TAXATION AND CAPITAL

Dominion, Volume 4, Issue 1022, 11 January 1911, Page 5

TAXATION AND CAPITAL

THE POSITION-IN NEW ZEALAND. AN AUSTRALIAN CRITICISM. The following leading article appearing in the Melbourne "Argus" on Tuesday of last week will be of special interest Ngav Zealand public:— Sir. Hughes never baulks at liis jumps. In speaking on the subject of the progressive land tax- in New Zealand, he repeated the assertion that the eilcct of that impost has not been to drive capital out of the Dominion.- This statement-was made in'reply to the speech ot Dr. Murray, chairman of tho i\ew Zealand and Australian Land CoraPt \ n Edinburgh, on the effect that the Federal land tax will liavo in divertrrg ?P ltal from the Commonwealth. Mr. Hughes could not have made a more unfortunate appeal than to New Zealand. He has only to look at the annual ac* counts of tho company mentioned to see that it alone has withdrawn a vast amount of capital from' New Zealand as the direct result of the progressive land tax. And if he were to place himreli m communication with commercial men who are in touch with tho affairs of the Dominion he should soon be l satisfied (if he desires to know the truth as well as to utter it) that thero has been .a very considerable efflux of_ private capital. One can understand him saying: lYe do not want any' British capital here, and so we are going to tax it out of the.count*T> but to deliborately assert that the effect of the land tax in New Zealand has not been, to force capital away is a pieco of sheer recklessness. • "Surely he must know tfcat the resulks of the land taxation policy in New Zealand have been concealed by the tremendous borrowings of the Seddon and Ward Ministries. /Not onIy : has money been obtained for public ".works, • but for closer settlement, and for advances to farmers. s "Without that bor-. rowing the.t<mo3t convincing testimonywould long have been afforded of the disastrous effects of the policy which Mr. Hughes is over ready to champion. Moreover, JCew would, in the. nature of things, be less liable than Australia to suffer quickly from an-ex-cessive tax. New Zealand, unlike Australia, has an assured rainfall, and the seasons are regular. They do not, .'as I imhappily happens in Australia occa-1 sionally, cause acute financial stringency; the land-owner. in New-,Zealand is free i from the terrors o£ drought. By the favour of his ..climate., he.,is<in an. inn mensely hotter;-,position. than v ,.the "Australian 'to endure the effects .of heavy taxation. But, even if this were not so, ; tho land-owners of New Zealand 'were not treated so harshly . as ar®. those in Australia. "When Mr. Seddon. made up his mind' to-dispossess ownerk -of their" land;; he loa.d ".his gun up to the muzzle right off. 'Ho -began at a comparatively rioirs rate- -of .taxation, and increases., ,;ivjers: jriadc: : ally., Mr. HugKes 'went to tho'full' limit; in one effort. "•'"His'idea is' to'drive 1 out. the large land-owner,. and . was fixed regardless of the Toss that would be inflicted on individuals, or of the in-, v jury that would be caused to tho try by checking the inflow of .capital. In any case, what evidence '.does Mr.

Hughes rely. upon, when he says that everything is rosy in New-Zealand? - If he recalls ■ the set-back that country experienced .three years ago when it had to 1 - face a temporary falling-off in primary products, combined. with a, low range of prices, he must , realise thateven a country so highly favoured may. uo brought into difficulties by unwise taxation. .The situation is, indeed, not nearlv -so satisfactory •as it should be. Mr. Beauchamp. general manager, of the Bank of New Zealand,', quite recently complained of the lack of, enterprise noticeable in : the country.. He knows more .than Mr. Hughes. " , "If an object-lesson were wanted to' convince anyone that capital, when well invested and controlled, is of immense value to a young country it is, provided: in the very case of the New, Zealand and Australian Land Company.' Thotjiconi* pany took over the assets held in New Zealand by the City, of Glasgow Bank Assets Comnanv, nart of the wreckage from -the City of Glasgow Bank failure. Jt spent vast sums in converting unoccupied land into fertile holdings. . It also was vert- largelv instrumental in .establishing The frozen-meat industry, that has been the salvation of the country; it introduced the most improved and up-to-date methods of agriculture and. pastoral farming, and in every way was <v splendid nioneer of. industry. 'As is the case with" other nastoral companies.-it ■ could do these thines only because it has the necessary, canital. The . aim of JLr., Hushes and his colleagues is to drive such companies out of: the country tq the Argentine. Then Australia will .not only be denrived of the benefit accruingfrom their. expenditure.. but will' have to face them as competitors in. the markets of the world." . : .