FARMERS AND LAND TAX

Dominion, Volume 22, Issue 267, 7 August 1929, Page 13

FARMERS AND LAND TAX

Sir, —Various letters have recently been published bearing on the above. The position would be less obscure if a typical concrete case were taken for illustrat ton : Say a farmer has a farm the value of which for land tax purposes is £50,000 (without stock. £20,000 or improvements £30.000) and he is earning a net profit of £15,000. (a) What would be the total amount of land tax paid under the present system by the said farmer? (b) What would be the total unmount of land and income tax if the farmer —as assessed on the same basis as a bn ss man earning a net profit of £15,000 and owning land worth £50,000 with improvements £30,000 —no mortgage either case?—l am, etc., STUDENT. Wanganui, August 1. (The Income Tax Department replies as follows to the above questions:—(a), £OB2 10s. 3d.; (b) £3112 10s. 3d.] Sir, —The replies given by the Commissioner of Taxes to the letters from "Business Man” and “5.8,M.” in your issue of August 1 are hardly clear enough, and require certain other facts to be pointed out in order to show the true position regarding farmers and land tax? The Commissioner stated that the farmer paid a “very heavy land tax.” and that the business man reyived an allowance of five per cent, on the capital value of the land used in the production of the income as a deduction from his income. The farmer pays no heavier tax than the business man on his land. In fact, owing to the very much higher values in the cities the acreage tax is much lower in the case of the farmer. A business such as that of one of the biggest Wellington drapery establishments would pay a land tax equal to thousands - of acres in the country. The city firm receives an allowance of five per cent, on the Government valuation of the used in the production of the income, but does not receive any allowance for depreciation on buildings. The five per cent, is supposed to compensate for this, and has alwa'ys been accepted as a natural corollary to the deletion of depreciation by the Legislature. The Commissioner of Taxes cannot have the five per cent, doing more than one job. The position is best compared from the fact that the farmer with 10,000 acres, making a net profit of £5OOO pays —assuming the valuation to be £40,000 — a land tax of £l3OO and no income tax. The business man with the same valuation (and less area) pays a land tax of the same amount, plus income tax at the rate of 4s. 6d. in the £l. The fact that the business man receives an allowance of five per cent, does not enter into the matter, and neither does the rate of income tax. The principle that two persons living in the same community, enjoying the same measure of freedom and protection, should pay on a different basis for the privileges of civilisation is a vicious one.

The Commissioner of Taxes states that the farmer pays land tax whether he makes a profit or not. So does the business man. —I am, etc.. ACCOUNTANT. Wanganui, August 2.