LAND AND INCOME TAX

New Zealand Times, Volume XLII, Issue 9740, 16 August 1917, Page 2

LAND AND INCOME TAX

IMPORTANT STATEMENT BY SIR JOSEPH WARD. LAST YEAR’S AND THIS YEAR’S RATES COMPARED. EXCESS PROFITS TAX. ENORMOUS INEQUALITIES OF INCIDENCE. An important statement was made in the House of Representatives yesterday afternoon, giving comparisons of actual assessments to income tax and to land tax and income tax combined at the present (last year’s Budget) rates and at the rates proposed in this year’s Budget Statement. The comparative statement in regard to income tax, said Sir Joseph Ward, illustrated the tremendous irregularity of tho great anomalies caused by the Excess Profits Tax last year. (Hear, hear.) Tho Government had to remove the uncertainty in the incidence of taxation thus caused, and it was being removed in the present Budget. (Hear, hear.) As showing the enormous inequalities of incidence of the Excess Profits Tax, ho would point out that last year on an income of .£56,368 (including £15,448 excess profits), the ordinary income tax, the additional 5 per cent, tax on all assessable incomes, and the Excess Profits Tax totalled £z0,590; whereas on an almost equal income of .£54,345, but with no excess profits, the taxation was £9613 only, in tho first case the excess profits tax alone was £15,448. Under this year’s Budget, however, the total taxation (ordinary income tax and war tax) on the £56,000 income would be £20,922 (a decrease of £5000); and that ou the £54,000 income would be £19,985, an increase of £IO,OOO odd. On an income ol £27,511 last year (with £4918 excess profits), the taxes totalled £9172; whereas on an income of £37,785 (with no excess profits) they totalled £4864 only. This year these incomes would be taxed, respectively, £9438 and £11,838. Again, on an income of £4594 last year (with £I9OO excess profits), the taxes amounted to £2583; on. an income of £4630 (with no excess profits) they amounted to £717 only. This year the taxes would total £1152 and £1231 respectively. INCOME TAX COMPARISONS. The following is the table referred to;— /

LAND AND INCOME TAX COMBINED. Sir Joseph Ward added that in the first case dealt with in. the comparative Abatement as to land and income tax combined tho unimproved value of the land was £102,000. Mr B. McCallum (Wairau): "How manv cases are there over £160,000?" Sir Joseph Ward: "I have' not got the information, but I can readily ascertain it." Mr J. Payne (Grey Lynn); "Have you the number of those over £6OO unimproved value?" Sir Joseph Ward: “I haven’t got U. but cam easily get it for the House.’’ Sir Joseph added that in making comparisons between last year’s land and income tax and the taxes now proposed duo allowance must be made for the fact that last vear there were big gaps or “jumps" between certain amounts, but this year there was a steady graduation. Any comparison thtut did not take those facts into account would not be fair to the Budgdt proposals, to the country, which would be misinformed by it. or te the hen. member who, no doubt unintentionally, made such a comparison. In the,first case, said Sir Josephunimproved value, £102,259, with no mortgage; income, £66,392, with no excess profits—the combined land and income tax lasft year was £13,926. This year it would' be £26,980, an increase of £13,053. (Hear, hear.) The land in all the cases dealt with, except case five, was farming land. In tho second case —unimproved value. £69,114, with no mortgage; income, £15,6-15, with ne excess profits—the taxes last year amounted to £3535. Tliis year they would be £67-11, an increase of £3196. (Hear, hoar.) In the third case—unimproved value, £58,043 (mortgages £50,074); and income. £16,406, including excess profits —(the taxation last year totalled £4S3S; this vear it would be £SCSI, an increase of £1752 (Hoar, hear.) In case fourunimproved value, £52,477, with no mortgages; and income, £9377, with no excess profits—tho taxation last year was £2274 in all; this year it would be £4066 an increase of £1732. (Hear, hoar.) In these two cases, with substantially equal unimproved values, the taxation was substantially equal. (Hear, hear.) In case five—unimproved value, £27,122. with no mortgages; income, including excess profits, £l6,23o—last year’s taxes totalled £2879; this year the; would be £6141, an increase of £3262. (Hear hear.) To take a case of much smaller unimproved value, case eight—unimproved v value, £5756 (mortgages £5500): income, including excess profit£looo—lost year’s taxes were £129. Thu vear they would be £B6 or a decrease of £33. (Hear, hear.) The land tax last rear in this case was £1 19s -Id, but this year it would be £4l 6s 4d. (Hear, hear.) EVERYBODY SHOULD PAY SOMETHING. At present, said the Finance Minister, they -were asking for money by way , ofwar'tnxa’tion to pay for tho rwar: and those who said that small people should be relieved should rfmemter that everybody- in the country should pay tome.thing towards the cost of the war that,,

was going to save to him whatever he had. (Hear, hear.) Mi- E. T. Lee (Oamaru); ‘ Some are going ito escape.” Sir Joseph Wai-d: "Last year ’some did escape, but this year very few will. (Hear, hear.) A whole body of taxpayers, ho added, escaped under /the excess profits tax altogether. They must have a system that they could not escape under, and such a system the House was being asked to adopt. (Hear, hear.) The people they would have to depend .upon for the revenue of the country in the future were being called upon to pay under the. graduated taxes. Ho would give oases in the course of the Budget debate of more than one taxpayer going to pay 15s in the £. Mr Payne: “On combined land and income tax?” Sir Joseph Ward: Yes. in income tax plus ordinary land tax." Mr T. M. Wilford (Hutt): “In America they aro ’asking 80 per cent, from some of them." • "FINANCIAL ELBOW ROOM." Sir Joseph Ward: "Yes; but, fortunately, we have not got in this country the multimillionaires they have fin America." (Hear, hear.) The Finance Minister added that the Government had. not got tho financial elbow-room to do What some members were . asking them to do. If thev were to eliminate tho "taxes on the small farmer, as some wanted, (during the war period, then they would have to make up their minds that a good many people who were now paying 5s income tax would haveto pay iOs in the £; and from those who were paying 15s they would have xo take the Jot. They would also stop the ordinary avenues of revenue that would ha required to keep the country going after the war was over. They should feel their responsibilities as members of Parliament in this -war time, and realise that to appeal art ouch a time to the sentimentality of their constituents in regard to the small men was wrong. (Hear, hear.) They had to got a huge sum of money; and they were bound to got it if they were to carry on their share of 'the war. (Hear, hear.) He had quoted those coses for the general guidance of hon. member* and of .anybody who was anxious to ask tho Government, in connection with their war finance, to introduce what he would call party. views of greatt questions of land "policy. To ask that was in his' opinion quite wrong. (Hear, hear.) They had to get through the war; and, until the war was over, at was net safe for them to go in for policies which could only be dealt with under 'the party system of a regular Government and Opposition. (Hear, hfear.) Mr Wilford: “When you have two parties in the Government, how do you manage it?" / MUST PROVIDE FOR EMERGENCIES Sir Joseph Ward, ignoring the question. said rthut 'the Government had to provide tor any eventuality that, might arise through the shortage of shipping, for example, and through other ciroumetancos beyond their control- They must ’have strong finance available , in close of emergency, and to enable them to carry tho burdens they would have to shoulder as soon aa tlha war was over. (Hear, hear.) Mr Payne: "Is 'that the reason for the big reserve in London?” ■ . Sir Joseph Ward: “It is partly the reason." They would have ten millions in the Posit Office Savings Bank, he added, after the war was over; and to give tho country the opportunity of righting itself under normal conditions, thev must ie strong in London financially to meet the position if people wished to withdraw their money from the post office to invest in trade and industry. (Hoax, ‘hear.) Mr Wilford: “All interest in War loans most be paid out of. taxation." Sir Joseph 'Ward: "AH interest on war leans is being .paid out of taxation and must be for the future. (Hoar, hear.) If the war is over in anything like reasonable time I believe this country will ho aa well off as any country in the world. (Hoar, hear.) , Wo Wave a powerful country behind us in the matter of productivity, and enormous natural resources." (Hear, hear.) But. he continued, it was not safe to introduce the great policy principle mentioned by some members: and it was wrong to ask the Government ta break off from providing for present urgent war needs to carry out views bhart they might think right in the future; SMALL FARMERS MUST DO THEIR PART. He wished to express the opinion that tho email farmers in the country were just as anxious as the large farmers to do their part. (Hear, hear.) And, even if they were not anxious to do so. it wag incumbent upon them to 'do their part; and members should explain ilo them the need for ft. (Hear, hear.) In case nine in the land and income tax table —unimproved' value £3085 '(mortgages, £2600); income, with excess [profits. £7B4—it would be seen that taxes last year were £92. whereas this year they would be £46. a . decrease of £46. In case ten, too*— unimproved value. £3500 (mortgages, £300); income, with excess profits. £loß9—the 'taxes last year totalled £134. but this year they would be £79. n reduction of ’£ss. He wanted to say this and this only, and he said it advisedly, that it was no use asking hew much an acre that was on 50 or 100 acres of land in expectation that .they could abolish it: and if any member wanted to exempt these men or make their taxation of no u/so in uweilliimg the total amount of taxation, then let them make up their minds that the income- tax had to be fixed art a higher rate than in England or anywhere else. Thev would have to make up their minds also, that they were going to cripple part of the revenue necessary fie carry on the country after the war. (Hear, hear.) Mr W. Nos worthy (Ashburton): “The difficulty ds that tho big people did no t pay as much la«t year as they should have dkme." (Hear, hear.) Sir Joseph Ward; “The fact is that forme of them are being called upon this year to pay five or six times as much as last year. ‘But ft is necessary; and I think that it is generally recognised throughout the Country that it is unavcrid'able." (Hear, hear.) LAND AND INCOME-TAX COMPARE SIGNS. The following is the comparative table, with regard to land and income-tax combined. referred to above.— Tax at Tax paid. ProPresent posed InRate. Rate, crease. Case 1.

+ Includes excess profits. 'lndicates a decrease. SOME CRITICISM. Mr Hornsby (Wairarapa) deprecated the remarks of the Finance Minister in regard to the criticism directed by members against the finance proposals. He considered that if members allowed gome of those proposals to go by without protest they would bo lacking in their duty. It would bo better for membora to stay at home if criticism were not allowed. He must repeat his protect against the Government allowing owners to hang on to large areas o. land without any attempt to burst up these estates. .THU BAETIAL PAYMENT SYSTEM. Sir John Findlay asked the Finance Minister if he had provided for the contingency of allowing employees to contribute to the loan in small amounts through their employers. Mr Wilford: "Flartial payment?" Sir John; "Yes.” The Minister repined that he intendec bo provide for this contingency In the bill-. Mr Wilkinson (Egmont) saad ho must again urge on the Government the necessity of allowing a fanner to deduct from bis income tax the amount he already had paid in land tax. Mr T. M. Wilford hoped thalfc the National Government would not endeavour to pass its taxation bill as rapidly as it had passed other finance measures this session. Sir Joseph Ward said he had intimated that the Taxation Bill would not be passed in such a way. Hon. D. Buddo said that while he did not object to the taxation proposals in general he thought that they acted unfairly on the' small holder of land who had a mortgage on such land. Sir Joseph: "In the bill to be brought down this point is to benefit in a reasonable way." ■Replying to Mr Hornsby Sir Joseph Ward said he had not suggested that any member of the House should refrain from criticism. Further, never in the history of the Dominion had large landowners been so heavily taxed as under the present taxation proposals. A member: "They will want to sell their land—it is a good thing for the country.” THIS TEAR'S SURPLUS. Replying to an interjection Sir Joseph said that the surplus for the coming year wsa a safe estimate. The surplus at the end of the year probehlv would be much larger, but the- had to make allowances for possible setbacks. If the shortage in shipping continued, for instance, the surplus would probably dwindle. In existing circumstances the surplus should be over three millions, but they could see it would be unsafe for him. to put this down. No man living knew what the next six months would bring forth. Last year's surplus was based pn complete safety, and it was the Government's du±- to an for complete safety this year. (Hear, hear.)

Total. Total, Income. Tax. 1916-17. Proposed Tax. 1916-17. £ £ £ £ £ 56,368 2,818 Ordinary. Section 5. 8,239 Ordinary. 15,418 Excess profits. 12,682 War-tax. 23,590 20,922 Ordinary. 7,758 Ordinary. 2,717 Section 5. 12,227 War-tax. 9,613 -■ 19,985 27,541 Ordinary. 3,236 Ordinary. 1,377 Section 5. 4,918 Excess profits. 6,196 War-tax. 9,172 9,433 37,785 ...... Ordinary. 3,336 Ordinary. 1,889 Section 5, 8,501 War-tax. — 4,864 ' 11,838 4,5m Ordinary. .409 Ordinary. 229 Section 5. . 1,900 Excess profits. 2,583 743 War-tax. 1,152 4.630 Ordinary. 446 Ordinary. 231 Section. 5. 717 785 War-tax. 1,^1

£ .£102,259 Land, U.V 2.543 £66,393 Income 11,383 £ £ 2,661 117 Land-tax 24,319 12,936 Inc.-tax No mortgages 13,926 Case 2. £69.114 Land. U.V 1,243 £15,645 Income 2,295 26,980 13,053 Tot’Iinc. 1.351 102 Land-tax 5.390 3,093 Inc.-tax No mortgages 3,535 Case 3. £58,043 Land. U.V 769 £16,498 IncTnef 4,129 6,741 1,009 5,641 3,196 Tot’Iinc. 240 Land-tax 1.753 TotT inc. ilortg's £50,074 4.898 Case 4. £52,477 Land. U.V 736 £9,377 Income 1,537 6,651 1,752 Tot'l inc. 855 119 Land-tax 3,151 1,613 Inc.-tax No mortgages 2,274 Case 5. £27,112 Land, U.V 186 £16,280 Inc’mef 2,693 4,006 307 5,834 1,732 TotT inc. 121 Land-tax 3,141 Inc.-tax No mortgages 2,879 Case 6. £20,691 Land, U.V 131 £3,671 Income 322 6,141 208 624 3,262 Tot’l inc. 77 Land-tax 301 Inc.-tax ■ilortg's. £4250 453 S32 379 TotT inc. .

Caeo 7. £10,792 Land. u.v .£1,698 Inoomot 52 157 88 143 Mortis. £1525 210 231 21 Case' 8. £5.756 Land, u.v. .£1,000 Incomet 1 127 41 54 MortK’s. £5600 129 96 £33* Case 9. JB3.085 Land. U.V. £784 Incomet Nil 92 18 S3 MortK’s, £2600 92 46 £46* Case 10. £2,500 Land. U.V. .£1.039 Inoomet S 128 10 68 Mortg’s, £800 184 79 £55*