TAXATION

Dominion, Volume 12, Issue 34, 4 November 1918, Page 8

TAXATION

SIR, JOSEPH WARD'S VIEWS THE MORTGAGE Some references were made to taxation matters by the Minister of Finance (Sir Joseph AVard) on Saturday, in replying to the representations of the Farmers' Union Conference. The Minister predicted thai the Dominion would be able to reduce taxation after the war, and would be the lowest-taxed portion of the British Empire. Referring to, the suggestion that the mortgage tax should bo. abolished, Sir Joseph Ward said he did not like the tax, and he realised that it) might produce hardship. But he felt as Minister of Finance that there was no alternative. The tax applied not only to ■farmers; but io'all classes,; and without it the lazy man would merely need to mortgage his land, invest in the war loan, income-tax free, and pay nothing. Tho conference was oppose 1 to the free-income-tax loan, yet it was driving the Government in the direction of an export tax, to which he was opposed. "I hopo the Farmers' Unions are against .it," said Mr,.-Alassey, and there was u niurmur of assent from the deputation.

Sir Joseph AVard added that if the mortgage tax were removed a very: large proportion of the iand tax- would not find its way inio the Treasury. The country had to have it. If the tax was moved from the mortgagor to the mortgagee it would Jje necessary in common fairness to allow him to charge a higher rate of interest to the mortgagor. The whole policy of the'country had been to keep as low a rate of interest in the country as possible, and the whole basis on which financial institutions carried on their business was altered by legislation to keep money in the.oountry. Clients could go to, the banks and get advances at 5} per cent., but if the .mortgage tax were removed the country would have to let all liniiis cease, -and< money would rise to 8 per. cent, and 10 per cent. Disruption would take the place of, the present smooth running. There was a close connection between tax-free loans and a low rate of interest. Canada had a hundred million loan at 5£ per cent, free of income tax, and the United States was doing the same thing, while the British Government had always provided a portion of its loans free of income tax. It "was no breach' of confidence to 6ay that some millions of the money obtained in .New Zealand had been given by private individuals who hod got overdrafts at 5£ per cent, for the purpose. The Government, in providing tax-free loans, had no object except to keep the rate of interest down. When the war 'was over, added Sir Joseph Ward, lie believed* that taxation could be reduced very heavily, but the Dominion's iinal responsibilities must first bo ascertained.' Happily the country's, financial position was strong. The mortgagee was not escaping, and was actually complaining at the moment, There were 130 millions in mortgages recorded last year, and the mortgagee had to pay on the whole of the interest he levied, on a graduated scale. At the end ofithe war the Dominion would probably owe 200 millions in addition to ordinary indebtedness, but when the war .was over he was firmly ,of opinion that New Zealand would be by far the low-est-taxed portion of the Empire, and pos- , sibly the strongest financially.