TAXING PROPOSALS. BILL BEFORE PARLIAMENT.

Evening Post, Volume LXXIV, Issue 78, 28 September 1907, Page 3

TAXING PROPOSALS.

BILL BEFORE PARLIAMENT.

THE FIFTEEN PER CENT CLAUSE. CONSIDERATION ADJOURNED. The Land and Income Assessment Bill was further considered by the House, of ' Rcprcsentath cs yesterday afternoon. Clause 17 was first taken. It provided that no disposition of an estate should be effective, so as to exempt the person making the same from the payment of tax, so _ long" as possession waa 1 retained, and the Public Accounts Com- ■■ mittee had inserted a provision that the clause should apply ' not only to future but to past transactions. Strong exception was taken to tho retroactive portion of tho clause on the ground that it set absolutely no limit to the time tho department could go back. Mr. W. Fraser pointed out that tho proposal would act very harshly in tho caso of a man who held land under mortgage. Tho mortgage would bo held to be the owner, and if, for certain reasons he would not accept payment oE tho amount of the mortgage, or tho mortgagor could not pay, hs ■would be unable to get tho title to His property. Tfciis -vvas art important point, and one that the Government would hear more about in a, very little while. Some means should bo devised to prevent Hardship in certain cases where a genuine transaction had taken >. - place. After some further discussion an amendment by Mr. Wilf ord to strike ' -'but the retroactive portion of the clause pufc in by the Public Accounts Committee was lost by 28 to 18, and tho clause passed us amended. , Clause 18 provided that an equitable Vwnex of land should be liable for graduated tax. as if he was the legal owner. In answer to' criticisms the Premier said he was advised th&t this did not apply* to native lands and leases. The clause passed unamended. The next clause (19) provided that rustees are- liable for graduated tax as if they were beneficially interested in ,the land. Mr. Herries did not think that the clause met the case of the Public Trustee and the West Coast Settlement ' Reserves. The complaint was that as the Public Trustee held the lands as a wholo be was not able to get the redactions for individual owners that he .would get if he held them in severalty. The clanse passed unaltered. Considers Je discussion took place on clause 20, which provides that for the purposes of tho graduated tax, no deduction from the .unimproved value on account of mortgage money or unpaid purchase-money shall be allowed. , The Premier said that if this pro- . vision was not inserted it would defeat, the object of the Bill — to prevent the aggregation of large estates. There . was no system that he knew of by ■which they could ensure the payment of the graduated tax being paid* if they allowed tho deduction of mortgages. Mr: Lang said each 1 clause in the BilJ was objectionable, but thi3 one was ten times so. Mr. Major suggested that clauses 16 nnd 20 should be merged. -At present they were in conflict. Mr- - Laurenson expressed surprise ' at the contentions put forward by the •'Opposition." The argument against the clause was strikingly, illustrated by a writer in the press a few days ago. Jl maa.Jiad bought a horse, for £20, and ■..he wished" to take it across a ferry. - The charge was one shilling. "But, ' said the purchaser of the animal, -'I ■ should get the animal across for sixpence. I have only paid £10 of the purchase .money." ,-The chwise only ' affected the man who bought up enormous blocks of land and because entangled in debt. The "small man" ' should be satisSed with £5000 worth of unimproved value. Sir Joseph said that without the clause •it "would' be possible to get into the posL tion of avoiding payment of tho graduated tax altogether. The clause would ■work in sympathy with that .providing for payment of 15 per cent, of the pur- ■ «hase money of land. It was not a • bursting-up proposal that would affect 500-acre farms.. The tax on £10.000 unimproved valne would only be £7 16s 3d. Mr. Dillon eaid a lot of unnecer>sarv fuss was being made about the clause. A man who had £20,000 worth of un- ' improved value (and that was equal to £40,000 with improvements and stock) only paid £41 13s 4d. Was that a per.al tax? If he had a property assessed at £20,000 unimproved valuo" he would have no objection to paying £41 annually to the State. ' The committee divided on the clause, •which was carried by 40 votes to 8. Clause 21 was " passed' without amendment. ABOUT- TDIBER AND FLAX Clause 21a, making standing timber assessable for half its value for the pur- .. pqs.es of taxation, was objected to by Mr , Masgey. ' The principle of the clause, n>-. said", was absolutely wrong. So lons as -„ timber 'was standing, it. was taxable; ' -immediately it was cut.it wa* free from taxation. ■ The Premier said the proposal was an .eminently fair one, and he ventured to ' «o,y tie timber people were satisfied. These proposals were much less, severe ■ than .formerly, when the assessment was O.n_Jthe full value.' The concession was "" jC Very big one. Taxation had to be paid and tho only question was the fair •way to arrive .a,t it. - In regard to minerals, tnty were formerly Valued as pirt of the land. Strfrir as* flax was concerned, it was originally intended to value flax as part of the land. Mr' Rutherford asked if the clan«e affecting timber referred to plantations. The Premier said it did not. Plantation* were improvements. Mr. Stevens objected to the portion in which flax was being placed. He suggested that timber and flax should be assessed at a third of its value. 3lr. Hogg agreed with the last speaker. Was the non-exemption of timber not likely to compel tho destruction of the standing timber now .remaining? The Premier: We are making a reduction of 50 per cent. Mr. Hogg : I know ; but is that sufficient? I think timber and flax should be left as originally proposed. The Premier said those connected with ths flax indtfjitrv urged that flax should not bo dealt with m a Land-tax Bill, hui that thtre should be on income-tax. For this reason he had moved in iho " Public Accounts Committee to have flax taken out of the Bill and let the existing Jaw continue In reference to timber h© eaid that if H .vao argued thnt the tax w»s gotng to re"m?t in of the forests it would be logical to contend toafr sawmilling should be stopped. .Replanting wa« what was required. Mr. Stevens wished < to ask one question. Was it intended tr> collect tax op the unimproved value of flax land? ' The Premier : Yes. Mr. Stevens said that in many cases the value of the land without the flax was almost nil. lie knew of cases where planting had been carried out. The flax was the crop. Thfrefore. inttead of taxing on the unimproved value, the

State would be taxing on the highest improved value. lie thought it would be a reasonable and proper thing if it was assessed at one-thirc 1 its value. This would bring it at all events partially into line with timber. Mr. Massey said Mr. Stevens's arguments were absolutely unanswerable. The Premier, reverting to timber, ssid he knew of one company that had timber ahead for twenty ye'arF. Was that company to be free from taxation ? As a matter of fact this company did not object to the Government's proposals. Flax and timber were, not in the same position, and ho could not ogree with, the request of the member for Manawatu. A big concession had been made, but some members were not satisfied. He often -wondered if it were possible to get to tho disappearing point of taxation, whether the Government would not I bo asked to go a little further. Mr. Massey said the Premier's refercuct to plantations being exempt was wrong. ihe existing law provided that improvements were not exempted beyond tho first cost. Plantations were improvements, the value of which improved with years. Mr.* Mander said the tax on timber was a most unjust one. After some further discussion the clausa was agreed to. Clausas 22 and 23 were agreed to. THE FIFTEEN PER CENT. CLAUSE. These were the last clauses in tho Bill, and the committee then went back to clause 16, which provides that tho seller of land is to bo liable for- taxation until he has received 15 por cent, of tho purchase money. Mr. Massey said this clause made it impossible; for tho small man to acquire a piece of freehold. Instead of placing difficulties iv tho way the path should be made easy. Tho Premier said the object of tho clause was to prevent bogus sales. Unless a proposal of this kind were put in — A member : Make it ten. The Premier : No, I will ovi; I nave' come down 10 per cent, already; the clausa is a reasonable one. Mr. Aitken said everyone wished to put down 'bogus sales, but thera «-ere scores of sales where nothing like 10 per rent. v.-a,s paid down. He hoped the Premier would give further consideration, to the clause. If it were passed it would defeat the object the BUI had in view. Jit. Rutherford pleaded for 10 per cent. He_ said that in his own electorate Sir George Clifford was cutting up an estate and selling it on a first payment oi 10 per cent. Under the Bill, although the sales were absolutely genuine, he -would still be liable for taxation. It would be better'to have a provision giving the Commissioner of Taxes the right to decide as to the genuineness of the sale. Th« Hon. T. Y. Duncan said that tho easier transactions weva made the better. Mr. Massey : Hear, hear. Mr. Izard said he could not vote for what was retrospective legislation. The Premier said it was quite apparent thai some members did not realise what had already besn done. As members did not seem disposed to finish the Bill under two or three hours he said he would move to report progress and promised to look into tho point of clauses 15 and 16 being m conflict. Progress was reported and the House adjourned.