NEW TAXATION

Dominion, Volume 22, Issue 263, 2 August 1929, Page 13

NEW TAXATION

SUPER LEVY ON LARGE ESTATES REDUCTION OF MORTGAGE EXEMPTION FARMING INCOME TAX INCREASE IN PRIMAGE DUTY Regarding taxation the Minister said that in view of the deficit last year and the general position of the country’s finances when the Government assumed office, there was no practicable option but to face the facts and obtain additional revenue from taxation if tlie Budget for this year was to be balanced—and that- of course, was essential. “In determining how the additional revenue required may best be I have endeavoured to make a virtue of necessity, and, while adjusting taxation on an equitable basis, place the added burden in such a way as to assist the Government’s land-settlement policy. At the same time I have had regard to the desirability of creating as little disturbance as possible in business and trade- in order that the economic progress of the Dominion may not be hindered."

“Attention was first given to the large farming incomes, which I consider have not borne their fair share of taxation in recent years. Accordingly, to adjust this inequity and assist in bringing about the cutting-up of large estates, it is proposed, in the case of farming lands of an unimproved value in excess of £12,500, that the amount of land tax assessed on the present graduated scale shall be increased by a supertax calculated on a graduated percentage basis rising 1 per cent, for each £5O of unimproved value above £12,500 on which such land tax is assessed, until for an unimproved value of £15,000 tbe supertax will be 50 per eent of the land tax on the present basis. Thereafter the percentage rate of supertax will continue to increase 1 per cent, for every £3OO of unimproved value on which land tax is based, until for an unimproved value of £30.000 the supertax will be 100 per cent. Above an unimproved value of £30,000 the supertax will be at a flat rate of 100 per cent, of the land tax as assessed under the present scale. The following examples will show clearly the effect of these proposals:— Per-

REDUCTION OF MORTGAGE EXEMPTION. “It is further proposed that the mortgage exemption allowed -in assessing land tux shall be reduced to £5OOO, disappearing £1 for every £1 of unimproved value in excess of £5OOO. The present exenqition is £lO,OOO, disappearing £2 for every £1 of unimproved value in excess of £lO,OOO. It is a fact that at present, owing to exemptions, many fanners with an unimproved value up to £lO,OOO pay neither land nor income tax. INCOME TAX ON LARGE FARMING INCOMES. - “In addition, it is intended to amend the law to make all farmers, including farming partnerships, with holdings (whether owned or leased) of an unimproved value of £12,500 and over at any time during the year ended March 31, 1929, assessable with income tax on their farming income, but subject to n set-off of the actual amount paid in land tax on the land used for farming. In effect, this means the payment of land tax or income tax, whichever is the greater. In such cases, however, the 5 per cent, of the capital value of land otherwise deductible from assessable income derived from such land will not be allowed, as normally this is intended to cover land tax paid. This proposal is intended to ensure that the large farming incomes will contribute to the

national revenue in the same ratio as the incomes from other occupations, which is only just and equitable. INCREASE IN PRIMAGE DUTY. “As I do not anticipate that these land and income tax proposals will produce enough additional revenue to ensure a balanced Budget for this financial year, it is proposed to move a resolution to-night increasing the primage duty on imports from 1 per cent, to 2 per cent. Primage is purely a revenue duty imposed upon practically all imports whether dutiable or not, and to obtain the additional revenue required in the manner indicated will not affect any particular industry or class of goods. The duty is so small and so universal in its application that the proposed increase will be the least felt of any possible increase in indirect taxation. Further, ns soon as the Budget balance is stabilised, this additional duty can be taken off without disturbing the tariff in any way. INCOME TAX EXEMPTION FOR CHILDREN. “To remedy a cause of htirdshipe under the present income tax provisions relating to children’s exemption, it is proposed that the present age limit of 18 years shall not ajtply in cases where the Commissioner of Taxes is satisfied that a child, owing to mental or physical incapacity of a permanent nature, is unable to earn his or her own living. Further, it is proposed to provide that the exemption on account of children under 18 years of age shall be apportionable over the twelve months in cases where a child is born or attains the age limit for exemption during the income tax year. At present, if a child is born on March 31, the full exemption is allowed, ■and if a child dies or attains the age of 18 on March 30 the exemption for that year is lost. ADDITIONAL REVENUE FROM TAXATION PROPOSALS. “The available data in connection with farming incomes is meagre, as income tax returns have not been made by farmers since 1923. Moreover, the effect of the steeper land tax ns a set-off against income tax cannot be readily arrived at. For these reasons it is difficult to estimate how much additional revenue will be derived from the proposals. The matter is further complicated by some uncertainty as to the extent of the increase in imports that will result from' the present large favourable balance of trade. The direct cause of the deficit last year was the failure of the revenue from taxation to come up to expectations, and I want to ensure that the same thing does not happen this year. However, after careful’ consideration of all the circumstances. I am of opinion that the new proposals should produce the additional revenue required.”

LAND SETTLEMENT DEVELOPMENT OF WASTE AREAS CUTTING UP LARGE ESTATES GOVERNMENT’S PROPOSALS I The Minister claimed that he could “say unhesitatingly” that the cause of the unemployment trouble was the “neglect to foster land settlement.” “We have secondary industries and they are expanding, but they cannot compete in the world’s markets. The prosperity of the whole country is bound up in the products of the land. The widespread effect of a drop in the price of wool or butter is striking evidence of this. Accordingly, the only real cure for our present difficulties lies in the old slogan. ‘Back to the land.’ Increase the production of our primary products, and also the number of people on the land, and the market for our secondary industries is widened and stimulated, which means more work and trade for the people in the town. Recognising these basic facts, the Government placed land settlement in the forefront of their election programme, and the people endorsed it. The Government accordingly will vigorously foster land settlement in. any and every way that is feasible. It is a matter that will take time, but I can assure honourable members that the Government will spare no effort to obtain the desired end.” WASTE LANDS DEVELOPMENT.

The State holds some millions of acres of waste land, but a great deal of it, for various reasons, is not suitable .for immediate settlement. Some of it is inaccessible. and roads will have to be constructed before it can be utilised: while in other areas the nature of the land is such that considerable developmental vork will have to be done before a settler can go on it and make a living for himself and his family. The Minister of Lands, however, has been taking stock of the position, and the Government proposes to take steps to bring some of these waste lands into cultivation. Capital, of course, is required, and in addition to existing authorities it is proposed to ask tbe House to authorise the borrowing of up to £5.000.000 for land settlement. In this connection legislation will be submitted to the House to enable the funds of the Lands Department to be used for the preliminary development of selected areas, which will be cut up and offered for selection as soon as the land, with the assistance and co-operation of the experts of the Agriculture Department, has been brought into such a state that settlers can go on to it and get an immediate return from their fanning operations. This means that, as an alternative to buying developed lands for settlement, the funds will be used to develop the waste lands that are already in the possession of the State. The cost of such development work will, of course, be capitalised. In addition, it is proposed to provide for special assistance tq those energetic and capable men with the pioneer spirit who are willing to take up sections of waste land and do the developmental work themselves.. This will be done by setting up a special Land Development Branch of the State Advances Office, the funds of which will be used for advances on special liberal conditions to selected men taking up the class of land referred to. The idea is that in lieu of buying land that is fully developed and loading the settler with the capital cost, the man will be allowed to have the land at a nominal cost and be given the opportunity of making the capital improvements himself, the necessary capital being advanced to him on suitable liberal terms by the State. f Using the State Advances Office tor this purpose was really a return to the original purpose for which the office was established in 1894, in conjunction with the land-settlement policy inaugurated at that time. Of late years the State Advances Office had developed overmuch along the lines of a straight-out investment corporation, and the real purpose of assisting new land settlement had been allowed to fall very much into the background.

CUTTING UP LARGE ESTATES. As well as developing and settling backward land, the Government also intended to proceed resolutely with the cuttingup of large estates suitable for closer settlement. Such estates will be acquired by voluntary purchase where tho land can be obtained at a reasonable price. The Government, however, will not pay more than the true economic value of the land, and if sufficient suitable areas cannot be acquired at a reasonable price the Government will not hesitate in the interests of the Dominion as a whole to use compulsion. To facilitate such action where it is necessary it is proposed to amend and simplify' the procedure nt present governing the compulsory acquisition of lands under the Land for Settlements Act. A number of suitable properties have already been purchased, and some have actually been cut up and settled. A great number of properties are being investigated by the Land Purchase Board, but it is evident that the prices asked by mnnv of the vendors are above the economic "value from a production point of view, and the compulsory provisions may have to be resorted to if such an attitude is -fling to be maintained. The Government is not out to exploit anybody and will pay a fair price, but it is not going to put 'settlers on to land carrying such a heavy loading of capital charges that they will have no hope of making a success of it. Settlers taking up lands that are purchased and cut up will, of course, be able to obtain all the necessary capital for development purposes from the Settlers’ Branch of the State Advances Office nnd the Rural Intermediate Credit Board without any delay. To get more men on to the land is n matter that takes time, said the Minister. but the policy outlined will be steadfastly pursued, and the full effects will bo seen in a few years’ time, when the increase in production and in the general prosperity of the whole Dominion will have caused unemployment and other preso’it difficulties to disappear. AGRICULTURAL RESEARCH. The organisation of the Department of Agriculture would be used to assist the mot) on the land, and particularly the now settlers. To this end the instructional activities of the Department were being steadily extended and research activities were being given special attention, particularly as regards various diseases of dairy cows, certain sheep troubles and the mineral content of pastures in relation to animal nutrition and deficiency diseases. A Plant Research Station hns boon established at Palmerston North in co-operation with (he Research Department. and the Department of Scientific and Industrial Research was. in collaboration with the Agriculture Department, investigating problems of wool research. losses due Io temporary sterility of cows, and cold-storage problems connected with all perishable exports.

Stowaways from New Zealand.— George MacDonald, of Glasgow. Robert McClement. of Belfast. Henry Mooch, of no fixed abode, and David William Smith of Dunedin, were sentenced to a month’s imprisonment at Woolwich for stowing away on the Mataknnn from Wellington states an Australian Press AssociationUnited Service message. All declared that they hail come to Britain because work was not available in New Zealand.

SUPERANNUATION FUNDS “A HUGE SHORTAGE” FULL INVESTIGATION TO BE MADE The Minister said his investigation of the financial position of the State superannuation funds—i.e., the Public Service, Railways, and Teachers’ Funds—showed that the financial position of these funds was even worse than he had thought. The cash shortage on account of current pensions alone, which should have been covered by State subsidies, in the past, was over £2,000.000. This huge shortage bad arisen from the neglect in the past to pay the subsidies which the actuary had certified from time to time, in terms of the Superannuation Act, as necessary to make up the amount required to pay the pensions of the Public servants who had already retired. The pensions, of course, had been paid, but partly out of the contributions of the officers at present in the service, which contributions should be accumulating against their own pensions. Through the loss of interest thus entailed, the failure to pay the subsidies required in the -■'a- had been cumulative in effect, ’ with the result that a large and permanent increase in the subsidies, with a corresponding additional charge on taxation, is now required to rehabilitate and maintain the funds on their present basis. The position has oeeti further accentuated by a mistaken policy of early retirements and other concessions granted, apparently without due consideration as to their effect on the superannuation funds. It is certain that a change must be made in the policy of automatic early retirement now operating. “As a matter of fact, the position of these funds is such that it is a question whether a radical change in the whole basis will not be necessary. The whole matter is so complicated and so farreaching in effect that, with the short time at my disposal and the general pressure of work, it will be quite impossible for me to deal with it in time for amending legislation to be brought down this session. Moreover, the matter is of such outstanding importance not only to tl Public Service, but to the taxpayer, that T propose to set up an inquiry as soon as possible to investigate the position thoroughly and report to the Government on (he state of the funds, and generally ns to what should be done to niece sn»»erannimtion for Public servants on satisfactory >oting.

“In addition to these matters affecting Government employees. I have also under consideration requests regarding salary adjust! nts involving heavy liahili ties I'iie superannuation question, how nvcv : s >n mv ontnion first in importance, nnd until the Government can see a -aring-up of the requirements in this connection I find mvsolf unable, in view o' tho finem-in 1 position generally, to take any action -n the direction of -d- --.. ■ <->|.>rio». other 'inn is brought about by promotion and regrading under the law.”

Receiver of Stolen Property.—ln the Supreme Court at Timaru yesterday George Cathlow. who was found guilty earlier in the week on a charge of receiving stolen property, was ordered to be retained for reformative treatment for a period not exceeding’three years. - Press Assn.

centproved value of land. Present tax. With proposed super-tax. age increase. Increase. Per £ £ s. d. L s. d. £ s. d. cent. 12,550 78 7 ,) 79 3 1 0 15 8 1 30 14,000 91 8 9 118 17 4 27 8 7 15,000 100 18 9 151 8 1 50 1) 4 50 18,000 131 10 3 210 18 0 79 1 9 SO 21,000 166 5 0 282 12 6 116 7 6 70 30,000 290 18 9 581 17 0 290 18 9 100