The Dominion FRIDAY, JUNE 13, 1930. LAND TAX BURDEN

Dominion, Volume 23, Issue 220, 13 June 1930, Page 8

The Dominion FRIDAY, JUNE 13, 1930. LAND TAX BURDEN

Evidence is steadily accumulating that the results of the drastic land tax imposed last session are giving some measure of concern to those responsible for its imposition. The ostensible purpose of the tax, as stated by Sir Joseph'Ward in his Budget speech, was to raise additional revenue on an equitable basis, in such a way as to assis the land settlement policy of the Government. These results have not been attained. The financial return has been small, the working of the tax has exhibited a flagrant disregard for equity in the imposition of the burden, and-results in land settlement Jiave been negligible. One of the motives behind the 1929 land tax was undoubtedly political vindictiveness, and this has proved a veritable boomerang. The farming industry is faced to-day with discouraging conditions. Values are down and incomes reduced, and prospects are not bright for an immediate improvement. The land tax, levied on valuations assessed on the basis of a much higher world price level, now constitutes a serious hindrance to national recovery, and is an important element m the difficult economic situation with which the country is confronted. Since our prosperity is based on the primary industries, the economic revival of the Dominion must come from a recovery in farming. The land tax is perhaps the last straw in the abnormal load which the primary producer, is bearing at the present time, damaging effect in retarding readjustment to existing world values must be many times more costly to the Dominion than any revenue which it could conceivably produce. . Even as a revenue producer it has been disappointing, and has incidentally introduced a strong element of inequity into our system. Of 628 appeals submitted to the Hardship Commission, total exemption was recommended in no Tess than 399 cases, and P art, a exemption in 109. In other words, about 80 per cent, of the applicants secured some relief, and nearly two-thirds secured total relief. It requires little argument to show that a tax which cannot be operate without such a wholesale system of exemptions, amounting to the sum of £118,287, is unsound in principle and unfair in practice. The fundamental vice of the land tax is that it is not based on relative ability to pay. Income enjoyed, and not property owned, is the only fair criterion. Property valuations bear no uniform relation to income or taxable capacity. Especially when full allowance is not made for mortgage liability is' the injustice accentuated, since under no rational system of taxation would a man s debts be regarded as an index of his taxable capacity. The tax has the further aim of compelling land subdivision but incidentally-it penalises estates not suitable for such purpose—another example of its unfairness. There will be no effective readjustment of our tax burdens until t the advice of the 1924 Taxation Commission is adopted. The Commission recommended “that the present graduated land tax be abolished, and income tax should be paid in respect of income from land as part of the taxpayer’s income.” From the taxation point ot view the source of the income is irrelevant; what matters is its amount. It is on the basis of the amount of income that equity among taxpayers should be secured. It can be got in no other way. Until the handicap of the present land tax is removed. New Zealand cannot expect that primary production, and especially the important pastoral industry, will display that measure of prosperity which it must show if the Dominion is to effect full economic recovery.