THE FINANCIAL STATEMENT.

Globe, Volume XX, Issue 1397, 7 August 1878, Page 3

THE FINANCIAL STATEMENT.

We are indebted to the Government for the following message : At the evening sitting, the Coknial Treasurer (the Hou. Mr Bullance) delivered the Financial Statement. In the following report the first part is only a brief üb.-truct, and shillings and pence are omitted from all sums stated. The portions of the statement having reference to the progress of the colony, taxation, the tariff, &c, are given in full. The Colonial Treasurer first explained the steps taken duriDg the recess to simplify the public accounts. In stating the ordinary expenditure and income fur the past year he excluded the provincial liabilities, which were afterwards explained separately. Expenditure in the Past Year. The total ordinary expe< diture for 1877-8 was £3,030,241, against an estimated expenditure of £3,206,188. So that upon the votes of last session there was an unexpected saving of expenditure to the amount of £175,946. There was a small excess under the heads of Law and Justice and Native Departments, while under the head of Education there was an excess of £29,261 arising from various causes, some of them being exceptional. Put the total stated did not include all the disbursements of the year. Taking the land revenue paid to local bodies under the Financial Arrangements Act, together with £465,093 oi surplus land revenue paid to counties and other items, there was an amount of £725,307. which brought tho year's expenditure up to £3,755,548. Adding the gold duty and license fees given over to local bodies, there was a total disbursement from the consolidated fund during 1877-8 of £3,969,240. The Impounded Land Fund. As to the retention of certain sums out of the surplus land revenue of the provincial districts of Jlawkeo' Bay and Canterbury, the Colonial Treasurer said, "An estimate has been formed in the Snrveyor-Geuer d's Department that the cost of bringing up the arrears of survey outstanding on the Ist January in the provincial districts of Hawkes' Bay and Canterbury will be about £5700 and £ 37,000 re pe.-tivcly. These arrears had not ben provided for among the provincial liabilities, and as the surplus land fund was the actual proceeds of the land to bo surveyed, it appeared tothe Government that that fund was the proper source from whence to defray the charge. The sums of £4512 Is lod (being all that was available) in tin case of Hawke's Bay, and of £147,114 15s 31 in the case of Canterbury, were accordingly retained for the purpose of meeting the c> arges referred to, and wo propose that a sum shall be appropriated deb year, according to the estimate raquired for arr ars of survey within tho year in the provincial districts, until either the money shall be exh.listed or the surveys completed. The estimate of the work to be done this year will require £31,512 Is 10d, and this hits been placed on the estimate for appropriation. V- e propose th t the amount inoxce39 of this sum shall be phved in the Bank as a fixed deposit, the s.ecruing interest to be .banded over to the countios interested, together

with any balance of the principal not required for the work." I EVEN-UK— 1877-8. Hi" surplus brought forward from the previous year wis e-timated by the then treasurer at Jg 148,2-0; of the sum so estimated only £1 3,110 had proved to he realisable, beirg 25,1 0 0s 8(1 less thin the estimate. The rovenue of the current year was estimated by the late Government at £315*1,085, consisting of ordinary revenue £2,263 160 and territorial revenue £890,5.'5. Th > net revenue actually c llecfced a-nounted to i83,915,')15, consistiug of ordi- nry revenue £2,328,752 and territorial £ ,586,562, showing an excess on the estimate of £761,63 >. It w uld be interacting to the committee to know that the benefit the exchequer had received fr>m the colonial! atioa of the 1 ind revenue was £9IS* 40. The Citato - s revenue reached £1,27i,90T: or an excess of ,£72,961 ove- t e estimate. On stamps there was an excess of £27,068, chiefly due to legacy duties, though the largest amount yet accruing from a single estate was not paid within the year, a technical difficulty having caused delay Other excesses over the estimates were :—Postal, £''3sß;; Telegraphs, £2301 ; Land transfer, -£7078 ; aud Miscellaneous, £15.07-1. The increase from railways was estimated at £<i00.450, hut had reached only £546 458, showing a deficiency of ,£53,991. This re-mltid from certain linos not having b»en opened during the year, as they were intended to have been, and the expenditure had been proportionately loss than the estimate. The profit j'or the year on railways was ,£145,151, aua nst £31,182 during 1876-7. The land revenue had far exceeded the differ nt estimates formed last session, and was ih-3 largest; amount jet recollected in any one ye r Compiring last year's revenue with that of the precedi g year, the result was equally favorable. The net increase on ord nary revenue was .£423,919. and on territorial revenue £'580.707. This showed an increase of £1,001.626. or adding the incre se in the revenues of local bodis which amounted to .£75,784 t'.ere was an incra.se on nil revenues collect d by Government ast year of £1,0:30,411

over the previ >uj year. Results of the Past Year. Summing up the results of 1877-8, the hon. gentleman said—" Ihe receipts for the year, as already stated, amounted to ,£4,415,560 5s 6d he expenditure was £3,969,210 17s Id. The excess of receipts over expenditure being £ 176,319 8s sd. The actual b.l mce in the con i-olidated fund on the 30th June was £6 9 705 6s sd. Hut this was reduceable by a sum of £5733 9s brought from loan in aid of provincial liabilities. By the balance of the deposit account, £93 069 17s 2d, and_by sums held at credit of several coun'.i s, £ > '•582 Us I0d; deducting these sums fr m the total just referred t), there remains £476,319 8s sd, agreeing with tha excess of receipts over oxpen ditnre. To this we add the assets realisable £14,153 3.59 d making .£520 772 12s 2d. The liabilities to be provided f r out of this sum consist of 2:) ptr cent land fund and other moneys payable to counties or available jfor special services, £279,131 17s 2d, and the ordinary departmental services £121,169 Is lOd. These sums amount to £ 100 303 19■», and de ductinsr them from the balance of £520.722 12s \'d, there ro,ain.-|£120,468 13s 2d, the surplus of the year 1877-78. Considering hat tt.-e effect of the 'financial changes at the close of last session was to produce a large estimated deficiency, this surplus is as unexpected as it is gratifying Disposal of the Surplus.

The question then arises—how should wo dispose of it? The Government believe if the railway system is to be extended and carried on with >ut interruption until it connects every part of each island, public loans must be large y aided from some other source; I refer here only to the railways which should be undertaken by the colony. For several years a moLtyof the stamp duties was set aside for the purpose. But. as I think rightly, the policy was d scontinued. A surplus seems to be exactly one of tho services from which such

aid oucrht to fl w. and we propose to pi ice £loOouoof the surp us of the p st. yar to the credit of the pubic works account, leaving a balance of £20.468 13s 2d to l.e brought furward to the credit of ordinary account of the pros mt year. If the committee approve of thiiDodo of applying a surplus any extraordinary increase on the e tiuia'e -;f land revenue will in fu ure be applied to supplement the fund available for the prosecution of public works. 'I hk .New Loan. After explaining tho position of tho provincial liabilities account the Colonial Treasurer described the raising of the £3, 00,000. The Bank of England undertook to issue the loan for a commission of half per ce t Tho price adopted was par with a 5 per cent rate of interest, and the total amount subscribed for wa ci?ht mllions and three-quai ters. The £3 500,000 raised included - ne iuillio < under the Act of 187 Gto meet the advance on hort dated

debentures f iling due at the end of this and the beginning of next year, and £2,500,0u0 under the Act of lust session. .£300,000 out of the loan was appropriated to provincial liabilities, je virg £2,2<j0,00U available for public works, 'f he guaranteed debentures rele.sed wi re still to n main available as a security on which to obtain temporary advances in London. Out r f the appropriations of last ye r for public works .fit, 107,583 had be:m expended, and .£1,126,157 remained unexpended. Immigration and Public Works Expenditure. The total amount of loan* yet raised for immigration and public works since the public wrrks account was created iu 1870 was £l3 700,000. This amount hid been supple merited by a moiety of stamp duties, £264,657, and contributions and transfers, amounting to £"5,963, showing a total of ,£14,040,620. Balance Available. The expenditure up to the end of the financial year was £12,038,472, reducible by a sum of ,£54,791 repayable to the account, and leaving a ba'auceof .£2,056,910 available for appropriation. Indebtedness of the Colony. The gross debt of the colony on the 30th June including the loan just raised, but exclusive of the guaranteed debentures, was £22,491,111. The sinking fund accrued amounted to ,£1,581,992 and deducting this from the gross debt, there was a net indebtedness of £20,906.118, the annual charge on the 30th June, for interest and sinking fund, being £1,195,318. Treasury Bills and Consolidation. The issue of Treasury oills was next explained, and the instructions i-ent home as to operations under the I onsolidated Stock Act of last session were stated. Supply. The Treasurer added that, to avoid the objectionable system of carrying on expenditure for a considerable portion of the ye r by moans of Imprest Supply Hills it would be proposed to follow the practi e :,f tho House of Commons and to go on with the estimates iu committee of supply at the ea'liest possible moment Estimated Expenditure, 1878-9. Dividing the expenditure under two heads, viz., Permanent Appropriation and Anr.url Charges, it was estimated that the expenditure during the current yxt, under the former head, w,ud be £1809,767, and under the latter £2,183,741; adding £200.000 to represent lees. &c, payable to local bodies, there would be shown a total estimated expenditure for the year of £4,1j3,508. It was 'ntended that a number of charges, hitherto made against, loan, should be in future met out of revenue, and it would be proposed to charge ugainst revenue a sum of £44,000 for heavy guns for the defence of the principal ports. Eevenue, 1878-9.

Tu e?timatrng the revenue for the present year tho results of alterations that night to be proposed in the tariff would not be taken into account, but he would deal with the revenue to be raised under the existing law. From taxation £1,490 000 was expected, £1,320.000 of that being from Customs and £170,000 from stamps. Under the head of receipts for services rendered £1,112,145 was'anticipated. These items would make together a total of ordinary revenue amounting to £2,002,115. Included in this was £710.000 from railways, or £148.000 in excess of the receipts under that head daring 1877-8. Making what was believed to be a moderate estim te, £1.220,677 was set down a? territorial revenue. From receipts specially applicable £230,215 (?) was estimated as receivable. These fisures showed an estimated revenue of £4,062-037, or, including the fees pavable to local bodies, estimated at £200,000, a total of £1262,137. Add tie balance of the surplus of last year, £20,468, and the whole 63 imated race pts for the year were £1 505. Dedu- ting the estim ited expenditure, £4,]93,5u9, there would be a surplus of £88,996 available to meet > uppleaientary estimates or contingent expenditure. Public Works and Trusts Accounts.

■.the public w rks account and the public trusts, -wsre next briefly referred .o, and the Treasurer then spoke of The Pbogkess ojt tiif, Colon t._ The most gratifying feature, he said, is the remarkable iuerea-o or pxports fo the ye ,r end* ing December 1877. which stand at £6,327,472, against £5,673 465 in the previous year an increase of £6si-,007. ' hf> imports, unnaturally inflated in 18*4 to upwards of £8,000,000, havo

fallen to £6,973,418, indicating probably a more halthy condition. The quantity of wool exported in the calcndir year 1877 exceeded that of the prec ding year by about four and a half million pounds w< iicht, the value showing an increase of £263,122 '1 he value of gold exported in the past financi 1 year was £ ,475,669^ against £\ 407,247 in the previ'.us j ear, the incna-e b >ing £68,422. The export of grain slightly declined in ihe yc<r oi.ding December, 1877 the return being £290,1' 1 5 against £314, i 42 in 1876. Reform of the Tariff. T have now 'o s-ate the propos .Is we intend to make resp cting the tariff Sir, ever observer of the . ffect of the system of ad valorem duties which was applied to a multitude of articles in 1873 has been led to condemn it. It is a remarkable fact that the revenue derived from these dutit s has shown no increase, the returns of last jeir standing at the amount derived in the year when the change took place. Allowing for the portion of the year during which the measurement system prevailed, I have had returns compiled to enable the committee to see at a glance the non-progressive character, notw th-tanding the unpreccd. nt jd prospi rity of the colony, of the revenue collected under th:- ad valorem system. A few comparisons will demonstrate the position. In the year endin? June, 18?5, during the whole of which the 10 per cent ad valorem duties were in force, the revenue derived from this s;.uree was £364,558. For the year ending June, 1878, the revenue from the same dnties was o\.ly £3311,770, a falling off of £ 53.788. During the same period all the other great items of revenue sh wed a large increase, presenting a remarkable contrast to ihose subject to the ad valorem system. The duty on tea, for ins ranee, increased in the same time from, in round numbers, £68,000 to £80,000; on sugar, from £114,000 to to £131,000; and on goods by weight from £63,00" to £ 1 7,000. We may or mav not accept the theory t at these different results are to he only accounted for by a large proportion of fraudulent entries at the Custom house for which the ad valorem system gives superior facility. Hut the figures I have sated of themselves point to the necessity for reform, and ju>t fy the Government in proposing a change, even though necessarily incomplete, in the prosent session. The object wc have iti view i* to change the ad valorem into specific duties, but we cannot with the data and time at command do more than m;ike a beginning this year It is not part of our proposals to increase the tot il rev. nue but to make the specific duty yield as nearly as pos ible the amount derived under the ad valorem tariff. The following the articles on which the changes will take place : vVoolpacks, c<>rn sacks, flour hags, carbonate of sod i, cream of tartar, tartaric acid, fish - p >ttcd and preserved, jams, Ac, buttled fruits, mustard, pickles, smces. starch and blue, lead pipii g, naphtha, nails, wrapping paper and paper bags. '■ aphtha was formerly on the free list, but we have included it because of its relation to other dutiable urtich s. The total revenue received from th -se urticles la-t year was £23,291. and w« anticipate about the same amount under specific duties. To complete the list, we propose to include boots and shoes, ti e revenue from which last year was £18,295, and th i specific du'ies on which are fixed on a scale well understood in the trade Paper showing the proposed duties will be laid on the table. '1 he effect of the-e changes is calculated to relieve trade from some of the opprobrium it was certain to incur under a system whi h has be n condemned in nearly all commercial countries, while care has been t .ken that the young and growing industries of the colony are not injured, but r.ither lostered. The tariff at present comprises 'iso specified he dings, of which ninety-one ate fixed rates and 159 ad valorem. if o,r proposals are adopted twenty headings will be taken from the ad valorem list and added to *he fixed duties, and it* the remission of duties be carried out thirty-eight boding* will he altogether removed from the tariff.

TAXATION. I now approach the question of taxation. The House has decided, ami the country has endorsed the de ision, that our taxation bears with unequal i ressure on dtff r-nt classes of the com munity, and that the time has arrived when wo should' a (dress ours»lv» sto the task of readjusting the burden which the colony > is called upon to sustain. In one re-peet the time for accomI li.-hing this object could hardly be more favorable than it is a' this moment. It is in periods of prosperity we are freest to consider what in questions of taxation is just, as well as what is expedient, and where change* can he effected with least apprehension of unfavorable results. The coloni di-atio" of the land revenue has placed in the hands of tho Government and the House a powerful reserve force, capable of immediate expansion im emergencies. But we must also recogciise that it is a force which may be easily abused. The Government accept the position that this great source of income should n it possess entirely the character of ordinary revenue or Lc dc .it with as if it were i fountain i evert) be exhansted. A-tached to the revenue; f; om land sale s there are obligations wieh we cannot overlook in the changes we intend to propose. It might be c<■mparati- ely easy to remit a uomb rof taxes wide a are either oppressive or irksome, making good the los- to the exchequer by increasing the land sales. But the unwisdom of thus dissipating our capital, without regard to the primary interests of beneficial occupation, would be at once apparent. We assume then, sir, that the land fund was not coloiialiscd in order to supply efficiencies in the ordinary revenue or to prevent a reconsideration of the question of taxation. If this view of the character of the land revenue be generally entertained, we shall be able to approach the question of a change in the incidence of t ixation with ou? minds free from considerations about the probable amount likely to be derived from that source in the future. Exceptionally favored ye>rs in reaped; of land sales will mean simply that a large

auxiliary aid to the prosecution of public works will be forthcoming. With tbis distinction between land and general revenue understo d, I may at once state that we do not ace ovtr way, even were it d suable, to propose large remissions, without at the same time providing a means of compensating the revenue en this point. I will have rotnething mire to nay us L proceed to cevelope our proposals, and I shall refer now to— Remissions. It often follows that if the remissions of Customs duties arc gradually and judiciously made the consumer is relieved, while the revt-nue soon recovers itself. This experience, however does net apply to total reinn-

sous, But i would point out that the revenue derives less benefit from a great number of trifling duties than trade sustains injury by their imposition. Having briefly allud< d to the principles on which we have proceeded, the committee Vvill be prepared to hear our proposals. We propose, then, to abolish altogether certain Customs duties which either fill on the neces series of life or clog the wheels of industry, or render more complex and costly the system of collection, the list embracing the following:— The duty on grain, which yields £3930; the duty on flour, which yields ,£SOBO ; on maizena and corn flour, £545 ; on sago, ,£299 ; on arrowroot £206 ; on bacon and haras, ,£l3O ; on butter and cheese, -Ml-; on artizans' tools, ££43; on buildin* tools not otherwise enumerated, £I6L; oa axles, axle arms and boxes, ,£316 ; on cart shafts, spokes, etc., £ 00; on photographic goods, £ iS7; on baskets and wicker •<'-re .£103; on perambulators £125; on steel, £117; onion fencing wire, ,£5038; on paints wet or dry, ,£2OBI, and on twenty-four minor articles the duty on which yields £939. The total of these iemissions amount to .£19,726 !>e tea and sugar duties, though last on our list, are first in point of importance. The demand for " a free breakfast table" may not at first sight appear to have the same meaning in the colony as in the mo her country, but when we consider the immense proportions of the taxat'on which these article* yield, and th.it the labouring classes are the principal consumers, we may be aide to realise the justice of the complaint of the breakfast table. We shall show our sincerity by giving as substantial relief as we caa afford in the present year, and, therefore, keeping in view the stability of our finance, as much as would promote the welfare of the classes particularly affected. 1 have estimated the revenue on tea this year at .£BI,OOO, and we propose to reduce the duty from Gd to 4d per lb, giving relief to the tea drinkers of £2B,' 00 a year. Tea being a universal beverage, 1 have not estimated any recovery from increased consumption. The sugar duty mainly bears on the same class as dots the duty on tea; but if it affects a number of industries which require special consideration. A reduction of duty in the first place mi-jht possibly tend to prevent or rct-n -: the cultivation of sugar in the colony. To whatever • xtent it would m this way operate, now offers pro-pectivo protection The benefit in thus encouraging tin establishment of the indntry is perhapa more hypothetical than real for it ;s probable that in but few instances is the amount of protective duty to be placed in compari -on w.th climate, the price of labor, and the circumstances in deter mining tho success of such an industry. Whither this will ever be a sngargrowing country or not, it in likely to have an increasing commercial intercourse with those countries which cau produce sugar unier the most favorable influences, and the ex hinge of productions with them will bo stimulut d by the invitation to reciprocity winch we hold out by the reduction of our import duties. The reduction in the

price of sugar would probably largely influence the success of tho fruit-preservinsr industry, which at yresent ex'sts and will become important if our m inufacturers : .re able to compete with those of ether countries. 1 should not omit mentioning that a reduction of duty wou el he a d rect relief to the icer-driukcrs and the brewers, who.-e responsibility to the Treasury I shall refer to presently. But, ne, sugar is one of the common commodities of life—an article of food neces-ary to the comfort and the happiness of all, and the Government have haet no difficulty in deciding as to wh.it should be done in this matter. The duty on sugar is now a penny per pound and we pr.ipo e to r. duce it to a halfpenny. The est mated revenue from sugar this year is £ 37,000, >md the r»-li f to consum rs und r our proposal will be £68,500. We estimate the increased consumption will reduce somewhat the loss to the revenue on tins item, buttheeffe t will probably not be great daring the present year. VVine—The duty on Australian wine we also propose to revise. Before the year 1873 memoranda were sent, home from this colony to the Secretary of State, urging the right of our Legi-latnre to establish differential duties on articles, the. products of the Australian colonies. Hon. members will recollect ttat the question was urged with more than usual energy, indie,it ing that tho matter was thought to be one of seimc importance to the colony _ 'lhe result of the correspondence was that in 1873 the Imperial Legislature passed the Australian Colonies Duties Act, which enabled auy or all of the Australian cenonies to establish with eaem other and with New Zcal.nd differential duties, applicable to their natural poductions. But strange to say no action up to the present has been taken by this colony to give; effect to a system about which at one time it displayed unusual e irnesteess. Yet t has appeared to the Government that the re isms for a reduction of the du y on Australian w no are as strong to-day as

1 they appeared in 871. Th rquantity of Australian wine imported into the colony in the year 1877 was 12,075 gallons, yielding in duty, at 4s a gallon £2415. The'amount of the duty is almost prohibitive, and its reduction on this article would, from the stimulus given to increased consumption. probabl.v not entail a loss to the reverie. We propose this year to reduce the elutyto 2s a gallon, estimating the same amount of revenue as w en the elu'y stood at tho highe'T.ste. 'I he Goveroment are not without hope that Iho reduction of duly on Australian wine will tend to promote a spirit of reciprocity in the sister colonies towards New Zealand, and that some of the duties which prevent the eleve'opment of trade ad limit the export of ouo productions thither, will be reduced or abolished. We believe that this will be the ran, at least witli New ,-outh Wales, whose Postnia ter-Gener.l recently paid a visit to our shores, anil whose desire to -ee established a closer commcr.-ial alliance and a more friendly intercourse between the two colonies was earnestly expressed. I have now to deal with, briefly, another article of the same class. If it be true that duties should bear Rome proportion to value, and that, luxuries shomd be taxed higher than artic es of general consumption, the committee will, 1 trw-t, concur in the equal justice of increa ing the duty on sp irkling wines from 4s to (3s a gal on. 'This duty is that fixed in most eff the Australian colonies, and is a reasonable demand on those who will p»y it. As there is not likely to be a decline in the quantity consumed we expect £I3OO additional f om this s urce, or a total rovenue from this description of wine of £39110. To sum up the i ffect of the-e changes, we propose to abolish altogether the eluties on a great number of the conveniences and necessaries of life with a loss to the revenu ■ aid a gain to the conmmer of £19,726. The remission of 2d a pound on tea is £28,000, and the r, duction in the sugar duty from Id to Jd a pound will benefit the consumer to the extent of £tJß,suO The remission on Australian wine is £< 207, the amount being recovered to the revenue; from the increased consumption. The total amount of tix-.tien thus remitted is £117.433. in round numbers £1 7,000. As I have shown to the cornmi tee. nearly the whole of this taxation is taken off those commodities wh ch are consumed principady by the great boely of the people, _ or as in some cases, a number of articles which yield

h-.rdly any revenue are struck oft' witli the object of simplifying the tar.ff. This then, si", is the nature and the extent of the reli'-f -which the Government nee their way to afford in the pre s nt year, and we think the committee will at once recognise that the relief has been given with no niggard hand. That we have not passed the bounds of prudence, it will be for our proposals when reviewed as a whole to establish, as therenri-sious are intended to take pi ce from the Ist of January, 1878 The loss to the revenue in the present financial year will be about .£58,000. Land Tax. And now, sir, I shall ask the attention of the ommittee to the proposals we have to mak-) on the subject of fre h taxation. ■he policy of opening: up for settlement ttie landi of thecolouy by means of ralways, roads, and other works, executed out of loans contracted in the foreign market hasentailei upon the colony a_ heavy resp nsibility in the form of interest, whi h ha< rea-be I on the total debt a sum of ab ait ii million and a quarter annually. On the other hind, one of the most marked effects of that p licy has been to enhance the value of all prop rty, especially land, which derives a permanent benefit from the railway sy-tem and oth r m<ans o! communication. The increase in the value of land is due to the additions which the population has received by means of assi-ted immigration in a decree scarcely inferior to that caused by public works, and as the same cause will continue in existence, a similar result may confidently be expected, it is the exerap ion of land, from contributing to the general r< venue of the colony lint lias been condemned by the House as unjust to those who have been pnyiug on the perish able necessaries of life the principle porti .n of taxation We prop ise, therefore* to extend the taxable basis with the double obj -ct of establishing more firmly the finance and credit of the colony, and of fairly adjusting the fiscal burdens according to the capacity of the different classes to bear them. And here I may take the opportunity of disclaiming and repudiating the charge which i sometimes made that the Government have in c intemplation a class tax. The very contrary is the fact. We hold that the system which we propose to corre . t ha-* worked unf irly in the past; tat it has

fa sored the escape from taxation of the greater portion < f the wealth of the colon?, and has implanted a strong sense of injustice in the minds of the wages class. The readjmtment we hope to effect v ill tend to efface the inequalities I have referred t>, aud in trad of promoting hostility between classes will remove the cause which his ben gradually estranging them. The worst enemies of the privileged classes are those who, while crying out against class legislation, are intent on preventing any settlement of grievances. For the longer the readjustment i s delayed, the more violent will be the remedy when the time comes, as come it must, for its application. We believe thut no form of wealth is more legitimately culled upon to contribute a poition of the pubii s revenue of the colony than the value of land, minus improvements, which lor brevity I shall cull " the unimproved value." as no other commodity increase-so rapidly in value from the increase of population and the natural progress of a country. By exempting impi oremeats we award a premium to industry and discourage a system of speculation which thrives only upon the labor of others. Now, Sir, there are two methods by which the unimproved value of land may be found. Ihe first is classification, with a fixed aud arbitrary value attached to cell class, as in Victoria, where the distinction is arrived at by estimating the sheep-carrying capacity of the land. At first sight this system appears simple and easy of application. It has the obvious effect of discouraging the holding of large areas, unless the quality of the soil is good and there is abundance of capital to work it. The principal objection to it is that with a given number of classes it does not recognise the position and value of urban and

suburban property, or sufficiently distinguish between the capacity of the holder ot poor land and the holder of the rich kind to contribute the tax, between property in proximity to railways and roads and property isolated from arterial lines of communication. But perhaps the strongest objection is that the tax is co < paratively stationary and does not bring under it the increment of unimproved value which takes place between one period and another. The system to which these objections do not hold good, and which has recommended itself to the Government after much consid ration m the fairest, is founded cm a direct valuation according to the market v.ilue, deducting improvements. Here every holdir-g would have it.-! own special value derived from position and quality iueludii g accessibility to market, situation in towns or suburbs, the productive capacity of t : ie soil and other natural adva' tnges Ihe principle, then, we propose, is to take the actual value to sell, minus improvements, embracing both town and country, with a re-valuation every third year. The nltuval increase of wealth thus ascertained from one period to another will indie ite chic peculiar and remarkable thing in progress, namely that arising from the general prosperity of the community, apart from the enhanced value which labour gives to the land itself. A man in making improvement!! will know that he is not at the same time b welling the exactions of the tax-gatherer, but that the reward of his in-

dustry is altogether his own. We propose to follow the precedent of the income tax in England in exempting values [below a certain amount Every holder will be entitled to claim an exemption to ihe ex cnt of .£'soo on the total value of all Ids holdings, and 1,0 one will be called upon to p*y the tax, the value of who>e praperty is not more than that sum The leasehold r, except where the lea-e is held from the Crown, will have a right to deduct from his rent at the time o payment the amount of the tax. The minimum unimproved value of land will be fixed at a pound an acre.

Ihe nvasure we shall introduce to give effect to [ roposals will provine for a system of assessment within each county and municipality, si-ttintr forth the improved and unimproved value, and it will empower the local bodies at their option to accept the valuations required under the I'-aling Act The committee will observe that the owner of landed property will not begin to contribute under the tax until two deductions fir exemptions of a very material character are made. By the exemption of improvements the industry of the improving settier escapes taxation, and by not taxing the first £SOO of uuimproved value, the settler commencing with small means is left unburdened until, in making a start in life, he rises above his difficulties, while the class character of the exemption is destroyed by making it universal. I now come, sir to the question of results, after having explained the principle and basi-i on which we to proceed. The present local valuations for rating purposes are probably not entitled to the nii't-t implicit confidence, but they constitute the only data from which I atn able to e.-tunate the value of improved land in the colony The annual valuation of Highway atid Local Boaros this year is ,£2,313,24'J, and the municipalities £ 1.407,7tG, giving a total annual value of J 63,8 0 995. The highway valuations are incomplete, and the annual value may, with moderation, bo taken at £4,000,000. This, capitalized at 5 per cent, gives .£BO 000,000 as the improved capital value of the real property of the colony. It may be more, as the valuation seldom roaches the market voluo, but we accept it as the basis, I deduct for improvements three sixteenths, or £15.000,000, and for the exemption of £SOO another £15,000,000, leaving £so,' 00,000 of a tax ibie vdne undo our proposal. Tlr* estimate of the amount deducted for exemptions, I have taken at what may bo considered the minim ;in, so that the rnvenne expected, and which wo think ought to bo derived from this source, may not provo ex essive, or be more than enough to meet o;r requirements. The principle being kept in view that in imposing a new tax, before all the statistics relating to it can be collected, it is preferable to obtain less, not more, than the amount of revenue anticipated, we propose that property undo-this head shill contribute ah..llpenny in the pound, which on £50,000,000 will yie:d to the revenue a sum of £lOl, 'O'G, or in round numbers, say £IOO,OOO. The uet pain to the revenue will however, not reach this amount by £IO,OOO, the estimated cost of valuation and collection. The Gove-nT.eut believe their proposals on this su j t-1 vv ill be received as characterized by fairness and moderation, as founded on a principle just in itself, and so applied as to inflict the least hardship on any class of the community.

Joint Stock Companies. We propose, sir, to equalise the burdens of taxation still further by imposing an income tax on joint-stock companies transacting business iu the colony. The first and greatest objection to a general income tax, that of f.ihe declarati ns, does not apply t-> companies whoso profits require to be published The capital moreover invested in companies difFers from the capital a private individual employs in his business, the first being generally the accumulated savings of the investor over and above what he requires in Li' trade or profession. In the credit and pr<\speiity of the colony the e companies directly participate, while m ny of the shareholders live out of the colony, and without effort or respousibili y to other for .is of taxation, continue to draw away their profits. We think, sir, that to impose a tax of 3d in the £ on the net pr fi'.s of all Joint Stock Companies registered or trading in the colony will not show any w*nt of appreciation of their value or enterprise, or in the least discourage this form of cooperation, but that, on ihe cont ary, more than a corresponding benefit wi 1 be returned in the prosperity and contentment of th.- peo, le. A careful estimate of the paid up capital and profits of the companies show an annual income of .£BOO,OOO, and 3d in the £, or \ percent., will yield £ 10.000 to the revenue. I here is a large proportion of the companies which pay no dividends and any attempt to tax the paid-up capital by means of an increased stamp duty (an alternative plan) would fall with great severity. But no company showing a net profit for disposal at the end of the year can reasonably object to p y in taxation so small a per-ceatage as 3d in every pound of the-r income. We have no doubt, sir, but that the companies will admit we have treated them with consideration, and with a due regard for the important interests involved. Beer Tax. I have referred t > the given to the brewers by the remission of one-hft f the sugar duties. '1 he quantity of sugar returned as used in the breweries of the colony in 1876 was, 2,271,600 lbs, yielding in duty £9465. Sup posing the same quantity consumed the relief to this industry is £t7.;2. Ihe total duty paid by the breweries under the existing tariff on the material-, —malt, hops and sugar —is about 2s 8d per hogshead. If the average value per hogshead be £5, the duty pud but slightly exceeds 2i per cent, and with the remission 0o s gar the duty will be reduced to less th ;n 2 per cent. Now we are a'le to compare the position of the beer drinkers iu the colony w th those of the mother ccuntry, where the diffatent t ixes on materials and licenses constitute a duty of from 18 to 23 per cent, on the trade prices of beer f the position werd reversed, the colonial consumer would have no right to complain, for the wages test would still lie in his favour. At present he almost escapes taxation on this article. The amount of duty paid by the brewer-' on malt in 1876 was £2654, and on hops £4832. Now the importations of malt are declining, £1593 only having been collected on this head last year, and on hops £4136. and iu a few years it i"s probable the whole of the malt used will be produced within the colony. The production of colonial hops is also progressing, so that the duty der.ved from the importation of thee articles is not likely to be maintained. It will thus be seen that from all but a revenue point of view these facts are satisfactory, Well sir, we think the beer drinker will concur iu the great moderation of our proposals if we ask him to contribute a beer tax of l{d a gal on. It may be said that the consumer will not pay the tax at all, but that it will come out of the profits of the brewer or the retailer. It is only in accord nice with sound economic doctrines to suppose that all such changes ultimately affect the consumer only, and 1 do not wish to reason away the conclusion How then will he stand? He may certainly s-ive his tax by drinking so much less beer ; but as the habit of indulgence is stronger than se fdenial, there is no around to anticipa e in that re po tan rpprecioble falling off. 'lhe tax on beer will then stand at 6| per cent, in addition to the 2 per cent, at present contributed indirectly on the materials, or a total duty of 8i per cent. a percentage considerably lei's than one-half the duty received from the same source from the people of England. Estimate the consumption of the colony at 5,000,000 gallons, though there is some ground for thinking it may be more, but as our statistics are incomplete I have taken the lowest calculation. 'J his quantity at lsd a gallon, would yield a revenue of £31,250, or sly in round nimt ers £30,000. We propose to allow the brewers a drawback of the duty on all beer expoited from the colony. # The mode of collection will be arranged to give the least trouble to the payer of the tax, the system of stamps prevailing in the United States recommending it.-elf by its and directness. ihe Customs department, will assume the control of this item of inland revenue, and I do not expect any considerable increase to the stjiff in consequence. I submit this tax to the committee as one which, while toucbi g with great lightness the contributor, is calculated lo strengthen, as it will augment, the finance of the colony.

FINANCIAL RESULTS. Sir, I have approached that-, point when I may bring together our different proposals and present the result in a condensed form to the committee. The annual »mount of the land tux I hare estimated at i! 00 000; the income tax from joint stock companies will, I expect yield J2lO 000; from beer brewed in the colony we hope to obtain £lO 000 ; and from sparkling wines say .£OOO. These different mm* make up a total in fresh taxation of J 8141.000. Deducting Iroiu this the total of remissions. jeil7 000, tbere is a margin of «£2',000 which the new tax s are calculated to bring in above the revenue remitted But there wid stand against this margin the depa'tmenlal exp nses incurred over the land tax, wh ch will probably be not le s than .£IO,OOO the fir-1 year. But as the and tax and the tax on joint stock companies will not come into force beforo the Ist January next the result for this year m->st be modified accordingly. The amount r- ceivable from the.-o taxes during the present financial year will therefore be £ 5,0 0. The Voy tax will bo receivable at o"cp, and will yield for eleven months £27.27'A. For the samo time thy iuertwse on

sparkling wine* will give ,£IOOO, making a total from the new taxes in the present financial year of £83,273. Deducting from th s t'e estimate of the loss from s for the half year, £58,000, we have a s irplus of £25,273. and it' we subtract the £lo,oooestimated departm nttl cost of collecting th* land tax, there remains a net surplus in favor of revenue of £ls, .73. Now, sir, although we do not ask that the total ot taxation should be increased, wep opo-e ih*t this m.rgin should b; allowed to sta d. It would be over-refining the po ition to make the remission- and th i new taxf-s exactly equal, the data, aj I h ive said, being in many res, ects incomplete. Nor should it 'c fi r..-.otten that the work of effecting a thorough reform is not to be achieved in a si' pie year. While we t ink the new taxes proposed will be sufficient with continued progress, and the increasing na l ure i f the revenue to yield all that will be demanded from the same sources, we are not wi hout hope that the state of the revenue at the end of the present financial year will ensbla us to make still further remissions on the necessaries of life, and to proceed yet a cons iderablo distance in reducing the length' of the tariff. fair, one of the pr ncipal aims of the Government, since the termination of last session permitted them to devote attention to tho question, has been to render simple and clear the financinl position and the magnitude of the public accounts, to remove unnecessary distinctions and establish others which msiy appear natural and obvious, to bting into a focus arid under survey the whole field rf colonial finance. Tho credit of a British colony depends as raw h upon the openness and publicity given to its financial opera'ions, even to their weaknesses and defects, as upon the traditional honesty and industry of the race. It is, at the same time, a fortunate circumstance tVat looking k over the field, there is nothing to disturb the faith which is reasonably repoied in our continued industrial commercial, and financial prosperity. The changes we propose to inaugurate we believe are strongly calculated to accelerate this prosperity, which moves only with certain steps when public right end justice are respected and jealously guarded. I'o maintain, for instance, those inequalities of taxation which we propose to remedy would benefit no man who intended to remain and make his permanent home in the colony. It would be vain to expect that all interests can be blended in mutual compromise, or to suppose that human nature can be changed to break down the lines of demarcation between the allies of resistan'e and the advo-

cates of progress. Hut wo can easily imagine progressiven<3H9 arising from the constitutional conflict of both elements ; the common object being the welfare of the colony and the difference only as to the means by which that object may, in the highett degree, be obtained. Conclusion. The policy I have the honor to submit on this occasion embraces questions of the largt-Bt interest to this colony. We have proposed to freo commerce from unnecessary restrictions and to re ieve it from the ban of a system which offers a premium to dishonesty by making it difficult of detection. Wo have given direct encouragement to industries which are taking root in the colony, by striking off the duty on articles used in manufacture. Foreign trade will be encouraged by the offer of reciprocity, which we advance with stipulations leaving it to be determined by the mutual interest of those concerned Some luxuries are brought further wiihin the range of taxation. On articles of every day consumption and among the necessaries of life, we have proposed that the duty sh.U be either altogether remitted or substantially reduced. Tbe accumulations of wealth in the form of real estate and joint stock capital will be place, for the first time on tbe same level ns tea and sugar, and be made to contribute a fair and not burdensome proportion of the revenue of the colony. W< are convinced, tir, that these proposals, if adopted will give a fresh impetus to the march of progress in New Zealand, as tiny will show a country inviting 1 bor as well as capital from all parts of the world by the justice and liberal character of its legisl tion. it cannot be doubted that the colony possess' s inexh lustible resources, It is true that nature has bestowed upon it the m- st lavish gifts. But the bounty of nature must be matched by the bt-nefieence of our institutions and of the equity of our public policy. Towards this end this our purpose tins been directed, and we ask the Assembly to give it form. The Treasurer concluded by moving :

"1. That, to-vard* raising the supply granted to Her Majesty, there shall be levied and charged, on *ind after tbe 7th day of August, 18 'B, on all ale, beer, porter, and other malt liquors, brewed or made in New Zealand, an excise duty of one penny and one half-penny per gallon, whicb duty sh 11 bo paid by brewers or other wholesale vendors of beer by means of inland revenue .-tamps, to be affixed by them or by tueir agents or servants in such manner as the omm ssiom rof Customs may direct, on every hogshead, barrel, keg, or other receptacle in which ale, beer, or porter or other ma t liquor is contained when sold or removed from any brewery, cellar, warehouse, or other place in which the same may be made or stored." "2. That in lieu of duties of customs now charge d on the under mentioned articles, the following- duties of customs shall on and after the 7th day of August, 1878, be charged thereon, on importation to New Zealand, or on being cleared from any warehouse for home coDSumption, viz.:— Bicarbonate of soda, 2s per cwt. Cream of tartar, Id per lb. Fish (potted and preserve 1), Id per lb (or reputed package of thiit weight). Sardines, Id per half tin. Jams, jellies, and marmalade, 1 per lb (or reputed package of that weight). Bottled fruits, Is per dozen. Must rd, 2d per lb. Pickles, quarts (or reputed packages of that quantity), iSs per dozen. Pickles, pin s, do, Is per dozen. i?auce, Is per dozen reputed pints, and so in proportion per dozen of greater or lesser reputed quant ties. Starch, 4s per cwt. Blue, Id per lb, Lead and composition piping, 2s per cwt. Nails, 2s do. Wrapping pipe? (brown), 2* r?o. Wrapping pnpc • (other kinds), 3s do. Paper bags, 6s do. Woolpacks, 2s b'dper doz. Cornsacks, 9d do, Flour bags, 3d do. Boots and shoes, men's No. 6 and upwards, 12s pr doz. Youths', Nos. 2 to 5 10s do. Boys' Nos. 7 to 1 b's do. Women's, Nos. 3 and upwards, 8s do. Girli', Nos. 11 to $, 7s (5d do. Girls', Nos. 7 to 'O, 6s do. Children's Nos. oto 6, : ; s do. Women's lasting and > tuff b' ots, 8s do. Gob sh: s of ail kinds, 2s 6d per doz. Slippers, men's, women's, and children's, No. 7 and upwards, Bs do Wines sparkl ng), o's psr gal.