Evening star. [volume] (Washington, D.C.) 1854-1972, 1906-07-05
Systems of Taxation.

Most systems of taxation are devised
for the purpose of providing revenue, but
1t is characteristic of New Zealand idea
of the functions and purposes of govern
ment that the primary intention of its
scheme of direct taxation is to provide an
other means of combating the tendency of
wealth to flow where wealth already is.
There is no property tax. and there Is no
tax on improvements. The land tax is on
the gross salable value of the land less
the value of all improvements. In addi-
ton to the ordinary land tax there is
graduated land tax, which begins when the
uniriproved value of the land is So, 900.
Between this and $4,000 the rate Is one
eighth OF cent to the pound sterling, and
above that value the rate increases by
equal steps until 1t reaches 6 cents to the
pound, payable when the value is a million
dollars or more. Fifty per cent additional
tax is levied upon absentee owners. Hold
ings of small value are exempt from the
ordinary land tax, the exemption amount
ing to $500 where the unimproved value
does not exceed 81, 800, and gradually dimin-
ishing up to the value of $12.5O This is
in accordance with the settled policy of
the government to make it easy for the
poor and difficult for the rich to increase
their possessions. The result of the ex-
emptions and deductions is that only one
fifth of the New Zealand land owners pay
a land tax; but, during the last ten years
the number of land taxpayers has increased
by 80 per cent.
The Income tax is levied in conjunction
with the graduated land tax. and Is as
seSSed all income except that derived
from land or from mortgages on land. This
is exempt, of course, because its capital
Is assessed under the land tax. Incomes of
less than $500 are exempt from the in
come tax. and there is further deduction
from all incomes of $3.50 yearly for life in
surance premiums. The rate of the tax
for last year was IL cents on the pound
for the first taxable S., 600 and "a cents on
the pound for all exceeding that amount
respectively. az and per cent The num-
Der OF income taxpayers Is about one In
100 of the population. They have more
that time the receipts from the income tax
have increased by 174 per cent. The gov
eminent officials think that their returns
are rema rkably complete, and do not be-
lieye that there is much. II any. evasion
of the Law. Inspecting officers verify re-
turns at the taxpayers domicile. and the
commissioner can compel the production for
theiN use of all books balance sheets stock
sheets and other evidence of the taxpayers
income. The knowledge that this will be
done II necessary and the penalties at
tached to refusal have had wholesome
moral effect, while the careful and SYSTEM
attic work of the inspectors, who also give
instruction to taxpayers when necessary as
to the keeping of simple forms of account
which will facilitate the making of returns
in correct form, and the system of re-
vision and checking by comparison In the
commissioners Office. have made the law
very efficient in its practical workings. The
land and income tax act has been in opera
ton since 1891 and has therefore had ample
large iandholders, naturally enough do not
like the graduated land tax, but there see,ns
to be no dissatisfaction with the income
tax, IN either principle or practice