VV. M. NICHOLSON.]

115

8.-5.

Before, cost of working can be, allowed for, anel even on such a low basis as 5 per cent., this property must make' sales to the extent of over £9,479 3s. 4el. out of stock anel plant valued at £20,000, while still leaving the stock and plant without depreciation, anil with no allowance for improvement in the way of renewals of pastures, scrub-cutting, materials, food for staff, wages, costs erf management, and losses of stock. When we remember that, in addition to taxation having doubled and in some cases quadrupled, the wages paid have also been increased by approximately 100 per cent, since 1911 (see table of increases attached No. 1), the impossibility of the producer being able to continue to carry on operations with any hope of success under average conditions must be obvious. The land-tax payable by the holder of land the unimproved value of which is £1.00,000 (irrespective of whether an income is earned from the land or not) equals the income-tax paid by more than forty-one individual investors receiving an income of £1,000 per annum each. In other words, this one man's land-tax equals the income-tax payable on over £41,000 of income, while the capital which has earned this income is left untouched. My executive wish me to especially stress the point that the land-tax as at present levied is a capital-tax pure and simple, and is imposed on one section of the' community only, anel they respectfully urge, if a capital tax is found to be: unavoidable in order to provide means for meeting the expenses of government, that all capital, however employed, shoulel be: made to bear its share at least equally with that used in working the land for production, so that some: measure: of relief may be given to the primary producers. If some: alteration is not made in this direction, then it can be; emly a'matter of time berfore large areas of land which have in pre-war days been in profitable occupation must go back to nature, or aggregation take plae:e on a large scale, with a consequent reduction in output. The great majority of farmers are under a heavy load of mortgage to-day. The; result of the reduced, interest-earning power of land through the excessive amount of mortgage placed on it by the Government (as represented by the lanel-tax) is clearly shown by the changed attitude of financial houses when dealing with applications from farmers for money on first mortgage on lanel of which the: following letter is an example. Insurance Co. of N.Z., Ltd., IJiSAB Sir, — Dunedin, 28th February, 1922, Our Canterbury manager linn forwarded us your letter of the 27th instant, with reference to a loan of £6,000 em fifteen hundred acres of land at VVaiau, the property of Mr. Owing to the high rate of income-tax, in our case Bs. 9d. in the pound, we regret to say that we have been compelled to cease lending money on mortgage. (Such investments will give us a return of only £3 l.'is. 2d. per cent, net, whereas by investing in municipal debentures at 6J per cent, our net return is £5 13s. 9d. The policy of the directors in the past was to invest tho greater portion of our surplus funds in broad acres, with a view to helping the farmer and developing the Dominion. Unforunately, such a policy is now a thing of tho past. Thank you for bringing the investment under our notice. Yours faithfully, Gbnbbal Mahauek." The real position is that the margin of security that formerly existed in favour of the orelinary first mortgage has now, on account of the Government having increased its mortgage on the lanel, been reduced to an extent which necessitates a higher rate of interest being paid for mortgage-money, and this in turn makes it still harder for the primary producer to pay his way. Unfortunately for the country generally, and for the landholder in particular, there is no possibility of his passing on any extra charges, as the prices of our primary products are, almost without exception dependent on the world's market values. This is not the case in commercial enterprise's. During the perioei of the strike one of our members had occasion to hire a lorry to take some lambs from his place to North Canterbury. He ordered some cement to make a back loael for the lorry, and the firm told him that there was a surcharge of £1 per ton. on the cement on account of having to cart the cement over the hill from Lytteitem. But as a matter of fact I know that there; was no cement carted over the hill from Lyttelton. That is what is done by the commercial people. The position of the primary producer is infinitely worse than that of any eif the: various dividend-earning companies throughout New Zealand,' as the landholder is forced to pay out from his capital, while: the companies arc only required to pay on profits, and if none, are, maele:, then no tax is asked for. My executive feel assured that this Committee will realize that the first consideration must be how best tei give relief to the primary producer. Unless this is done, and done quickly, the effect on the Dominion generally must be, disastrous, as if production for export is restricted, then it naturally follows that the amount of foreign capital coming into the Dominion must be reeiucod in proportion. The foreign money received for our primary products (which in our case is almost our only source of income.) represents in the ultimate analysis the only money wherewith all classes of the: community pay their taxes. From the sheepowners' point of view there: can be no serine! basis of justification outside war conditions for saying that the unimproved value of the land in the Dominion has risen since 1913 by £60,000,000, as is shown by the Valuatiem Department's figures, and on which land-taxation is assessed. This is approximately 50 per cent, increase, and cannot be justified under present conditions. With prices of our primary produe:ts at an average, and making due allowance for the increased cost of operation, the unimproved values of farming anel grazing lanel should be lower rather than higher than in 1913 : 1913—Unimproved value of lanel in the Dominion,-£152,273,929. 1920 Unimproved value of land in the Dominion, £212,148,731. 1921 -Unimproved value of lanel in flu' Dominion, £227,574,242. 1922—-Unimproved value of land in the Dominion, £229,925,874. My executive, in view of the enormous increases in working-costs and materials since; 1913, tei which, must be added 4-0 per cent, increase in railway freights, would suggest that every endeavour be made, to give relief to the landholeier, and as a means thereto woulel further submit that such relief may be given and the load be more equitably distributed by the substitution of an income-tax pure and simple, to be levied on a graduated scale on all incomes. In this case it might be necessary to fix the value of stock at a mean level, and that might be arranged slightly below the average, so as not to allow manipulation by the, farmer to beat the Department. Second, if no other means of taxation proves possible than that existing at present, that all capital, however employed, should be taxed equally so that a modicum of relief can be given the; man on the land. Third, that a propertytax be levied on all property owned in the Dominion, as the: capital cost of expensive establishments should be considered as idle capital, and the value of the luxury enjoyed by the owner should be