Taxation in New Zealand 19 



of the Act." Mr. Major said: "The unimproved value of land is 

 always assessed at a higher rate than it should be, and the valua- 

 tion for improvements is invariably too little. That is brought 

 about by reason of the fact that there are certain improvements 

 that are lost sight of, and are not visible to the eye of the average 

 valuer. Some of the valuers are not sufficiently competent to 

 assess the improvements at their true value." 1 



There are several other reasons why the valuation tends to be 

 too high. In the first place, the department wishes to make a 

 high valuation in order to secure a large revenue from the land 

 tax. Secondly, the government likes to show a high valuation 

 because it is an indication of prosperity and strengthens the Do- 

 minion's credit in the loan market. Thirdly, owners like to have 

 a high valuation when they come to sell their land or to borrow 

 from the Advances to Settlers Office or from private lenders. 

 Fourthly, if the owner insists on a low valuation, the government 

 may purchase the land at the owner's valuation. True, the owner 

 has, under the Act, the right to demand that the government pur- 

 chase his land at the government's valuation, or to have his valu- 

 ation reduced, but there may be reasons why an owner might not 

 want to do this. At any rate, there has been little protest against 

 the government's valuation until recently, when speculative values 

 have fallen off and the land tax has become a burden. The gov- 

 ernment has promised to revise the valuation and it is probable 

 that it will be considerably reduced. 2 



The income tax is complementary to the land tax, being levied 

 upon incomes derived from sources other than land and mort- 

 gages on land. It is a graduated tax, with an exemption of £300 

 ($1,458), which, however, is not allowed to absentees. Life in- 

 surance premiums on the taxpayer's own life are exempted up to 

 £50. On the first £1,000 of taxable income, after allowing the 

 exemptions, the rate is 6d. in the pound (2.5 per cent) ; on in- 

 comes in excess of £1,300 the rate is is. in the pound (5 per cent). 

 For example, a person with an income of £300 would pay no tax ; 

 a person with an income of £1.300 would pay 2.5 per cent on 



1 Parl. Debates, vol. 144, p 427, August 26, 1908. 

 "Evening Post, Wellington, March 9, 1909. 



267 



