THE INCIDENCE OF TAXATION.

New Zealand Times, Volume XXX, Issue 4525, 21 September 1875, Page 2

THE INCIDENCE OF TAXATION.

TO THE EDITOR OF TUB NEW ZEALAND TIMES, Sir, —As a matter of course, the present being the last session of the existing Parliament, a large proportion of tho speeches are not addressed so much to the House as to the electors. This is more particularly the case in what has been said as to the incidence of taxation, members showing great anxiety to make tho "poor working man" understand that it is not their fault if he continues to be ground down by a load of taxation which ought fairly to be borne to a much larger extent by tho owners of wealth-and property. In a hustings speech this sort of thing is perhaps to bo expected, and to some extent tolerated, but when deliberately uttered in Parliament, and endorsed by the Press, as it has been, there is danger of its truth being taken for granted without careful consideration. 1 propose, theroforo, t > examine as briefly as possible how far the statements which have been mado are consistent with actual facts ; and I think it will bo found that the professed working man's friends in this, as in most cases whore they rush into extreme statements, are grossly deceiving him, whether intentionally or no, and that lie cannot possibly derive the benefit they would lead him to expect from any possible chango in the mode of taxation. A calculation was made—first, I think, by Sir G. Grey, and repeated by others—that every working man with four children contributes some .£24 to tho revenue, which is obviously absurd, and hardly requires to bo disproved, but to put it beyond doubt it is only nece-sary to consider what income such a man would have, and how it would bo spent. Any employer of labor knows that oven at the high rates which havo lately ruled—say 7s. to Bs. per day—for unskilled labor, if duo allowanco is mado for wot weather, loss of time in seeking employment, holidays, &c, a man will not average more than (is. per day through the year, or £94 in all. Out of this he has to pay house rent, not less than Os. per week, or £ls 12s. a year, and should certainly bo able to save, if a steady man, at least £2O. Of coxirsc, if he chooses to contribute to tho revenue by consuming this in the form of spirits and tobacco, it is his own fault, and ho has no excuse when colonial beer can bo obtained cheaply and untaxed. Taking then £35125. from £Ol leaves him for actual expenditure the sum of £SB Bs., but out of this a large proportion must bo spent in moat and other untaxed articles of consumption, so that at tho very ontsido he cannot spond more than £4O in articles liable to duty. Assuming the average duty on these articles to bo 10 percent., it gives £4, instead of £24, as the amount ho really contributes. But even though ho aripears to pay this amount it is, I think, very doubtful whether be really does so; that is, whether his position would bo improved if these duties were abolished. It is clear that the effect of high duties is to make every taxed article dearer than it otherwise would be : and though it is a mistake to assume as a principle that wages are regulated by tho price of food, it cannot bo doubted that in some statos of tho labor market they are so regulated for a timo. Mill admits thisinhis"PoliticalEconomy,"aiHl our circumstances are very much tho same as those under which he says it may bo tho case. So far then as wages ore thus raised, it is tho employer of labor who actually fools the burden, and probably many largo employers aro shrewd enough to see that they are quite safe in making political capital by coming forward as the working man's friends, as if the change is made, thoj' will gain more by cheap labor than they will over pay in direct taxation. I have taken tho case of unskilled labor as being tho simplest. As we ascend to higher paid classes, of course the amount they pay becomes larger, but evcryono must kuow from practical experience how onormously their rate of wages has been increased in consequence of their always ready argument " the cost of living," so the reasoning applies to them, and they have still less to complain of. While tho working man is thus pitied the. " wealthy land monopolist is held up as an object of envy, as being almost entirely freo from taxation." Now, what aro tho facts in this case 1 I havo already shown that lio pays a large proportion of the taxes, in t.ho form of increased wages, in addition to boing, of courso, a much larger consumor of dntiablo articles ; but apart from this, ho is already subject to a vory heavy taxation of a direct nature. In this provinco ho pays ono penny in the pound on tho actual valuo of his property for highway rates, and a halfponny for education—that is, a property valuod at £IOOO pays 1500 pence annually. Such a property would bo reckoned, at the ordinary estimate of 8 por cont., as worth ,CSO a year, on which the charge is £(i 6s. a year, or rather more than eighteen peuco in tho pound on rental. While paying this it is certainly rather hard to bo told that he escapes taxation almost entirely.

Then it is said there are the wealthy merchants unci holders of realised capital who escape their share, ami they must be reuched. This is all very well in theory, but in practice must prove simply impossible. The money-lender invests here because it pays him bettor than to send his capital elsewhere. Tax hirn.heavily, he will either be able to make the borrower pay increased interest or will seek outside investments. In a similar manner, the merchant's profits being regulated by competition, he will always nnd some way of making his customers pay any taxation levied on him, and probably make a profit in doing so. The only conclusion such reasoning as this leads to, and I believe it to be the correct one, is that whatever form taxation may take, it must ultimately fall on the actively employed capital of the country and on nothing else, and that any attempt to reach particular classes and benefit others, will prove to be one of those delusions by which a people are often led away for a time, believing them to bo a great success, but which end in complete failure. If, instead of looking at this question as is now being done, it were considered with relation to the advantages of free ports and unrestricted commerce and the effect of direct taxation in encouraging an interest in public affairs, a great deal might be said in its favor, and this policy, if judiciously carried out with these ends in view, might prove of immense advantage to the colony.—l am, &c,