TAXATION COMMISSION

Evening Star, Issue 18627, 7 May 1924, Page 9

TAXATION COMMISSION

CANTERBURY SITTING ENDS. LAND TAX A CLASS TAX. [Per United Press .Association.] CHRISTCHURCH, May 6. At to-day’s sitting of the luxation Commission Richard M. D. Morten, farmer, of Tai Tapu, and president of the Canterbury A. and P. Association, gave evidence against the land tax, which, he said, was a class tax, and an evil example of a capital tax levied on the primary industries. The remedy if capital were to _oe taxed was a property tax—i.e., one levied on all landed property, since capital invested in the property was so invested for one reason—a return. The invention of “unimproved vauues to suit the land tax methods was merely an aggravation of the evil, since the improvement of iand__ automatically advanced its unimproved value, and since the latter was the capital value less that of the improvements. Further, some improvements were not held to be such after a time. The tax had fulfilled to excess its purpose of breaking up large estates. It could not ha equitably assessed throughout the dominion, and the result was very uneven, being influenced by the personalities of the valuers and the stale of financial affairs at the time of valuation._ In towns and cities the taxation of unimproved, values tended to force the subdivision of land into minute areas. The poorer landlord, who could not afford to erect tall buildings, was at a disadvantage as compared with the man who held little land and put his money into buildings. Ebenezer Hay, sheep farmer, of Pigeon Bay, also opposed the land tax. He said that it was manifestly unfair that a farmer who made nothing in a particular year should be compelled to borrow money in order to pay the tax. His own land tax was very heavy, and of lato ho would have had to borrow money to meet it but for the fact that he had other sources of income. He considered an income tax on the farmers would be fairer. Witness said that the tax on unimproved values was really a tax on improvements as well, though tho department would say that it was not. If there were two farms, one well kept and tho other neglected, with soil of equal quality, the good farm was nearly always assessed £2 or £3 an aero the higher. * Valuers did not seem able to resist tho Influence of the improvements. p 0 did not know by what method they worked. Apparently each had a method of his own.

In answer to Mr T. S. Weston, witness said that if income tax placed a burden on tho thrifty and industrious man the same could be said of the land tax. If it were desired to prcvent_ aggregation, surely Parliament could devise some other’ method than piling on the land tax. ]Mr James Bogg suggested that a farmer might Ibe able to evade the income tax by making many improvements to his property and showing a small income. Similarly, where the land was being exhausted, part'of his income would be made up out of capital. Tho Commissioner of Taxes (Mr D. G. Clark) remarked that except in the case of the grazier, which it was hoped to meet in the course of time, a farmer had to make an income before he it into improvements. A grazier could improve his property by reducing his stock and allowing tho grass to seed. Mr Hay, in conclusion, said that the day when the land tax was abolished would be one of tho best in the history of How Zealand. “ I have been a fanner all my life,” he added, “and I can say the land will be better looked after and improved. There is no encouragement for that now.” Henry Worrall, mill manager of D. H. Brown and Sons, flour-millers, stated that, in his opinion, the present system of comany taxation should be retained. In practice, ho said, the present method seemed quite satisfactory. The amount of the tax and not the basis on which it was levied seemed to be tho cause of dissatisfaction. In regard to company taxation, the companies should be taxed on their profits, as distinct entities. The present system certainly gave rise to but as every other suggested alternative _ possessed some similar disadvantage, it appeared to ho a wiser policy to retain the system which had already been tested. If taxation of the company profits were discontinued and taxation of the dividends were substituted, it would be necessary to reduce the limit for the income tax to a very low figure or to increase the present rate on private incomes to an extent that would stifle progress. On the other hand, a broader field of income taxation would causa a great deal of hardship, and tho cost of collecting the tax would be enormously increased. Any drastic chance in tho incidence of company taxation would bo very likely to upset the balance in respect to the channels in which the capital was invested, and it might lead fo very serious consequences. Tho present basis of company taxation, while admittedly not perfect, seemed to be reasonably fair and equitable, much more so than any suggested alternative. Mr Hunt: Do you believe in the system of graduated taxation? Mr Worrall: Yes, I do, because it is fair. I admit, however, that the present system of graduation appears to be too strict.

Mr Weston : You appear as one of the general public who, although having to pay tho tax, and admitting that the present system is not altogether perfect, is nevertheless satisfied with it. Mr Worrall: Yes.

Tho Commission lias finished its Christ church sittings, and will resume in Auckland.