WAR'S WAGES

Dominion, Volume 9, Issue 2833, 26 July 1916, Page 8

WAR'S WAGES

INTRICATE PROBLEM IN FINANCE

ADVICE FROM THE LAND

SPEECH BY SIR JAMES WILSON

- The intricate problem of how wo ought to allocate the financial burden- which we inherit from tho war is still in process of solution so far as public men are concerned. Tho latest production of note is by Sir James Wilson. Sir .Tames Wilson

views the field through tho glasses of a farmer, and ho lights on weaknesses in the campaign, which is heralded by the noisy batfjle-cry. "Tax the land!" Ho believes that ■war profits, when they can be fairly ascertained, arc fair contributions

toward tho expense of tho war, but he sounds the Warning that excess profits will vanish shortly after tho guns of war are throttled by the hand of peace. Ho thinks wo may look forward to even heavier taxation in tho future, possibly with a. lower level of prints. Ho considers that tho Budget places on tho farmera additional taxation which they should not have to bear, but he recognises that tho Government has had a difficult task to master, and ho trusts that whatever harvest is

garnered to tho. Treasury will he wisely spent. He submits to the fact that tho new taxation is law and must be paid; ho turns to. the land for' the replenishment of our wealth; and he sees us in tho future

with, great things accomplished, even before tho passing of another decade. . In his presidential address to the Doninion Conference of the New Zealand farmers' Union, yesterday, Sir .Tas. Wilson said: "The year that is past has been a phenomenal one. How could it be otherwise? We arc spending our capital nt the rate of about a million a. month, and yet have withdrawn 50,000 men from the adult population. Those left in occupation are therefore receiving more for-their labour in whatever occupation they may be engaged. Great Britain is spending five millions a day, which is circulating'amongst the people, yet everything we purchase costs more. Wool, which was just sufficient for tho r ■wants of .the world, is required every-" where, for those who are fighting. Every Pound we can send Home is quickly beinp turned into khaki or underclothing for the soldier. The meat wo produce goes now to feed .the men at tho front, and only the surplus goes into the or-1 dinary channels. Tho consumption ot cheese in the Army has increased the demand enormously, and Is. per pound has been reached as a selling price since the freezing process enabled us to sell our produce in Britain. With such prices for our food and clothing products, all have to pay more to feed and clotho their families. The increase of non-intcrest-bearing deposits with the banks shows that their clients are holding reserves, J>ut it is gratifying to note that the worker is saving some of his increased returns, for during tho war the Post Office Savings Banks show a net increase in the funds of over three millions since the war began, of this two-millions is the increase during the past year. As our bills ''have reached such an enormous total we must expect further taxation to bo a certainty. How is this to be raised? Estimates Cause Exaggerations. "Our expbrfs have exceeded those of last year on paper by six millions. ..For the two years ending March 31, the exports nere .— 1915-16 33,108,069 19 W-15 • 27,153,947 m 5,95*,122 The difference, however, is very much exaggerated by the fact that in both cases these amounts are estimates. I am sure that in 1314-15 the prices realised were much higher than the estimates Known in the above figures. Exports must always be estimates for the reason that there is no means of ascertaining what the actual values are. Imports nowover, are exact. The invoices give them correctly. I should /not bo surprised if. tho difference in actual valuo of our exports for the two years in ques„i^L« ,ras ln reality no more than .£3,000,000. There must have been a considerable difference in the' estimated and actual value in wool, meat, butter cheese, and hides.

-. "Whether ive have been over sanguine in our estimates this year remains to ™,„fi e(m i lfc , s , ho,ll<l ts noted that much of this last, year's exports has yet to be paid for. "Of the £33,155,992 of exports, the produce from the land in the year endin» Man* 81,-1910. amounts to a truly stupendous amount for a a U d°%£ e r 6 tO ,. I tßkß torn! the laud. Besides which the ■ people nave been fed, and to some extent clothed out of it. Practically the "hole pi this has been taken from the land sistonce of horses in the agricultural portions We may safely say? that no more than four millioni at the outside rs the result of war. . Values have I™t u,. 010 P/evious year, but this has fa-bo discounted by the fact that it has cost a great deal more to raise and market, the produce; but wo have bean decreasing our imports in comparison to our spending power, although the higher values bring the total of last year to a little moro than that of 1914-15 so that-we have- a margin of twelve milions of excess of exports in comparison to .imports. This is shown "in the banking returns There is an increase of over four millions in non-interest-bearine deposits. There are politicians who say the Government should take from the farmer the extra six millions of increased valuo of exports which he has .jot got, and Hie-nineteen millions of ircc deposits to pay war expenses. The year s balance-sheet in the Budget begins .with a credit balance of-.-0149,000 "and ends with a surplus of J2,10G,000. So 'Sir Joseph Ward was ..very." near the mark when he said the new taxation of last session would.bring in 000 Who, then, paid this extra taxation? •According to the Budget, Customs, •with the one per cent, primage duty has brought in ,£200,000; beer duty ifi3o,ooo, and presumably all pay towards these increases. Stamps and'death duties are higher by.about .£53,000; Post and Telegraph, <£33(i,500; land and income tax, the, outcome of increased rates, JJI,102,516.- Railways show as receipts *E377*000 more than the previous year. The following table shows-the greater amount raised in the items mentioned:— Stamp and death duties are higher by about ...: 53,000 Post and Telegraph 330,500 Kailways, including 10 per cent. increase in freights 377,000 Land and incomo tax 1,102,511! "Most of this would be paid by those who also pay land and income taxes. All this is over and-above, tho very large sum subscribed for war purposes and contributions to the Defence Minister; stock for. military purposes, patriotic funds, Ecd Cross, hospital ships, and the thousand and one things the women of New Zealand have produced, as well as relief I'iiuds raised in many ways. The Land to Bear the Burden. "When wo turn to the taxation proposals of the present War time, it is certain that the burden of thorn is still further to be borno by tho land. It is of course true to-day what Artaxerxes, tho Persian monarch, said over 2000 years ago: 'Ultimately all taxes must bo paid by agriculture.' Primary production is our only source of wealth. The winning of gold and coal is destructive production. Once obtained, the products cannot be reproduced; agriculture, on tho other hand, goes on while the world exists. The Government of Hie country ami tho safety of tho individual 'should bo assured by each paying a percentage of his earnings, as they, pass through his hands. In our present case I am afraid that there ,will be many hardships, most-' ly amongst, those of the farming cla?s, which are least able to bear them. In later years,. with the help of dairying, many men have put (heir savings into land, and assumed more than usual liabilities. The mortgage.tax has now .been altered, so that the income from this form of investment has to pay income tax. In small sums this will be a relief to tho lender, but if tho mortgage income comes under the graduatco.

scale it may 1)d heavier, and thus tend to divert this investment into other channels. The suggested legislation to restrict the rate of interest would only hasten the diversion. When tho time comes for renownl, the second mortgage. l ! ywhich so many have will bo called up, and if the rate is fixed the man .will be forced to sell, and the farmer will probably loso his savings of a life-time. Ho will be thrown again on the labour market. Then, again, in connection with tlib graduated tax, there is now a certainty of a large amount of capital being taxed twice. The Government has considered this unjust in the case of an income derived elsewbero paying taxes in tho country of origin and hern as well. Often we hear in the debates in connection with this subject what is being done by Air. M'Renna, the Chancellor of the Exchequer. But it is never pointed out that lie has pointedly taken, the GO per cent, from business and not from tho producer—recognising' that production is the life blood of the nation, fn the case of srraduation, which is now very heavy, the owner of the land p'l.ys graduated tax upon the total unimproved value of his land, viz.: his own interest in tho land and that of the mortgagees. Tho mortgagee pays income tax. possibly at a graduated Tate, upon the income derived from the same amount. Thus the capital is first taxed, and then the income from it.

The 5 Per Cent. Tax Should Not be Made. "Tho farrr>«r. is also first his capital in the land and then upon his income derived from it. East year when the tax w?s a moderate amount— though it brought in a great deal more than the estimate—the farmers iiaid 't cheerfully, but now that an additional 5 per cent, is added to this and a i!i per cent, tax on all profits over a. certain percentage of return from capital, it certainly is conscripting wealth to a greater extent than anticipated. The 5 per cent, additional income fax should not have been imposed on them, , although war profits when they can be fairly ascertained, are fair contributions towards the expenses of the war. What is to be the destination of these piled-uo millions however is another point. It would ftertainly ■be more reassuring if the additional millions were earmarked for tho nayment of Ihe war debt we owe fp tho British Government so long as they were not required for the expenses of. our soldiers at tho front. The taxation would thus go towards paying the expenses of the war." Sir Joseph Ward has specifically stated. that the whole of this money invested in Eondon will go to tho payment of our war debt to the British Government, when the time comes to square accounts.

It must be remembered that although tho values of our products havo gooo up, the costs of production and distribution as well as improvements havo gone up ■by'leaps." If the cost,of living has gono up' the farmer pays it just tho samo as anyone else. Ono special feature is the remission of the 25 per cent, additional graduated taxes on business premises. This seoms unjust, though it may b© expedient. Land on which business premises are built aro just as necessary for the making of an income in that business as the land is to the farmer to make his, and moreover in making up costs, business men include all taxes and outgoings, and they are passed on to the purchaser. This is imposs-iblo in the case_of tho farmer.. Tho business man can increase his accommodation by going up in tho air without further cost either in taxes or rates on the land.; but the farmer is restricted to the area of Lis land; if he improves it he pays more iu taxes and rates. However, oven if wo may have some feeling that tho land user is paying more than his 1 share in the new taxation, it is tho law of the land, and .it must bo paid whether we liko it or not. Ono significant fact one sannot help noting is that during all tho debates as to how the taxation should be imposed on others, there has not been a suggestion that any remission of payment should be made cither by Ministers or members. When, however, all is said and done, however much hardship may result from taxation, the Government- has had to deal with very exceptional circumstances, and although they havo been squeezed unduly by some sections of the community and throwing tho cost of the process on others, they must havo the money, and I. am sur« all those who have to find it will hope that it will be wisely and economically spent, and help to end tho war in tho only way .in which the Empire will permit. '..'.'■. The Remedy! Increased Production,

- "If -we are to pay all this enormously ■increased taxation (and Sir Joseph Ward warns us we may have to pay moro'next year), what means has tho country got to meet it? It must be remembered that the. 'Excess Profits Tax' will vanish into thin air as soon as peace is declared and prices resume the normal, and it is stateu to Le only for one year; we shall then have to meet the additional interest on all the money we have borrowed for war purposes. At tho loast it will Le 15 or 20 millions, according to the length of the war. Assuming 'that the surplus which the present taxation brings in goes towards repaying some of the millions borrowed at Home, that means that enr interest charges, even without a sinking fuud, will amount to a million more than is paid on our ordinary debt. This means that we may look forward to paying additional, taxation in the future, and possibly with a much lower level of prices. It is quito clear that, if tho produco of the land is 30/33rds of ithe exports of the Dominion, to restore the dissipated wealth of the world .which 'has gone in this disastrous war,' we in New. Zealand must look to the production of-tho laud to again create it. No power on this earth can restore to us the fine young lives which have been voluntarily given, to allow us to retain our Pberty.;but, as a monument to their self-sacrifice, I hope that when peace comes it will mean industrial peace as well as peace from war. If that is assured Ly all, and we all set resolutely 'to. work to increase production with due ecciunny, I have no doubt that before another d'.H ado is over we shall have accomplished great things. The Dominion, nowevor, will havo to rely upon the land to do this, and it certainly would bo delayed/ and much harm done if the cry of 'trix tho land' which from a class of tho community is so often heard,, were listened to by our politicians, and itndiio taxation is levied in consequence.

"How, then, are we to increase the production? Por tho present there Is much more need of increasing the output from the land in occupation than there is for- further settlement. That will come in duo time; wo want well directed labour on the land if we are to turn out more produce. First, it is clear that the country must bo made' as attractive as possible. Jlan is a gregarious animal, and does not require much encouragement to remain in towns; yet thoso who lovo the country and tho life there wonder what attraction there is in town life which holds them in its grip."