SEVERE HANDICAPS

Otago Daily Times, Issue 26640, 10 December 1947, Page 6

SEVERE HANDICAPS

Farming of Marginal Land OPPRESSIVE TAXATION P.A. WELLINGTON, Dec. 9. The present cost of superphosphate, which has risen in price from £3 16s a ton to £lO 2s 6d a ton in less than 10 years, put it beyond the reach of marginal land, said Mr. James Andrew, a representative of Federated Farmers, giving evidence before the Royal Commission on’ Sheep Farming. The effect would be disastrous, he said, unless early steps were taken.

Top-dressing and the use of clovers was the key to increased production, Mr Andrew said, and every artifice known to man should be brought to bear to put dustings of phosphates and suitable grass seed on to hills. He urged the commission to look into the matter of aerial top-dressing. Mr R. Eddy, M.L.C., a member of the commission, said he did not think suitable aircraft were yet available for the work in New Zealand.

Urging that national labour be employed to wage war on the Dominion’s growing rabbit population, Mr Andrew said that 10 rabbits would eat or destroy as much grass as one sheep, and a pair of rabbits, under favourable circumstances, could produce 1,000.000 descendants in five years. Discouragement of Effort A change in the method of taxing and rating second-class land was essential if confidence were to be restored in the farming of poorer country, said Mr Andrew. With Mr J. Soler, Hawke’s Bay, he gave evidence on behalf of the Nqrth Island Hill Country Committee of Federated Farmers. At present, said Mr Andrew, any farmer on such land who embarked with limited capital on an extensive farm improvement policy was deliberately facing a lengthy period of hard work, long hours, and the lowest standard of living for himself and his family in the whole community. Instead of recieving encouragement and reasonable assistance in the creation of what was a truly national asset, the farmer was hampered by the State in every possible way. His committee, said Mr Andrew,

considered that land tax, graduating land tax, income tax and death and estate duties were inequitable insofar as they related to farmers, particularly of second-class land. Land taxes were fixed annual charges which operated whether the land provided an income or not. They were inaugurated to force the subdivision of large holdings of first-class land and retained solely for revenue producing purposes. They now operated unfairly against the larger holders of second-class land whose properties were unsuitable for subdivision. Owing to the fluctuations of farming produce prices and varying seasonal conditions there was a definite need for the adoption of a five-year average or longer term for the assessment of income tax. In past slump years, which quickly followed periods of high prices, farmers generally were financially embarrassed when forced to pay tax on 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 strongly and adversely affected the development of land.”

When money from farming returns was spent on allegedly permanent improvements which should result in increased carrying capacity, the amount so spent was defined as assessable income. If this increase of stock were provided by returns from the farm it was also defined as income. “A purely technical interpretation may justify this practice,” he added, “ but there can be no doubt that it has resulted ir. retarding and discouraging many farmers from embarking on a farm improvement policy.” . >

Confiscatory Taxes

The high standards of death and estate duties were also considered very discouraging factors in the long-term welfare and sound farming of secondclass lands. In many cases, said Mr Andrew, the only available method of obtaining the necessary funds to pay these taxes was by heavily mortgaging. Land taxes amounted to confiscation by the State'of a considerable portion of the capital invested in the indus-, try and were responsible for a widespread conviction among farmers of economic frustration. They were also a determining factor in influencing farmers to educate their children for the professions and for commercial careers in the cities. The extent of such loss of farming personnel was made painfully evident in his organisation’s most recent census return. Both witnesses urged the commission to consider seriously the standard of farming taxation on its relation to the economic development and maintenance of the Dominion’s second-class land. They considered that relief through any other method might not be of any value unless it was protected against reabsorption by the State in the form of taxation.