BURDEN OF TAXATION

New Zealand Times, Volume LI, Issue 11772, 7 March 1924, Page 4

BURDEN OF TAXATION

“FAIRLY DISTRIBUTED” PRIME MINISTER ON “FIGURES AND FACTS.” TAXES IN CITY AND COUNTRY. “Since my return to "Wellington a few days ago,” stated the Prime Miuister yesterday, “my, attention has been called to an article under the nom do plume of ‘Justice,’ appearing in several of last Saturday’s daily papers, and headed, ‘ls is fairly loaded? Burden of taxation. Who is carrying it? Seme facts and figures.’ I have read the article with a certain amount of interest, and though it contains many figures, there are very few facts. It is evidently intended to assist in encouraging the difficulty that has been created between town and country by writers of the same type as ‘Justice.’ To commence with, he lays down this axiom—‘A sound principle of taxation should not take into consideration whether the payer lies in the town or country. All are citizens of the same Dominion, enjoying the same benefits and privileges, and should be liable for the same proportion of their income in taxation, no matter what occupation they follow, the spot they live in. or the source from which their income is earned.’ This is quite good enough for John Stuart Mill, Adam Smith, or any of (the other great authorities on political economy, but, unfortunately, ‘Justice’ does not attempt to practise what ho preaches. He is evidently not aw'are of the burdens imposed by the land tax upon country settlers, or he does not stop to think that the land tax is out of all proportion to the income tax. For instance, income is exempt up to £3OO per annum, and there are many concessions after that. £3OO per annum capitalised at 5 per cent, "gives us a capital of £6OOO. Land, on the other hand, is exempt only up to £SOO, so that the exemption works out as £6OOO capital before the operation of the income tax applies, and £SOO for the unimproved value of land before the land tax applies. How is that for fair dealing? “WOULD BE BREACH OF FAITH.” “Over thirty years ago the New Zealand Parliament decided that settlers occupying country lands should pay land tax, but should be exempt from income tax, and very little exception has been taken to thait arrangement until as a war tax farmers were called upon to pay income tax as well as land tax. But they were informed at the time, that, when the war came to an end and matters settled down, they would get back to land tax only as they were before. To retain 'the income tax would be grossly unfair as well as a serious breach of faith of which no set of decent men would be guilty. “‘Justice’ seems to think that business men pay heavily in land tax. Perhaps great institutions such as the banks, with branches in each centre of the population, or insurance companies, or even stock and station agencies do, but the ordinary business man pays very little in the way of land tax. What would ‘Justice’ think if it happened to be suggested in Parliament that the business man should pay taxation on Ibis stock in trade? But land is the stock in trade of the country settlers, in which his capital is invested, or, putting ilt in another way, the raw material from which he makes a living. But whether he makes a profit or a loss, the country settler has to pay land tax. During the slump years, when everything that he produced fell in value by at least 50 per cent., he had to find the land tax, though his losses were in many cases very serious. But he got precious little consideration from individuals of the turn of mind of ‘Justice,’ who writes about a subject of which he evidently knows very little, or else is attempting intentionally to mislead the public. This is the sort of stuff that we might expect from a Socialistic representative in Parliament, and it is just the sort of thing that, coming from representatives of the commercial oommunaty, wall, in the not far distant future, place a Socialistic Government on the Treasury benches. “EYES CONVENIENTLY SHUT.” “Justice” talks about leaseholders in this country, one of whom, he says, to his knowledge had an income of approximately £20,000 from his wool alone this year. (He does not think it necessary to inform those who read hie article that the £20,000, even if any such, case existed, which. I very much doubt, was the gross income of the sheepfarmer. Out of that, if it was Crown land, he had to pay rental based upon the value of the property. He had all the incidental expenses of his farm or station, or whatever it happened to be, cost of labour, material for fencing and building, interest upon his mortgages, 9 per cent, probably, to the stock and station agency with whom he does business, losses of stock, local bodies’ taxation and land tax on the goodwill of the lease, if it happens to be worth anything, and the thousand and one expenses which every settler experiences and understands, but to which men like ‘Justice’ conveniently shut their eyes.

“Just one instance occurs to me of the case of a gentleman with whom I am well acquainted. His holding is something under 750 acres. It is fairly good land and in a fairly good position. His land tax was paid at the proper date, and I have seen the receipt for £504, the amount handed over to tho Land Tax Department. The local taxation on the property referred to is very little short of £1 per acre. And this is l only one instance out of thousands in New Zealand, and it is on the industry and enterprise of such people that ‘Justice,’ and others who think as he does, are probably living in ease and comfort. SPELL IN BACK BLOCKS RECOMMENDED. “I should like to see ‘Justice’ on a backbloclcs farm, struggling with rent and mortgage and the high cost of everything that he has to purchase, including high rates of interest, and endeavouring to bring up a family respectably. I have seen many of the type, and, I am sorry to say, a great majority of them found it necessary to return to tho city as quickly as possible. ‘Justice’ says; ‘We are one community, depending for our work, our living, our pleasures, and our happiness on each other. EVery just man and woman is prepared to pay for the State’s services in accordance with their income.’ I am sorry to have to say it, but ‘Justice’ does not appear to bo one of the latter. Compare the opinions expressed by ‘Justice’ with a sentence from one of the last speeches made by tho late President Harding, where he said, ‘lf the nation fails to aid the farmer it will precipitate disaster that will affect every industrial and commercial activity’; and this is as true of New Zealand as it is of America, and probably applies 1 more rloselv, because practically the whole prosperity of this country depends upon the agricultural

and pastoral community. It would do ‘Justice’ a great deal of good to turn him on to a dairy farm for twelve months, and compel him to live on his earnings or profits, or whatever* they might happen to he. An experience such as that would convert him in a short time to a better way of thinking, as it has converted many others. “Most people are of opinion that it is in the interests of the Dominion that the number of primary producers should he steadily increased, but if we are to be successful in this respect we must give intending settlers to understand. that they will be treated fairly and justly, and that no unnecessary burdens will be placed on their shoulders. So far as the Government is concerned, we favour no one class, but we know perfectly well that if the producers are prosperous, all the other classes of the community share in their prosperity. Ae President Harding implied, if we help the farmer, we assist every industrial and commercial activity in the Dominion.”