THE New Zealand Herald AND DAILY SOUTHERN CROSS WEDNESDAY, SEPTEMBER 18, 1929. THE TAXING BILL.

New Zealand Herald, Volume LXVI, Issue 20363, 18 September 1929, Page 10

THE New Zealand Herald AND DAILY SOUTHERN CROSS WEDNESDAY, SEPTEMBER 18, 1929. THE TAXING BILL.

The most important piece of legislation required under the Budget proposals of the Government appeared yesterday. The Land and Income Tax Amendment Bill was needed if the Prime Minister's dual plan to raise more revenue by taxing landowners and to encourage the subdivision of estates was to be given effect. As introduced, the 1 measure embodies the proposals, modified, and, as Sir Joseph Ward somewhat naively confessed, not modified by way of increase. The meaning of this is plain. The great volume of spontaneous objection to what was outlined in the Financial Statement—objection from landowners who were not "wool kings" as the Prime Minister has admitted —has had its effect. The limit of unimproved value at which the penal land tax or the income tax, whichever is the greater, begins to operate is raised by the bill from £12,500 to £14,000, the amount of mortgage exemption in the assessment of land tax is increased from £SOOO to £7500. > The amount of relief granted thereby may be great or it may be small ; ■ nobody knows as yet. The country is still very much in the dark about the probable effects of the whole taxation proposals, and none of the official explanations given has shed much light on the subject. The one thing certain at present is that the Prime Minister has retreated when he said he would not. In his speech on the recent no-confidence motion Sir Joseph Ward said: "As a matter of fact, the Government stands or falls by the Budget. ... I say, in reply to the amendment, that we stand by our proposals, and we ask the House to give them fair and iin- , partial consideration. If members do that 1 have no doubt as to what the result will be." Yet there is i <a retreat before the House has been asked to implement the proposals. Though the Budget proposals have been modified when the Prime Minister said they would not be, none of their objectionable features has been removed. First there is the question of the incidence of the new taxes. Certain figures were given during the financial debate. The Prime Minister quoted a statement prepared by the Commissioner of Taxes which said the reduced mortgage exemption would increase the number of farmers paying land tax by about 550, it would increase the land tax already payable by about 1650 farmers, thus affecting in all about 2200 farmers. The supertax on farming land would be paid by about 1750 landowners. The Minister of Health explained later that the proposals as a whole would apply to about 6250 landowners altogether, the reduced mortgage exemption 4500, of whom 2200 were farmers, and the super-tax the 1750 already mentioned in the Prime Minister's statement. Since the Government has felt impelled to recede from the position it attempted to justify by these figures, it is reasonable to ask what the result will be. If figures can now be given showing how many landowners, especially how many farmers, will be affected by this softening of the blow, the country will have an indication, which it has not had before, of the extent to which the taxation as originally proposed touched those just beyond the margin of exemption. Then there will be a means of estimating, roughly, but better than heretofore, how far the broadside will reach those at whom ostensibly it is aimed, the "wool kings" of whom so much has been heard. From the late date at which official figures appeared, it was fairly obvious the Government did not really know, when the Budget proposals were framed, to how many landowners they would apply. It will be interesting to discover whether there is equal vagueness about the number to whom a concession is now being made, or whether it is merely a concession in the dark, offered in the hope it will dull the edge of unmistakable resentment shown by the rural community over the nature of the taxation. The character of the taxation proposals is, as already stated, objectionable for many reasons. Reducing the mortgage exemption has been criticised as tending to tax a landowner on his debts. It would be more accurate to say it is liable to tax him for something he does not own. His equity is the measure of his interest in the land. Any arbitrary level of mortgage debt allowed in assessing land tax makes it possible to tax a landowner far above the measure of his equity in the land. Pieducirig that level simply increases the chance of injustice by increasing the number of those who have to pay on property that is not really theirs. As for the super-tax, increasing the margin at which it becomes operative does not dispose of the fact that it takes no account of the landowner's capacity to pay. A man whose property has an unimproved value of £12,500 may enjoy a much better income from his land than a neighbour whose valuation is £14,000 or higher. The one will escape the super-tax, the other will pay it. After the margin of £14,000 is passed, notice is taken of l'-o earnings from the land, for if the assessable income of the owner would yield more taxation than the land tax and super-tax combined, then income tax must be paid. Again, the farmer whose unimproved value is even £13,000 may bo making more out of his estate than two neighbours who are just over that level, one of whom pays super-tax. the other income fax; yet, because of Uiat £lt)0 by which the property of (ho first falls below the limit, ! lie escapes the not. Ihe, Government j hopes to cast, As a means of raisi ing revenue thc'pi'uposa'.s ate dumsy

and full of potential inequities, in no way improved by an increase in the limit of exemption. As a method of forcing estates into the market for subdivision, they have already been riddled with critifcism, inside Parliament and outside of it. Thus the retreat the Prime Minister makes from the position taken up in the Budget, a position he said he would hold at all costs, significant though it is, leaves him as badly placed for defending his measures of new taxation as he was in the beginning.