The Dominion. MONDAY, AUGUST 2, 1909. SPECIAL PLEADING AND TAXATION.

Dominion, Volume 2, Issue 575, 2 August 1909, Page 4

The Dominion. MONDAY, AUGUST 2, 1909. SPECIAL PLEADING AND TAXATION.

Dk. Findlay. has delivered another very interesting speech on taxation. At Timaru, the centre chosen for his latest address, he set out to controvert all' the accepted doctrines of taxation in order, apparently, to justify the very. remarkablo increase in taxation per head since the Liberal Government came into office. "A now view" of taxation, he tells us, has been at work in this country, and in explaining that view ho was really not wanting in lucidity. At anyrate he made quite clear what the.theory is that he asks us to accept in justification of the increase, in tho amount of taxation per head collected by tho general Government. We may summarise his argument as follows:—Formerly, when the State restricted its functions to the provision of protection for life and property against aggression from without and disorder from within,' the tax-collector made his levies'simply upon the property protected. To-day, however, . ; the State has ; greatly extended its functions— from being protective,' it has become developmental. It levies its taxes no longer I as insurance premiums, but as interest I upon its investmeata. -"Our taxation,"

to quote tho exact words used, by Dn. ] Findlay, "is, or ought to bo, mainly a I return to the State of some part of the : wealth the State has added, directly or : indirectly, to the property or business of the taxpayer." Dr. Fixm.ay, we think, i will say that the abbve is a true and correct statement of his position. The main point of this contention is, that ill order to defend the growth of taxation, a responsible Minister .has had to announce that the Government's object is to.levy toll upon "the unearned increments" arising directly or indirectly out the State's developmental activity. Such being the case, he tells us, "we can see how absurd it is to treat the increase in taxation in this country during the last ten or eleven years simply as 1 an additional burden upon the people as a whole." It is not difficult to show that the absurdity lies in that every increase in taxation is an additional burden. Consider the case if the State had made'its taxes so high that it.secured the whole of the 1 wealth which it "added, di-

rectly or indirectly, to the property or business of the taxpayer," Dr. Findlay's theory would compel him to say that even in that case it would be' "absurd" to treat the increase in taxation as "an, additional burden." His argument, that is to say, contains, and cannot discard, a theory that 'is manifestly opposed to. common sense. If he has not the courage of his logic, he should discard his premises. The fact is, of . course —a fact that has never been challenged by economist—_ that every increase of taxation, however it originates! is a direct increase of the burden ,upoh the people; Supposing that this country had reached its present stage of development without. "State aid" (we use the phrase for purposes of brevity, since there can be no confusion as ,to its meaning), Dn. Findlaywould probably admit that an increase of. 103. per head of taxation in one year would certainly be ari additional'burden. But, he would doubtless add, that' extra burden would be a "fair" extra burden, if the State had assisted in. the work of developing the country. We are not concerned, however, as to whether, the additional burden is or is not one that people should growl at as unfair. Our. whole point in discussing the subject in.the past has hecn- that, ■fair or unfair, it is an additional burden

in the exact sense of those words. But 0 ■we have not objected to the burden sim- f< ply because it lias been a burden. , For Cl there must be some burden of taxation, or.how shall we pay the police and build ® our fortifications ? Our • point has been j, that a wise Government would i. have .{ striven, in good to keep the. taxa- t tion per head down to what other coun- D tries enable us to se« is'ii safely low average. Instead of adopting that course, tho * Government has so arranged, its; levies f that the rate of taxation per - head has j steadily risen until it stands at' twice as I high a figure as the rate in Britain, which is regarded as a high war rate. Arid what has it done: with the proceeds j of the taxation! .It has largely wasted c the money. If our railways wore paying,' £ and if the need for borrowing had ceased and the public debt were being, paid ' that case there would .be some ground for contending that the riso in

the taxation per head l could b6 justified. , But what, actually,, is the. case?. i Government has been wasteful. It is icon- I fessing that, it has been extra,vagaiit; it-' • js promising to. save; rnpney without any loss of efficiency ;■ it'has. admitted that the railways ought to bo paying their way. Suppose that the' Government had been I wise and cautious. Suppose that the rail- j "ways had paid their way for ten years. Suripose that the cost of administration had remained (it or about the figure of ; ten years'ago. Suppose that money had not been frittered away in every, direction.-; Suppose that Ministers had not spent. thousands in . personal,' extrava-. i gances. It is a safe thing to say.;that in that case the saved money would -have amounted by now to not much less than twenty : million pounds.. If that saved money had been used to relieve the taxpayer, the rate per head would be about £3, instead of over £5. And would Dr. Findlay not admit that it would be better if the rate per head were £3 ? Surely he would say it were a .most desirablo thing. What the Government has to do, then,, is to justify the extra £2 odd. But

it must base its: justification on ' something othor than the principle ."that .wo , should not grumble, since >ve are only paying back what the State gave us in the first placo. What is the State? The community. Who are the taxpayers ? The .community, Dk. , F ixdi.ay says. that' the ' taxpayers are only paying "back a part of what they owe, to the! State's activity. Bring the statement to the light of fact, . and -what does it show itself, to 'bel j Simply this: that tha community haa ■ subscribed a greater sum every year. For what purpose ? To jiay the interest on : the borrowed for developmental work 1 In part, yes; but mainly to meet _■ the increased cost of government due to . wasteful administration. No* all the - rhetoric, in the world will disguise the '■ simple fact that the great rise in the taxation-per head has beon mainly due— the inability of the Government to keep. 3 the taxation down by remissions has< been duje—partly to the wastefulness of "Liberalism's" methods, and partly to' the costliness of the State's unwise experi- ' merits. To close with one .concrete example : If the railways were properly : managed, so as to pay their way, the Government would bo able, without disturbing the finances, to remit £500,000 a year of the taxation, or 10s. a head. That 10s. per head which is not remitted is due t to Government mismanagement. But I)r. Findlay would have the public to helieye that it is collected because of £ some kind of theory that he holds re- | spejeting the State and the taxpayer.