The Hawaiian gazette. [volume] (Honolulu [Oahu, Hawaii]) 1865-1918, 1912-11-19

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sugar indust y, ana the feeling hcromc
acute whenever agitation Ia made to
the removal or reduction of the tarii
on raw sugar. 1hs uncertainty affect
TO ONE extent nearly all values in thii
reii tory, but especially those of sugar
properties ON January |, 1912, as ID
is now. II was impossible to predict
what, il any. change might be made in,
the sugar tariff. As to market prices
the prospects nt that time were that
fair prices would be obtained for the
1912 crop. The market price of sugar
iiuetuates considerably and some times
unexpected events cause sudden changes
in the world : market. Yet compare
lively small fluctuations in the world E
price may make the difference between
profit and loss to a Hawaiian sugal
plantation.
"It is because of these uncertainties
that this court has recognized the fact
that il would be unfair to base the
value of sugar plantation upon a
consideration of the profits of single
profitable year, or to assume that large
profits are assured for the future be
cause they have been realized for sew
oral years past And it is because OF
this that in basing an estimate of value
upon the capitalization of past profits
very liberal rates are authorized. If
Wailuku S last year Is dividend of $540,'
90 was assured indefinitely, it would
he absurd, of course, to think of as
sessing the property at only $4,0O0,0O
What effect upon the intrinsic value OF
sugar properties threatened tariff legis-
lation will have cannot be calculated
until the legislation has been accom-
lplished and its nature ascertained. In
the meantime at least the carefully con
sidered rules laid down by this court
in 1897 should be adhered to.
AS to Future Profits.
CIT is true, as held in IL Haw. 237,
THAT assessments should not be changed
from year to year for light reasons, but
under our system of taxation property
is valued each year and assessments
may be increased or decreased to meet
changes in conditions which materially
affect values. If, as it is contended it
will happen, the cost of production OF
sugar will continue to increase, market
lprices decline and profits shrink, good
reason will doubtless be furnished for
reducing the assessments on sugar prop
critics in future years.
"The average annual yield of the
Wailuku plantation for the past three
J years was 1924 tons, and the esti-
} mated yield for the present year was
lplaced by the manager at 1900 tons.
Its net profits for the last three years
laveraged $536,l5S. The dividends paid
Ito its stockholders during the three
years averaged annually the sum of
$517 800. The capitalization of those
dividends, according to the rule here
tofore held applicable to plantation
! such as this, i. e., at the rate of 12Hs
per cent, will show a value of $4,-
100000.
Intimates Stock Juggling.
GA comparison of Waikiki planta-
, ton with Paauhau plantation and the
valuation fixed upon the latter shows
, that an assessment of the former at
81 100000 would be very fair to the
company. Paauhau paid no dividend
, in 1911, but it made net profit of
| $117,70S in that year. Regarding that
sum as available for dividends during
that year and adding it to the divi-
, dends paid during the five years next
/ preceding, it would show an average
r annual dividend over period of six
' years of $19O,451, which, capitalized at
the rate of 12h per cent, would show
, valuation of 1888, sos. It's assess
t ment has been fixed at $1,500,000
5 Gin the Paauhau case the evidence
of sales of stock is entitled to little or
no weight. The purchase made by G.
Brewer & Company was for special
, reason, and the company's corporation
! exhibit which, to put it very mildly,
was highly inflated and misleading may
! have deceived purchasers and paved the
way to stock Juggling. To assess Wal
luku plantation at $3,600,000 is, upon
. the capitalization of profits basis, at the
/ rate of about IA Is per cent. But Wal
luku plantation is in situation, condi-
{ ton and stability far superior to Pau,
Q hau and its future prospects are much
, brighter. To assess Paauhau at 81 $780,
600 and Waikiki at $3,600,000 is to
) do gross injustice either to Paauhau
8 in its case or to the government in the
5 Waikiki case, or probably, to one and
5 the other in each case. 1t is true that
5 as the Paauhau company did not appeal
) from the valuation fixed by the tax APP
peal court this court cannot, reduce the
A assessment. But the Paauhau Company
D returned its property at 81 100000, and
; even if it should be conceded that that
I company is over assessed at 81 500 900
III hob PioNC lhdb Ndiluhu WOull
8 be over valued at the sum of $4,000, 900.
t 'Tbere is nothing in the record that
5 will warrant the inference that the
$ property could have been purchased
on the first of January last at less
than that figure, or at the rate of
| $133,33 per share of stock. The statute
provides that property shall be assessed
at its full cash value Discrimination
between different taxpayers, unless
based on real differences in circum.
stances, is even more Objectionable than
general excessive taxation. IL Haw.
1 242. In the cases at bar the more stable
plantation is assessed upon a basis more
+ favorable to the company than that
, applied in the less fortunate concern.
1t seems to me that the majority opin-
ion, while purporting to follow the prin-
; ciples laid down in the cases in II
: Haw, in effect repudiates some of them,
and tends to set adrift the whole sub.