THE New Zealand Herald AND DAILY SOUTHERN CROSS FRIDAY, SEPTEMBER 20, 1929. A LEVY FOR REVENUE.

New Zealand Herald, Volume LXVI, Issue 20365, 20 September 1929, Page 12

THE New Zealand Herald AND DAILY SOUTHERN CROSS FRIDAY, SEPTEMBER 20, 1929. A LEVY FOR REVENUE.

Two purposes are sought by tho Government's proposed super-tax on farming lands; -It is contended that large farming incomes have -not borne their fair share of taxation in recent years, and that an equitable adjustment can be made by a graduated addition which will also assist in bringing about the cutting up of large estates. In principle, both contentions are generally endorsed. Both large and small farmers should be required to contribute their fair proportion of taxation and the subdivision of large estates that are suitable for closer settlement is desirable, provided it can be effected without injustice. There is, however, a manifest fallacy in the assumption that an arbitrary scale of taxation will achieve both purposes. If the increase is merely sufficient to adjust the contribution from large farming incomes to the same level as taxation from other sections of the community, its punitive effect should be negligible. On the other hand, taxes that would compel the owners to sell—obviously at lower prices than they would otherwise demand—must be in excess of tho equitable standard. At present, the disruptive effect of the proposed taxation may be left out of consideration. Its operation this year will be simply to levy from a selected group of landowners contributions to the national revenue. The super-tax is payable by all persons who, at noon on March 31, were the owners of farm lands of a total unimproved value of more than £14,000, whether their properties are suitable for subdivision or not, whether, indeed, they have ' since that date sold or subdivided their properties. Moreover, to ensure the maximum assessment, the taxation is to be based on the valuations recorded in the so-called subsidiary roll, since the latter is not to be abolished until April 1, 1930. As long ago as 1907, landowners were given the opportunity of declaring a valuation as the basis of sale to the Crown, and so long as that valuation remained on the subsidiary roll, it determined the amount of land tax to be paid. Thus, so many properties as have been under offer to the Government on these terms, and taxed at the enhanced rate, are now to be subject to a super-tax on the same basis, ostensibly to persuade their owners to make way for closer settlement.

The suggestion is implicit in. the presentation of the Government's proposals that the effect of the increased land tax will be equivalent to taxation of incomes from the lands concerned. Land tax and super-tax will be levied on all properties exceeding £14,000; income tax will also be assessed, and if it exceeds the land tax, the balance must also bo paid. From the latest available statistics of farm land taxation, the second assessment appears to be superfluous. According to the official estimate,- the original scheme of super-tax commencing at £12,800 was expected to affect 1750 farmers, and to produce £325,000, which, as ordinary tax on farm lands exceeding £15,000 amounted to £395,000 in 1926-27, appears to be conservative. It may safely be assumed that the new scale applied to properties exceeding £15,000 will produce £700,000 in ordinary and special land taxes. Taxation of all farming income in 1922-23 produced only £78,761. Then an exemption of 5 per cent, of the unimproved value of the land was allowed, whereas no such concession is proposed in the new assessment of income tax. Even so, it would require a drastic multiplication of the former income tax to equal the proposed land tax, so that, except in rare cases, the alternative con- j tained in the legislation has no practical value. That is apparent from the following illustrations of the contemplated taxation where the present scale is to be doubled, showing in comparison with the proposed levies amounts of net taxable income upon which approximately the same charge would be made under the present scale of income tax: — Double Land Income Tax equals Tax on "£30.000 .. £582 „ £3,840 40,000 ... 934 „ 5,100 50,000 1365 „ 6,600 60,000 1876 „ 8,400 100.000 4710 „ 20.900 128,000 .. 7448 „ 33,100 The graduated scale reaches its maximum at £138,000 at which it will bo 14.9 d on every' pound (the maximum during the war was lOAd) but the highest figure used in the comparison represents the average value of the 16 estates exceeding £IOO,OOO on which land tax was paid in 1926-27. An indication of the relation between income and unim-

proved value can be obtained from the 1922-23 return, which shows tho former and 5 per cent, of the latter. In that year, assessable incomes from farming exceeding £2OOO represented an average of 11 per cent, of tho unimproved value ;• the three highest groups, £SOOO to £20,000, were equivalent to only 7 per cent, of the unimproved valuo. /In the examples set out above, estates of £30,000 to £50,000 are being taxed as though the incomes produced were 13 per cent, of the unimproved value; at £OO,OOO the ratio is 14 per cent. ;at £IOO,OOQ it is 21 per cent, and at £128,000 'it is 27 per cent. There could not /be a more convincing demonstration that the proposed taxation is arbitrary and inequitable. ♦,< ' I

There is Nothing in the legislation restricting the super-tax to obdurate owners of large estates suitable for closer settlement. It is to be applied indiscriminately to all farm lands exceeding an arbitrarily selected value simply if they are "used or capable of being used for agricultural or pastoral purposes." There is nothing to exempt properties which are being used to their maximum capacity of production,

nothing to exclude properties which the Government has rejected as unsuitable for its purpose. Indeed, if the Government is sincere in its suggestion that it will purchase on fair terms all farm properties on which "the land tax is to bo doubled, there is no occasion for a punitive tax at all. There were in 1926-27 only 348 estates exceeding £30,000 in unimproved value, so that it would not be an impossible task to inspect every one of them. The inherent absurdity of the implied proposal is, however, apparent. The unimproved value of these properties was £14,924,000 ; including those between £14,000 and £30,000, the total was about £35,000,000. Does the Government seriously suggest to the country or the large farmers that it is prepared to buy land for settlement on that scale 1 The allusion to closer settlement ib in fact merely an excuse for proposing a crudely arbitrary scale of taxation, without tho slightest consideration of its injurious effects. The group of landowners affected have no means of escape, since it has been proposed without warning upon a retrospective basis. When its effects are examined in the light of the fact that in the first instance the tax has no real relation to settlement policy, the Government's proposal is revealed as nothing less than a capital levy, as vindictive and as merciless as any Socialist has ever proposed. Its only excuse is expediency, to provide additional revenue, and if it is legitimate to "make a virtue of necessity" in this fashion, as the Prime Minister remarked in the Budget, a similar disregard of all other considerations might lead another Minister of Financo to apply an equivalent measure of confiscation to any other class of property in the Dominion.