INTEREST, NOT TAXES

Poverty Bay Herald, Volume LV, Issue 17067, 27 September 1929, Page 7

INTEREST, NOT TAXES

THE CAUSE OF HARDSHIPS LABOR LEADER’S ANALYSIS SOME SPECIFIC INSTANCES (Parliamentary Reporter.)' WELLINGTON,; this day. Members of the House of Representatives have received -a largo amount of information to demonstrate the" operation of the Government’s proposed new land taxation, and it provided Mr. H. E. Holland, leader of the Labor Party, with one of the most interesting features of his speech on the Taxation Amendment Bill in the House last night.* His deduction- from this evidence was that large farmers are suffering not so much from heavy taxation as from interest bills.

Dealing first with what he called the Canterbury table, Mr. Holland suggested that if its statements were accurate, one of two things was apparent; either there had been very few improvements on these estates, or the valuation system was very rocky indeed. In one example the unimproved value was £14.100 and the capital value £15,340, and the mortgage was £15,150. Worked out. on a 6 per cent, basis,. though the average interest rate over the . whole Dominion was 6.40 per cent., this estate had an interest bill of £906. It,s present land tax was £76, and the proposed tax £122. If the Prime Minister had kept his promise with respect to a reduction of interest rates he ventured to say that the reduced interest bill would have more than offset the larger land tax. The Rt. Hon. J. G. Coates: On a £15,000 mortgage?

Mr. Holland retorted that the Leader of the Opposition could easily work it out- that a 1 per cent, reduction would mean £l5O less interest. “What' these other examples prove,” he continued, “is that the trouble is not taxation trouble, but interest trouble.” In another case the unimproved value was £13.747, and the capital value £14,790. which meant that the improvements were only £1045, though the mortgage was £10,354. This represented £6lB interest, and the new tax would be £ll2.

HAWKE’S BAY ESTATES.

An example was given of another estate of an unimproved . .value of £80,570, and a capital value £92,010, showing that there was. only £11,440 in improvements. Surely , there was need for legislation to break up an estate of that kind. Its mortgage was £40,950, the interest £2754, the.land tax £1587, and the new tax £3174. He could, he said, go on quoting such cases, and he wished to draw attention to an extraordinary phase of -the position. There was another estate with a capital value of £55,940, and the mortgage was £46,500. He wondered what was the explanation. The interest bill Was £2790, and the new taxation would be £621. Obviously the mortgagor’s problem there was not taxation, but interest. The leader of the Labor Party went on to say that he had been given particulars of the finances of; certain Hawke’s Bay estates. 1 Over an IB months period, the gross income from one was £2555, and the expenditure comprised, wages, £212; rates and taxes, £161; sundry expense, £152; depreciation and small items, £92; interest, £1412; the latter being well over 50 per cent, of the expenses. Another Hawke’s Bay estate produced an income of £2240, and had a £OOOO mortgage. Its net income was £945, and the interest bill £540.

It. had been argued that money could not be provided more cheaply, and he had an advertisement (from’ A' Southland paper stating a responsible firm had money to lend at 51 per cent., and he had heard of offers of 4? per cent, on good freehold security. W r hy could this be done if the Government couldn’t do it? “My own opinion,” coftcluded Mr. Holland, “is that it would pay this country to lose on' making money cheaper.” . .... .