DRIVING OUT CAPITAL.

Wairarapa Age, Volume XXXII, Issue 9538, 9 July 1909, Page 7

DRIVING OUT CAPITAL.

(The "Australian Insurance and Banking Record," June 21st.) A conference of the Chambers of Commerce of the Dominion was held in Wellington towards the midole fo April, at which a wide range of subjects came under discussion. Amontf these'were the incidence of the mortgage tax and the graduated land tax, both of which, it was contended, were calculated to drive money out of the country. The mortgage tax is Hd_in the £, per cent, upon the amount of all mortgages, the land tax being at the rate of Id in the ±\ The conference urged that the ir.ortgaee tax had driven financial companies out of New Zealand and still operated, to keep money out. Sir Joseph Waid replied that it was not the mortgage tax that had driven the finance companies the Advances to comers Act, and cheap money. If the finance companies were operating now, they could lend out money on mortgage at 6, 6£, ai d 7 per cent, end the income tax on such earning'', in the case of a company, would be 6s, fis d, cr 7s per cent., in place cf the mortgage tax of 6s 3d. t .Of course, if interest came down to 5 per cent, the income tax would only be 5s per cent. It is, however, asserted that it is r.ot only the present rate of the tax that deters capitalists, but the uncertainty and fear of what it may be raised to any day. Moreover, it is pointed out that the mortgage tax affects buildings, which are expressly exempted ur.der the land tax. This Sir Jtfseph has denied, but it appears to be incontestable. It ■ has been pointed out, for instance, that the man who owns land worth £IO,OOO, with buildings thereon worth £20,000, would pay land tax only on the £IO,OOO value of the land. But let him on security of this property worth £30,000 and the mortgagee ia at once taxed on' £200,00, of which at least £IO,OOO is secured by the buildings. And that applies to nearly all mortgages on town properties. Again, there is no-doubt that the 6s 3d mortgage tax is a factor In the calculations when a man is debating Whether he will lend his money out on mortgage or withdraw it from New Zealand. There is another point. Sir Joseph admits that the Advances to Settlers policy has driven the finance companies out, and now the department is unable to supply all demands so as to adquatelv meet the situation. On the graduated land tax al.o the case of the Conference is prptty strong. This tax was introduced to compel owners of bisj estates to sell ur subdivided —the so-called "bursting-up" policy. Latterly however, it has been made to apply co town lands, and as far as the graduated, or additonal, tax ia concerned, it applies also to shareholders interest in a company that owns 1 ni. ev-r; the land on which, for inst ::.ce, a factory is erected. The shr-r- h ider's proportion of interest in the land rf the company is added to the value of all his landed properties, urban or rural, and if it brings him within the scope of the graduated tax he has to pay. It is contended that if a large landowner to escape this tax sells his station property for, say, £40,000, the tax still follows him if the invests the proceeds in town properties or industrial compani29, and he is driven to take his money elsewhere. It is argued that this was not the intentiun of Parliament in imposing]'the tax.