The Dominion. THURSDAY, JANUARY 5, 1911. "GETTING AT" THE LANDOWNER.

Dominion, Volume 4, Issue 1017, 5 January 1911, Page 4

The Dominion. THURSDAY, JANUARY 5, 1911. "GETTING AT" THE LANDOWNER.

. those v/ho take a serious interest in the political development of JSew Zealand, whether that interest is purely scientific or the practical interest of .the intelligent citizen, there is much that is important in the decision of Mr. 1 Justice Cooper in the dispute. between mil. G D. Greenwood and the Commissioner of Taxes. Tho facts of the case are very simple. Mr. Greenwood in January, 1905, being then the. owner of the. Teviotdalc station, agreed to purchase the U liiterock station for a total sum of £100,000. In order to avoid the obligation to pay a very large sum in graduated land tax, which would 1? 1 ~u P .o n hira if he merely added the Whiterock station to his personal holding, Mr. Greenwood formed, a private company of 35,0G0 ■ shares, of which lie held £34,998, in which _ Whiterock became vested. Jiarly in 1903 this company detersell the whole .of its property in lots, and did so, at a profit of £52,000. Tho Commissioner of xaxes charged the company, with inconic tax on this profit, and the' tax, amounting to £2G50, was paid under. protest. The case beforo Mr. Justice Cooper was a claim by the company for the refund of this amount, and the Court upheld the claim. - In some earlier cases the Judge had established the principles that governed him here. A company is liable, he had held, to pay incomc tax on profit derived from the sale of land-if its ordinary business comprised _ dealing in land and not otherwise; Where a company was formed "for the main or primary object of dealing in land," its profits were liable to income tax, but "it is equally clear that a company may buy land and afterwards sell it "at a profit, if its memorandum of" association contains sufficient pbwcuy and that such profit may not ' he taxable.- In order to' render the profit taxable, it is not sufficient that the transaction or transactions shall be within the power of tho company; • such transaction or transactions must be carried out by a company whose, business comprises 'dealing in such property' and not otherwise." Whether tho company in tho present-case'came under this exemption was a question of fact, and the Judgo found that' this exemption did apply. ; Tho first point of public- interest is tho spirit displayed by the Tax Department, or, perhaps wc should say, tho policy of that Department as given to it by the Executive. Tho argument of the Solicitor-General shows quite . clearly that, the Department's policy is to "get at'' tho landholder in any ease. Had Mr. Greenwood _ simply purchased Whiterock in his own person, lie would bo liable to a' heavy graduated tax. Losing the chance of collecting that tax through his decision to avail himself of one of the few rights, still left by the Government to the owners'of land, the Department attempted to' make a raid on tho profits derived by Mr. Greenwood when he divested himself of his newly-acquired property. The admission by tho SolicitorGeneral that there would have been uo. excuse for a raid on tho profits of tho re-sale if Mr. Greenwood had not formed the company means that the Department's demand was not based \ upon general principles of justice (any ~more -than it was based upon law), but upon a keen-' 'ness to seize upon any technicality that might enable the landowner to bo harassed. It is characteristic of the. Government that, after passing an Act professedly with tho object of inducing landowners to subdivide and sell their land, 'it should try to rob a man for doing that very thing. This point must have occurred to Mr. Justice . Cooper, for, at the end of his judgment, after saying tljat he held that Mr. Greenwood's sole reason for selling Whiterock was an anxiety to escape the heavy taxation, his Honour added: •'lndeed, tho policy of the Legislature, as evidenced by tho alteration in • the law effected by the Act of ] 907, was to so increase the graduated land tax in tho case of large and valuable properties suitable for closer settlement' as to compel the owners.to cut upland sell such properties." There is ono passage in tho .judgment that deserves tho attention of Parliament and public. Wo refer to the digression upon tho meaning of "evasion." Tlie . Government and its friends arc ,vcry fond of talking of the wretches who "evade" land taxation. They never lose an opportunity of suggesting that tho man who "evades" taxation .is a thief and a law-breaker. It is one of their ways of inflaming the ignorant against the holders of land, and it does them no credit. Here is the opinion of Lord Lindi,ey, quoted with approval by Mr. Justice Cooper:

There are two ways of construing the word "evado": ono is, that a person may go to a solicitor and ask him how to keep out of an Act of Parliament—how to do something which does ( not bring him wi'-u the scope of it. That is evading in one sense, but there is nothing illegal in it. Tho other is, when he goes to his solicitor and says, "Tell me how to escane from tho consequence of an Act of Parliament, although I am brought within it?" That is au act of Quito a different character.

We trust that the Government will profit from the reproof contained in this opinion. In the meantime, we have little doubt that the AttorneyGeneral's mind is already busy with some new measure to upset the rule established by Mr. Justice Cooper's judgment. _ When the Bill comes down it will almost certainly, if it keeps the character of the Government's Bills relating to land and land taxation, bo a crude thing that will produce damaging results in all sorts of unexpected ways. The whole case makes a very interesting commentary upon the attitude of the. Government towards landholders and owners of property in general, and upon the spirit in which it oxcrciscs its powers.