8.—5.

254

[P. J. SMALL

But a man with a property such as I have described ought to be able to contribute £45 for the: government of the country ? —That does not cover his taxation on that property by any means. He has interest and local rates to find. Are not we always inclined to blame others instead'of for the position we are in ?—I am not blaming any one for the position we are in. But you are asking for a reduction in the burden ? —lt is only a reasonable thing to ask, where: a man has not got the money and has to borrow it. There is one other matter : for the average dairy-farmer in New Zealand the upkeep of his herd amounts to something enormous, through various diseases. Each dairy-farmer to-day has to be a practical veterinary surgeon to be able to live at all. He, starts the- beginning of the season with a good herd of cows. I know a man who paid £80 an acre for some of the richest land in New Zealand. He paid a high price for high-grade: Jerseys, and his neighbour was envious of him. His neighbours thought that that was the proper way to go about dairy-farming. But at the end of the season there was only one cow left. How is that man to pay his land-tax ? Otto William Williams, Finance Chairman, Dairy-farmers' Union (Incorporated), (Wellington Province), examined. The Chairman.] You are a dairy-farmer, Mr. Williams ? —Yes ; near Palmerston North. You are giving evidence on behalf of your union ?—Yes, more or less. And this memorandum sets forth the views of your union : will you read it to us, please ?— Yes, the statement is as follows : — In giving evidence on behalf of the Dairy-farmers' Union I shall confine myself to the question of land and income tax, and as to how they effect, elirectly or indirectly, the dairy-farmers of tho Dominion. The dairy-farmers are inclined to look upon the setting-up of a Royal Commission to take e:vidence on matters of taxation as the result of the invidious criticism which has been levelled at the Government from various epaarters for eixempting the farmers from paying income-tax. They naturally fear that an attempt will be made to reinstitute the income-tax without giving him an equivalent relief in other directions. In orde:r to obtain some indication as to the feeling amongst dairy-farmers with regards to taxation the Wellington Provincial Union sent out to all its branches a circular letter asking the following questions : —(1.) Should the present system of taxation continue ? (2.) Should income be taxed and land-tax remitted ? (3.) Should both land and income tax be paiel. by producers with the following exemption : (a.) Land-tax—Only to be payable on margin between assessed value and amount of mortgages. (6.) Income-tax--Only payable on income above (a) £500 ; (b) £1,000. The replies received from the various branches indicate that a substantial majority is in favour of a remission of the land-tax, while a few branches favour the remission of the income-tax, and only one branch was in favour of the third question with an exemption of £700*. . Although these questions were only circulated in the Wellington Province we: believe the answers represent a fair average: opinion throughout the dairy industry. At a number of meetings which I attended personally I have gathered the impression that the average dairy-farmer, without perhaps being able to give: logical reasons or economical facts, is instinctively convinced of the unfairness and the injustice of the present land-tax. I have also invariably found that the average dairy-farmer who has not the slightest objection of paying a fair income-tax provided his financial position justifies such a tax, whde at the same time he resents a trifling land-tax if his year's work, has resulted in a loss. Coming to the profits made by the dairy-farmers during the past few years, an entirely erroneous idea exists in the minds eif the city and business people. If the price of butter and cheese shows a slight rise on the Loudon market, business people inevitably jump to the conclusion that the dairy-farmer is making a fortune. As a matter of fact, no class of farmers have had, and still have, a harder task to make ends me:et than have the dairy-farmers. It is quite safe to say that not 10 per cent, of the dairyfarmers of the Dominion have in any way profited by the exemption from income-tax which was granted to farmers last session. The few who did not actually show a loss on the year's work were more: than covered by the £300 exemption as provided by the Act. In spite of the £17,000,000 of dairy exports from last year the dairy-farmer of to-day is little better off, which conclusively proves that the cost of production in the dairy industry must be excessive. The fact of a business showing a large turnover is, of course, no proof of its financial success, and the dairy industry of New Zealand finds itself in a very similar position to-day. While the producers have a large turnover and a tremendous output the cost of production compared with the selling-values of their produce is entirely out of proportion. Considering that the selling-price of dairy-produce is beyond control of the producers, the only logical remedy is, of course, to be found in the lowering of the cost of production. Considering the importance of the industry, we think that the Government should do everything in its power to assist the dairy-farmers in this direction by a remission of direct and indirect taxation, in so far as such remission will help to reduce the rate of his interest, the work of his farm, and his general cost of production. As already stated, we do not think that the remission of income-tax has had such an affeevt, nor is the average dairy-farmer very much concerned whether this tax is reinstituted or not. In fact, the only relief such a remission has brought him was the fact that it saved him from making out an income-tax return, as the latter troubled him more than the tax itself. Personally, I am inclined to look upon this as a distinct disadvantage, as a making of a return necessitated a certain amount of book-keeping, which no matter how elementary was of some benefit to the average dairyfarmer. Coming to the land-tax, the general feeling appears to be that it is both unfair and inequitable. This no doubt applies to the principle as well as to the application of the land-tax. In the first