PRODUCTION TAXATION

Evening Post, Volume CVII, Issue 143, 21 June 1929, Page 8

PRODUCTION TAXATION

In his references to means of increasing primary production, Sir George Elliot to-day opened up a big question. In commenting upon his suggestions, we understand that he could not, in the time, present more than an outline of his ideas. The comment must, therefore, be read with due allowance for much more that might be said on. both sides. Especially does this apply to the proposal that the Government should consider exempting from taxation for a period of years certain secondclass unimproved lands at present lying idle. The argument for this concession was briefly stated by the speaker as follows: The imposition of tho graduated land tax has limited the acquisition by individuals or companies of large blocks of second-class ' unimproved areas. There are, in New Zealand, great blocks of unimproved lands, areas that, under present conditions, no private individual or group of individuals can handle with any hope of financial' success. To support this argument, however, it is necessary that there should be a statement of the costs which make such lands unprofitable to work. If I the lands are fairly valued on a pro- | duction basis the graduated land-tax I (which is imposed on value, not on area) should not be an obstacle to development. Land which is really' I worthless, or nearly so, in its unim- | proved condition, should be liable for little or no taxation. The exemption would not be of such value to the pioneer improver as, say, an improvement in transport methods or the provision of capital at a low rate. Moreover, land-tax exemption must necessarily involve great difficulties which cannot be overcome by legislative provisions. There is, for example, the difficulty of determining how long the exemption should continue, and when the tax should be reimposed to hasten the subdivision of the improved land. Sir George Elliot's other suggestion was that Empire fiscal policy should be reconsidered and redrafted to extend markets and encourage proi duction. We fully agree that such 1 reconsideration would- be welcome, I and that it would be timely, in view I of the fact that there has been little I system hitherto in the general plan. | But the obstacles in the way of genI eral revision are enormous. . The imposition by Great Britain of small duties on foreign-grown beef, mutton, lamb, fruit, butter, wool, etc., is out of the question for years. Even the Conservative Party, most favour--1 able to Empire Preference, has been compelled to pledge itself to exclude foodstuffs. But Britain is not the only unit to be considered in an Im- ; perial exchange organisation. The Dominions, unhampered by Cobdenite ideas, and mainly actuated by selfinterest, have developed a fiscal system which leads to frequent | clashes." Where reciprocal treaties i have been negotiated (so that the j haphazard quality of the concessions is less marked), trouble has not been I avoided—as witness our butter marketing troubles with Australia and probably with Canada, and the New Zealand fruitgrowers' and jam-mak-ers' request for higher duties on South African jams. Many of these difficulties are deep-rooted in local politics, and it will take years of experience to work but a better policy. At the same time, there are anomalies which could be removed if the necessity were more clearly perceived. To hasten this clearer perception, ah Empire conference such as Sir George Elliot suggested would be of value. But Empire Conferences, whether political or economic, are not enough. The intervals between them must be bridged by the work of regular agencies, implementing the policy of "the last conference, and" studying the issues for presentation to the next. There is the nucleus for such an organisation in the Empire Marketing Board and the British Department of Overseas Trade (with its capable Trade Commissioners). This should be strengthened, especially upon the Dominions side. A complete organisation would cover trade representation of each Dominion in Britain, and in the other Dominions, thus facilitating continuous study and interchange of ideas.