The Otago Daily Times. THURSDAY, AUGUST 6, 1925. THE TAXATION OF FARMS.

Otago Daily Times, Issue 19551, 6 August 1925, Page 8

The Otago Daily Times. THURSDAY, AUGUST 6, 1925. THE TAXATION OF FARMS.

During the sittings of the Taxation Commission last year we took occasion more than once to suggest to the Commissioners the inclusion in their report of the recommendation of a drastic simplification (at no loss of revenue) of the income tax returns demanded from the holders of pastoral farms. W© admit that in general the policies advocated by ns on various important points of the taxation system found ultimate expression in the report presented to Parliament, and were equally favoured by the late Prime Minister in framing his financial proposals. It is, however, to be regretted that the opportunity for thoroughly disentangling from clouds o* useless r©d tape the complicated and almost incomprehensible strings of enquiries which at that time were being presented to pastoral farmers by tho Tax Department for categorical reply has not been carried quite ns far as it •advantageously might b©. We are not concerned with the present rates of taxation on pastoral farms, nor do we advocate the least remission in, the case of the holders. The present rates doubtless may be called high, but so i» every other form of taxation since the war; and as far as we know, now that tho “double income tax” on such properties has been tardily removed, the rate of tax on pastoral holdings is relatively quite fair. It is pleasant, further, to be able to acknowledge that the new special schedule applicable to small grazing runs and pastoral farms generally is a vast improvement upon the untranslatable Chinese puzzle which used to distract the averag© pastoral farmer before the days of the Taxation Commission. It eliminates much that formerly made the compiling of the return an ordeal often more irritating and troublesome than the payment of the tax itself. The feature in which it falls short of a reasonable standard of enquiry is in its perpetuation of the demand for the numbers, quantities, and values of “wool, skins, hides, sheep, cattle, and other live stock, unsold at the beginning of the year,” and for a similar statement with regard to the number and value of those commodities unsold at the end. We suggest that statistics like those, besides being in many cases impossible to furnish—for instance, who can say to-day what the value is of a dozen bales of unsold wool or a bundle of mixed sheepskins ? not only betray a complete ignorance of the general course of business on a v pastoral farm, hut have absolutely no real relation to tho true income of that farm, cannot possibly be on the whole of the slightest advantage to the department, and only invite the perfunctory and inaccurate compilation of a farmer’s return. What the department seeks, and is entitled to receive, is a true and accurate statement of the whole of the income the farmer has received within the specified period, and of the wages, rent, and other costs which he has expended directly in the earning of that income. Every honest fanner will supply that, and a dishonest one shirks it or tampers with it at his peril. Farms are not managed by rigid east-iron dates, even if all farmers were trained actuaries or accountants. What happens in a collection of paddocks before or after that first of April which to the Taxation Department is more sacred than a dozen Christmases is entirely a matter of the conditions prevalent at the time.

amoug which that of the weather (including the weather of weeks before) often takes a primary place. Taking the matter of live stock alone for instance, if at the end of the year a farmer has 500 more sheep than he had at the beginning of it, the reason in nearly every case is-that the turnips are rather later that year, or that his agents advise delay in disposal, or that trucks are temporarily unprocurable. It is difficult to see what sense there is in such circumstances in the Taxation Department pouncing on the unfortunate owner with “Aha! you have gained 500 sheep this year in addition to the sales you have been paid for. They are worth a pound a head. Up goes your income total, —what we call its total—by £500.” “But,” the puzzled farmer may reply, “I haven’t increased my stock by a single animal, and I don’t mean to; I can’t—my farm won’t carry any more; and lam no better off than I was last year.” “No use,” Red Tape replies, “you don’t know anything about it, and we do. Rook at our forms. Income increased by £500: pay up.” Similarly with other items such as we have named. The exasperating part of it is that, vexatious and at times impossible as the demand is, the whole business obviously cannot in any year, upon the general average of all the farms, be worth a brass farthing to the tax-gatherer or the Treasury, while the individual anomalies and injustices it involves are inevitable. It is surely obvious, moreover, that where a farmer really has increased his stock, not by the normal fluctuations of his musters or the accideut of mere dates, but by adding definitely to his carrying capacity, the department will get the tax on his added produce from the increase —instead of which it seeks to claim it both ways, not only on the 'augmented income, which would be legitimate, but on the capital value of the added stock as well.

There remains, unfortunately, still another source of serious complaint. So far, we have dealt only with a special schedule which is extra, to the regular form, and is issued solely to the occupiers of-pastoral runs. The remarkable circumstance remains that in the case of farms of every other kind—agricultural, dairy, fruit, and so on; in fact every farm which is not a Crown leasehold—the old complicated and incomprehensible medley of impossible inquisitions upon which we commented last year is pVesented for solution in the identical and iniquitous form of precommission days. Why the still imperfect concession we have described should bo confined to pastoral farmers only, and denied to all the others, is a mystery that only those can solve who can profess to unravel mentally the weird convolutions of the official brain. The application of a moderate dose of common sense is hero acutely called for, and with the advent of a new Commissioner of Taxes and a new Minister of Finance the opportunity for applying it would appear to have arrived. We have acknowledged the improvement in the schedule placed before pastoral fanners. We can only hope that the Department will recognise, if only from mere motives of consistency and not in obedience to the requirements of common sense, that the time has come for it to shed its last shackles of red tape, and in future to tax the farmers —all farmers alike —on what their true income really is, instead of upon what official theories, concocted within gloomy city headquarters and in utter ignorance of the conditions prevailing where affairs are conducted in the open, . pronounce that that income ought to pretend to be.