DEATH DUTIES.

Marlborough Express, Volume XLIII, Issue 267, 12 November 1909, Page 3

DEATH DUTIES.

PURPOSE OF THE NEW BILL

TO MAKE THOSE PAY WHO CAN

The Financial Statemeut contained the following reference to the subject of death duties: —

The existing law with, regard to the imposition and collection of death duties calls for amendment, not only for the purpose of taxation but for the purpose of securing a,fairer adjustment of these duties in accordance with both the amount of the estate and the shares taken. by the beneficaries or next-oPkin. The existing scale is illogiclly graduated; moreover, many of the largest estates to-day escape - taxation. No matter how great the fortune left to the widow or widower, no duty is payable, whereas duty is payable on small estates even if left to children under the present law. For example: £20,000 is divided among ten children, all undejr age. The estate has to pay the same duty as if the whole amount went to one son. I propose to introduce a new Death Duties BiU, which will impose-'two descriptions of duty: (1) Death duty in respect of estates of deceased persons, and (2) gift duty in respect of gifts made by a person in his lifetime. The former is substituted for duty imposed by the existing consolidated Death Duties Act, 1903, while the latter will take the place of the deed and gift duty imposed by the Stamp Duties Act, 1908. Death duties under the proposed Bill will consist of two kinds, viz., estate duty and succession duty. Equitable principles in the Bill will provide a graduated rate, rising from 2 per cent, in estates of £1000, atid increasing to 8 per cent, in cases of estates of £100^000; and other important alterations will be proposed. I hope to circulate the Bill at an early date. Alterations will aLso be made in the law to brin^g it into conformity with English law asregards tests of domicile with raspect to the situation of property... Estate duty will be imposed, not only on property of the deceased which vests in his execiitor or administrator under his will or intestacy, but on certain other property which for this purpose is deemed to form part of the estate;

for example, entailed estates, property over which the deceased possessed a general power of appointment, gifts, made by the deceased within three years or his death, and settlements of property to take effect oil the death of the deceased. Similar provisions to these are contained iii English law, and are distinctly necessary in order to safeguard this duty against existing and future evasions.

So far I have dealt with estate J duty. Unlike estate duty, succession duty will be imposed, as in England, not upon the aggregate property of a deceased, but upon each separate interest taken in that property by the several persons who succeed, whether as legatees, devisees: or otherwise. The rate of duty will depend upon the relationship between the successor and the deceased. Up to a very large amount a man who succeeds to his wife's property pays 2 per cent, and after that amount is reached the rate is increased. Other relatives not more, remote than a cousin pay 5 per cent; more remote relatives and strangers in blood pay 10 per cent. No succession duty is payable on any property left in trust for any charitable, educational, religious or other public purpose in. New Zealand. Although estates under £1000 are exempt from estate duty they pay succession duty in the same manner as larger estates. Thus, if a deceased leaves his whole estate, worth £500, to a stranger in blood, the succession duty will be 10 percent; but if he leaves ft to his widow or children it will pay an estaW nor succession duty. If, however, a man leaves an estate worth £100,000 to his widow and children it will pay. an estate, duty at 8 per cent, but no succession except in respect to that portion of the estate wjiich exceeds £40,000...... As regards gifts, duty will be imposed upon all gifts made by any person in. his lifeiime with,,the exception, of gifts, less-than'-£SOO in value, and of gifts to,any charitable use. The rate of duty will be 5 per cent, of the value o| the gift. .It is necessary that I should explain the difference between the proposed gift duty and the existing gift duty in New Zealand to-day. The new duty i will differ from the- existing duty; in two chief respects: (1) The pew duty will be imposed on all gifts, Whether made; by instrument .in writing lor ,<aot.y under the,existing,law gift duty is, merely .sta^mp, duty imposed upon the. instrument of gift, if, there be such an instrument, consequently gifts of money and other gifts, however great in value, now escape duty altogether. (2) The existing "gift duty.; is levied at the same rate as the existing^ death duty, and therefore, depends partly on the aggregate value of, the donor's estate and partly on the relationship between him and the beneficaries, instead of depending solely upon the amount of the gift. The general aim of this new law will be to relieve the burden now imposed by our death' duty upon the smaller -estates, especially where they go to the chill--dren arid grand-children, and to increase the burden upon the very large estatfls, which in many cases now escape taxation, either wholly or in part. Another principle which has been followed is that of inducing testators to distribute their wealth rather than concentrate it upon one or a few persons, by imposing an increased rate of duty where the amount left to any one person exceeds a stated sum. As I have said,, the new legislation is aimed at introducing,a more logical and fairer system into our law, while increasing upon shoulders fully able to bear it an increased contribution in the shape of death: duties to the Exchequer. It is estimated that the amount, of death duty'collected on the total deceased estates taken over a period of the last 15 years has been only a little over 3^ per cent, while on estates of £100,000 and upwards the average,!" if you include estate^ given to widows, is barely 5 per cent. These figures illustrate how inadequate the present death duties imposed in New Zealand are. They are much lower than in England at present, and substantially less than the rate prevailing in several other Eng-lish-speaking and European counj tries. It is universally acknowledged that taxation in the form of death duties, so long as it imposes no hard" ship whatever upon the deceased's dependents, is the most justifiable of air forms of taxation; it but takes from a man or woman inheriting wealth some portion of that wealth I which the beneficiary has not earned,and which in many cases of intestacy the deceased never contemplated his obtaining.