THE TAXATION PROPOSALS.

New Zealand Herald, Volume LXVI, Issue 20323, 2 August 1929, Page 12

THE TAXATION PROPOSALS.

The adjustment of taxation forecasted by the Prime Minister with the announcement of a deficit in last year's Budget has been entirely in the direction of increasing the burden. Exclusive of the special levies for main highways, the taxation collected last year for the ordinary Budget amounted to £16,593,000; according to the estimates, the proceeds from the samo sources this year will be £17,507,000, the increase comprising £446,000 from customs duties, £353,000 from land tax, £90,000 from income tax, and about £25,000 from other sources. It is impossible to say exactly how much of the additional sums is due to the changes now proposed and how much to normal expansion. The Prime Minister has not given any estimates; in fact, he has frankly admitted that the effect of his proposals cannot be calculated, so that it is quite likely the actual increase will be more than £914,000. In the forecast of customs revenue, allowance has presumably been made for some growth of imports, but it is conservative to take the figure of £400,000 as the direct effect of doubling the primage duty, which was introduced in 1915, and has been maintained ever since. It is levied on all imports except a small class of exemptions; by doubling it, the Government proposes to increase the whole customs taxation by about 5 per cent. That is certainly a surprising interpretation of its promise |to reduce this class of taxation. I Nearly as much additional revenue is to be obtained by a supertax on land, for the apparent increase of £353,000 has been forecasted after allowing for the declining tendency of the present taxation. This proposal is based upon the contention that farming income should bear a "just and equitable" share of the national burden, and while the principle is unquestionably sound and complete exemption illogical, it is doubtful whether the method adopted is equally justifiable. In effect, a graduated supertax is to be imposed on farming lands of which the unimproved value is £12,500 or more : the owners of those properties are also to be assessed for income tax, and are to pay either land tax at the new rates or income tax. whichever is the greater. It is impossible to discover how many farmers will be affected by this device, but the number cannot be large. There are about 52,000 payers of land tax, of whom about 3000 pay on values exceeding £12,500, but both these numbers include urban properties in respect of which both taxes are already paid. The valuation of land is, however, an arbitrary method of assessing farming income, which is the real and legitimate objective of the present proposals ; adverse seasons, such as an exceptionally dry summer in Hawke's Bay or a heavy snowfall in the sheep country of the South Island, might extinguish the income fairly liable to taxation and subject the impoverished farmers to a heavy land tax. Sir Joseph Ward has made another attack with a bomb in each hand. In addition, he proposes a radical reduction of the mortgage exemption, involving a corresponding increase in land taxation, though it is not clear whether this is to apply to farmers alone or to all land. The only concession is the remedying of a minor anomaly in the operation of the income-tax exemption in respect of children, the actual cost of which is probably insignificant. All this constitutes the first instalment of a programme of reviewing the incidence and reducing the burden of taxation. Instead of reducing income tax, an increase of £140,000 i 3 proposed through the agency ot a new levy on land ; instead of placing all foods on the free list, the Government proposes to collect £IIO,OOO more in customs duties on all imports into the Dominion.