Manawatu Evening Standard. FRIDAY, SEPT. 20, 1929. THE MODIFIED TAXATION PROPOSALS.

Manawatu Standard, Volume XLIX, Issue 250, 20 September 1929, Page 6

Manawatu Evening Standard. FRIDAY, SEPT. 20, 1929. THE MODIFIED TAXATION PROPOSALS.

There is a wide difference between promise and performance. Tlie Lnited Party promised if they were returned to office that they would reduce taxation. Their leader, Sir Joseph Ward, was the authority for that promise being made. The Bills covering the taxation proposals for the current financial year, brought down in the House of Representatives on Tuesday, show no signs of any reduction in taxation, but, on the contrary, provide for increases in the most undesirable direction for a country such as this where the main source of its wealth is derived from the land. The income tax remains the same as it was last year, namely, 7d in the £l, where the taxable income does* not exceed £3OO and rising to the maximum of 4s 6d in the £l. The latter is said to press heavily upon companies, but the land tax and the new super-tax on land will press more heavily upon individuals, and upon some who will be actually paying, not upon their income but upon their debts. It is true that Sir Joseph Ward has modified his original proposals, under which the supertax was to be levied upon all holders of land having an unimproved value in excess of £12,500, and the mortgage exemption was to be reduced irom £IO,OOO to £SOOO. Sir Joseph has shown that he has not altogether turned a deaf ear to the many protests that have been made all over the Dominion against the iniquitous character of his proposals, as has raised the limit above which the landholder is to pay super-tax from £12,500 to £14,000, and now proposes to raise the exemption limit from £SOOO as he originally proposed to £7500, where formerly they were exempt up to £IO,OOO. The concessions thus made are good in themselves but they do not go far enough, for they still involve a tax on the farmer’s capital invested in the land he holds and occupies, and the value of which is bound to depreciate because of the additional levy that is to be made upon it. The super land tax, insofar as it does this, covers a vicious principle which should find no place in our taxation system. .It is as well, therefore, that the Prime Minister has shown himself more amenable to reason in departing from his original proposals, but he is still dealing unjustly with one section of the community, because he fails to make allowance for the

fact that the land, held by the farmer either on freehold or leasehold, is as much part of his capital as the city merchant’s premises and stock form part of his. Because a man holds land arbitrarily assessed at an unimproved value of, say, £20,(100, it does not follow that his capital investment is anything l approaching that sum. He may be holding the land with mortgages over ?t up to £15,000 or £IO,OOO, or even more. By making him pay supertax, and in addition levying taxation on the excess over the mortgage limit of (assuming the unimproved value to be £20,000) £12,500, the farmer is being levied upon both in respect of his capital investment and 6f his debts. The injustice remains, even with the introduction of the hardship clause providing for the appointment of a commission to inquire into cases where the operation of the super-tax is likely to involve hardship, so that the Commisisoner of Taxes may, on receipt of the report of the commission, refund the whole or any part of the. special land tax and release the taxpayer wholly or partly from his liability in that respect if the facts are held to warrant it. That the State is making an additional levy on land usefully occupied for stock raising purposes must inevitably result in tlie reduction of land values and increased difficulty in obtaining moneys on mortgage for the further development of the land. The export of meat, wool and other station products is just as important as that of butter, cheese and other dairying produce in adding to the wealth of the country. The true basis of taxation is found in the ability of the taxpayer to pay, and that is surely more justly ascertainable on a man’s income than upon any property he may hold, whether the latter takes the form of rural or city land, buildings or stock, etc. Much of the land comprised in the big estates is not only unfit for sub-division for closer settlement purposes, but is already under profitable occupation, and contributing to the wealth of the country. The effect of increasing taxation upon it is bound to result in diminished production and an increase in the number of the unemployed.