TAXES ON TIMBER

Otago Witness, Issue 3148, 15 July 1914, Page 3

TAXES ON TIMBER

SAWMILLERS’ GRIEVANCE. * — (Feosi Odr Own Correspondent.) , WELLINGTON, July 6. The desire of sawmillers to be relieved from the payment of income tax on the value of standing timber was again represented to the Minister in charge of the Income Tax Department (the Hon. J. Allen) to-day by a deputation representing the industry in both islands. The deputation was introduced by Mr Reed, 'M.P., Messrs F. Mander, R. F. Bollard, J. H. Bradney, T. Seddon, T. W, Rhodes, A. Harris, and A. IS- Malcolm, M.P.’e .were also present. Mr Milroy (secretary to the Kauri Timber Company) pointed out that at present eawmillers m making returns for income tax purposes were not allowed to deduct the value of standing bush, and that they thus had to pay income tax on the capital t cost of the timber as well as on the proceeds from the sale of the sawn articles. Ordinary manufacturing concerns wore permitted to make the deduction, and sawmillers considered that they should bo placed in the same position. It appeared that there was some technical point in the wording of the Act which had caused the courts to hold that sawmillers were not entitled to the benefit of the deduction. Sawmillers had to pay the tax not only on their profits as realisation of capital, but also on the sum paid for the thnber, which the courts held wa 'J . an ‘ investment of capital. There was a further anomaly in the fact that.whilst the income tax was levied on the value of the standing timber purchased for cash, it was not levied on the growing timber purchased on the royalty system. The flaxmillers were formerly in the same anomalous position, but their position had been readjusted by an amendment of the Act. The flaxmillor now paid income tax only on the value of the leaf that he took off the land._ 'That, was the nosition that sawmillers desired to be placed' in. He suggested that the clause appearing in the Acts of 1900 and 1903 (which enabled the desired deduction to be made) should be re-enacted. Mr F. G. Dalzicll, representing the Taupe Totara Timber Company, said that the sawmilling industry was the only one that paid income tax upon its raw material. Sawmillers should at least be placed m the same position as flaxmillers. _ At present, the timber industry was paying both a profit tax and a tax on the raw material. ■ Mr Bradney, M.P., said the aspect of the matter as it affected the general community should also be considered. Any extra taxes were added to the retail price of timber, which was already too high, tuis tending to increase house rents. The Minister: If we reduce the tax on sawmillers I am afraid that wo shall have to out it on someone else, and thus I am not at all . sure that the cost of hv’ng would be decreased- He pointed out that whilst gdld mining companies paid tax on one half of their dividends, coal mining companies were in exactly the same position as sawmillers. In regard to the latter, he reminded the deputation of the fact that prior to 1907 land tax was, levied on the value of the standing bush, which was added to the value of the land in making the assessments. Mr Mander remarked that very frequently half the value of a bush was destroyed by fire. Mr Allen, in referring to the flaxmillcrt said that whilst they paid income tax onij on the value of the leaf they paid land, tax on the value of the roots. He asked whether the sawmillers desired ,to be placed on the same footing. . , . Mr Dalziell said that the two industries were not on *tho camo footing. Lix (which produced a crop every three yearn) had an annual producing value which timber did not possess. • Mr Milroy said that if the land tax were imposed on the same ba<sis as formerly, it woulcji kill the kauri timber industry. They would hand over a great part of th* bush to the Government rather than paf the tax. The graduated land tax would be insufferable. ‘ The Minister said he could not agree that a kauri forest had no earning power. Tha value of the timber was constantly increasing, and therefore, it must have _ a great earning power. Ho did not think that it would be fair to ask Parliament to agree to allow standing timber to be exempt from taxation, gnd ho could hold out no hope of the Cabinet agreeing to the proposal, although he would place representations before his colleagues._ Mr Milroy suggested the imposition of the land tax without the graduated tax. The Minister said he would consider this suggestion, although iho could not aay whether he would agree to it. He asked the deputation to consult and place tneir views before him in writing.