TAXATION TALK

Wairarapa Age, 11 August 1928, Page 5

TAXATION TALK

MR. H. E. HOLLAND DESIROUS OF PILING IT ON. WISHES WOOLGROWERS TO PAY ON LAND AND INCOME. MINISTERIAL OBSERVATIONS. (By Telegraph.—“ The Age” Special.) WELLINGTON, August 10. City business men who complain of a heavy burden of taKation may seize with eagerness upon an important hint by the Prime Minister that he would be prepared to exempt them from land tax payments. Mr. Coates made the statement during a rapid crossfire of interjections in the House in the course of the Budget Speech of the

Leader of the Opposition (Mr. H. E. Holland). .The latter * was contending that wealthy profit-making sheepowners,' with tremendous annual incomes from wool sales, paid not one penny in income tax. He drew attention to the fact that the Minister of Finance noted a falling-off in income tax receipts of £148,487. There was 1 no reason in the world, Mr. Holland declared, why income tax receipts should show a. deficit. The reason for this big decline was to be found in legislation of past years which exempted certain classes from the payment of income tax. For the year - 1927, as agaihrt 1926, wool prices increased in the aggregate iby about £890,000. As all members knew, it did not matter how wealthy a sheepowner might be, he did not pay a penny in income tax.

Chorus of Reform voices: “Wrong!*” Mr. Holland: “He does not pay because he is a landowner. If tasstion were levied l on sales of wool, the Minister of Finance would not show a falling off in receipts, but. a big increase. Dalgety’s figures, showed that this yearjs, wool sales resulted in 658,300 bales being exported at an average of £24 per bale. The aggregate. . value would be about £15,800,000' for the current year. The value of the wool exported' last year was £12,030,815. Thus the exports this year went up ’ over £3,000,000 in value. If to this figure one added the increased price paid for wool not exported, but used in New Zealand mills, the extra yield from wool sales totalled about £4,000,000 more than for last year. Yet ther.e was a falling-off in the income tax receipts. PROFITS AND TAXES. Mr. Holland Went on to show how certain large sheep-owning families made tremendous profits without contributing anything to income tax revenue. One family in the Wellington district, with 106,000 sheep, had an annual income of from £90,000 to £lOO,OOO. That figure was computed! on a basis of 101 b of wool per sheep, which an authority on sheep-farming had assured) him was reasonable, taking into account the wool obtained from lambs. Wool went up by 4Jd per lb and an extra £20,000 went into the pockets of this family, but they paid no income tax at all. “Surely,” said Mr. Holland “here is a source of income that should be taxed. No government could find justiftcation'Jfor exempting families like that.”- A handful of sheepowners obtained a major share of the profits from wool sales. Fifteen owners possessed upwards of 20,000 sheep each. Worked out on the same basis, the increase in their income was £65,000, free of income tax. Then 119 owners had from 10,000 to 20,000 sheep each, and their incomes went up by £227,000. Another 507 owners each had. flocks of from 5000 to under 10,000 and they enjoyed an increase of £750.

The Minister of Finance (the Hon. W. Downie Stewart): “These men would prefer to pay income tax.” The Leader of the Oppoistion: “I’m prepared to assist to make them pay it at any time.” The'Prime Minister: “And take off the land, tax?” Mr. Holland: “No, certainly not.” The Minister of Finance: “Not take the land tax off?” Mr. Holland: “Will the Prime Minister be prepared to take the land tax off the city business man?” The Prime Minister: “Yes.” Mr. Holland: “Then let him bring in his Bill. What will the local bodies say about it when there is no tax on land?” The Prime Minister: “Nonsense.” Mr. Holland: “I know what they would say.” Mr. Coates: “You are mixing the local and the State tax.” Mr Holland: “Now the Prime Minister is talking about the national tax. He is prepared to go half-way and to stop there.” WHY RECEIPTS WENT DOWN. The Minister of Education (the Hon. R. A. Wright) who followed, suggested that the plain truth about the reduc-tro-n of income tax receipts was that last year’s were levied on depressed incomes. The Leader of the Opposition had evidently overlooked the fact that big landholders,. such as Crown, leaseholders, did pay income tax. Mr. Ransom (Pahiatua): “But not land tax.”

The Minister: “I don’t suppose you want to tax them every way. I don’t care what a man’s income is; if you go beyond a certain point, he ceases to earn an income,” Labour members asked for higher pensions and higher salaries, the Minister continued, and if they succeeded in their demands there would be no income left for the woolgrowers. Nobody seemed to have a good word for the large landowner, but many had heavy mortgages and they had their bad years. If an individual paid a reasonable amount of taxation, that was all that could be expected of him. As for- the point that land tax as well as income tax was paid in boroughs, it must not be overlooked that before paying income tax, the taxpayer was able to deduct 5 per cent on the captial value of his land and buildings, and in many eases that simply wiped off one of the taxes. Taking the land tax off city areas would not affect the local rates, which were levied on a different basis.