LAND TAX CRIPPLES FARMING

Chronicle (Levin), 10 December 1947, Page 7

LAND TAX CRIPPLES FARMING

STATE GRAB BRINGS FEELING OF FRUSTRATION WELLINGTON, Dee. 9. A change in the metbod of taxmg and ratiug seeond cdass land was essential if confidence were to be restored in the farming of poorer country, said Mr. James' Andrew, a representative ot Pederated Fanners, wlien giving evv denee before the Royal Commission on 8heep Farming. At present, -said Mr. Andrew, any farmer on such land who embarked with limited capital on an extensive farin improvement poliey, was deliberately facing a lengtliy period of hard work, long hours and the lowest standard of living for himseli and his family in the wliole eommunity. Instead of receiving encouragenrent aua reasonable assistauce in the ereation oi wliat was truly a national asset, the farmer was hampered bj- the fSate in every possible way. JEKs conmiittee, said Mr. Andrew, considered that the land tax, graduated land tax, income tax and death and estate duties were mequitable insofar as they related to farmers, particularly of seeond class land. Land taxes'were lixed by aniiuai charges which operated whether tlie land' p ro vided au income or not. They were inaugurated to force the suiidivision of large lioldings of first class land and were retained solely for revenue producing purposes. They now operated uufairly against larger holders of seeond class land whose properties wei'e unsuitable for subdivision. Owing to fluctuations of farming, produce prices and varving seasonaJ eonditions, there was a delinite need for llie adoption of a live-year average or longer terni for t iie assesshient of income tax. In past siump years whicn quiekly followed periods of liigh prices, the farmei;s generally were financially embarrassed wlien forced to pay tax 011 the previous year's income. "While income is the most equitable base for taxation, " he said, "the existing interpretation of what constitutes farming income has stronglv and adversely all'ected the develojmient of land." When money from farming returns was spent 011 allegedly permanenl unprovements which should result in increased carrying ca]>acity, tho amount so spent was delined as assessable mconie. If an increase of stock was ,provided by returns from the farin, it was also delined as in-ome. "A purely Lechnical interpretat ion mav juslify this practice, " he added, "but there can be no doubt that il has resulled in retarn ing and discouraging many farmers from embarking on a farm iniprovenieni poliey. ' ' The high standards of death and estate duties were also considered very discouraging factors in the long tenn welfare and sound faruiiug of seconu class lands. I11 many cases, said Mr. Andrew, the only avaiiable method ot obtaining thc necessary funds to pay these taxes was bv heavilv mortgaging the land. Taxes amouated to conlisca tion by tlie State of a considerable por tion of the capital invested in tlie industry and were responsible for tlie widespread conviction nmong farmers oi econoinic frustration. They wero also a determining factor in intluencing farmers to educate their children toi professious and for connnercial careers in cities. The extent of such a loss oi farming personnel was made painfuil} evident ia his organisation 's most re cent census returu. He urged the comnfissioii-, to- cqusid.er serttnt^ty '.tire S'tan .;dii07.^t'aE^ung •tevxation' i n rts. rela/ion ecShHniic-"" tlovelopmeiit of thc. Aecuhd class land. He x'dli i'Widfered fdlief th'rough any other mettift- , tnight not be of any value unless iDwas protected against reabsorption by the •State 111 the form of taxation.