LAND AND INCOME TAX.

New Zealand Herald, Volume XXX, Issue 9307, 16 September 1893, Page 5

LAND AND INCOME TAX.

THE MORTGAGED FARMERS. [BY telegraph.— special correspondent.] Wellington, Friday. In committee of the House on Tuesday Mr. J. Mackenzie, of Clutha, moved a new clause affecting mortgaged farmers that has attracted some attention, and as it affects a large class and opens up a question that) will come to the front again, I have obtained from Mr. Mackenzie a statement of his case for the mortgaged farmer. The new clause proposed by the member for Clutha, and which being opposed by the Government was of course defeated, was as follows :—" In the event of any person liable under this Act to pay land tax, and owning land to the extenb of £2000 improved value, on which there may be a mortgage, he shall, in addition to any other exemption he may be entitled to, deduct a sum equal to one penny in the pound from any interest sum that he may have covenanted to pay his mortgagee, and the mortgagee shall also be entitled to deduct any such deduction so actually made from the amount of his land tax." In support of his contention, Mr. Mackenzie Rays :—" Under the present system of taxation the farmer who is in a good position undoubtedly has great advantages over the mortgaged man. Now the Government contend that their taxation is framed to relievo the poor, and place the burdens on the backs of the wealthier, yet in reality I the reverse is the case. I can best make my contention clear by an illustration. We shall assume that three men {arrive in New Zealand, named Brown, Jones, and Robinson. Jones and Robinson each own £5000, and Brown £1000. Brown and Robinson each buy £1000 worth of land for farming purposes, and Jones purchases a home for himself costing £1000, intending to five I upon the interest of his £4GOO. Brown and Robinson resolve to improve their properties, Robinson spending £4000 for that purpose. He spends his own money, and is therefore not liable to taxation on his improvements. Brown goes to Jones to borrow his £4000, and offers 6 percent. Jones refuses to advance ib at that rate of interest, because the money is subject to £16 13s 4d taxation if advanced on land, whereas he can get six per cent, interesb froM a mutual agency company, and is not required to pay any taxation at all. Ho therefore refuses to advance, unless he obtain of £16 13s 4d more interest. Thus Brown is handicapped against Robinson, not only in having to pay interesb for money required for improvements, but, further, because the money used, because ib is borrowed for improvements, is taxed as well, whereas Robinson's is free. Now, as the Government in their amendment of the Act are reducing taxation, to the wealthy, because no man owning less than £0000 will benefit by the new concessions, I contend that these reductions should be given to the encumbered farmer so that he may be placed on a more equal footing with his unencumbered neighbour. The new concessions will enable men worth over £100,000 in land to pay less than they did under the old property tax. It is urged by the treasurer that if what I desired to see carried became law a man with £80,000 might advance that sura to eighty different persons and thereby himself benefit by the reduction. My arrangement would prevent that, because it provides firstly that the borrower can deduct the tax from the lender, and secondly the lender can upon proof to the Tax Commissioners of such deductions having actually been made deduct from his taxation the amounts so allowed to borrowers. The contention made by some that the money-lender pays the tax is an untenable as to assert that because the grocer pay the tea and sugar duty in the firsb instance he actually bears the taxation. The user pays finally the tea and sugar duty, and the borrower pays actually the taxation upon mortgaged land."