LAND TAXATION.

Timaru Herald, Volume CXXV, Issue 18350, 22 August 1929, Page 9

LAND TAXATION.

DISCUSSED BY CHAMBER OF COMMERCE CANTERBURY RESOLUTION SUPPORTED. The Government’s taxation proposals were discussed by the Council of the South Canterbury Chamber of Commerce last night. The Canterbury Chamber of Commerce forwarded a copy of a memorandum relating to taxation in the Dominion, which had been prepared by the Economics Committee of the Chamber. The accompanying letter stated that it was felt by the Chamber that the subject should oe taken up with vigour throughout New Zealand, in order to try and induce the Government to follow the example of all business organisations, and reduce its overhead figure, and taxation to what the Dominion could reasonably afford to pay. Mr J. Anstey said that the question really was that there was a shortage in revenue which had to be made up and to do this, ways and means had to be devised. The question was a very important one, and was being discussed from one end of New Zealand to the other. The great weakness to his mind was that while there had been plenty of criticism, no one had proposed an effective remedy, whicn ne considered could be done without injustice to anyone. The Government Sroposed to increase the primage duty. ut when they increased the tariff duty, there was always a chance ot reducing importations. The proposed increase was a direct quarrel with the whole principle of customs taxation. Instead of increasing the primage duty, there was an alternative, and that was to put a tax on unessential goods coming into the country. Dealing with land taxation, Mr Anstey referred members to the statement made by Mr W. Machin, of the Canterbury Chamber of Commerce. One or two assertions were made there that people owning large areas of land paid neither land nor income tax. If that was true, it was a serious reflection on .the Tax Department in allowing it to go on so long. The real trouble was that the present system of land tax was so erratic and so Irregular, that many people who were holding large areas were already paying their share. Simply to duplicate the tax indiscriminately was going to cause a lot -n hardship. The main and largest objection he had was the proposed reduction of the mortgage exemption. There were large numbers of farmers who were holding land which was not Sealer than ihe economic limit, and their case there was certain to be hardship. If the reduction came about, then these people would have to pay the land tax twice over, which was grossly unfair. The decrease would automatically write down the capital value of their land. It would simply mean that a lot more people would be forced off the land. Mr Anstey Baid that for a number of years they had neglected to collect income from a large number of investors (shareholders in Joint stock companies) many of whom enjoyed large incomes free from Income tax. 'The present crisis was a most opportune time to bring these people into line, and to insist that they pay tax on the incomes they receive. There were many people receiving large incomes in this way who did not pay a single penny of income tax. That was distinctly wrong. He knew of a number of such people, and they were quite willing to pay on the incomes thev received. The secretary (Mr J. Leggott): •What sources are they that they don’t pav income tax?” Mr Anstey: “Shares held in Joint Stock companies.” Mr Leggott: “They are paying at the highest rate.” Mr Anstev went on to say that the Income tax in every instance was paid by the company. Wealthy individuals could and did escape taxation under this system. He himself was one of the culprits, and he considered the svstem unfair and unjust. He knew of one case where between £6OOO and £7OOO was being received each year, and not one penny tax was being paid. Whet Bmount his suggested remedy would brine in he did not know, but the Commissioner of Taxes could soon find out Thtvamount of incomes now exempted were estimated to be about £10.000.000, and if they took the tax at 2s in the £, that would bring in about £1.000.000. There was one objection which might be raised, and that was that t.tasy could not tax shareholders unless they altered the company tax. but he contended that the-' were collecting the taxation from the consumers, who were a different class of people altogether. He contended that a complete review of the present svstem of income tax was long overdue. Mr Anstev then moved:—

"That this Chamber, while appreciating the difhcultv of the Government in meeting the present financial crisis through shortage of revenue, disagrees with the methods proposed by the Government to meet the position on the ground that in many respects tbev are unjust or oppressive, and *n aome esnes mav even lead to disastrous results. We appreciate the importance of reducing expenditure wherever nossible. but in view of the Be verity of the unemployment problem. env verv drastic reduction In expenditure would onlv ac-entuate the unemployment difficulty, and would be quite inflective in dealing with the present problem. We suggest that the position c°n he met. and the increased revenue obtained, without injustice to anvone. bv imnosing income tax on Incomes derived from shares In Joint af«>ck companies, a class of income in manv cases enioved bv wealthy Individuals. hitherto exempt from tax o v - Incomes from this source. The total Income of an individual from all aoumes (tax free bonds exempted) should be added together and the appropriate graduated rate annlied thereto. We earnestly urge the Government to adopt this method of meeting the present financial needs, as it is free from ininstice. and avoid the anomalies, injustice and possible disastrous effects of the methods proposed fey the Government.”

The motion was seconded pro forma bv Mr G. D Virtue. Mr p. B. Foote said he thought that Mr Anstev was to be congratulated and thanked for the trouble and thought he b*d nut into the subiect. Although he did not agree with him altogether, he had given a fin© exposition of his

point of view. They were not discussing a general reorganisation of taxation in New Zealand, and to create a discussion on it would get them nowhere. His opinion was that they would be wise to confine their attention to a particular point rather than canvass the whole field of taxation. He suggested as an amendment that they should generally adopt the resolution carried by the Canterbury Chamber of Commerce, which appeared to effectively set out the disastrous attempt on the bigger farmers. Mr Machin had made out a good case against the weird endeavour to break up the big estates. The whole thing was a case of “heads I win and tails you lose.” He thought it would be sufficient if he moved that the Chamber support the resolution carried by the Canterbury Chamber, which claimed that—“the super land-tax will cause great hardship in demanding from many farmers amounts of land-tax up to twenty times what would be their assessments under income-tax. Mortgagees will become nervous at probable high charges against the land which constitutes their securities, and win again view land securities unfavourably. The reduced mortgage exemption will press hardly on small land owners who are heavily mortgaged and whose incomes are small. As these taxes would constitute a capital levy on many farmers, we beg to draw attention to the refusal of other coun» tries to impose capital levies, and the danger to the economic position of New Zealand if capital levies of this kind were commenced—especially in normal taxation yeras—with the posibility of extension to other forms of capital. That the question of a general income-tax on all incomes (farming incomes included) and the abolition of land-tax be considered.” The amendment was seconded by Mr A. P. Greenfield. Mr Anstey contended that Mr Machin’s resolution was destructive, and did not suggest a remedy. The latter part of the resolution suggested that the money should all be collected out of income, which was impossible, because it was inequitable. It was quite wrong to collect the whole of a tax from one source. There was not a single British Dominion which imposed a graduated tax on farmers. It was condemned by every authority on taxation. The secretary said that there were people who were receiving small incomes, and who were at present paying on the highest scale. If their incomes were handed over to them, they would pay little or nothing. Mr J. M. Jenkins moved as a further amendments that the words "and the abolition of the land tax” be deleted from the resolution. This was seconded pro forma by Mr G. H. Andrews. Mr Anstev said that in a country where taxation was there was no such thing as exeniDtion. It was simply a transfer. If investors were exempted, the tax was passed on and on until it finally reached the land, and it could go no further, and then farmers were asked to write down the value of their land. Mr Foote’s amendment was carried.