DRIVING OUT CAPITAL.

Dominion, Volume 2, Issue 555, 9 July 1909, Page 8

DRIVING OUT CAPITAL.

V ; ::',x;--'--'ANri;r}s:m4i^ '' A^°^^° M ' pf Chambers 1 of Commeree"- ' ° f '% Dominion .wgs. heldin- Wellington j towards the middle of April; at which a' wide ■ : range- of subjects camV" 'under : discussion. 5 Among* these were: the- incidence -of the mb'rt- [: PW.tax and the; graduated-land tax, both "of • "■lnch, it: was:"contended, 1 were calculated" to >> drive money .out of the'country. 'The' mbrt- [ gage. ■ tax■ is ..Ji ,-the... £,' i6ri,6tt,r3di-..'per' cent, I upon, the amount of (alb mortgages, .tlio- land ! .tax'-being at .the. rate of ,ld., in .the'J3. 'The ■i .conference, urped that, njm-tpage tax had--1 driven:,financial companies- out, of''New..Zea'n.n,dV,>?d,■■■eHll-: operated to keep money, out.' ' SirJqjeph .AVard rtplied that/it was ! 'not the , ' mortgag.er;tax. thatlhad-.-driych'the-flnance , com-' 1 ' . pames:out; but:;the' Advanees to Settlers , . Office; and .cheap..money. 1 ' If the, , finance companies. wep operating now they could lend oiitmoneyon. mortgage at 6, Gi, and J per ; cent., and the income tax.on such earhiugs, in the case of a ; company, would be 6s;, Gs.; Gd.; or 7s'.' per' cent., ( m place~ of the mortgage' tax of- 6s. 3d. 1 .Of course, if. interest came down to' 5 per cent:; the income'tax, would-onl.y be.Ss." per, cent. ■' It : . is, however,. asserted that it is; not only the nmsent rate.of the tax that deters capitalists; but- the. uncertainty, arid fear .of* what it. rria.v be.raised to' anyday. Morcqver, it is pointed , out. that' the. mortgage 'tax. affects ;bnjldings, which, are s exprossly exempted'niider the land tnx. -This- Sir Joseph .lias 'denied,, but it apl pear;;-to.bo incontestable/ It has-been pointed j. out, for instance, that the man who owns land , worth' ,£10,000,' with buildings , thereon i worth X 20.000, wouldpay the .£ld,ooo' :• value of the land." ,But. let.him -borrow ',£20,000" . on/security of this.' property worth .£30,000, and ■ the. mortgagee' is at once-taxed .-on tl)e ; '.-£20,000, i of which at least is secured by ;tho • buildings.-.' And v .that applies to: nearly,'' all. .* on,town, properties.■ ARaiii, there is [ ho, doubt that the. 6s'. ; 3d; 'mortga'ge.i ; tax is n . factor:in:,the'calculations .ivhen a man is dc- :' bating whether he will lend ,liis money, out on '■ mortgage.-or, withdraw it from New. "Zealand/ There ia, another point . ,Sir'- , Joseph admits . that, the', .Advances..'..to- Settlers : pdlicy ,has 1 driven'the finance companies out, and now the ■ Department is'not able ,to supply all:de'mantls ' so as to'adequately meet the situation ; Oh the [ graduated' land tax. also the case ofthe conr ference.is pretty ■'strong/ This tax-was'.intro- , duced,,to compel..owners of big. estates to'sell , j or Eo-call?d "bursting-tip" policy. I/atterly, however,' it has , been- ina'de. to ■•■ apply to town lands, and as far. as' the graduated, or .additional,' tax is concerned, it- applies : rilsp to. a shareholder's interest, in a company" that owns land, even the land on which, for in-. i stance, a factory isi erected, The shareholder's' . , proportion of interest in the land of 'the.com*-' pany is. added to. the .value, of all his''landed- , ; properties, urban or'niral, and-if it brings him within: the scope of the graduated tax he has to pay. It'is contended, that'if:'a large landowner, to. escape "this tax, sells his' station 1 property for, say .£40,000, the tax still follows him if he invests-the-proceedsiin town properties or< • industrial companies, and he'is . driven. to' take his money elsewhere.. It .'is argued that this was.not.the .intention of' Parliament in imposing the. ta\\—"Australian; In- : surance and'. Banking .-Record," ■~':;■ '■;,.'