the. income tax' on the ' business men and traders in the towns. . Two irien "in the House, holding large farms., had worked it out, and found that " they Were not coining under the tax, after ■ tlie reductions allowed had been-made. The proposal w-as put in to.fet a portion of tho Drofits made on account of the war. They had'.'tp;do>somethinfr, and there. was -no. doubt that those who, had earned more from the war should pay for it. A man who had done remarkably, well had told him that day_that,he was_ quite prepared to; Id. taxation on every," pound of wool sent from the country. Ho did not think they should make distinctions in their taxation; a fair anS • equitable way_ was to get,at the. profit's . through the incomo tax. .He believed that what, they were doing in the .aggregate ought to help his country to get its position, right. _ . There, were ;very. few.. fanners'who d-id not recognise that they had to pay' an increase over what they ' were paying before. He, didi not knowanything more difficult.. than altering ; taxes, «?r putting on new taxes. :. As to the railway, . there was to be an aTtJirst'-".' ment of the tariff, so .the Minister'of 1 Sailways informed him; but at present . they wanted those charges in operation' , as soon as they could get them.The motion to lay tho report on- the. table was agreed -to,. . .