INCOME TAX DEDUCTION.

New Zealand Herald, Volume LXVII, Issue 20649, 22 August 1930, Page 13

INCOME TAX DEDUCTION.

LAND USED IN BUSINESS. NEW BASIS CRITICISED. EXTRA BURDEN ON FIRMS. [BY TELEGRAM. —SPECIAL REPORTER. ] WELLINGTON, Thursday. The Government's proposal to change to tho unimproved value basis the present general provision allowing a deduction for income tax purposes of 5 per cent, on the capital value basis of property used in the production of the income came under the review of the Hon. W. D. Stewart (Reform —Duncdin West) when speaking in the second reading debate on the Land and Income Tax Amendment Bill in the House of Representatives today. Mr. Stewart referred particularly to the effect of the change in the cities Mr. Stewart said it was truo that the Government was reverting to the law ;>s it stood before 1923. However, during the war period incomes were largo and enormous prices were being received on exports, and as a result the burden was not felt as it would bo now. Thus, when it was decided in 1923 to make the deduction upon capital value the chnngo was made largely because of the fact that the war period inflation was passing and the economic pressure of falling prices was being felt.

Hardship On Some Firms. "As far as tho cities are concerned it is true, as some members of the Government have pointed out, that the 5 per cent, allowed on the capital value worked out too favourably for some individuals," Mr. Stewart said. "In some cases it not only meant that the taxpayer paid no land tax, but also that he got a substantial reduction in income tax. But while the 5 per cent, on the capital value gave undue favour to certain city taxpayers, it was the only relief those businesses with tranches throughout the country had from the h'savy burden of the graduated land tax, which operated with great harshness in the cities." However, the substitution of the unimproved value would impose a mucn greater hardship on tha firms with branches in various centres, and Mr. Stewart said ha believed the Prime Minister recognised this. He asked that the Government should review any anomalies in the Act next year and should pay particular attention to this phase of the question. Building Contracts Abandoned. Information had come to him, added Mr. Stewart, that already largo building contracts were being abandoned, owing to the extra taxation proposed in the bill. Businesses with branches throughout the country were not only aggregated for land tax on freehold, but also for leasehold. It was true there was another aspect of the question, in that while soino persons might buy up land in various centres for purely business purposes, others might make an aggregate in one city with the object of being landlords puro and simple. It seemed that it should bo possible to modify the graduated land tax as far as the cities were concerned so that legitimate businesses were not hampered in any way, and so that cases < f hardship could bo met, a.id also that tho landlord speculator should not escapo tho graduated tax. These points could well bo reviewed if tho question caino up for investigation noxt year. MEMBER CAUGHT NAPPING. AN OPPORTUNITY MISSED. SLEEP CLAIMS MR. McDOUGALL. [n\ r TELEGRAPH. —SPECIAL REPORTER.] WELLINGTON, Thursday. When an extension of time is sought for a speaker in the llouso of Representatives, all eyes instinctively turn to Mr. I). McDougall, Government member for Mataura, who has set himself up as a. sort of censor of Parliament bv opposing all extensions, even to members of tho Ministry. However, Mr. McDougall was literally caught napping in the House this afternoon, when the Minister of Lands, Hon. E. A. Ransom, moved an extension for the Hon. W. D. Stewart (Reform —Dunedin West), who was speaking on the second reading of tho Land and Incomo Tax Amendment Bill.. As usual, everyone sat up to see how Mr. McDougall would act, but Mr. McDougall was fast asleep and the extension was granted without protest.