THE LAND TAX.

New Zealand Mail, Issue 382, 7 June 1879, Page 19

THE LAND TAX.

Questions are constantly being asked as to the apportionment of the land tax between the landlord and the tenant. For the benefit of those interested we reprint the clauses, 50 and 51, relating to this point : " Where land is held under any lease, or agreement for a lease, or other instrument creating a term of years not less than three years to run or expire from the date of the valuation list,, whether granted prior to the coming into operation of this Act or subsequent thereto, then the land tax payable for such land shall be apportioned between the landlord and the tenant in the following manner : If the land b« held under lease at a rent less than an amount equal to five per centum on the value to sell—(1.) The tax to be paid by the tenant shall be proportional between the rack-rent and the rent actually paid ; and (2.) Rack-rent, for the purposes of this section, shall be deemed to be five per centum on the value to sell, as defined by section four of this Act. Provided always that if the rent payable by the tenant shall not exceed the amount of the tax, the whole of the lax glial i b-j paid by the tenant. " The lessee and landlord shall each be liable

for the payment of the tux, aud either of them paying the same shall be entitled to recover from the other the amount chargeable to him under the previous clause. Provided that if any dispute arise as to the proportion to be paid by a tenant and landlord, the same shall be decided by the commissioner." We have good reasons to believe that a great many taxpayers would lie unable to interpret the legal phraseology of the clauses, and having asked an opinion from a legal gentleman as to lii-i rending and application of the sections we < ffer the following practical illustration :—A owns a landed property valued at £IOOO (without improvements). B is a tenant of A. Rent—we understand to mean ground rent." The rack rent of the property under the Act would amount to £:"50 per annum. If the tenant B pays more than £SO a year we understand that the landlord is Cable for the whole of the land tax, which, in tiie case before us, would amount to 1000 halfpence or 41s 3d. If the tenant B pays less than £SO per annum for his ground vent, the land tax would be divided between the landlord and tenant in Vie'following proportions : —lf the tenant pays £2:> per hnuum he and the landlord would each pay half the tax. If the tenant pays £37 10s. a year as ground rent, he would only have to pay quarter of the bind tax, and the landlord would have to pav thr e-quarters of the tax. By a proviso to clause fiO it is enacted that if the tenant pays lrs-> rent than the land tax amounts t.o, he will be liable for the who'-- tax. If we apply this proviso to the cms-- before u-\ a tenant who paid than 41s 3d. rental for a piece of laud valued at £IOOO would be liable f' r the whole tax, in addition to his sent. The department may recover the rent either from the owner or from the tenant. But if the tenant pays his landlord's share we presume that the snm paid for the landlord by ♦lie tenant may be deducted by the latter from his rent.

The clauses are somewhat puzzling to the non-professional reader, and if the above interpretation is inaccurate we shall be triad of correction or criticism. The chief difficulty in towns will be to assess the value of the ground rent apart from the rent paid for the buildings which are erected upon the land. The ground rent of land in towns, if there were no houses or improYements, would not be

very high. Under sub-section 7 of clause 5 of the Land Tax Act every tenant of land vested in the council of any borough, either by way oF endowment or geuerallj' as a reserve for educational purposes, is deemed to be the owner of the land. This will bear very heavily upon some of those who have leased land in the town belt for pastoral purposes. The land has been valued under the Land Tax Act at about £SOO per acre. This is quite an absurd valuation for grazing purposes. A case has been mentioned to us which will exemplify the special hardship imposed in certain instances. A gentleman leases 11A acres of inferior land in the town belt, his rent is £ls 10s. The land is assessed at £5720, which will necessitate the payment of a tax of £il 18s. 4d. by the tenant, in addition to his rent. The same person has leased 6h acres of town belt elsewhere, for which he pays £45 10s. rent. The land is valued at £-3293, which involves a tax of £6" 18-*. We do not believe that any such valuation will be upheld before the Assessment Court. It would be far better for the town belt tenants to abandon their leases in many cases than to pay such an enormous increase on their rental as the payment of the land tax would involve.