TAXATION ISSUE.

Auckland Star, Volume LIX, Issue 229, 27 September 1928, Page 22

TAXATION ISSUE.

ANNUAL BILL PASSED.

FARMERS' POSITION REVIEWED.

COMPARISON WITH CITY MAX.

(By Telegraph.— Parliamentary Reporter.)

WEIiLINGTON. Wednesday.

The debate oil taxation was the chief feature of to-night's sitting of the House of Representatives, -when the Land and Income Tax (annual) Bill was put through all stages from the second reading and paesed. Sir. Savage (Auckland West) said many city people were not aware that income derived from land was exempt from taxation. The city taxpayer paid land and income tax, and a thousand and one other forms of toxation in addition. Therefore there was nothing in the question: Are you in favour of making the farmer pay double taxation? The small working farmer paid neither land nor income tax. Mr. Savage maintained that, no matter from what source it was obtained, income should be taxed. Many farmers, however, would not pay income tax since their incomes were not high enough. If farmers were exempted from land tax they would not, as a class, reap much benefit, because only a small percentage of farmers actually paid tliat tax. Thia was due to exemptions in respect of mortgages. Mr. l>. Jones (Klieemere) reminded the Opposition members that the small business man did not pay income tax, so that he was in the suuie position a= tho small farmer. The big landowner was lighting for the abolition of the land tax and the substitution of income tax. The farming industry would bo ruined if the Labour party 'had its way and itnpoistxl both land and incoinc tax on the man on the land. United Leader's View.

Sir Joseph Ward, Leader of tlio United party, said he did not believe that many people in ordinary circumstances wanted to tax a man doubly. "Largo" men, who had benefited out of their land since the war ought to pay their fair share for the saving of the country during the war. That question β-hould be looked into. The principle of dual taxation for the man on the land was wrong. The tax of 4/6 in the £ on the man in the city was a high penalty upon his efforts. The Minister Explains.

Replying to the debate, the Minister of Finance, Hon W. D. Stewart, said ho understood Mr. Savage's argument to mean that it would bo equitable to apply land and income tax in the country on the average of the land and income tax. which was paid by the cities. So far ae the city man was concerned, Mr. Stewart said he had often stated in the House that unless one took account of the five per cent exemption which he got on the captial value of his property, it was not feasible to make any comparison between him and the farmer. Indeed, five per cent exemption, which the city man got, meant that he paid no land tax and received a substantial reduction in his income tax. If the eaine concession were allowed to farmers as was given tho city man, it meant that he paid no land tax and received a substantial reduction in his income tax. If the same concession "were allowed the farmer as wae given the city man, the farmer would pay less than at present. A cxhnately two-thirds of the fari paid only one-third of the land tax. \u-n uj) in the higher hanks of the farming industry were paying very heavily, and approximately one-tenth of the farmers paid three-fourths of the total land tax collected. He (Mr. Stewart) did not think the Government held the view that the graduated land tax should be abolished. One of the difficulties in changing over would be to find a riystem that would prevent aggregation and yet be fairer than the existing system. When tho commkoion suggested that the graduated land tax should be abolished and an income tax substituted, it recognised that for some years there would be a substantial loss of revenue, and it recommended that for some time there should bo a flat land tax on a graduated scale. Nearly all the recommendations of the commission had been given effect to, but the question whether the farmer should pay land or income tax had not been considered because of the disparity of views among farmers as to which was the most equitable system. It was fair to say that the great majority of small farmers preferred the land tax, even though in certain cases it might press heavily on them, but because of their mortgage exemptions it was not very likely that they would do so.