FISCAL REFORM.

New Zealand Mail, Issue 31, 26 August 1871, Page 11

FISCAL REFORM.

It does not appear to us that Parliament has yet grasped the full meaning of the intimation conveyed in one of the briefest and least obtrusive of the sentences in the Governor’s speech. “ It rests with you,” he told the House, “ to adopt measures for equalising the revenue and expenditure.” It is true that neither these words, nor the position they occupied, were calculated to impress members with a due sense of the gravity of the “ situation.” They were put in the least sensational of forms, because they bore a very sensational meaning. They do not so much convey a disagreeable fact, as they indicate an unpleasant purpose. Few persons were prepared for the announcement that there had been such a great falling off ia the value of our imports ; and yet in proportion as the colony becomes self-sustaining the less outside assistance is required. Still, had the people and Government been as economical and careful in former times as they have had to be lately, they would both have occupied a better position. They are not so much suffering from present sins, as from former follies. The falling off in the revenue is owing in part to the increased production and consumption of home-made articles, in part to the decrease in the gold duty, but chiefly to a diminished consumption of imported ale, wine, and spirits. The difference between the amount of duty paid on these luxuries last year, compared with the amount paid the preceding year, is of itself almost sufficient to account for the difference in the amount of the Customs revenue during the two periods. The Customs revenue for 1869 amounted to £823,507, and for 1870 to £765;930, showing a decline in this branch of the revenue, last year, of £47,577. But the duty paid on ale, wine, and spirits, in 1869, amounted to the enormous sum of £391,470. This sum represents the amount paid at the Custom House, in the shape of duty, but that bears no proportion to the amounts paid for the articles by the consumer. In 1870 there was a falling off in this branch of the revenue of no less than £43,322 ; but how much of this was owing to diminished consumption, and how much to an increase m smuggling, adulteration, and illicit distillation it is impossible to conjecture. In any case, to talk about the pressure of taxation, underj.be circumstances, is ridiculous. It is not the pressure of the public debt, but of private indebtedness, which is felt so severely. This indebtedness is the natural consequence of overspeculation, more especially in public lands; of over-exhaustion, the result of such speculation ; and of a long course of extravagance. This extravagance the fiscal policy of successive Ministries has not tended to check; and it was upon this extravagance that those Ministries mainly relied for an income. It is quite evident that no additional duties on imports will augment the revenue. This important fact appears to be generally admitted by both sides of the House. Nay, it is quite possible that a decrease in some duties would have the effect of increasing the revenue; but no such experiment is likely to be adopted. The present Government, last session, attempted to effect this ob-

ject by a more certain, though a more circuitous, process. They proposed to increase the Customs revenue, not by increasing the Customs duties, but by an augmentation of the population. Any increase in the population would necessarily have the effect of increasing the consumption of duty-paying commodities. The measures Government adopted for this object have not yet had time to produce their legitimate fruits. It, however, appears to us extremely doubtful whether the Customs revenue will be augmented proportionately with the population. More than half the Customs revenue is at present derived from duties paid on the importation of tobacco, cigars, and intoxicating liquors. But no increase in those duties would have the effect of increasing the revenue, whatever effect it might have in diminishing the consumption. The present heavy fjjduty imposed on tobacco and spirits encourages the domestic production of both, besides operating as a premium on- smuggling and illicit distillation. These contraband trades are now carried on much more extensively than is generally imagined ; and the larger the market the more brisk the business. Such trades not only injure the revenue, but the honest trader, and certainly require no greater facilities for their profitable prosecution than that which the present high duties afford them. Without taking into account the diminished consumption of imported spirits which the Permissive Bill agitatation has already effected, and, it is to be hoped, will still effect, tbe legal distilleries already in operation, and which will be sure to be largely multiplied when the colonising operations of the Government are carried out, must annually and progressively diminish the amount of duty paid on the imported article. In 1869 there were 500 gals, of spirits legally manufactured in the colony ; in 1870 there were 12,516 gals thus made. The natives already grow much of their own tobacco, and there can be no doubt whatever that an augmented population will encourage its home growth, and increase alike the facilities for smuggling, and the demand for the cheaper article. Notwithstanding tiie increase in the population the consumption of duty-paving tobacco is but little more than in 1867. The duty on ale and porter has been annually falling off, and any addition to it would have the effect of destroying it altogether. The total quantity imported in 1865 amounted to 925,146 gals, and paid in duty £52,435. In 1870 the quantity had fallen off to 267,636 gals ; and the duty to £16,204. From these figures it will be seen that the loss to the revenue occasioned by the establishment of colonial breweries has been much greater than is generally supposed. The establishment of other new industries, instead of being the means of increasing the public revenue proportionately with the increase of public wealth, will have the very opposite effect, by diminishing the importation of those commodities on which duty is now paid and which would then be superseded. If the deficiency should be sought to be made up by raising the duties at present imposed on such commodities which the country cannot produce itself, their importation will be diminished by a dimunition of the consumption, owing to the enhancement in price; if by increasing the duties on articles which the colony, under the influence of a tariff could possibly manufacture, their importation would be diminished by reason of their domestic production. In the latter event the colony would be benefited, while the revenue would be impaired. This is an important consideration which statesmen should not lose sight of. Notwithstanding the great increase in the duties which was effected in 1864, the revenue, rateably with the population, has fallen off. The total Customs revenue in 1867 was £843,804, while in 1870, as we have shown, it was only £765,930, though there was a much larger population in the latter than during the former period. An increased duty on blankets, tweeds, leather, harness, soap, candles, pickles, and jams, would diminish the revenue by lessening their importation. It has been said that in the case of soap, if the duty were so high as to be prohibitory, it would only temporarily enhance its price to the consumer, on account of the competition which would then be cheated in the home production of this

article. From all which, we think, it follows that any increase in the Customs taxation would not, in the long run, result in any appreciable increase in the Customs revenue. But it might, if judiciously applied, as recommended by the Colonial Industries Committee of last session, be the means of starting and fostering new industries, and thus be the means of increasing the public wealth. In any case there will have to be found other sources besides those which exist at present. Instead of looking upon this circumstance as an evil, we are persuaded that it is capable of being transformed into a great public benefit. It will prove such a benefit if it necessitates a reform in our fiscal policy. The indirect mode of raising nearly our whole revenue by taxes on imports, besides being in opposition to the principles of the economists, the theory of free trade and the spirit of the age, presses very unequally on the people, while it prevents them from seeing its injustice. It thus engenders that public apathy which breeds aud sustains corruption. There is a radical defect in the existing system which the immigration and public works policy of the Ministry, by the effect it will have in enormously augmenting the value of landed property, will largely increase and render still more glaring. It is this : while tbe state confers great and manifest advantages on the owners of realised property, it lays upon them no corresponding obligations. If tbe necessities of the Government should result in a fiscal reform which would remedy this glaring defect, the benefit that will be conferred upon the colony will be such as will be felt and appreciated by future generations. Any additional taxation will be, no doubt, thought burdensome, but evils which are known to be unavoidable are generally, when they arrive, borne with resignation.