THE LAND TAX.

Star (Christchurch), Issue 12081, 9 August 1917, Page 3

THE LAND TAX.

SIR JOSEPH WARD'S PROPOSALS

HOW THEY WILT, OPERATE. Sir Joseph "Ward hopes to obtain from his proposed now land tax tho sum of £1.250,000 a. year, instead of £713.000 obtained last year. In place of the present ordinary and graduated land taxes, h n proposes to levy one progressive, land Ux. This will be imposed on the unimproved value, without deducting tho mortgages, but allowing exemption as at present, of £SOO on the taxable balances up to £ISOO, and diminishing so as lo disappear at £2500. Tho rate ho proposes will bo a progressive one, which can be raised or lowered by percentage additions or deductions to meet tho requirements ol the time. Tho. lowest schedule rate will bo Id in tho pound on tho ilr.s't £IOOO of taxable balam-o, and it will be increased by l-32.0()0d for each pound of tho increase over £IOOO until it reaches 7d, which will bo readied at tho value of £192,000. Sir Joseph, rn his Budget, expressed a belief that this will give a. fairer gradation than the present system, under -which, he said, tho rato i's broken, boing higher on the lower balances and diminishing on the higher balances. .Mr J. A. Flesher, who has taken some trouble to study tho position, expresses tho opinion 'that this theory is not likely to bo satisfactory when put into practice. His investigations show that the greater the unimproved valuo of Itho land, the less will be tho relativo increase of the tax. in some cases, indeed, so far from there being an incroa.se. there will be an actual decrease. To demonstrate the soundness of his argument, ho has compiled tho following table, showing tho differences betweon tho present tax and the proposed tax on properties of different values:—

Unimproved Present Propoßcd Inc. Dec Value. Tax. Tax. p.c. p.c. £ £ s. (1. £ s. d.

5,000 . 2V 16 2J 35 3 14 67 10,0110 . 53 7 8J 80 1 fij 42 15,000 . Ot 14 Gi 134 15 3j[ 42 20,001) . 141 18 6i 199 4 4J 40 ,'!u,oO>> . 293 19 1J .'157 7 5 22 40,000 . 481 2 dj[ 555 3 9 15 70,000 . 1340 19 1 1380 17 2J 2.9 JdO.OOO . 2624 12 7$ 255S 11 10 193.000 . 9261 1 1 8400 0 0-- 10.2

Tlio proposed change, Mr Flesher said, would ho inequitable, because tho owner of highly valued property was better a bio" to bear his corresponding sneritioo than was the owner of property valued at a comparatively small sum. Another point was that the owners of city and suburban property would suffer more severely than tho owners of property in tho country, Sir Joseph Ward proposes to chargetlio now tax on tlio unimproved value, and no longer to allow deductions on account of mortgages. This seems to Mr Flesher to be hardly fair, because tho value of a person's interest in his land is merely his equity of redemption. His interest, in other words, is what) remains after he has provided for liis liabilities, and on that interest he ought to bo taxed proportionately to tho tax imposed on persons whose property is not mortgaged. If he is not allowed deduction ot mortgages, he will be taxed on his debts, a principle which is distinctly unjust. '• If the exigencies of the position demand that revenue must be obtained in this way," Mr Flesher said. "a. fairer system would be to allow deduction of the sum owing under mortgage, apportioned to the respective values of tho improvements and of the bare land. This would bo fairer to the owners of city and suburban properties than Sir Joseph Ward's proposals. Sums borrowed on mortgage represent capital to the owners of the properties mortgaged, and if owners are taxed on mortgages, other forms of capital also should be taxed. It seoms harsh that a mortgagee, who lio.<? beon compelled to enter into possession of a property on account of the mortgagor defaulting should be regarded as the owner of the land. His rights as a mortgagee extend merely to obtaining the money he has lent; any surplus belongs to the mortgagor. Vet, for the purposes of the land tax, that riiortKiigoo is treated as if iio tho owner, and will have to pay the progressive tax on the unimproved land in the security, although he may he obtaining no return from the money ho has lent on that security."