GRADUATED TAX.

Rangitikei Advocate and Manawatu Argus, Volume XXXII, Issue 8924, 18 September 1907, Page 2

GRADUATED TAX.

The Laud and Income Assessment Act Amendment Bill, as reportec from the Public Accounts Commit tee, contains the following altera tions :

Under the existing law, if the total unimproved value of laud in auy assessment amounts to £SOOO or over, graduated laud tax is payable thereon (iu addition to ordinary laud tax) iu graduations beginning at the rate of 1-lCd iu the pound, and increasing by sixteenths to the maximum rate of 3d iu the pound. Information gleaned from expert sources elucidates some points in the Bill as it left the committee’s hands.

Now the graduated tax runs up at the present rate until £-10,000 is reached, and then it commences at an altogether new rate, Which is divided into two parts, oiie portion, a substantial increase on the present rates, commencing straight away at the collection of the tax Then there is a 25 per cent addition on to that taxation, which is to come into existence the following year, so that the year after the current year the full force of the tax settles down on the country. Apart altogether from the higher rate of taxation brought into existence by this Bill, there is a different way of collecting the tax, alter it has produced increases even below tho £40,000. , Take, for instance, a man with from £30,000 to £35,000 worth of property : He pays 12-16ths of a penny in the pound under present taxation; but under tho present law there is only counted the value of his freehold property or his marketable interest iff his lease. Under the Bill his lease is calculated as if it wore a freehold, and a man then may probably bo lifted up from £30,000 to £50,000 or £OO,OOO, and come iu under the graduated tax for that figure. The reason why the Legislature has to adopt this system is that land owners are now finding that to evade taxation, all they have to do is to make a bogus sale, execute a bogus lease, and hold as tenants, with power of sale contained in the mortgage to cover the unpaid purchase money of the bogus sale, the man holding as tenant iu possession having at the same timo mortgaged over the property for the full value, and all the rights of tho owner; therefore to prevent evasion, the Legislature has to provide that a man oanuct accumulate property under the guise of a tenant. Suppose a man were to approach four large property holders, and take a lease of their lauds to work as one property. Under the old legislation, if tho leases were for the full market value, he would probably pay no graduated tax. Under the present Bill he would pay graduated tax on tho capital value of the freehold of these four properties run into one as if he wero owner. So that, not only does it prevent a man evading by sub-division and holding as tenant, hint it prevents a man accumulating from others as genuine tenant. Tho Government’s estimate of extra revenue by this taxation is £70,000,. but this estimate is evidently based on owners paying the taxation and of sub-dividing largely; complete sub-division will, of course, produce no extra taxation. Some of the properties which under the present law do not come into tho graduated tax will go right up to the point proposed, because • they wore formerly sub-divisions to evade taxaton, which cannot now be done.