INCIDENCE OF TAXATION.

New Zealand Times, Volume XXXIII, Issue 5353, 24 May 1878, Page 5

INCIDENCE OF TAXATION.

TO TILE EDITOR ON THE NEW ZEALAND TIMES. . Sir, —In recurring to tho subject of taxation, I will commence by showing that tho classification of land, ns proposed by Mr. Eallanco, will act most unfairly, not only where the two classes meeting the one class will bo saddled with doable the amount of tho other, while the quality and value will be very nearly the same ; but in other cases,, of which I'will gfre au instance. One man shall have purchased land at ss. per acre, which will come under the one penny per acre tax, which land has 'not been increased in value, and would only fetch that price in tho market at the .present time, less the .tax. In this case tho tax,

would clearly come out of the original capital invested. Another person shall have purchased land at £1 per acre, which iu virtue of the progress of tho colony is now worth £2O per

acre I this wilt bo taxed at only threepence per acre, 1 while he is being enriched to the extent' of £l9 per acre, less tho tax of threepence. The burden of the tax, therefore, will hear no proportion to the benefits: received; the one having to pay tho tax out of capital, the other contributing only a very small percentage out'of clear profit! Mr. Ballance’s views on an income tax are certainly unique, hut are decidedly more in harmony with the most narrow-souled communism than with what wo might expect

from a philosophic statesman. - :While he looks ■with disfavor on an income tax, yet he would impose a tax on “ large companies who were reaping very handsome profits,” by which, I presume, he means .that large companies with only small profits should go free, i Hewould thu 3 impose a direct tax on superior intelligence, skill, and industry. As Mr. Ballauce has not defined “ very largo profits,” I will assume them, for, the purpose of illustration, to be 15 per cent, per annum. It then follows that all “largo ” companies (but how large he does not state), paying 15 per cent, per annum net, shall baud; over per cent.: of. that amount to, the Colonial Treasury, i But mark the operation of such a scheme. A man who possesses and invests £SOO in a large‘company paying 15 per cent., or £75 per annum, is to pay an income tax of 21 per cent, on an income of £75 per annum; while another man who, having an interest in'a private firm or anyj.ll company to the extent of £so,ooo,'paying. 50 per cent., or £25,000 per annum," would 'escape. And why ? Simply;according to Mr. .Enhance, because it is a private firm or company, and does not publish its accounts. X have an idea that the large companies which Mr. Ballauce is: specially anxious to reach are onr banking and money lending institutions. If :SO, he is equally wide of the mark, because any taxation upon those institutions will fall principally, and in the most needy cases, wholly on the borrower, in -the form of a proportionate rise in the price of money, the net interest being that on which ■ the lender bases his calculations. Thus the tax would fall on the class of all others the i least able to bear any additional burden ; and the poorer and more-necessitous.the borrower,: the'more certainly would the entire burden of this tax fall on him, because his great need ■would place him at a disadvantage in bargaining with the lender. Without occupying your space with any elaborate argument, I think the suggestions I have thrown out indicate clearly the unsoundness of any such schema of taxation, in reference to both land andpncome, as that reoentlypnt forth by the present Ministry through Mr. Ballauce.—l am, &c., Q. • Wellington, May 23.