TAXATION.

Taranaki Daily News, 8 September 1920, Page 5

TAXATION.

SOME IMPORTANT CHANGES. RELIEF TO MORTGAGED LAND. (By Wire.—Parliamentary Reporter.) Wellington, Last Night. When introducing the Land and Income Tax Bill to-night, Mr. Massey said it proposed some very important changes. The first point to which lie would call attention was the proposal to relieve mortgagors to a certain extent from a grievance that they had suffered for a long time. He had been unable to give full relief, and had not gone as far as he would have liked—he referred to the grievances of the ma:i who had a mortgage on his land, and who was compelled t6 pay land tax on his debts. The position under the present law was that a man with mortgaged land was exempt from taxation up to £ISOO unimproved value. This £ISOO. gradually disappeared until it went altogether at £3OOO unimproved value. The proposal in the new Bill was that the man. with mortgaged land should be granted complete exemption to £4OOO, and then the exemption would disappear on a sliding scale at £SOOO. This gave S. considerable advantage in favor of the mortgagor. He did not doubt that many people would consider that the Government had not gone far enough. He had gone as far as the Treasury, the Finance Committee, and he himself thought advisable. IMPROVING WASTE LAND. The next proposal of importance in the Bill was in Clause 0, and referred to unimproved land which was capable of improvement. Members were aware that land of this kind was being held in an unimproved state in large blocks in various parts of New Zealand, and the Bill was telling the owners of such land that if they did not commence to improve their holdings they would have to pan an increased rate of taxation at the rate of SO per cent, over the ordinary taxationSection 11 of the Bill provided for an increase of the exemption from income tax in the cases of men with families. The present exemption was £25 of income for each child. The Bill proposed to double that exemption, thus making it £SO for each child up to the age of eighteen years. If the taxpayer happened to be maintaining his mother an exemption of £SO would be allowed. There were also exemptions for insurance and superannuation. He thought that the exemptions would be regarded as fairly liberal. The Biil discriminated for the first time, as far as he could recollect, between earned income and unearned income for purposes of taxation. The exemption in the case of earned iilcomo would disappear at £2000" per annum, i Above tha't level earned and unearned incomes were to be treated alike. The sdvantage in the case of earned income would be ten per cent. NEW SOURCE OF EE VENUE. Section 18 of the Bill dealt with shipowners who had escaped income tax to! some extent in the past. If a shipping company with its headquarters in New Zealand had steamers trading and' earning profits between ports outside New Zealand, it would become liable under the Bill to pay income tax on income so earned. An alteration was beiiig made in the system of taxing income from debentures. The holders of debentures escaped some part of their fair share of taxation. Under the present law they were taxed ou income from debentures at a flat rate of Is in the pound, plus a war tax of Is fld in the pound, making U total of 2s Od in the pound. Tlie Bill proposed that this income 'should be taxed, in the ordinary way. The land tax was being amended. Where the tavable unimproved value of the land did not exceed £IOOO (the exemption' being £f>oo), the land tax would be at the rate of Id in the pound. The rate was to be increased by graduations, and he believed that the aggregate amount produced by the tax would be increased. The highest. rate of taxation was reached under the present law in the case of land having an unimproved value of £192,000. The Bill proposed that the highest rate of taxation should be reached; when the unimproved value of the land amounted to £138,000. This meant, of course, that an increased number of estates would pay the maximum tax. TAX ON INCOMES. i No increase was being made on estates up to £IO,OOO unimproved value, .and theii was a slight decrease in the case of estates below £9OOO unimproved value- The old rates and the new rate Were about equal at £IO,OOO unimproved value, and there was no serious increase in taxation until a value of £30,000 was reached. From £30,000 j up to £138,000 the rate was increased. The Bill amended the incidence of the income tax. The graduations stopped at present at £6400, and the Bill proposed to continue the graduations to £IO,OOO. The payment of income tax would not stop at 7s in the pound. There would be 20 per cent, to be added in some cases, in addition to the 10 per cent, allowed off in the cases of earned incomes. Mr. Massey added that he regarded the Bill as a great improvement on the existing law. It did away with .various anomolies. He had not aimed at increasing the revenue of the State from I land tax and income tax, but he had allowed a margin, and there Would be no reduction in the revenue. The Bill provided that trading departments of local bodies, and also the Government trading departments, should pay income tax' in the same way as the businesses with which they were competing.