The Wanganui Chronicle THURSDAY, AUGUST 22, 1929. LAND TAX AND SUPER TAX

Wanganui Chronicle, Volume 72, Issue 199, 22 August 1929, Page 6

The Wanganui Chronicle THURSDAY, AUGUST 22, 1929. LAND TAX AND SUPER TAX

pRIOR to 1915 incomes derived directly from land were

exempted from the payment of income tax. But a land tax was imposed on the unimproved value of the land, the objects being not so much the production of revenue but: (a) the discouragement of holding land in anticipation of a rise in values without working the land; and (b) the discouragement of land aggregation.

Prior to 1917 a double system of land taxation was in operation. There was first the ordinary rate of Id for each pound of unimproved value, and secondly there was a graduated tax ranging from l-32d to 5 5-6 d in the pound in accordance with the increase in the value of the land from £5OOO to £200,000 or more. This system was, however, abolished in 1917, when a single progressive tax took its place, under which the scale of taxation ranged from Id where the unimproved value did not exceed £lOOO, to 7d in the pound on the large holdings. A fifty per eent. super-tax, however, increased the minimum and maximum rates to lid and IOJd in the pound respectively. In 1921 a further alteration was made, the scale remaining at Id on land not exceeding £lOOO in value, but the rate thereafter was increased by 1-20,000 th of a penny for every pound in excess of £lOOO upwards to a maximum of 7 17-20 d. For the year 1921-22 the super-tax was reduced from 50 per cent, to 33 1-3 per cent. The super-tax was, again reduced next year to 10 per cent, only, and the year following 1923-24 it was removed altogether, while from 1924-25 onward a deduction of 5 per cent, has been provided. The land tax to-day, therefore, extends from Id in the pound on land not exceeding £lOOO unimproved value, extending upwards until nearly 8d per pound is reached.

This tax is certainly not an onerous burden upon a farmer who is settled and doing well. But it must be remembered that it is a permanent charge. Like mortgage interest it must be paid annually, no matter whether the farmer makes profit or loss on the year’s working. Last year land tax produced £1,140,324, whereas income tax produced £3,310,877. It is only reasonable that a land tax which is a permanent charge on land in good seasons as well as bad should be on a much lower scale than income tax which is a tax upon profits only. If there are no profits then there is no income tax to pay, but the land tax is an ever-present burden.

It has been admitted by Sir Joseph Ward himself that the farmers should not be called upon to pay both income tax and land tax. He now proposes, however, that they should pay the land tax plus a super-tax, or in the alternative to pay income tax if that be the higher. The farmer who pays land tax, therefore, will be called upon to pay that in the years when he makes a loss, but he cannot hope to recoup himself when he makes a profit because he will then be called upon to pay income tax. Instead of being placed in the same position as the rest of the community he is being especially singled out for an unfair and exceptionally heavy tax burden, in the hope that he will be compelled to throw some of his land on the market. Those who still can be found to lend money on broad acres will hesitate to continue financing farmers when the Government’s avowed policy is to create forced land sales. The super-land tax which Sir Joseph Ward proposes to impose is to apply to all agricultural land having “an unimproved value of over £12,500, calculated on a graduated percentage basis rising the per cent, for each £5O of unimproved value above £12,500 until for an unimproved value of £15,000 the super-tax will be 50 per cent, of the land tax on the present basis. Thereafter the percentage rate of super-tax will continue to increase 1 per cent, for every £3OO of unimproved value on which land tax is based, until for an unimproved value of £30,000 the super-tax will be 100 per cent. Above an unimproved value of £30,000 the super-tax will be at a flat rate of 100 per cent, of the land tax as assessed under the present scale.” The foregoing is Sir Joseph Ward’s own exposition of his proposal. He also gave the following examples to show the effect of these proposals:

These proopsals are put forward under the excuse that only about 1650 farmers will be directly affected. This is not an argument worthy of consideration. Justice does not hold the scales in favour of the big battalions. The argument that few will be affected is alone sufficient to damn the proposal. The question is not how few or how many will be affected, but whether the proposal is just. It is at least to the credit of the Budget advocates that they have made no such claim on behalf of their proposal, in so far as we are aware.

Percentage Unimproved value of land. Present ax. With proposed super-tax. Increase. Increase Per cent. £12,550 . £78 7 5 . £79 3 1 .. £0 15 8 • • 1 14,000 91 8 9 .. 118 17 4 .. 27 8 7 30 15,000 . 100 18 9 . 151 8 1 .. 50 9 4 .. 50 18,000 . 131 16 3 .. 210 18 0 .. 79 1 9 .. 60 21,000 . 166 5 0 .. 282 12 6 .. 116 7 6 70. 30,000 . 290 18 9' .. 581 17 6 .. 290 18 9 100