FEARS OF LEVY

Poverty Bay Herald, Volume LXIII, Issue 19099, 21 August 1936, Page 13

FEARS OF LEVY

GRADUATED LAND TAX VIEWS OF DEPUTATION WARNING OF EFFECTS FARM AND CITY AREAS O (Per Press Association.) WELLINGTON, this day. A joint, deputation, stated by Sir William Hunt to be representative of all parts of the Dominion and consisting of men genuinely disturbed by the graduated land tax, waited on the Minister of Finance, the Hon. \Y, Nash, this morning. The, deputation was introduced by the Rt. lion. G. \V. Forbes.

Sir William Hunt said that, the weight of the tax would fall much more heavily than the tax condemned in 1924, because there was to be no allowance of 5 per cent on the taxable value of land. '1 he proportion of unimproved value to capital value varied enormously in different parts of New Zealand, and this meant that the tax would be very unequal in its incidence. It would ne felr. mostly by sheep fanners and also by some of the larger dairy farmers. Sir William stressed "that- the position of farmers was bad, this causing Mr. Nash to ask whether be suggested that all incomes of farmers were below cost.

“I do,’’ replied .Sir William. He went on to say that it would be very difficult for them to carry on. The biggest mortgagee of land was the State, and any loss would have to be borne by the taxpayers. The next biggest were the trustees, such as the Public Trust Office, trustee companies, and private trustees, and most of the mortgages were tied up for the benefit, of women and children. INSURANCE JNVESTMENSTS The third biggest were life insurance companies, which had enormous sums lent out, representing hundreds of thousands of insurance policies taken out for the benefit of women and children. Coming to the cities, Sir William said that if business firms were not given the 5 per cent allowance, many would have to pay out, from earnings, 8s 6d to 11s 6d in income tax. That was an excessive burden and would halt enterprise. The restoration of the reduction of the 5 per cent in the taxable value of land would be a great help to the larger farmer and to city businesses. He further suggested full mortgage exemption. It applied to £7SCO, but disappeared at £15,000. People with large mortgages having to pay the fulL value in land tax were going to have practically no income. He urged that a hardship clause should be included in the bill, because there were going to bo some very difficult cases to deal with, and some tribunal would have to be set up to handle them. FARMERS' UNION OPINIONS The proposed taxation sis it would affect the farming community was referred to by Mr. Mulholland, the president of the New Zealand Farmers’ Union who appeared on its behaii and presented 12 points in which the tax- offended. and submitted that the farming community was entitled in thu same treatment as other sections of the community, t hat a mail should not bo penalised for tackling a large block of poolcountry and that the tax would press heavily on second-class country, not suitable for subdivision and on which partnerships should be encouraged. He also submitted that young men with courage and enterprise should be encouraged to take up areas of poor land and not to lie penalised by being taxed on debts. A young man without much capital behind him would be at a disadvantage compared with wealthy men who could pay off the debt on a. place and therefore were not taxed on the mortgage. Mr. Mulholland recalled the findings of the 1924 taxation committee that the graduated tax was no longer required for the breaking up of large estates, and that it was preventing development. The tax meant that a farmer must reduco expenditure in other directions. Naturally the maintenance of properties was the first item to be reduced, which not immediately hut ultimately lowered production seriously. • A similar proposal in 1929 caused so much hardship that a special Royal Commission was set up to deal with applications for relief. In 63 per cent of cases the tax was remitted in full, m 17 per cent it was partially remitted, and only in 20 per cent of the cases reviewed was no relief given. , . There should be no class distinction in the levying of taxation. The contribution of each citizen towards the upkeep of the State should be according to income and ability to pay. The Farmers’ Union suggested that this should be the basis of all taxation. REPLY BY MINISTER Mr. Nash said there were anomalies in connection with the land tax procedure. One of the main reasons that actuated the Government in re-introducing the graduated land tax was that it was in operation in 1931 and the Government wished to extend it. Those who noW owned land were no worse off by the payment of the land tax to-day than in 1931, assuming other things were equal. The Government's objective was to get community value for the community and if there were ways and means of doing it: (hey would do it. “If we can get the added value that conies to land by expenditure and enterprise associated with the activities of the Government and local authorities, then we will take it,” Mr. Nash said. He was prepared to look into every matter raised. He said that the Government intended to adjust the position as between Iho. mortgagee and the mortgagor before the month was out. He said that before the bill came down, he would discuss it with Sir William Hunt, Mr. Mulholland and Mr. W. Macliin.

He drew a distinction between city finiil and country farms. The profits were totally different. It was essential that production must increase if the country was to prosper, and even though millions were added to values, the country could be developed only by increasing production. It would he wrong for the Government to do anytiiing that would stifle the best, utilisation of land.

Air. Nash’s last remark, after summing up the position, wss: “Please go away satisfied that you have no promise other than the fact that we will look into every word that lias been said. ”