THE BUDGET.

New Zealand Times, Volume XXXIII, Issue 5434, 27 August 1878, Page 3

THE BUDGET.

(From the Sydney Morning Herald.) The alterations in the fiscal system of New Zealand, announced in our telegrams of Thursday, have the appearance of being somewhat of a sweeping character. Relief is to be afforded through the Custom House to the extent of £117,000, and this loss to the revenue is to he recouped by a land-tax and a tax on the profits of joint stock companies. We have previously shown that the colonial, provincial, and municipal debt of that colony must reach, up to the present date, the enormous total of twenty-two millions sterling, or £52 per head of tho European population, which is three times the rate of indebtedness of tho people of New South Wales. One-half this debt has been incurred for railways, which are but the skeleton of a system, and pay only about two per cent, on their cost. One-fourth is represented by harbor works, and roads, bridges, and telegraphs. The other fourth was spent in Maori wars, the purchase of native lands, and the introduction of new families from Europe, the first and second being non-produc-tive expenditure, however necessary, in the circumstances of New Zealand. Everybody was expecting that this heavy burden for a people numbering only a little over four hundred thousand would compel the imposition of new taxes ; but few expected this imposition to be accompanied by a reduction of the Customs to the extent proposed by the Treasurer. Are the new taxes likely to yield sufficient to enable these remissions to be made without throwing current expenditure upou the proceeds of loans or the sale of Crown lands ?

First, as to the reductions and remissions. In 1876, tea yielded £75,000 to the revenue when the duty was sixpence per lb., and sugar 128,000 lbs. at a penny per lb. Unless the reductions should stimulate consumption, they will cost the revenue £BO,OOO per annum. That they will stimulate consumption to any appreciable extent is not probable, because the bulk of the people in these colonies are in such easy circumstances that a duty of sixpence on tea and a penny on sugar is scarcely felt in the domestic expenditure. In England, where wages range at half the rates prevalent here, there may be some reason for the cry “ a free breakfast tab’e,” because tea and sugar are next door to the necessaries of life which taxation should spare. But England has many forms of taxations not yet introduced, and some of them never likely to be introduced into Australasia. A moderate tax upon one or two articles not absolutely necessaries of life, hut still of general consumption, is one of the best of all taxes for meeting that part of the cost of government which is incurred by the protection of personal rights. Tea and sugar are just such articles, and are a legitimate source of taxation to a reasonable amount. The other redactions are on provisions, fencing wire, and .paints, which will not very greatly affect the revenue. New Zealand grows her own breadstuff.-) and has a surplus for export, so that a tax on wheat and flour through tho Customs would be inoperative. But she imported 61,000 bushels of maize in 1876, chiefly from Fiji, and tho duty of 9d. per cental, which is equal to about 12 per cent, on the value, is now to be abolished, the effect of which should be to increase the trade with New South Wales, As to tho ad valorem duties, the telegram is somewhat obscure. They yielded no less than £302,428 to the New Zealand exchequer in 1876, or about one-fourth of the total receipts from Customs. Tho reductions already mentioned will absorb nearly tho whole £117,000 said to be the amount of tho remissions, and that leaves little, or nothing to be taken off tho ad valorem duties. Like our own former ad valorem imposts, they are limited to the moderate rate of 10 per cent., although they yield twice as much in proportion to population as ours did at the time of their abolition in 1873. Altogether the remissions and reductions proposed are equal to 6s, per head of tho population, or about 1-llth of the gross taxation of New Zealand. The additions are to come from property, Tho land-tax is to spare all below 500 acres, and is to be a halfpenny per acre on all the rest, or a halfpenny in tho pound on unimproved land ; and as improvements are not to bo reckoned, all land seems to be fixed for the purpose ot taxation at tho uniform value of a pound per acre. Fending the arrival of details which are necessary for showing the working of tho scheme, wo may remark that the, area alienated in New Zealand must amount at the-present time to nearly fifteen million acres. Tho exemption of a maximum of 500 acres will probably restrict the tax to oao-half this area at tho .most; and, if so, the Treasury will get a gross revenue of only

£30,000, which will leave perhaps no net revenue at all in excess of working expenses for the first year. The average rate of the Victorian land-tax is 5Jd. per acre, or ten times the rate of the New Zealand tax. In its incidence it spares city and municipal property, and also a maximum area of 640 acres, and a value of £2500 in all other parts of the colony. Tho area alienated in Victoria is eighteen million acres, or about one-fifth more than in New Zealand, and yet the tax has produced only £120,000, one-third of which will be swallowed up in expenses. If the island colony is imitating its neighbor in this instance, the imitation is not servile, but very I’mitcd and cautious, as an experiment in taxation of so grave a character ought to be. It is better to go too slow than too fast, as Victoria is learning to her cost. A land-tax must he introduced gradually, if it is not to be a form of spoliation. The tax on the profits of joint stock companies is fixed at threepence in the pound, or per cent. Turning to official documents we nosice that in 1870 there were forty of these companies registered in the colony, with a nominal capital of less than half a million sterling. A tax on profits earned from such a small sum would not be worth collecting. Whether the banks, which have a capital of, five millions, and the large financial and mercantile companies of the colony, also como within the incidence of the tax, our telegrams • do not state ; but without them the revenue will not benefit much by this proposal of the Treasurer. Until further information reaches us it is impossible to estimate the full effect of all these change*, but so far the reductions seem to be much larger than the additions. Still, as the revenue for tho current year is given at £4,280,000 and the expenditure at £4,190,000, there is a surplus more than equal to this difference. Trade, also, shows symptoms of a revival, and tho increase of imports may fully recoup the exchequer. The rate of taxation from all sources was £3 11s. ,10d. per head in 1876 against £1 16s. lOd, in New South Wales, and the alleviation now proposed will still leave the fiscal burdens of New Zealand twice as heavy as our people have to bear for the government of a territory three times as large. •