GRADUATED TAX ON LAND

Southland Times, Issue 23330, 14 October 1937, Page 6

GRADUATED TAX ON LAND

Former Arguments Recalled MR NASH REPLIES TO OPPOSITION COMPARISON WITH OTHER COUNTRIES (From Our Parliamentary Reporter) WELLINGTON, October 13. Arguments formerly advanced by Opposition members in favour of lhe graduated land tax were recalled by the Minister of Finance (the Hon. W. Nash) in his reply to the second reading debate on the Land and Income Tax (Annual) Bill in the House of Representatives tonight. Mr Nash said that during the debate the Hon. Sir Alfred Ransom (Nat., Pahiatua) had made a suggestion that the graduated land tax penalized the industrious pioneer settler. Speaking in 1929 on a similar Bill, however, Sir Alfred had stated that a considerable number of farmers had been escaping its fair share of taxation. Sir Alfred: That was in direct relation to income tax.

Mr Nash: You were referring to the position under which the old graduated land tax had gone. Sir Alfred had said on that occasion that the tax was not a tax on the farmers in the ordinary sense, but was rather a “wool king’s” tax, Mr Nash continued. He had also described it as a tax on profit over and above ordinary expenses. “I suggest,” the Minister added, “that Sir Alfred should meet other members of the Opposition afterwards and argue it out with them. The Rt. Hon. G. W. Forbes (Nat., Hurunui) and Mr W. A. Bodkin (Nat., Central Otago) also commended the graduated land tax in 1929, but if I stayed here all night I could not read all the things members of the Opposition have said in its favour in the past.” Mr Nash said that last year there had probably been some unfair assessments of land tax—a position which the Government intended to remedy—but there was no doubt that since last year there had been a considerable number of subdivisions as a direct result of the tax. It obviously promoted land settlement. STATE ORGANIZATIONS “It has been claimed by members of the Opposition that the land tax is unfair because State organizations do not pay the tax,” Mr Nash continued. “That is not correct. Last year the State Fire Insurance Department paid £2164 in land tax and £36,416 in income tax. The Government Life Insurance Department paid £3034 in land tax and £31,038 in income tax. The State Advances Corporation paid no land tax, but £163,026 in income tax. The Public Trustee paid no land or income tax last year, but the year before paid £28,500 in income tax.”

Members of the Opposition had stated that the average amount of tax paid by a family of four in New Zealand was £B9 10/- a head, the Minister added. If there was one class the Government was trying to legislate for, it was those with incomes of £4 a week and less. A man in that position paid no income tax or land tax. A large part of his income was spent in the purchase of food and since there was no tax on food the Opposition’s average was slightly out there. The Rt. Hon. J. G. Coates (Nat., Kaipara): Who says there is no tax on food?

The Minister: There is no sales tax on food and no Customs tax on food produced in New Zealand. Mr Coates: Qualifying again “A man on £4 a week pays about £7 a year in unemployment tax,” Mr Nash added, “and it is not likely that his total taxes will amount, allowing for variations in circumstances, to more than £lO 10/- a year. That is rather different from £B9 10/-.

“Opposition members have been saying that New Zealand is the highest taxed country in the world,” said Mr Nash. “I do not know if that matters so much as long as we have a sound national economy and a high standard of living. They say we are higher taxed than the people in Great Britain, but in the £4OO and £6OO income fields the British taxation .is slightly more than ours.” Mr Coates: I say that is not true. You have not taken the wages tax into consideration. “Let us look at that in its completeness,” said Mr Nash. “In England workers pay unemployment insurance and if the wages tax is taken into consideration here there would have to be an addition for unemployment insurance in England.” Mr Coates: I have done that. LOCAL AUTHORITIES “Taxation in Great Britain is heavier than it is here,” repeated Mr Nash. “It has to be remembered that taxation is levied in New Zealand to cover all services. In England local authorities have to tax to pay for services which in New Zealand are the responsibility of the central Government. They have to tax for police and education.” The Opposition had stated that taxation in the Dominion worked out at £22 a head of population, Mr Nash continued. “That figure included every form of taxation, but it was misleading to say that it was the highest in the world. Mr Coates: In the Empire. Mr Nash: Taxation is higher in South Australia.

“Great Britain is heavily taxed,” the Minister continued. “Taxation there is much higher than it is in Spain or Italy, but I have been thinking that that country in Europe which is the most heavily taxed, Great Britain, is the country in Europe with by far the highest standard of living.”

Mr Bodkin: How about taxation in Russia? “We are heavily taxed in New Zealand,” said Mr Nash. “I admit that. We are not taxed quite as heavily as the United Kingdom, but our standard of living is as high as that of any country in the world. A country which can afford high taxation can maintain a high standard of living.” The Minister stated that the Leader of the Opposition (the Hon. Adam Hamiton) had asked for a return showing why the revenue from the land tax last year was £250,000 below the estimate. To a certain extent it was because the figures for land valuations went back to 1929-30 and the effect of the intervening years on land values had been so depressing that it had been impossible to collect the estimated sum. The land values were not there. Mr Coates: It was a faulty estimate. Mr Nash: It was a faulty estimate because it was based on figures left by the last Government. Mr Coates: When you make a mess of your own estimate you blame somebody else. Referring to the Opposition criticism of the gold export tax, Mr Nash said the general argument used by Mr Coates as Minister of Finance when the tax was imposed in 1932 applied with equal force today. Mr Coates had pointed out on that occasion that the alteration in the rate of exchange had placed a premium on gold and that it was legitimate for the State to take something back by way of duty. The price realization of gold today was £7 0/6. That was equal to £8 13/10 in New Zealand currency. As the gold export tax was 12/6 an ounce there was still over £1 left on the exchange transaction. Under the land tax proposals, Mr Nash added, the small farmer was still fully protected.