TAX HARDSHIPS

Hokitika Guardian, 30 September 1929, Page 8

TAX HARDSHIPS

“INTEREST THE TROUBLE, NOT TAXES. ' WELLINGTON, Sept. 26. Members of the House of Representatives have received a large amount of information to demonstrate the operation of the Government’s proposed new land taxation, and it provided Mr Holleader of the Labour Party, with one of the most interesting features ol his speech on the Taxation Amendment Bill in the House to-night. His deduction from this evidence was that large 'farmers are suffering, not so much from heavy taxation, as from interest bills. Dealing first with what he called the Canterbury table, Mr Holland suggested that if its statements were accurate one of two things was apparent, either there had been very few improvements on these estates or the valuation system was very rocky indeed. In one example the unimproved value was £14,100, capital value £15,340 and the mortgage was £15,150. Worked out on a 6 per cent basis, though the average interest rate over the whole Dominion was 6.40 per cent, this estate had an interest bill of £906. Its present land tax was £76, and the proposed tax was £122. If the Prime Minister had kept Ins promise with respect to reduction of interest rates he ventured to say that the reduced interest bill would have more than offset the larger land tax.

Mr Coates: On a £15,000 mortgage ? Mr Holland retorted that the leader of the opposition could easily work it out that 1 per cent, reduction would mean £l5O less interest. “What these other examples prove,” he continued, “is that the trouble is not a taxation trouble but an interest trouble.”

In another case the unimproved value was £13,747 and the capital value £14,790 which meant that the improvements were only £1043, though the mortgage was £10,354. This represented £6lB interest, and the new tax would be £ll2. An example was given of another estate of the unimproved value of £80,570, and a capital value of £92,010,, showing that there were only £11,440, improvements. Surely there was need for legislation to break up an estate of that kind. Its mortgage was £40,950, interest £2754 land 'tax £1587 and new tax £3174. Ho could, he said go on qouting such cases, and he wished to draw attention to an extraordinary phase of the position. There was another estate of the capital value of £35,940 and the mortgage was £-16,500-. He wondered what was the explanation. The interest bill was £2790 and the new taxation would be £621. Obviously the mortgagor’s probleih there was not taxation but interest. HAWKE’S BAY ESTATE. The leader of*'the Labour Party went on to say that life had been given particulars of the'finance of certain Hawke’s Bay estates over an eighteen months period. The gross income from one was £2555, and the' expenditure comprised wages £212, rates and taxes £l6l sundry expenses £152, depreciation and small items £92 and interest £1412 the last mentioned item being well over 50 per cent, of the expenses. Another Hawke’s Bay 'estate produced an income of £224o.'and had a £9OOO mortgage. Its N net income was £945 and the interest bill £540. It had been argued that money could not be provided more cheaply. He had an advertisment from a Southland paper stating that a responsible firm had money to lend at 5-J per cent., and he had heard of offers of 4$ on good freehold security. Why could this be done if the Government could not do it ? “My own opinion” concluded Mr Holland, “is that it would pay this country to lose on making money cheaper.”