INCIDENCE OF TAXATION.

New Zealand Herald, Volume LXI, Issue 18685, 15 April 1924, Page 7

INCIDENCE OF TAXATION.

1 Sir.—The writer who has written voluminously in the press lately under the' nom de plume 7 of'"Justice^ on taxation•.-•> in New Zealand, has hot? preserved .the ; judicial "attitude which his name implies, ;■ nor has he shown ; much knowledge off the; f basic principles of land and income taxation. /His contention that .the r exemption ..•." of farmers from income tax is unsound in > principle, is not supported by any reason- • ing ; other than the^ bald fact ithat -team*■■■, ; farmers who could afford ito pay income : tax do not pay it. Now, as one who in. the days of Mr. Balance's Premiership : bore small , part in /securing? the re- - introduction of the form of land taxation. of which Sir George; Grey was the father, I would like to point -out that both of the distinguished Liberal Premiers mentioned;? deliberately? exempted from taxation income derived ■■ Itorn land. Section "16 subsection {e) of Mr. Ballanco's Act ,of 189 L ; exempts from income tax \ (inter alia)' mj-;' come earned by ° the'; owner or occupier ,of - land in New Zealnad, or from the use or produce of such -land derived by such owner or occupier."" /So also .did Mr. Seddon exempt the ; farmer in his time. .Indeed it was a cardinal principle of liberal policy ' that income- derived , from - land should not be taxable income. And the reason is plain. The principle of an; income tax *is i that ? the income derived'

from the use of fa' certain commodity or commodities ~i should * alone be taxed and v.-~ that the commodity of commodities which produce the jncome should not be ; taxed. f Hence the Liberals abolished the property 3; ; i tax -which taxed >thd merchant's stock-in-I trade whether he 'made a profit or not, and no tax } is* now! levied on * the merchant's stock which i produces his income. Conversely, the principle of » land tax is : -' ; ' (for special reasons applicable to land .only:-:,; and not to goods) that the, commodity itself should be taxed but not that which it produces, viz., ; the income, but if. yen ; taxed the fanner's income : derived from. y working his land - as ,>-' well; ■; as > the .- raw "; material—the ; land—which produced the;, • income, you would be penalising the farmer by double taxation, viz., a land tax and. an income tax: levied' upon' the same source. Now the merchant—bo it. remembered—is not subjected to doubly taxation/ He only pays on* tax— income tax— 'he has always been exempted from land tax in respect of the land on which: his warehouse and store* :;■.-■ were erected. And now by Mr. Massey s new Land and Income" Tax Act,; 1923. ft. , , is ; expressly • provided by .'.section; 83 tfiata trader is to l < receive a, deduction 01 i> per cent, on the whole capital value of the land, including buildings,<on*- which ; his business premises are situated, incur are city merchants ! and building are worth probably «£>»<*" ■ who pay no land tax on such sites or buildings, but the j farmer n bus mess;gU~ ■ his farm-is taxed for land tax. The «g merchant therefore has , no cause *&**■. scumble at the present incidence of tnwUon. He is indeed a favoured individual. It will thus bo •; (seen that, as abor*. stated/ under the present system the merchant pays only one tax-the income tax- ■ and the farmer only, one tax- the land tax Could equality'of treatment, farther- « ™» If the farmer is to pay both laud tax; y , ; and income tax, then it. must follow as » corollar* that the business, man must nay both land tax and income lax where. he owns his warehouse and store sites, and must also;pay, a tax on the value of In*., stock-in-trade. I agree that this latter tax cannot be entertained; it would be the property tax, but it would be-quite as defensible as the assessment of the farmer for income tax when he pays a large percentage of the using value of his land in the: form of land tax. Elementary ; justice I demands) ' that if the farmer is to pay income tax he should bo v allowed to deduct therefrom his land tax, as his , farm is equivalent ' to &a merchant?* Warehouse, which is, as abo\*« stated,-: now •.- exapupted from the ' rami- " of land tfex. It cannot be denied that the Land anfi Ineome Tax Act, 1923, passed | by Mr. IVfassey's: Government embodies ; the prnciples of all the Liberal Premier!. , Th* question of taxation concerns Its* , whole community and should not be mad' the snort of political parlies, ; i.l fhonw be approached in a calm and detached spirit with an entire freedom feoft-tag 5 and ■ the ■ history of;our. system : ofg*g and the teaching, of our !;reat.,Vmn « ~ of the past 5 be «,'« , word;4l^-Jußli^^^ e v£r»* Hiareaa should. i ail. ";■. Quern Barest, ,ane*ian«« - o **"* U, TH