TO BRIDGE THE GAP

Stratford Evening Post, Issue 4, 25 July 1930, Page 2

TO BRIDGE THE GAP

further taxation. placing the burdens. \\’!hmi wo find ourselves faced tins V( v,r with a shrinkage of £2,830,001 iu revenue and added liabilities on rigid items of over 0400,000, there is no possibility of bridging the gap without some additoual tasaton, stated the Prime Minister, Hon. G. '' . Forbes, « his Jinanjcial statement. Having carefully combed out the expenditure, the most the Government ean do is to endeavour to place tho additional burdens as equitably as possible and in such a: way as to cause a". UHL. economic disturbiUK.o a.s possible, in order that a return to more prosperous times may m ,l be hindered any more than can be helped. CINEMATOGRAPH FILMS. ‘■ln connection With the amount of additional revenue which it was deemed advisable to obtain from indirect taxation, I may say that m preference to other things it was

considered Unit additional data should he placed upon cinematograph 'sound films. As the value 01 Jihns \ a lacs a great deal in bo equitable ant increased taxation shmud uf upon an valorena, and not a footage basis, 'tile difficulty here, however, is that the value of the him .in not known when it comes over the wharl. In this connection it. may be ex., plained that hints are not sold, hut' are real a! to the theatre proprietors, ip-n.diy Kir a pereentage of the gross i iieai,''e 'takings’, further hints are not dealt with singly, bat in groups | oi “blocks’’. (aider these circumstances an ad valorcai Customs duty in. the ordinary way is hardly practicable, hut it is proposed to impose the equi v.dccnt of an ad vai'"'em duty in the shape of a film-hire j iax. Urielly, the proposal is that the lilin-distrihnting firms will he requirlo make returns monthly to ilia

Commissioner of 'Tuxes of "the gross rentals received from sound-films and the administration expenses incurred in New Zealand commencing as from .Inly I last. After deducting these expenses, and also the percentage of gross rentals upon which income-tax is levied, the residue will represent the value of the films, on which will he levied an ad valorem tax at the rate of 10 per cent, in the case of British films and 2d per cent, in the case of foreign films. removing anomalies. » .‘I i o i s proposed to obtain part of the additional revenue required from laud and income tax, but at the same time the opportunity js being taken to remove certain anomalies and place the taxes on a more equitable bases. j The information obtained from last years income-tax returns of farming incomes showed clearly that pre- ‘ viously many large incomes had been escaping their fair share of taxation and that the amendments made last session were in the right dir. ection. Bxperienie has shown, however that the special land-tax was 100 rigid in its incidence and was inequitable in some instates. At the same time information received by the Tax Department shows that the incomes derived from many farms of an unimproved value of considerably less than £14,000 and thus not at present assessable for income tax) are not contributing a fair .share towards the expenses of | the State, SPECIAL LAND TAX ABOLISHED. Accordingly to overcome all these difficulties and inequities it is proposed to abandon the social land-tax and make all farmers owning or occupying land of an unimproved value of £7500 or over liable to assessment for incometax on their farming as well as other ’income. The provision in last year’s legislation whereby the landtax payable was deductible from the income-tax on farming incomes will bo repealed, and farmers will hence, forth bo assessed for income-tax on the same basis as other classes of ‘the community. TOO ROUGH AND READY. Further it is found that the present general provision allowing a reduction for income tax purposes of 5 per cent, on the capital value of property used in production of the income (has given Jdse to perious anomalies rand inequities. This /allowance is intended as a set-off for land tax paid, and also to provide for depreciation of buildings, -but the method is too rough and ready, to be equitable. For instance, a taxpayer, deriving income from rents is at present allowed as a deduction the interest on his mortgage and also 5 per cent, on the full capital value, in which his equity may he relatively small. In many such cases the taxpayers practically escape in-come-tax ,and by reason of the mortgage exemption may also escape land tax. Again, in the cities, owing to the erecting in recent years of large and valuable buildings the 5 per cent allowance lias in some cases reieved the business man not only of the amount of his land-tax. but, in addition, {of a. considetfatble part of his income-tax. Further, the tax-

payer carrying on his business in a steel-frame structure with a life possibly exceeding one hundred years is allowed the same rate of 5 per cent, as the taxpayer using a wooden building with a possible life of, say, forty years. Even in the latter case o per cent, on the capital value is an excessive allowance. Further depreciation is an actual expense and should lie allowed as a

deduction before arriving at, the assessihle income. At present, it is a speeal exemptou. Accordingly, it is proposed to revert practically to the position obtaining prior to 1923, and reduce the allowance to .5 per cent, on the uuiin proved value ortlie taxable balance in cases where a mortgage exemption Ims been allowed ,iu the landtax assessment, together pith an appropriate allowance for depreciation of buildings, varying pith the dif. ferent classes of building, at the discretion of the Commissioner of Taxes. The proposal really amounts to dividing tho present allowance into its two parts—an allowance of 5 per cent, on the unimproved valwa as a set-off against land-tax paid, ami depreciation on buildings at appropriate rates as a reduction liom profits. The change will apply to all assessable income derived from the use of land whether in the course of fanning or trading.