INCOME TAXATION

Dominion, Volume 23, Issue 53, 26 November 1929, Page 13

INCOME TAXATION

Sir,—There has been an enormous amount of correspondence and leader writing regarding the taxation proposals brought down by the Government, which have now passed both branches ot the Legislature, and are consequently the law. How little those members ot both Houses know of the laud and income tax law is evidenced by their speeches. I doubt whether ten of the members ot both Houses could talk for ten minutes on the Act, and explain its many weaknesses and unfair provisions. There is one matter in particular which has for years escaped the notice of our members, when discussing any proposed amendment of the Act. One has only to visit the four main towns in the Dominion to be struck with the enormous amount of money that is being spent in bricks and concrete. What is the reason for this? To escape the payment of income tax. To show the method under which this is effected, take the case of a person or company with a block of land valued at, sav, £7uoo. A building is erected costing £1'5,000, a total of £22,500. Oni this security a mortgage is raised for £12,u00, the interest on which is 6 per cent. Whether the property is let, or used as business premises, an income tax return has to be furnished. It is then that the unfairness of the Act shows itself. Under its provisions no land tax would be payable, as the deduction of the mortgage from the unimproved value of the land would render it exempt. In the income tax assessment, the owner would be allowed to deduct the interest paid to the mortgagee, £750, but for some extraordinary reason he is also allowed a deduction of 5 per cent, of the total capital value of the property (£22,500), while his interest therin is only £lO,OOO. It will thus be seen that the total deduction allowed represents no less than £lB7<> under the heading of interest, and the o per cent, allowance, a total allowance of over 8 per cent, on the capital value. It is surely a good investment that returns over 8 per cent, on a brick or concrete building, and pays neither land nor income tax, and it is no wonder .that so much money is being i>ut to this purpose. The Prime Minister has stated that he must have money to balance the Budget. Here is a source of revenue which, it it were tapped, would yield him. at least three times the amount he requires, and would at least have the merit of being I hold no brief for the farmer. If he is making the income he should pay, and were he brought into lino with the trading and letting community, he would .also only receive the benefit of the 5 per cent, reduction on the value of his equity in the property, not, as at present, on the value of the mortgagee’s interest as well. If my memory serves me right, at least two Commissions have travelled through the Dominion sitting at the four chief centres, and inviting people, to give evidence as to how they should be taxed. What those Commissions cost the country I do not know, but I am satisfied that the only persons who would appear before them would be those who wished the burden of taxation taken off their own shoulders and put on to those of others. Have any of the recommendations „of those Commissions been adopted? Not many, if any. The whole of the income tax law requires a thorough overhauling, but not by politicians. There are meu in the. Department who are competent to bring down a measure that would be fair to every taxpayer. ... Are any of the provisions of the new Act the result of recommendations made by the present Commissioner of Taxes? I doubt it. —I am, btc., ONE WHO IS INTERESTED.. November 21.