THE GRADUATED TAX.

New Zealand Times, Volume XXIX, Issue 6326, 28 September 1907, Page 7

THE GRADUATED TAX.

QUESTION OP MORTGAGES. EXEMPTION URGED. SUBDIVISION NECESSARY. The Land and Income Tax Assessment Act Amendment Bill was further considered by the House of Representatives in Committee yesterday afternoon. Objection was raised by Mr Wilford to clause 17. . . . No conveyance, transfer, declaration of trust, settlement, or other disposition Of land, whether made before or after the passing of this Act, shall bo effective so long as possession is retained. Ho protested against legislation which was going to create a penalty on a deed which the law at present said was legal Air Laurenscn: It creates no penalty. Mr Wilford: No; but it affects .the disposition. Mr W. Fraser said, assuming there was a mortgage of «UAO,CKK), then unless the mortgagee was a consenting party, and agreed to divide his mortgage between the people to whom he had sold, the owner could not comply with tho conditions of the Act, and oould not, until the money Was paid back again* be relieved of the 25 per cent. tax. The XVoinier pointed out that tho clause was agreed to unanimously by the Public Accounts Committee. The object was to insure that there should be no evasion.

Mr Massey said there were some clause* in the Bill that would make subdivision very difficult. A man's property was mortgaged, he wanted to subdivide in order to get out of the tax, and said to the mortgagee, ‘Tm going to out up." The mortgagee said, “No; I'm perfectly satisfied with my security." Thus the tax would ha Unfair in its operation. Ho supported the member for. Huttj there was no doubt the clause was retrospective; let them legislate for the future and not for the past, Mr Wilford moved to amend the clause with the idea of not making it apply until'the Bill became law. Lost by 28 votes to 18.

The clause was agreed to without amendment.

LIABILITY OR TRUSTEES. The Premier, explaining clause M, . . . Trustees to be liable as if

beneficially entitled said a trustee was taxed just as though he were beneficially interested, unless it was shown that the land is being held in trust for different persons i in that case he was entitled to subdivide so as to have the taxation applied to the-' different sections of land.

Mr Kerries inquired if the Public Trustee would be placed in the same position as an ordinary trustee under this Bill? He urged that effect be given* to the recommendation of the Royal - Commissioner, Mr Seth Smith, in respect to the West Coast settlement reserves, the natives there suffering an injustice at present owing to the exigencies of the law. The complaint was that where the Public Trustee held these lands, individual natives were not exempt, which they would be if they held severally. Mr Rutherford asked if they were to understand that in the'oaso'or a .trustee 1 for a number of people, the landed properties of these people were not to'be put in to the trustee’s estates for the pur-‘ g«e of increasing the graduated taxe understood from the Premier they i were not. If they were, then many people would be shut out from becoming trustees altogether. - The Premier : It doesn’t affect the trustee at all; it is the beneficiary. OBJECT OP THE TAX. Mr Massey contended there was no object in applying the graduated tax to an estate of the unimproved value of ,£SOOO. That was a small estate since the increase in valuations. He thought it was possible to draft .a clause which, while exempting a mortgaged man, would yet make evasion impossible. He thought the mortgage tax ought to be done away with, because it tended to keep up the rate of interest ;■ ... The Premier reminded members that the graduated tax was imposed with the object of preventing large landc*. estates or their 'aggregation. • Mr Rutherford: .£SOOO is not a large estate. ■ The Premier: The 25 per cent commences at .£40,000. If you put it in the position of the ordinary land tax. it is quite evident that the object to prevent , large estates would not be achieved. On the contrary, they would increase m size. To suggest that you should allow a mortgage to be deducted for graduated tax purposes is to suggest that largo estates should be allowed to grow. _ If you are going to say we’re not to have a graduated tax, let it be so, but the country , has been prepared for a grftdaft ted ei i. Mr Massey: Opportunity ; should be taken of raising the exemptions, because the graduated tax commences too low. I don't think large estates would grow the abolition of the mortgage tax. The best systems in vogue are those of Denmark and ‘ France, whore they haw no graduated tax* • ■■■ '■ hon. member; And the freehold. Mr Massey; Tee, and the freehold. A division was called for by the Opp* sition on clause 20 —

, . . That, for the purposes of the graduated land tax, no deduction shall be allowed from the unimproved value of the land in respect te mortgage money or unpaid purchase , money. - The clause was retained hy *0 vote* t» TIMBEE AND FLAX.

- When the new clause allowing timber to be assessed for taxation purposes at half its value came up for consideration, the Premier explained that a concession had been made because mill-owners required to buy large areas of standing timber in order to keep their mills going for some years. They- were not able to realise the whole of the timber at once, and in the meantime it only paid half rates. He believed both the bmtermillers and flax-growers were satisfied with the amendments which had been made. . . Mr Mander: It is an improvement to some extent. , ■ . ... Mr Field assured the Premier that life flax-growers were not satisfied, because they would be asked to pay land tax annually, though they could not realise their crops so often as the fariner. Mr Stevens said he hoped the Premier would reconsider the position in relation to flax-growers. They utilised lands for flax which were not suitable for ordinary farming, and it would discourage a great industry if the system was followed of taxing a man who planted worthless land upon the prospective value of that land when the crop came to maturity. Wherever there was an income, let it be reasonably taxed, but he wished the Premier to realise that for five years the flax-growers got nothing for their expenditure. . ■ Mr Hogg suggested that flax was just as much a cultivated product as cereals, upon which the farmer paid no *axav tion. He questioned very much whether there was wisdom in charging even half the taxation upon timber, because it would discourage the preservation of timber for climatic and scenic purposes. The Premier stated that it was at first proposed to charge on the fiax-millerEr income, but he was assured that this was unfair. He accordingly moved to charge land tax on the flax, land. lie had heard no obirction to this, bnt, as h- had been informed by the Commissioner of Taxes that dnfing the pastfewj days he had been urged to recommend going back to the original position, ne

would do so, and charge -income tax in* Head of land tax. Mr Stevens said his objection was. .o iuclutli.it; u Ki-otviua prop in the uunuproved vuluti ot the land, it .icum w. lucre reasonable if Max «tt» ar.-tc icd at one-tlnnl Hu value. f Mr M-.ihra-y tiiouglit the Oovcriimc:iit should seriously consider exeiuptius both Umber ami lias. Tunbor-xroa-iug should ''VhU/'Rmier informed the House that one powerful limber company hud secured sufficient timber land to lust it for the nest twenty years, but, hr-asked, should that company be exempt, the company was siitislied witn the Government's proposids. Mr Mess'-v: They n;iv income tax. Continuing, i ho Premier replied to Mr Masc:ey-s remarks on the eneonrußcment ~f Uleber planting bv quoting the Land Tax Act ot 11100, under which timber e rldfieiullv planted was exempt from luxation. " As flax growers secured a more frequent cron than timber grovvens, he could not put lioth on Ihe same tooting. If the flax growers were willing b) come under the income tax instead of J 3 1 e land tax, he would meet them. Mander-i Put timber there too. »tvT we would be satisfied. The Premier: That would not be fair. Air Wilford said the sunniest nlnu would be io treat firnber, coal, and flax lands, alike, charging them all upon income. Tlie olaiißo v.m=; passed unaltered. Tim purchase money.

A new KTj))-c]aiißO introduced bv the Public Accounts Committee provides—- ... That the seller w to remain liable until at least 15 per cent, of the purchase money has been paid.

Objection was raised by Mr Massey jnd Mr AUken that great hardship *-onld he entailed bv such a stringent ;hnisc, on tlie grounds. stated bv tbe latter, that the very desire would be prohibited by insisting upon too high a percenlagc. The Premier explained that the obiect Df the danse was to prevent boirn^ As th'* Bill came down originally the urn omit ashed was 25 per cent, of tho purchase money; the amount was reduced. on nnni t'nr the reason lhat it might operate against people w l -.- wanfed to oHdu l n nL Tie was on<* of those who was anxious, as ©very cm© pise, to see the poor man pet an opportunity nf going the land. The Hon. Mr Duncan nnoted instances In Canterbury where a -man working on itn ostate had not raid more than 10 per cent, of the purchase monev. TTb would not like to see these neonl© penalised in sueh a way as proposed in order to try and catch a bogus one. The discussion on thi« clause continued for pomo time. and it had pot been rasped when the Premier agreed jat midnight) to report progress.