B—s.

94

[a. clothier.

Witness: in the case of a man who is nearly taxable that provision fails, anel it, is these people who are nearly taxable and who may become taxable by an inspection of their accounts that 1 refer to more particularly ; and they are a large source of trouble, because they go about boasting that they have made no return. Mr. Shirtcliffe.] But those men are still subject to a penalty if they make no return —a penalty up to £100, although they may not be taxable ? —Yes, up to £1.00 ; and that is why I suggest an increase'of the minimum: There was a case reported in the paper in which a man, a professional man, had consistently refused to make a return for seven or eight or nine years. Finally he was summoned. He pleaded guilty, but instead of imposing a substantial fine one wliie-li this man could well afford to pay —the Magistrate rather condoneel the offence and blamed the Department, but said he was bound to inflict a penalty, anel fined the man the minimum amount —40s. Was he taxable: ? —That I cannot say. Mr. Clark : As a matter of fact ho had paid more tax than he was really entitled tei pay if he had made returns. He paid through default assessment. Witness : The point I want to emphasize is the absolute necessity for every one in business to make a return. Mr. Shirtcliffe.] With regard to your view concerning company taxation and the: question asked by Mr. Hunt, there has been a good deal of discussion as to the effect of the present incidence of taxation of companies, on the: small shareholders as compared with the: large shareholelers. I want to ask you for your view on this question. Small investors take up their shares in companies. They may have a few hundred pounds each. They put that money into companies for the purpose, as they think, of earning a tax-free dividend that they would not be able to earn outside. When the company pays its dividend —say, 7 per cent, if you like —they get the same rate of dividend as the large shareholder. Do you think there is any injustice inflicted on the small shareholder by the tax being paid by the company ? —No, sir, for the reason I have stated there —that the: small shareholder is amply protected by the, present Act. The process is so simple that a child in the Third Standard could do it. All one has to do is to write to the Commissioner and say, so-much tax has been deducted from the divielend, and he will refund the amount. The thing is quite simple. Mr. Shirtcliffe (to Mr. Clark) : How does that operate in the case of a small shareholder ? Mr. Clark: The provision is that the dividend, with the, tax refunded, must not exceed 6 percent, on the paid-up capital. That is the limit. The dividenel that the shareholder receives, and the: refund of tax made to him, combined, must not exceed 6 per cent, on his paid-up capital. Mr. Weston: Guaranteeing him 6 per cent, on his investment ? Mr. Clark : That is what it amounts to. Mr. Shirtcliffe (to witness).] Then, you consider that the; small shareholder is Weil protected—he is suffering no injustice ?—He is getting very materially the best of it. Mr. Begg.] You have had a lot of experience in valuing land, and you stated that you believe in a flat rate of tax on land ? —Yes. Do you think the fairest way of impxising that tax is on the, unimproved value as at present ? — Yes. Have you experienced any difficulty at all in arriving at the: unimproved value of rural lands ? — 1 think, Mr. Begg, that your experience is almost as wide as my own. Ido not remember a case in which there has not been a difficulty. You have been an objector yourself, and you have been an assessor. As regards structures, fences, and so on, the value is easily arrived at ?—Yes. But with regard to other improvements they are always more or less invisible, are they not ? — Yes, practically. In fact, in many cases they are not ascertainable ? —No. Take bushfelling, for instance. It disappears entirely after thirty or forty years. Draining ? —Draining eiisappears. Improvements in pastures ? —Yes. As there are, all these difficulties, with the inevitable consequence that it cannot be equitable in every case, that there is a clanger of its not being equitable, for an improvement that is invisible very often departs anel will not be allowed for ? —lt is like paint on a house. It is exhausted —gone. You know only about it if you know what it was like originally. Is not that difficulty liable to increase annually, as time goes on ? —I think not. The difficulty has mainly arisen, in my experience, through the want of knowledge, on the part of the valuers when taxation on the unimproved value was first introduced, which is not so many years ago, comparatively. You do not think that that difficulty will increase ?—No ; I think it will diminish. Will not the knowledge: of what tho land was like originally get more and more shaelowy as time goes on ? —I think sometimes you. will find that with old age your memory improves. But if this system depends upon an individual's memory is it not hopeless, because if this continues it will go on long beyond the extent of one man's life, so memory will not help ? —That will be some one else's funeral, not ours. Whether right or wrong, the system of taxation on unimproved value has come, and while it is here with us we can only deal with it as the Act stands. The question of valuation is outside the question of taxation. But, still, the tax is imposed upon the basis of a certain valuation, and it certainly comes under our review. The Chairman.] Yes, it comes within the scope of our inquiry. Witness: I have not the slightest doubt that with the progress being made the system of valuation will improve year by year, as it has done in recent years. The men are getting more experience. Mr. Begg.] The farmers think they are not allowed sufficient for their improvements : is that your experience ? —Yes; a farmer thinks that when he puts a spade into the ground he has made an improvement in every case. There is a large amount of necessary expeneliture, but very often it is non-productive.