TAXING THE FARMER

Greymouth Evening Star, 27 September 1929, Page 5

TAXING THE FARMER

GOVT. PROPOSALS CRITICISED

LAND v. INCOME (Special to “Star.") WELLINGTON, September 26. The debate on the Land and Incom Tax Amendment Bill continued in tne House, to-day. Mr. Bodkin alleged that large areas of land had been converted into freehold in order to escape subdivision. The bill was necessary for the promotion of land settlement. He welcomed the improvements made in the bin. particularly in respect to mortgage exemption. If there was harshness in the effect of the propoasis th'e farmer concerned could petition Parliament. Mr. Campbell said that there was no need for further legislation to enable the cutting up of large estates. Many large estates had been cut up under the Reform Government, and had proved a big success. He was afraid that the result of the proposed legislation would be to hinder the developing of land. Hundreds of thousands of acres would be idle. The bill would have a disastrous effect on land values, and farmers would have great difficulty in securing renewals of mortgages.

Mr. Sullivan said that he was prepared to support the heavier taxation on wealthy squatters, but not on the small farmers. It might be necessary to amend the hardship clause. Mr. Waite said the bill would destroy small farmers’ equity in land. The Budget seemed to be framed to gain support from the Labour Party. The Premier did not appear to understand what he was doing. The hardship clause would be an extraordinary and expensive procedure. The proposals were designed to allow the Premier to get out of his election pledges, and at the same time force some very capable farmers to get rid of their properties. Mr MacMillan asked the Government how they could say the bill would help to restore confidence in rural securities as had been promised in the Budget. There could be no denying that in some instances, the taxation increases amounted to injustice. The Reform Party did not necessarily stand for the big land owner, but it resisted injustice. The proposals constituted a raid, and were calculated to scare people off the land. A strong appeal to the Government to drop its proposals to institute the super tax on land and reduce the mortgage exemption, was made by Mr. Wilkinson. He also crossed swords with the Labour Party over the attitude it adopted towards the proposals to increase the burden on the farming community. Mr. Wilkinson said that he did not wish to give a silent vote in regard to the proposals. He expressed gratification at the concessions which the Prime Minister had granted since the introduction of the Budget, but disputed the assertion by the Minister of Lands that the only way to make the Budget balance was to impose a supertax on land. The Prime Minister bad stated that all that was required was £325,000. At the present time, the Government was collecting £3,310,000 by way of income tax, and he ventured to say that the Prime Minister could make up all his revenue by extending the income tax to farmers. It seemed absurd to suggest that they could get over £3,000,000 by way of income tax from the business community, and that they could not get £325,000 by income tax from farmers. There must be many wealthy farmers in New Zealand, and he had not heard a single objection to the income tax proposals. The income tax was a tax on profits. He was sorry that he was in disagreement with the United Party on such an important matter, but on a previous occasion he had stated how he stood in connection with their land tax proposals. He thought that the bill could bo improved. “I suggest that the Government should DROP THE SUPER-TAX altogether, and put the exemption of mortgages back to where it was before,” declared Mr. Wilkinson.” If the proposals were confined to the imposition of income tax, there would be little objection left, and as far as I am concerned, I would' be only too happy to vote with the Government. The Government should leave the land tax where it stands to-day. Mentioning the fact that the supertax would affect 14,000 farmers, Mr. Wilkinson said that the only chance they would have was under the hardship clause, which at best, was not of very great value, and he would suggest that a great number of farmers who were going to be adversely affected, were not going to bother to take advantage of the clause, in order to get a refund. It was an unfair, tax, in the sense that income tax was levied after the total amount of a man’s mortgage had been deducted. The payer of income tax was allowed to deduct the amount of his interest on mortgages, and also he received 5 per cent, allowance on his capital value. If that principle were acceptable in connection with income tax, why should it not be acceptable in the case of land tax? It seemed unfair to discriminate in that way. The only reason he could see for discriminating between the two was that the Government was out to cut up land. No one was more anxious than he was to see the land more closely settled, but he thought they could do a great deal in that connection without levying a heavy tax to effect the object. He urged that land should be prdperly classified, and that they should select the most suitable land, and deal with it accordingly. There seemed to be no sense in taxing the whole of the farming community in order to effect a few small divisions of land.

“We should take the land and pay a reasonable price for it,” said Mr. Wilkinson, “and not set about closer settlement in the way outlined at present by the bill.” I appeal to the Labour Party to assist in this matter. Whenever taxation proposals are before the House, the Labour Party rushes in and supports them regardless of consequence. I have no animosity against the Labour Party, in fact, I think it would bo a good thing if they were put on the Treasury Benches, for the one reason that they would be educated to the needs of the farming community.

Mr. Savage: We don’t need any education in that respect. Mr. Wilkinson said that responsibi

lity would bring about an improvement. If the Party ever expects to get into power in this country, it should attempt to conciliate the small farmer. The farmer does not get fail* play at all. Farming was the greatest industry of all, and there was no other way of making New Zealand prosperous except through what was produced on the land. The Government would lose nothing in dignity if it withdrew its proposals in connection with supertax and mortgage exemption. “Let us confine ourselves to income tax,” said Wilkinson, “and the Prime Minister will have a unanimous House bejhlnd him. I make this final plea to the Government, that the matter should have further investigation before the proposals are put into effect.” LABOUR LEADER’S REPLY. Mr Holland said that as soon as any proposal was made to place taxation on the shoulders of the very wealthy, all interests concerned began to shout and say it was confiscation. In the past, no real attempt had ever been made to place the burden of taxation on the shoulders of the wealthy. On the contrary, the burden had been placed on the rank and file. He was of opinion that the mortgage exemption charge which would produce only £25,000 would bo not worth bothering over, when exemption had been applied. There would be many landowners in the country with incomes of over £lOOO and who would not pay a penny of income tax. He was prepared to join with any section of the House in placing that obligation on their shoulders. Mi- Holland questioned whether farmers were experiencing such hard times that they could not face the new taxation proposals, especially as there was no shortage of money’in the country at present, and in view of the production during the last two years. The farmers’ trouble was not taxation, but the interest bill. He confessed that the method of hardship clause proposed did not appeal to him, and Labour was prepared “to join in an endeavour to provide an effective method of meeting hardship cases.” The general principle of the bill was correct, but he did not agree with every phase of it. The bill, however, was a represented step forward, and to that extent the Labour party was in favour of it. He hoped that modifications would be made in committee.

Mr Jones thought that Labour had taken up a very fairminded attitude, and he hoped the Prime Minister would be prepared to concede the amendments . suggested. The statement that the bill would affect only a few people was not correct. It would affect thousands of farmers. It would lead to destruction of land values, serious financial difficulty would arise, and the farmer had made absolutely no provision to meet it. Mr Ransom maintained that very few dairy farmers would be affected by the legislation, while many of the small farmers were heavily mortgaged. Many of those who were escaping income tax had their properties free of encumbrances, and were able to lend money on other investments. The legislation would mean land nationalisation.

If the bill produced a slight reduction in values of land, that would be much more beneficial to the country than what had happened .when the Reform Government created a land boom. The bulk of those people who were complaining about the legislation were men who had bought land under the Reform administration’s boom.

Mr Veitch referred to the extremely doleful speeches from the Opposition. The Bill was necessary to meet the grave national need. There were farmers walking the streets looking for work. The legitimate farmer would not be affected by the measure. His interests would be preserved by the Government.

The Minister was continuing when he debate was adjourned.-