LAND TAXATION

Dominion, Volume 29, Issue 150, 20 March 1936, Page 9

LAND TAXATION

Deputation Advocates Flat Rate UNIMPROVED RATING Requests to Ministers of Crown Adjustments in the incidence of land taxation were sought by a deputation from the New Zealand Land Values League which waited upon the Government yesterday. The deputation advocated a flat tax on land without exemption or graduation, anti asked that the system of rating on the unimproved value be made mandatory, that the legislation authorising local bodies to apply trading protits to the general account be repealed and that statistics be furnished giving particulars of landvalue taxation in the Dominion. It was contended that a. flat tax on land would produce sufficient to permit the wiping out of the sales tax, the gold export tax and the more obnoxious of the Customs duties. Sympathetic consideration of the representations was promised by Ministers, who remarked that the deputation had put forward a strong case. The representations were heard by the Prime Minister, Hon. M. J. Savage, the Minister of Finance, Hon. W. Nash, the Minister of Internal Affairs, Hon. W. E. Parry, the Minister of Railways, Hon. D. G. Sullivan, and the Minister of Lands, Hon. F. Langstone. The deputation was introduced by Mr. R. McKeen, M.P. for Wellington South. The chief speaker for the deputation was Mr. P. J. O’Regan, who said the league asked for the furnishing of proper statistics giving particulars of the incidence of land-value taxation in the country, the number of owners, the classification of these owners, how many were the owners of rural P l ®" perty, and how many were owners Ox town property. Although there was on the Statute Book a Statistics Act providing for the compilation of statistical information, there appeared to be no obligation whatever to provide statistics as far as the land tax was concerned. It had been the settled policy of the powers-that-were to foster the impression that the land tax mas a class tax on farmers. The deputation submitted that the very opposite was true; that the land tax was pre-emi-nently a levy on city and suburban property. It might be that the return was a fairly expensive one, but it was exceedingly valuable that it should be furnished at least once during every Parliament. No Graduated Tax. The desirability of imposing a flat tax without exemption or graduation was stressed by Mr. O’Regan Hie deputation submitted that land tax should be levied on the, same pnnciplc as the rating on unimproved va uethat was to say, there should be no exemption. They had to pay foi the valuation of land, and, having to 1 J for the valuation, why should they not collect taxation from it. it was the very height of ? ul first to incur the cost ot valuing lan and then to exempt it from taxation Dealing with the graduated tax, Mr. O’Regau said the alleged reason for the imposition of the graduated tax was to compel the subdivision ot large estates The submission by the deputation was that the great majority ot people liable to the tax were owners of city and suburban property which was incapable of subdivision. The late Government was guilty of the serious nns-statement-and that '' ttb unanimously re-echoed by the 1 esstbat the tax had been remitted to iclieve farmers. The fact was that the beneliciai-ies of the remission included every bank, every insurance company, every shipping company in the count). l, in proof of which the chairman ot he Bank of New Zealand cougiatulatea Shareholders in that the remission o the tax had meant the saving ot £16,000 a year to the bank. The deputation contended there was no case for a graduated tax insofar as the compelling of the subdivision of land was concerned, that a flat tax would mean a very light tax on the great majority of owners, but it would mean a very proper imposition upon the few who level in the monopoly of the people s laud. Total Unimproved Value. According to the last volume of monthly statistics, the total unimproved value of land iu New Zealand was £310,550,341. Deducting nou-taxable land such as that owned by churches, local bodies, etc., there was a total value of £290,000,000. A tax of Cd. in the £ on that community fund would produce £7,250,000, enough to permit the wiping out of the sales tax, the gold export tax, and the more obnoxious of the Customs duties, such as the tax on tea and sugar. Such a tax, which would be only a small instalment of justice, was overdue, and it was necessary if a proper source of revenue and at the same time some corrective to the rampant evil of land monopoly were to be- provided. The deputation also asked that the Government take action to make the svstem of rating on unimproved value mandatory. The system had been optional in this country since 1896, and out of the 120 boroughs in New Zealand 80 had now adopted rating on unimproved value, while the system obtained in practically half the counties. The repeal of section 320 of the Municipal Corporations Act, 1933, whereby borough councils were allowed to apply trading profits to the general account, was advocated by Mr. O'Regan. In two of the cities of this country particularly, Dunedin aud Wellington, the transferring, of large suras of lighting profits to the relief of the ratepayers had become a public scandal. For example, there were 68,000 municipal electors in Wellington, of whom only 22,000 were ratepayers. The great majority of the ratepayers were small proprietors, and they would gain a great deal more by cheaper lighting and heating than they would lose by an increase of the rates.

In practice the system meant that the richest class of ratepayers was being provided with an annual dividend at the expense of small ratepayers and the people who paid" rent. Were these utilities controlled by private companies it would be impossible to utilise their profits to relieve the ratepayers. The only valid ground for municipal ownership of these utilities was ultimately to make them free, but if they were to be used as a means of giving peculiar privileges to a few rich men, then the deputation said it was preferable that - they should be controlled by private companies. Mr. A. Parlane said that no permanent improvement in the conditions and wages of the workers could be ef-

fected while a land monopoly existed. The present Government proposed to introduce and improve upon the legislation of the Seddon Government, but unless it dealt with the land question any effort would be futile. Under the existing system of land tax the worker bad to pay tribute to those who rendered no service at all. He was suffering an injustice, and the speaker hoped that the Government would deal with those people who gave no service to the community. Mr. G. M. Fowlds, of Auckland, said he hoped that the benefit of the Government’s legislation would not be reserved for a small section of the community, but that,the general body of citizens would participate. It had been said that too many advantages of the Arbitration Court and other progressive enactments were being reaped by a third hand in the game—a nonproductive section—the land owners as such. They did not claim that the single tax was the whole thing, but it was a fundamental thing, and they would like to see the land tax restored to the position it once held, and perfected by the removal of anomalies and exemptions and the abolition of the graduated principle. Replies of Ministers. Mr. Nash said that, whatever figures were required bo assist the Governmetn In examining all forms of taxation would be obtained at the earliest possible moment by the Government’s statistical staff, and he would see that they were given, the fullest publicity. Whatever avenues of taxation could be explored to obtain money to enaole the Government to put its programme into operation would be invesigated. He could not say whab would be done in regard to land tax, but that avenue would be explored. The other ideas regarding rating on the unimproved value were much in accord with his own, but that was really a matter for Mr. Parry, who dealt with questions concerning local authorities. So far as the sales tax was concerned, before he could throw off one tax he had to see to it that the revenue was available from other sources. Mr. Parry said the Government was endeavouring: bo develon a form of local government in keeping with 1936, and he was satisfied that cohesion in the form of regional planning would be based largely on a uniform rating system. That was one conclusion he had come to very definitely- Uniformity was one of the things necessary in regard to rating. Following some, remarks he made at bhe recent Municipal Conference at Napier, it had been said the Government intended to use the big stick, but he did not think that would be necessary in view of the ready response to the Prime Minister's appeal for co-operation. Burden on Small Ratepayers. The opinion tM there was a great deal to be said for making the unimproved rating mandatory was expressed by Mr. Sullivan. From his experience In Christchurch he knew that it was possible under the existing law so to manipulate the various kinds of rating as to evolve a system thht placed the greatest possible burden on the small ratepayer and relieved the large ratepayer to the greatest possible extent. Any investigation would reveal ythe truth of that statement. The existing system had been used so as to put the greatest burden on the people least able to pay. Mr. Langstone said all realised that land and income tax were only annual taxes, and therefore they could always be altered when they came up fqr review every year. He should say it was the duty of the Government to collect that which rightly belonged to the State, reserving to the individual that which rightly belonged to him. The Government would go into the questions raised by the deputation and *h> the best as opportunity offered. They might not be- able to go the whole hog at once, but every step would be towarc the goal of social justice. Those with the ability to pay would pay, and those with no incomes or property would be relieved. Mr. Savage’s Conunents.

After congratulating the deputation on its enthusiasm and the case it made out, Mr. Savage said unless all the information were available it was impossible to deal intelligently with the incidence of any form of taxation. It was necessary to have statistics bearing on all activities. The representations by the deputation concerning the profits on municipal enterprises was not a question on which lie would waste time discussing, for the case put forward was unanswerable. Revenue was a very handy thing for the Minister of Finance, but it was not the only consideration. What the Government wanted to see, and what the people wanted, was a more equitable distribution of this country’s production. The Government stood for industrial development', but under the present system that would be of greater advantage to the land speculator than anyone else. Things like that bad to be taken into consideration. When they talked of shifting one tax it was necessary to see what else was able to take its'place. Euery step had to o ,; assured. When creating wealth it was always necessary to have in view who was going to receive the benefit. When some of its escaped into the wrong channel it. was necessary to check the leakage. It had to be seen that a'l efforts toward prosperity were not going to benefit the speculator. Day of Speculator Gone. The day of the speculator was gone and the day of the producer was here The Government was out to lay the foundation of prosperity in New Zealand, and wanted to see the farmer thriving. The Government was satisfied that removing a tax he never paid and substituting a dozen other taxes he did pay was not the way to prosperity. The Government w-ould secure all the information possible and use its own intelligence in shaping the incidence o± taxation, with the objective that those able to pay did pay and that of a more equitable distribution of this country’s production. The question of obtaining revenue was only incidental to that. The real problem was how to provide the best maAods of production and the most equlroble method of distribution. A land tax was a more equitable form of taxation than a sales tax. The farmer never paid land tax —the big fellow might have paid a little, but not half enough. The Government was out to develop industry, both primary and secondary, and out to see that the speculator did not reap the benefit of that development, but so long as the land tax remained as it was the speculator would get the benefit of industrial development. The Government was shaping its course a < rapidly as possible under the existing order of things.