Chamber of Commerce Conference.

Hastings Standard, Volume XIII, Issue 4204, 10 July 1909, Page 7

Chamber of Commerce Conference.

(The "Australian Icsurauce ami Banking Record," June 21st.) A conference of the Chambers of Commerce of die Dominion was held in Wellington towards the middle of April, at which a large range of subjects came under discussion. Among these were the incidence of the mortgage tax and the graduated land tax, both of which, it was contended. were calculated to drive money out of the country. The mortgage tax is %d in the £, or 6s 3d per cent upon the amount of all mortgages, the land t*x being at the rate of Id in the £. The conference urged that the mortgage tax had driven fiaancial' companies out of New Zealand and still operated to keep mouev out. Sir Joseph Ward replied that it was not the mortgage tax that had driven the finance companies out but the Advances to Settlers Act, aud cheap money. If the finance companies were operating uow, thev could lend out money on mortgage at 6, 6%, and 7 per cent., aud tiie income tax on such earnings, in the ense of a company, would be 6s, 6s 6d or 7s per cent, in place of the mortgage tax of 6s 3a. Of course, if interest came down to t 5 per cent. It is, however, asserteu that it ia not only the present rate of the tax that deters capitalists, but tl.e uncertainty and fear of what it may be raised to auy day. Moreover, it is pointed out that the mortgage tax affects buildings, which are expressly exempted under the land tax. This Sir Joseph has denied, but it appears to be incontestable. It lias beeu pointed out, for instance, that die man who owns land worth £IO,OOO, with buildings thereon worth £20,000 would pay land tax only on the £IO,OOO valua of the laud. But let him borrow £20,000 on security of |th is property worth £30,000, and the mortgagee is at once taxed on £20,000, of which at least £IO,OOO is secured by the buildings. And that applies to nearly al< mortgages on town properties. Again, there is no doubt that the 6s 3ci mortgage tax is a factor ia the calculations when a man is debating whether lie will lend his money out

on mortgage or withdraw it from New Zealand. There is another point. Sir Joseph admits that the Advances to Settlers policy has driven the iinanoe enmpauies out, and now tfie department is unable to supply all demands so as to adequately meet the situation. On the graduated land tax also the case of the conference is pretty strong. This tax was introduced to compel owners- of large estates to sell or subdivide —the so called "bursting up" policy. Latterly, however, it has been made to apply to town

lands, and as far as the graduated, or additional, tax is concerned, it applies also to shareholders interest in a company that owns land, even Che laud on which, fGr instance, a factory is erected. The shareholder's proportion of interest in fell e laud of the company is added to tne value of all his landed properties, urban or rnral, and if it brings hirn within the scope of the graduated tax he has to pay. It Is couteuded that if a large landowner to escape this tax sells his station property for, say, £40,000, the tax still follows him if he invests the proceeds in town properties or industrial companies, and he is driven to take his money elsewhere. It is argued that this was not the intention of Parliament in imposing the tax. j