NEW ZEALAND FINANCE.

New Zealand Herald, Volume LXV, Issue 20024, 14 August 1928, Page 7

NEW ZEALAND FINANCE.

TAXES AND ADVANCES* HON. W. P. REEVES' REMARKS, ASSISTANCE TO FARMERS* [FB.OM our own correspondent.] LONDON. July 1. _ At the annual meeting of the National Bank of New Zealand, the chairman, Hon. W. Pember Reeves, referred to taxation in the Dominion. During the 10 years ended 1927, he pointed out, the percentage of revenue yielded by land and income tax had fallen in a very striking manner. In 1918 it was nearly 57 per cent., in 1927 less than 27 per cent In the same period,the contribution to revenue of the customs and excise duties had risen from a little over 29 per cent, to a little less than 52 per cent. In other words, a considerable share of taxation had been shifted from the land-owning and propertied class and spread over the population generally. "Many people in this country," said Mi-. Reeves, ."appear to believe that land taxes in New Zealand are very heavy and press severely on the fanners there. This is far from being the ca3c. Only between 7 per cent, and 8 per cent, of the revenue is collected by land tax. Moreover, owing to various exemptions al« lowed, tho smaller and middling mortgaged farmers, while paying no income tax, pay also very little land tax. Most of the tax comes from the larger sort of properties.

"These facts go to indicate that further reduction of land and income tax is unlikely. If the agrarian class, "who more or less dominate Parliament, seek further relief from taxation during the next few years, tliey seem more likely to do so by recasting those portions of the customs duties which especially affect them. Broadly speaking, the Government, is not in a position to reduce taxation. The surplus on the Consolidated Fund this year was £IBO,OOO. That, coming after a period of depression, is satisfactory, but, when it is compared with the surplus of £587,000 in the previous year, and £1,155,000 in the year before, it is certainly not too large. Approaching Maturity of Loans. "In the course of the next two years a very large amount of our debt —nearly £30,000,000 —payable in London or held in this country, will mature. It would hardly help the conversion operations if the Government allowed their revenue "to decline below their expenditure in New Zealand; nor do I imagine that they will do so. The improvement in trade during the last eight months should be reflected in the customs and in certain other respects, so that with reasonable economy the task of the Treasury should not be difficult. "The Government is still lending heavily to farmers, and during the last four years has advanced nearly £15,000,000 to them. Since the system of lending to settlers was initiated in 1894, about £36,500,000 has been lent, of which about £17,250,000 has been repaid. Large advances have also been made to working people for housing purposes, the total, sum being about £13,500,000, spread over 22 years. Of this slightly less than £4,000,000 has been repaid. In this case also, the last four years show a quickening in the pace of lending out. Nearly | £8,000,000 out of the £13,500,000 mentioned has been lent since 1923. "For 20 years past the New Zealand Parliament has devoted much of its time and energy to measures designed to help, or at least to appease, the farmers of the Dominion. The latest of these measures, entitled the Rural Intermediate Credits Act, is a scheme for setting up a central board to lend money on chattel securities to members of co-operative rural credit associations and societies, and also o some extent to individual farmers. No Hostility from Banks. "The money is to be lent to the associations at 6 per cent., and lent by them to their members at not less than 6i per cent. As it seems to have been thought in certain quarters that the banks of issue are hostile to this scheme, I should like to say that I do not believe that they are. * I certainly disclaim any such feeling on the part of our own institution. We trust that the scheme may realise the hopes of those - who are, responsible for it. ''l can say the same about the Rural Long-term Advances Act, which came into force in April, 1927, and under which about £750,000 had been lent to farmers during its first year's working. Another long-term loan scheme, that of the Bank of New Zealand, had been in existence just over a year, at the end of March last, and its average loans outstanding during the March quarter amounted to £300,000. You will see, therefore, that the Government Advances to Setrtlers Act fffciD. far outstrips all other schemes in the axngant of money found for rural borrowers^