GRADUATED LAND TAX.

Evening Star, Issue 22413, 10 August 1936, Page 8

GRADUATED LAND TAX.

If an appeal were made to taxpayers at present to count their blessings a great many of them would have difficulty iu following the injunction. Their opinion, gathered from the Budget, is likely to be that whereas past Governments chastised them witli whips that of Mr Savage is minded to chastise them with scorpions. Higher income tax, shorter working hours and higher wages in business and factories, and a restored graduated land tax that will press not only on big landowners but on a great many city companies make an accumulation *of imposts which, coming all together, cannot possibly be envisaged without anxiety and threaten only to complicate the Government’s problem of dealing with unemployment. In regard to income tax, the Associated Chambers of Commerce have had reason to point out that this requirement, as imposed on companies, is a tax on paper profits, not on dividends paid. The tax takes no account of the fact that profits may not be distributed, but may be required in business. The injustice of the graduated land tax as applied to urban lands is as fairly represented. There is no question here of guarding against aggregation. “ All this land is put to full commercial use. To impose upon such companies the burden of the graduated land tax in addition to increased income tax will seriously handicap present business and

stifle expansion and extension.” Yet expansion and extension are before all tilings required if an army of unemployed, for whom no one doubts the Government’s solicitude, is to be absorbed in the only satisfactory manner. The arguments for and against the graduated land tax, now to be restored, were thrashed out with unusual completeness when the tax was repealed five years ago. It may have been repealed then too soon, when the landowners whom it pressed upon had had only a few bad years, after a longer period in which they had been over-favourably treated as regards taxation. When it was first imposed, however, the fanner did not pay income tax, and, apart from the special object of forcing subdivision of large estates, which the graduated land tax was no longer effecting when it was rescinded, there was cogency in tae plea that income tax was a much fairer impost. It was paid on profits, whereas land tax has to be paid, except when it is fixed so high as to make payment impossible, whether there are profits or not. The principle of ability to pay, which the Labour Government prides itself on following, does nob come into the question at all. At the time when the previous debate took place it was admitted by Mr Nash, upon evidence submitted, that many large landowners were being compelled to draw upon their capital and borrow to pay the tax, Mr Nash thought that that was the time, of all others, when the tax should be applied to force subdivision, though he acknowledged that they would have some difficulty in realising on their properties. Mr Coates drew a distinction between the bursting up of first-class land when it was held in too large areas and a similar process applied to second and third-class land, which could easily, in those circumstances, go out of occupation, and had done so in instances which he quoted. The opinions of Commissioners of Taxes were cited that the graduated laud tax, after a first phase of value, had produced a worse evil than aggregation—namely, land speculation. What was most significant in the debate, however, was that scarcely any attempt was made to defend the imposition of graduated land tax upon urban land. That application works most oppressively where a business has branches in many urban centres. All its sites are aggregated for land tax, although there is no real aggregation, and in each centre the business has to compete with local rivals who pay no graduated laud tax. Additions to taxation that are being placed upon traders and manufacturers cause more misgivings when they are imposed at a time when taxation is already extremely high and tho country is just emerging from sharp depression. “ Soak the rich ” has been always a popular cry. But, in the long run, there is no manner of doubt, the incidence of both direct and indirect taxation is borne, not by a section, but by the whole community. Excessive taxation is therefore against the best interests of employer and worker alike.