TAXATION BURDEN

Dominion, Volume 18, Issue 151, 20 March 1924, Page 5

TAXATION BURDEN

A PROMISE TO THE FARMERS TREND OF RECENT REMISSION PRIME MINISTER’S REVIEW "The whole question of the legislation of last year turns on one point: A definite pronilM was given to the farmers when the farmers' income-tax was imposed, that it would be abolished when the war came to an end. The promise was fulfilled, and the people of New Zealand are satisfied that the right thing was done.” The Prime Minister, in these words, introduces a general review of the burden of taxation, in replying to anonynv'ous criticism in AVellington. Mr. Massey deprecates the action of a critic in setting class against class by endeavouring to show the smaller settlers that more is being done for those with larger holdings. “The fact is,” he says, “that when 'the Government got to the length of being able to propose reductions in taxation the first move that was made and agreed to by Parliament was in the interests of the smaller settlers, and especially the men with mortgages. As tho law stood when the war came to an end. mortgages were exempted from land-tax only up to £l5OO. I asked Parliament to alter the law. providing that there should be a full exemption up to mortgages of £4OOO, and beyond that there should be a gradual decrease on a sliding scale tro to £BOOO, when exemptions ceased. This exemption applied to more than 10.000 settlers and cost £200,000 per annum. That was a proof that my sympathies and those of the Govegnment were with the smaller men, and it is the case now.” Taxation of Companies. On the question of company taxation, Mr. Massey quotes the opinion of the Commissioner of Taxation, expressed before the Taxation Commission:—“The proposed change in the incidence of company taxation would mean that the rate of income-tax on all taxable incomes of individuals between £3OO and £2OOO would have at least to be doubled.” That is, that powerful companies would become more powerful still, and individuals would be crippled.” The farmers’ burden was the subject of special sympathetic mention by the Commission, who said:—“The committee was much impressed by the fact that tho burden of land-tax, added to the increased heavy charges that the farmers now have to pay is being felt severely by them, and will probably lead to a reduction in output. A decrease in production would bo a serious matter for New Zealand, especially with tho large increase which has taken place in our annual bill of interest and sinking funds on foreign debt, and which has to be paid in farm produce. It is clearly essential that production should increase and not decrease.” Landholder?’ Tax.

The crushing effect of the combined t graduated land and income tax upon large landowners was also a matter of concern to the Commission, who remarked in their report that “considertion was given to the fact that a number of landowners have, during the past season, been obliged to pay their land tax, or portion of it, out of capital, and there are undoubtedly many cases of hardship in this respect.” This was a committee, added Mr. Massey, which was thoroughly representative of the business community, even more so than of the agriculturists and pastoralists. “An impression seems to have heen created during the last few months to the effect that the larger landowners practically escape taxation,” says Hie Prime Minister. “That, however, is not the case by a very long way. Take the following instances: — A settler whose unimproved value is—

£22,01'0 pays by way of land tax £lB7 18s. Id. per annum. £30,000 pays by way of land tax £306 ss. per annum. , £45,000 pays by way of land tax £6OO per annum. . ( £lOO,OOO pays by way of land tax , £1458 15s. per annum, , and there is no deduction on account of the land being mortgaged. A landowner whose mortgage is over £4OOO is taxed on his debts. A large holding very often means a large mortgage —but oven if it is mortgaged to the last shilling tho land tax has to be calculated on the full unimproved value, without consideration of the mortgage and irrespective of whether a profit or a loss has been made on the year’s operations.” Returning to Normal. “During the session of 1920 it became evident that more revenue would be required lor cleaning up after the war, and for' that purpose the land tax was increased, especially on unimproved values from £30,000 upwards, and i.hough there has been an all-round reduction since that date, the more highly-valued properties aic still taxed tn greater proportion than they were prior to 1920. I have been anxious to get both land and income tax back to normal as soon as possible, and it is in the interest of every section of-the community that such reductions should bo made, but » have been amazed at the opposition which has been shown to tins by people who ought to' have a snlficicm knowledge of economies to know better. “As for taxing the poor man, said Mr. Massey, “there is no country in the world where his burden of taxation is so light as in New Zealand. Income tax does not touch him unless he has an income of over £3OO, and under certaiij conditions he may claim exemption up to £l5O. Practically all necessaries of life are free of Customs duties, and Parliament struck out the tea duty last session. Effect of High Taiatlon. “In conclusion,’ said Mr. Massey, “I cannot do better than quote from the message to Congress by Coolidge last December tho following passage with which 1 thoroughly agree:—‘For seven years the people have borne with uncomplaining courage tho tremendous burden of national and local taxation. These must both be reduced. Hie taxes of the | nation must be reduced now as much as prudence will permit, and expenditure must no reduced accordingly. High taxes reach everywhere and burden everybody. They bear most heavily upon the poor. They diminish Indus-# try and commerce. They make agriculture unprofitable 'I hey increase the rates on transportation. They are a charge on every necessary expenditure of life. Of all services which the Congress can render to the country, I have no hesitation in declaring this one to be paramount. To neglect it, to postpone it, to obstruct it by nn- i sound proposals, is to become un- , worthy of public confidence and t:n- I true to public trust, 'the country .wants this nvssure to Irnvj tho right- J, oWay prar fiibq.ru. ’ ,J