TAXATION FALLACIES

Evening Post, Volume CV, Issue 121, 24 May 1928, Page 10

TAXATION FALLACIES

(To the Editor.) Sir, —I must compliment you upon your exposition of"the fallacies propounded by. the Hon.-A. D. M'Leod when addressing the members of.the Reform League upon taxation matters. His statement shows conclusively that he does not understand the effect of taxation at the source, nor does he realise that New Zealand is the only country in the world' that taxes its people in such manner. In cohsequence of taxation at the source, the wealthy man w*ho invests money in banks or companies has the advantage of having his taxation paid by those people who trade with such bank, or companies, and there are many instances of men drawing very large sums in dividends' without paying directly one peniiy in taxation. Mr. M'Leod was unfortuuate in his reference to a holder of'bank shares, but he was still more unfortunate in quoting the caso of a sheepfarmer with an interest in .a farm -\yorth £6500, of which sum £3500 was unimproved value, and upon which— according to Mr. M'Leod—he paid £15 in taxation. In quoting these figures Mr. M'Leod did not give the farmer credit for mortgage exemptions* whilst 'in quoting the sum payable by the income taxpayer he deducted each and every exemption possible. ,If we view the positions from' tho same standpoint, leaving out exemptions in both cases, the farmer would pay £15 in land tax and the income taxpayer, on a taxable income of £050, would pay . £28 8s Od—nearly 100 per cent, more than the farmer. Compared with the 1014 figures, the latter would be paying £12 3s 9d increased taxation, as his proportion -of the war liabilities, and therefore contributing his full share of the cost of the war. . , Will Mr. M'Leod explain how a sheep farm carrying £1300 worth of stock has had only £1700 expended on it in improvements?. To-day £1300 worth of sheep represents a flock of about 1000 head. If the farm is in country carrying two sheep to the acre, its area would be about 500 acres. Let us presume that it is-500. acres good bush country. Then it would cost , approximately,, per acre, £2 for falling,

£2 grass, £1. fencing; house, sheepyards, dip, add woolshed, says £2 per acre—a sum of £3500 in improvements. This leaves' £1700 as unimproved value, or approximately £3 9s per acre. If there were no mortgage tbe fanner would pay about £7 10s land tax, but if there was a mortgage of £1700 he would pay nothing.- In both casps quoted this is a different story from Mr. M'Leod's. Mr, M'Leod says he has made an unbiased attempt to analyse the position of the man on the laud, and that there wero few statistics available." There,are, however, statistics showing the number of land taxpayers and the area's: held by them, and from them I have' culled the following:— Land and Income Tax" Statistics, 1926----27.—The figures published in regard, to land tenures show that there were 85,628 holdings of from 1 to-over 50,000 acres, the total area being 43,557,698 acres. There were:— -...-, : ■;'; ...-.:, < 17,911 - taxpayers .upon taxable! returns of £1 to £999.' .... 31,377 taxpayers upon taxable returns of £1000 to £14,999. ' , '.'•' : 2,218 taxpayers upon taxable returns of £15,000 to'£loo,ooo'and over. Also, upon the figures piiblished:— 17,911 land taxpayers paid 17s 2d each, 31,377 land taxpayersl paid £11 7s each. 2,218 land taxpayers paid- £345 each. ' These figures included- all farmers and business men. phying: laud;tax.. • Let us see, however, how; much the farmer actually pays. , In. 1927-the .land-taxpayers totalled 51,500, of whom 25,470 .-were farmers. The tax. assessed ...wa5.'.'£1,138,258, and of this amount £603.205. was; assessed against farm holdings, . TlieVefpre business men paying land tax were about equal in number and in the amount of tax assessed . to the farming • interests. . .; ' Paid aver-;, Had average taxEarmers. age tax of able balance of 0,281 17s 10d each. £237 each, 17,563 £11 Gs each. £2425 each. 1,326 . £296 each.:. ;' .-.£27,701 each. The average unimproved value of. farm, land is £5539 per farmer, while the averago exemption, is £2349 per. farmer,'or approximately 40 per cent.' Ye.-in the case quoted, Mr. M'Leod made no allowance for exemptions, and he omitted to state that the business man pays both land and income tax, while tho farmer escapes the latter.—l am, etc., :• - ' ??: DUAIi'tisPAYEIt 23rd May. ■: '-r ■■ .-;*- ■ *^?-r- :