99

8.—5.

J. D. HALL.]

Will you pilease pilace your views before us by reading your statement ? —Yes, sir. It is as follows:— b .. This statement is presented on behalf of the North Canterbury Branch of the Farmers' Union, and application is made for feave to file a further statement on the grounds that sufficient time has not been allowed to get information and records from a substantial number of farmers to show how they have been affected by the: present system of taxation. The North Canterbury^Farmers' Union^consists small farmers engagedjnostly in the production^ pulse, and seeds, and what is known as " mixed farmers," the.mixture consisting mostly of»breedingi and fatteningnlambs and growing grain and other crops. In some districts dairying is mixed but a much larger number erf farmers are mixing the production of grain with meat and wool. According to the Agricultural and Pastoral Statistics for 1922-23, the number of farm holdings in North Canterbury was 7,681,_and the numbered permanent workers engaged on thesejroldings was 13,000. During the same yeaiym 2,080 holdings but last year this number has been reduced by nearly one-half. M Approximately, liowever, farmers in the district who may be classed as agricultural farmers anel whose farming eipierations have been more adversely affected by the increased cost of production on their farms than the purely pastoral men. The value of the produce of the agricultural farmer eloos not, like meat, wool, and eiairy-produce, depend on export values, but is generally a matter settleel by our domestic supply and demand, though at the present time this produce is competing with wheat anel oats imported from Australia and Canada. The sizes of the different farms vary greatly, but the average area is about 500 acres, which is the area most suitable for employing a six-horse team, that being the generally recognized power unit on this class of farm. As the result of investigations made by the officers of the Department of Agriculture, the cost of the upkeep of such a team to-day, inclusive of the wages of the teamster, is a little more than £500 per annum. Particulars of this cost are given in the December number of the New Zealand Journal of Agriculture for 1923. The unimproved value of such a farm would not be less than £8,000, and the land-tax on it would be about £40, while the income-tax on the investment of a corresponding amount in a business would be less than £10, and if the investment was in shares of a company there would be no tax payable at all. If the investor in a business does not make any income, he does not pay any tax, but the farmer has to pay his land-tax whether he makes any income or not. The payment of £40 a year may not seem a very large amount to some people to pay for the privilege of owning land and the possibility of its increasing in value as the country becomes more closely settled, but under conditions which exist to-elay, the amount mentioned may mean all the difference between a farmer living in reasonable comfort and working without any adequate reward for his investment and his work. Farmers owning land subject to a mortgage of more than £5,000 have to pay land-tax on the " gross value," and are not entitled to any exemption in respect of such mortgage. Farmers pay rates on the capital value of their land, anel this results in their contributing more to common services such as hospital and Harbour Boards than the city ratepayer, who also pays rates on his land, which is only a small part of the value of his whole property. In these cases services are for the people, but payment is out of the land. Indirect Taxation. —The amount paid by the farmer for land-tax is a small thing compared tei the taxes he pays indirectly, and which comprise; and are the main reason for the increased cost of production on our farms to-day. This cost is more than double what it was before the war. The main items in which this increase is found are Higher rates of interest, rates, and taxes ; higher rates of wages ; higher rates for threshing, hauling, and transport; higher prices for fertilizers, binder-twine, aid sacks ; higher prices for implements, repairs, harness, and other materials. The consequence of this increase in the cost of production is that farmers cannot grow wheat to-day at ss. sd. pier bushel, whereas up to 1914 they were able to grow enough for the Dominion's, requirements at 3s. The contention on the part of the wheat-growers is that this increase in the cost of production is caused by the high graduated income-tax on the banks and large companies, and which, though paid, in the first place by these bodies, is passed on to the farmers in the form of higher charges for services and higher prices for materials. Comparative statements are being prepared showing the fluctuation in the rate of the tax, and corresponding changes in the charges made to the farmers, but generally it is the case that up) till 1922, when the income-tax got up to Bs. 9d., the increase in the cost of production had risen 100 per cent., and has not come down very much yet, so that it does not appear that a mere reduction in the rate of the income-tax is the only thing that is required to improve matters. The result is that farmers have to give up growing wheat, and this leaves their teams idle, upsets their rotations, and that a substantial number of farmers are in this piosition : it will require a cycle of liquidation to readjust matters. It is this increased cost of production resulting from high income-tax on the conrpanies being passed on to the farmers that is hurting the farmers far more than the land-tax, and is restricting the energy and stifling the enterprise not only of farmers, but of those engaged in related industries. I should qualify that by saying that the reference to farmers right through is to agricultural farmers. lam representing them now, and they are the people who are in this peculiar position. Now, with regard to the resolution of the Council of Agriculture, I should explain perhaps that that Council is really the most representative organization of farmers in New Zealand. It is a gathering which represents all the agricultural and pastoral associations. As you know, there are the Farmers' Union anel the Sheepiowners' Federation, but that is the most comprehensive body. It meets annually in Wellington, or has done so, and 1 wish to submit the resolution that was passed last year as being representative, of the feelings of practically all the farming community on that occasion. There was considerable discussion, anel Ido not think there was any dissentient vote —it was not recorded, anyway. The resolution was : " That the Conference is of opinion that the present method of levying income-tax on companies is unjust aid calls for immediate revision, first because it compiels companies to increase their charges to cover the tax, and because these taxes are ultimately paid by farmers. The Conference therefore urgently requests the Government to adopt the method in force in other parts of the British