LEVY ON RURAL LAND.

New Zealand Herald, Volume LXVII, Issue 20640, 12 August 1930, Page 11

LEVY ON RURAL LAND.

LAST YEAR'S SPECIAL TAX.

COMMISSION'S REPORT.

DRASTIC REDUCTIONS MADE. OVER-VALUATION OF LAND* Details of the cases in which full or partial remission of the special land tax was granted are'given in the report of tho Royal Commission appointed to investigate appeals on the ground of hardship arising from the imposition of the tax. A summary of the report was issued by tha Prime Minister on June 11, and the full text has now been published in a paper presented to Parliament. In 399 cases, the special tax was remitted in full, the amount concerned being £86,552 19s 3d. Ihe tax claimed in these cases ranged from ~£l 19s 5d to £2541 19s 4d. Partial remission was granted in 109 cases, the amount claimed being reduced from £55,537 13s Id to £23,803 2s sd, the remissions totalling £31,734 10s Bd.

Summary of Partial Remissions. The extent of relief granted varied considerably. In the following summary, a classification has been made of cases in which the tax was reduced by the commission to one-fifth or less or the original levy, to one-third or to one-half or less, the remaining oases having to pay over one-half. In each group are shown the total taxes fixed by the commission as against the aggregates demanded under the Act of last session

Tax payable up to Cases. Amount. Assessed. One-fifth . . ?> £OSO £4,25<5 One-third . . 2t. 3.552 12.35 a One-half .. 11.135 24,3CU Over one-half . . 3J . B,4:iG 13,931 Totals . . 10S £23,803 £55,538 The eight cases in the first group wera assessed for taxes ranging from £238 17s Id to £998 19s 9d. These amounts were reduced 'ov the commission to from £3B 17s Id to £l9B 19s 9d. The group which secured remissions to the extent of two-thirds or more were assessed for taxes from £72 6s 2d to £4105 7s 9d. The revised taxes ranged front £2O to £I3OO. There was a rise from £24 12s to £6769 16s 4d in the group to which half or more remission was granted The amounts fixed bv the commission varied from £l2 6s to £3269 16s 4d. In the remaining group the lowest tax claimed was £SO 13s 4d and the highest £3187 3s sd. As amended, this list shows a range from £25 13s 4d to £2OOO. The smallest concession, proportionately. was the reduction of £47, 10s 4d to £4O. Taxes Greater than Income. The commissioners—Messrs. W. G* Riddel!, D. G. Clark and A. E. Fowlerremark that the term "serious hardship'* was not defined in i.he statute, and they therefore gave what they considered a fair and equitable interpretation to the term, as applied to each individual case, "The range of values which came under review was extensive, and a great variety of circumstances surround the cases, So that no two .vere exactly alike." they add "In the great majority of cases, however, it appeared that the unimproved values as assessed were excessive, j having regard to the- productive capacity of : the land, and in numerous cases the average income derived over a term of years did not return more than 3 or 4 per cent, on the capital employed. In many others, the ordinary and special land tax combined exceeded the income of the taxpayer." In a later passage, the commissioners remark that they "noted a marked variation in values in respect of land of the same carrying capacity situated ill different localities."

Appeals for relief on grounds of hardship were supported by financial and miscellaneous objections. These are set out) under 15 headings, six of which were contained in the official summary of the report. The latter comprised objections on various contentions that the taxes proposed were excessive. Other objections were that the imposition of the special tax increased the difficulty of renewing mortgages: that the tax had been imposed without notice in respect of past operations'and had to be paid in a year when income was reduced by the fall in prices; and that payment of the extra tax would decrease the capac.lv to employ labour*

Tax on Subdivided Lands. " With regard tc the question whether all or any of the lands of the objectors were capable of subdivision," says the report, "a considerable amount of evidence was tendered, but as the order of reference did not empower the commissioners to make investigations or report as to the suitability for closer settlement of the lands under leview, no definite statement on this question could he given. Many of the objectors considered that if their land was unsuitable for subdivision or had beer subdivided and offered for sale either to the Crown or private persons, such circumstances would bring them within the soope .of section 3 (tha exemption clause) and exempt them from, special land tax, irrespective of their financial position." fn many cases the evidence disclosed that land had already been offered to the j Government for the purposes of subdivision and had been declined as being unsuitable; or had already been subdivided by the taxpajvr and offered for sale without success; or had been subdivided and sold and had fallen back on the hands of the taxpayer in a depreciated state, saddled with heavy arrears of interest, rates and taxes outstanding; or had been subdivided and leased to tenants. fn dealing with each application for relief. the commissioners directed their, attention to the following considerations:— (a) As to whether the payment of special land tax would affect the taxpayer to such an extent that it, would, upon fair and reasonable grounds, entail serious hardship on him; (b) the ability of tha taxpayer to contribute to the general revenue of the Dominion. Financial Obligations.

Two examples are given by the commissioners to illustrate their statement that the tax was imposed on "holders of land who were subject to heavy financial liabilities, combined with other forms of hardship which called for relief.:' The first) was an area of 1044 acres of freehold, of which the unimproved value was at March 31. 1929. and the capital value £17.915. Mortgages owing at that data were £16,000 and other liabilities £ISUU. The taxpayer purchased the property in 1919 at £24 an acre At that date his capital ' was approximately £16.000; at present it is under £I6OO. Income for the year ended March, 1929, was £6OOI for the year ended March, 1930, it was • under £3OO The ordinary land tax was £lO6 6s 8d and special tax was assessed at £32 19s 3d. Since March. 31, 1929. the values of the property have been revised and now stand at £13,030 unimproved and £14,730 capital. Hie second illustration is of a case in which the ordinary land tax, £1230 5s Id. was to have been doubled by tho supertax. It comprised 5047- acres of freehold and 1031 acres of leasehold valued at £69,912 unimproved and £103,110 capital. Mortgages amounted to £141,246 and other liabilities to £23,250 Capital was £4115. In 1928 29. the owner suffered a less of £5126 and in 1929-30 a loss of £4415. Roth these examples are evidently identifiable, by the amount of special tax wit hi cases in which full exemption was granted*