LAND TAX YIELD

New Zealand Herald, Volume LXXIII, Issue 22489, 5 August 1936, Page 15

LAND TAX YIELD

GRADUATED SYSTEM ESTIMATE OF £1,300,000 WORKING FARMER HELPED [BY TELEGRAPH —SPECIAL REPORTER] WELLINGTON, Tuesday " It is proposed to re-introduce the graduated land tax, from which an estimated revenue of £1,300,000 is expected, or approximately three times the present revenue," said the Minister of Finance, the Hon. W. Nash, in his Budget speech in the House of Representatives to-night. " The tax removed by the Coalition Government in 1931 had, for 15 years previously, yielded revenue between £1,000,000 and £1,500,000 per annum, and sometimes slightly in excess of the latter sum," the Minister said. " The principle of land tax has been the subject of debato and controversy throughout tlio centuries. It must bo accepted that a charge on land of any kind reduces its selling value, such selling value being based on the net return which can be obtained from the land after all charges have been paid, which means that, given stability in prices and costs of production, a reduction in land tax is a gift to the immediate landowner. Conversely, an increase in the tax must bo mot by the immediate owner. Ability to Pay " To ensure taxation in some measure according to ability to pay, the existing flat tax will be continued at a penny in the pound of taxable balance of unimproved value up to £SOOO, after the ordinary exemption or mortgage deductions have been made, which means that the farmer owning land of an unimproved value of £SOOO, with mortgages of £3OOO, will be assessed on £2OOO, the tax payable being £8 6s Bd, as at present. The working farmer should be the first to be helped, after which tlio ability to pay should be considered. When the unimproved value reaches higher levels the tax will bo increased accordingly on all land, whether it be city, suburban or rural. " The existing ordinary and mortgage exemptions will be continued. The rates of tax to be paid on the restored procedure of graduated tax will bo as follows: —Taxable balances up to £SOOO —one penny in £l, increasing by l/8000th of a penny for every £1 in excess of £SOOO, reaching a rate of twopence in the pound at £13,000, threepence at £21,000, fourpence at £29,000, fivepence at £37,000, and sixpence at £45,000, from which point the tax continues at the flat rate of sixpence to the maximum valuo owned by any individual, trust, estate or company. Purpose of the Tax " The purpose of land tax is, in principle, to obtain for the community the ralues created by it. The principle behind the policy of the Government is to ensure to those who utilise land the maximum payment for their labour. In other words, the farmer's eyes should be on the return for his products, rather than the acquisitive possibilities of profit derived from land sales. Applied to city, suburban, or rural land, values that accrue through public activities and increased population should automatically eonio to the State, and the policy of the Government will be directed to this end. " Summed up, the procedure will mean the minimum taxation on the working farmer and home-owner, with increasing rates on abnormally large holdings and other areas, held in many cases for speculative profit, instead of for use en production." TAX SURPLUS BUOYANT REVENUE MOST ESTIMATES EXCEEDED [BY TELEGRAPH SPECIAL REPORTER] WELLINGTON, Tuesday Satisfaction at the buoyancy of the revenue, which had exceeded the Budget estimates by £430,000, was expressed by the Minister of Finance, the Hon. W. Nash, in his Budget speech this evening. He said that every item of taxation, with the exception of stamp and death duties and land-tax, showed a substantial increase amounting in the aggregate to £2,092,000. Mr. Nash gave the information that the increases from taxation were offset to the extent of £679,000 by a decrease in the yield from stamp and death duties, due to abnormal amounts of death duties having been paid during 1931-35, and a decrease of £34,000 in land-tax due to lower valuations. Mr. Nash continued that while the total revenue received exceeded the Budget estimates by £430,000, subsequent to the Budget being brought down a further review of tho revenue estimates was made, and on the basis of that review the 7\ per cent increase in salaries and wages and restoration in pensions was back-dated to August 1 instead of commencing on October 1 as was contemplated. The additional amount involved was approximately £140,000, and, if allowance is made for this, tho revenue for tlio year exceeded expectations by somo £290,000. Consequent on the surplus of revenue over expenditure, no treasury bills were outstanding on March 31.