LAND AND INCOMES

Evening Post, Volume CXII, Issue 87, 9 October 1931, Page 6

LAND AND INCOMES

With only a few.days to review reventie and] taxation possibilities, the Finance Minister could not be expected to produce a complete plan which would bear close examination. His main aim was to find revenue, and to take it in such a way as to lead to the least possible aggravation of existing difficulties. Such considerations explain the exemption of companies from the new income taxes. It must be admitted, however, that they do not account fully for abolition of the graduated land tax. This does not benefit the spiall farmer. Even the holder of a mediumvalue farm will have little relief when the taxable value is reduced by the mortgage exemption. The greatest benefit will be obtained by the owners of the biggest farms and by companies or individuals owning valuable business sites in tlie towns. Certainly the latter class received particular attention in the report of the 1924 Royal -Commission from which Mr. Stewart quoted. The Commission recommended that if the graduated land tax is not abolished,' relief should be given in connection with the present graduated land tax payable on business premises. It was the effect of the graduated tax in the towns more than 'in the country which impressed the Commission. There are other points in that Commission's report which call for attention now. For example, the Finance Minister has exempted companies from additional income tax, and has provided for the aggregation of income from all sources to determine the rate payable by the individual. The Commission recommended such aggregation as a step towards lightening company taxation; but it excluded tax-free War loans, and it added the following important proviso:— In fixing the amount of his tax the amount of tax paid, at the source in connection with his other investments should be taken into account, but no rebates should be made if the total amount paid after charging the amount taxable in the taxpayer's own hands at tho rate that would apply to that amount only, comes to moro than the amount that tho tax would have been if tho whole income had been taxed in the hands of the taxpayer. This in itself was a "Heads I win, tails you lose" proviso; but it did not go so far as the Supplementary Budget proposal. This proviso means briefly this: if A pays Is in the pound on the income taxed in his own hands, and the rate would be raised to Is 3d by including his company income; he must pay Is 3d, but allowance will be made -for the tax paid for him by the company, only not so far as tb make the amount of personally paid tax less than it would be under the old system. The Tax Department would" not refund to the individual any of the tax paid on his behalf by a company. The Supplementary Budget proposal means that the company income will.be included so as to fix the rate, but no allowance whatever will be made for the tax paid by the company; except that it will not be asked for twice. This is not equitable. Indeed, it is most unjust. It is excusable only as an emergency measure, and it emphasises the point we made in our first reference that the tax proposals should be accepted for the emergency only, and should be thoroughly revised as soon as lime and conditions permit.