THE MORTGAGE ACT.

Taranaki Daily News, 6 July 1916, Page 8

THE MORTGAGE ACT .

THE MINISTER'S THIRD THOUGHTS. INCOME TAX IN PUCE OF LAND TAX. (From Our Ou'n Correspondent). Wellington, Wednesday. When certain clauses in the Land "and Income Tax Mill were lipid over for ponsidcration dnrine the week-end, few people expected Sir Joseph Ward's tlu'rd thoughts would take the turn they did. The Minister's lirst thoughts were to repea! the leaving the mortgagor to pay land tax on his full assessment without making any deduction for the money lie had borrowed; his second were to defer dealing with the knottv problem till after the war: and now his third are to relieve the mortgagor altogether and still allow the mortgagee to deduct bis loan. This is the shape in which the newlaw passed its second rending in the House this afternoon, and in'nil probability it is the shape in which it will go on the Statute Book. Of course, the Minister of Finance is being denounced by some members of his own jiart.v for haVing. as Mr. Ilindinarsh put it, flouted the Ballance and Seddim traditions anil renounced one of the lirst principles of Liberalism. I! u t these critics are forgetting thai the legislation of last session, which brought incomes derived from land under the operation of the Income Tax Bill has put an entirely different complexion on this problem.' It is true (lie repeal of the mortgage, tax will relieve the mortgage of the. penny in the pound on the amount of bis investment be has to pay under the existing law; but. on the'other band, he will have to pay income tax on the interest he receives from the mortgagor, and it would not require so very severe a turn of the screw to make this equal to the present payment. However, the main argument for the repeal of the mortgage tax always has been that the impost is passed on "to the borrower in the shape of an increased rate of interest. Sir Joseph Ward calculates thai on an average it means an I addition of one-half per cent, to the rates paid by farmers, enough to cover the propose,] tax. that is. one and eightpence per cent, in addition. If this is the position it would be seen that the farmer would have been no worse oil' than be is now if the whole of the tax had been placed on his shoulders—if he had not been allowed to deduct the amount of bis mortgages—but Sir Joseph Ward hopes by relieving the lender of taxation to obtain cheaper money for the borrower. But there is some speculation over this point, and sceptical people are predicting that a good deal more of the concession will stick to the fingers of the mortgagees than will go into the pockets of the mortgagors. One point made by Mr. Wilford during his speech on the second reading of the Finance Bill dearly ought to have serious consideration when that measure is in committee. The member for Hutt suggested that as the rate of interest on existing mortgages had been fixed to cover the mortgage tax the rate should be reduced when the tax was repealed. If the existing mortgages ran into no more than twenty millions, a very moderate estimate, the abolition of the tax would mean a saving of £IOO,OOO a year, and this obviously should go to the borrower and not to the lender. The Minister promised to consider the point.