CORRESPONDENCE.

Taranaki Daily News, Volume LVI, Issue 6, 7 June 1913, Page 2

CORRESPONDENCE.

THE MOETGAGE TAX. i (To the Editor). Sir, Certainly the mortage tax should be abolished, and for sev ral reasons. In the first place it is a departure from the original idea of those who abolished the property tax and adopted land tax. Their object was not to tax improvements, but to tax land as having a monopoly value and exempt the imI provements made -thereon by the enterI prise and industry of the occupiers. In [ the next place it should be abolished because under it a large portion of the land i values in the country does not pay its I full share of land tax; paying only threeI farthings in the £, instead of a penny I as it should do. The abolition would not i mean, as the Lyttelton Times infers, that mortgaged land should be exempt [ from taxation; on the contrary, it would mean that mortgaged land would pay its [ full quota, which it does not now do. i As matters are now, all mortgages pay the same tax, whether the security be ! unimproved values or improvements. To ' take a case in point: on a site worth ; £2OOO a building is erected at a cost of ! £3000; the owner mortgages for £4OOO on which three-farthings is paid as tax—a tax on the improvements to the amount of £2000; if, however, the owner were ini dependent of any mortgagee he would only pay on his unimproved value, that is on £2OOO at the rate of one penny in [the £. This is unfair to the taxpayer. | Take another case: A farm is valued [at £9OOO, with improvements at £1800; I if free from mortgage the tax on the 1 unimproved value of £7200 at Id in the £ would produce £3O; on the other hand if mortgaged for say £BOOO the tax on the mortgage at three-farthings in the £ produces only £25, in which case the State is a loser. Viewed also from the position of the mortgagee who advances money. on second or third mortgages where, the whole unimproved value is taken by the earlier mortgages, he \i eels that his security is the improvements and ought noi to be subject to a tax which is ostensibly a tax on unimproved values only. To what extent the capital value of the lands of the Dominion are mortgaged, I do not know exactly, but whether the State gains or loses on the change it should be made so that, as we profess, improvements be really exempt, and alt unimproved land values not pay less than one penny in the £. It is not, I am sure, beyond the wit of our law draftsmen and law makers to devise a law to protect the State from loss of revenue, and the mortgages on improvements from unjust taxation.—l am, etc., G.H.M.