Poverty Bay Herald PUBLISHED EVERY EVENING GISBORNE, FRIDAY, AUGUST 21, 1936. GRADUATED LAND TAX

Poverty Bay Herald, Volume LXIII, Issue 19099, 21 August 1936, Page 4

Poverty Bay Herald PUBLISHED EVERY EVENING GISBORNE, FRIDAY, AUGUST 21, 1936. GRADUATED LAND TAX

Tin* protest made to the Minister of

Finance against tlio reimpositioni ol the graduated land tax is so strongly supported by reason and argument that it is hardly conceivable that the Government will refuse to reconsider the whole question, and, even it it is not found possible to abandon, the proposal altogether, take some steps to overcome the many anomalies and hardships. In the lirst place, it has to be remembered that such a tax has no economic justification. On the contrary, wherever it has beem tried or investigated it has been condemned on the grounds that it is inevitably unjust and inequitable. Expert opinion in regard to the land tax was succinctly .stated by the Royal Commission which sat in 1924 and which reported, inter alia: “The graduated land tax was originally designed to break up large estates. There is no evidence to show it is required any longer for this purpose, and there was much evidence showing that it is now preventing the development 01. large areas of land requiring a considerable amount of capital expenditure to break it in. The graduated land tax applied to business premises is a serious handicap to trade and industrial enterprise, and serves no good purpose.” It should not be necessary for any Government to go beyond such an emphatic report, for here there is the judicial opinion of a body that has investigated the question from every angle and taken evidence from all qiumcis. The only possible conclusion is that the Government is not concerned with what is just and justifiable bm that its actions are dictated by political motives. The object of the tax, according to the Minister of Finance in his Budget speech, was to break up largo estates. How does this view square with the finding of the Ravel Commission which explicitly states that the tax is no longer required for this purpose? Is the unsupported comment of the Minister to be accepted in preference to the finding of a judicial inquiry? There are other angles to the question insofar asr it relates to rural land. New Zealand’s future prosperity depends upon increasing production, which to some extent means bringing fresh areas into profitable occupation, but the land tax has the effect of “preventing the development of large areas of land.” From this point of view, therefore, the Government’s proposals will have the effect of retarding the progress of the Dominion. As for lands which arc already productive and it is considered should be subdivided, this position is effectively dealt with under existing legislation, for the Lands for Settlement Act definitely provides that the Minister of Lands may compulsorily require that estates or parts thereof shall be cut up and offered for sale. If, therefore, the Government sincerely desires to subdivide large estates, and not merely to penalise their owners, the remedy already is in its hands and the graduate.-! lam! tax is entirely superfluous. In its incidence to small areas of high'.y-valueu city property the land tax is still more anomalous and inquitous. Certainly city estates are not readily broken up, even were it desirable that they should be. The tax has no relation to the income of the property or its real value. A Jour-storcv building -on a small section might be more profitable titan a two-storey one on a larger piece of ground, but the latter will be paying more tax. Of three adjoining shops having the same rental value, two might be on one property and because of the graduated scale and mortgage allowances the tax payable on each might be ten or twenty limes greater than that, due, on the isolated neighbour. How is it possible to justify any tax that perpetrates such an obvious injustice, and, in any case, what reason is o: can be, advanced for such a tax at all? The only excuse ever offered is that of taxing the so-called un-

earned increment, but 1 1>is surely is more than met by the income tax and heavy local rates which constitute a land tax without Its anomalies. Under the Government's proposals properly will bo subjected to a throe-fold tax — the income tax, land tax, and local body rates, the last-meii'tioned sometimes being 'levied from more than one quarter. If those points are all considered it is easy to understand

the conclusion of the Royal Commission that “the graduated land tax applied to business premises is a serious handicap to trade and industrial enterprise and serves no good purpose.” Ts it the desire of the Government seriously to handicap trade and enterprise upon which the prosperity of the Dominion depends, or does it really desire to treat everyone fairly and ensure that no one is hurt? The whole taxation policy of the Government is avowedly to place the burdens on the shoulders of those best able to bear them. How is it possible to reconcile the land tax with this prin eiple, since the tax is levied irrespective of the capacity to pay and re gardless of whether there is any income from which it can. be paid. This argument applies equally to rural and urban- property. Tn many cases the tax will involve serious hardship, ii some it may even lead to the forfeiture of land, but in the aggregate it will undoubtedly mean just om more charge to be passed oil to tin worker by one means or another, foi it is he who, in the long run, mils' carry the staggering burden of ali taxation.