THE Pukekohe and Waiuku Times PUBLISHED ON TUESDAY AND FRIDAY AFTERNOONS. FRIDAY, MARCH 16, 1917 TAXATION OF EXCESS PROFITS.

Pukekohe & Waiuku Times, Volume 6, Issue 259, 16 March 1917, Page 2

THE Pukekohe and Waiuku Times PUBLISHED ON TUESDAY AND FRIDAY AFTERNOONS.

FRIDAY, MARCH 16, 1917 TAXATION OF EXCESS PROFITS.

"We nothing extenuate, nor tet down auaht in malice."

There is generally throughout country districts a feeling somewhat akin to dismay at the demands that have been made upon farmers for the payment of, in many cases, very 1 lrge sums, by way of special tax upon excess profits alleged to have been made by them. Most of those upon whom claims have been made are ignorant upon what basts they have been computed and we have been asked by several to explain the matter.

The imposition of a tax of 45 per cent, solely as a tax for carrying on the war, levied upon all profits accruing to the individual wholly arising out of the war, cannot be objected to, provided the assessment be fairly made. It is, of course, impossible so to adjust any tax that there shall be no inequalities or injustices, but care should betaken to reduce these to a minimum, and it is just here where the Income Tax Department seems to have made a dead failure of it so far as the farmer is concerned.

For the purpose of ascertaining how much war-profit has been made whut is called a " standard income " is set up. In the case of the ordinary income-tax payer, this standard is either the average income for the three years before the war, or that for one of these years selected for the purpose. Thus, in the case of the merchant, the professional man, or the person living on his means a tolerably fair standard is easily arrived at. But it is different in the case of the farmer. In the past he has not boen required to pay income-tax, but land-tax instead. Now he has to pay both. Only, as he has not in the past had to make income-tax returns, there are no data upon which to base the standard. Consequently a rule of thumb procedure has been eetablifckod. The standard income has been assumed to be 7.J per cent upon the value of his land and such portion of his stock as the returns permit him to include. For example, if the capital he employs bo £SOOO, his standard income would bo put down as £375, and if he mado during the year £6OO he would havo to pay by way of excess

profits tax 45 per cent of the difference of £225, i.e., £lOl5B.

The assumption that 7A, per cent is a fair allowance for so exacting and uncertain an occupation as farming is of course a eras) absurdity. The man who chose to realise his property could safely count upon a 6 per cent return and do nothing. No one in bis senses could imagine that 1A per cent is anything like a fair return for the risks, the anxieties and the drudgeries of farming. We are not surprised that theie is an outcry from those, who not conscious that they have made any very large profits during the past year, have yet received very heavy demands, amounting in some cases to hundreds of pounds. And it is not astonishing that they are beginning to look round for a remedy.

When the Taxation Bill was before the country we made a very strong appeal for the imposition of a moderate export-tax in lieu of an income-tax upon farmers, and a very large proportion of members of the House co-incided with our views. The export-tax would at all events have borne something like a fair relation to the profits made, whereas the farmers' excess-profits tax has clearly nothing whatever to do with them. Unfortunately the Farmers' Union made a determined effort to kill the proposed export-tax and succeeded. The result is now painfully apparent, and is evidently becoming plain to the members of that organisation. Last Friday the Waiuku branch of the Union carried a resolution—" That the Excess Profits Tax be abolished, and an export tax on produce substituted." t This is a move in the right direction, and we trust to see it grow and spread until it is influential enough to induce Parliament to remove the obnoxious measure from the statutebook.