THE GOVERNMET “POLICY."
TO THE EDITOR OF THE NEW ZEALAND TIMES. S.TR, —With your permission X propose to criticise the policy of the present Government from the philosophical and scientific, rather than from the party point of view, holding as I do, that the art of politics, like any other art, must ultimately rest upon a basis of fact and principle, in order to produce the best results of which it is capable. In affirming this, I am by no means contending that a course of policy which is not ideally perfect should be despised. On the contrary, the more perfect the idea the more certainly will the reality fall short of it, but I maintain that the practical outcome of political action will be largely affected by ideal standards. The navigator who understands “ great circle sailing" will shorten his voyage by a considerable percentage, while he will avoid rocks ahead as carefully as the skipper who never heard of the method, and the commercial success of both may mainly depend upon the choice of a port. The political analogy is obvious. When Sir George Grey and his colleagues took office as advanced “ liberals," they did their utmost to persuade the people of New Zealand that they were an oppressed and downtrodden race, their oppressors being capitalists and landowners chiefly. I am not certain what was the exact amount of land or money which was supposed to convert an ordinary colonist into a “bloated aristocrat;" but, to judge from the Financial Statement, about five hundred pounds worth of land would do it, and the “great untaxed" will soon become the colonial equivalent for the English term, the “ great unwashed." On the whole, the social distinction is so considerable that most people will feel inclined to say with Mr. Mantaliui, “ the odd halfpenny be dem’d," and pay it cheerfully. But, seriously, does it not look as if the Government had no ideal standard at all, —neither a sentimental polity, nor a positive polity, nor any mixture of these two, —but were only anxious to secure votes. As you, sir, well remarked, the morning after the Financial Statement was delivered (and this is the only indication wo have yet bad of the policy of the Government), “ It deserves careful consideration, less because of the magnitude of the fiscal changes which it proposes to effect than of the principles upon which the proposals are based. It may be said of it generally that it is a loyal, if a weak and halting attempt to give effect to pledges which, although recklessly aud imprudently made, could not be altogether ignored.” The landowners are to be directly taxed to the extent of £IOO,OOO, aud other capitalists to the extent of £IO,OOO through joint*stock companies, and this change in the incidence of taxation, which' amounts to leas than 5 per cent, of the ordinary revenue, and to less than 3 per cent, of the total revenue for last year, is, to use Sir George Grey’s own words, to “ enable every family, to partake of the necessaries of life knowing that they were
not affected by any unfair taxation—a taxation imposed upon the poor in order to prevent the rich from contributing to the necessities of the country.*' Never was a great injustice remedied at so small a cost, and never did aristocratic selfishness and tyranny escape with so light a punishment. "My wound is great because it is so small,” says tbe lover, and Sir George Grey seems to have adopted the poetic sentiment as a political maxim, and it is quite possible that his admirers will feel the logical force of the reply, “ Then 'twould be greater were it none at all,” and act accordingly, The simple truth is that this popularity hunting Government has proposed a sham remedy for a sham grievance. From the vote-catching point of view their scheme is an admirable one. The meshes of the financial net are of exactly the right size to catch the larger fish and to let the little ones escape. The big fish can’t complain, argues Mr. Ballance, the meshes of our net are the same size for all, and they have full liberty to stick a tail or a fin through them. It never occurred to the Colonial Treasurer that under these circumstances they might prefer to swim in other waters. In a colony situated as this is, with au enormous debt coranared to the number of its population, but with vast resources which can only be developed by the employment of capital and labor, it does seem a most unbusinesslike proceeding to try financial experiments as to the results of which neither theory nor experience has hitherto furnished any reliable guide. While it is certain that the relief afforded to the working classes by the reduction of the. duty on tea from 6d. to 4d. per pound and on sugar from Id. to -|d, will make no appreciable difference in their circumstances, it is by no means clear that the land tax, small as it may seem, may not seriously affect the revenue of the colony. That it will tend to do this is certain. " The objection to a graduated property tax,” saya Mr. Mill, “ applies in an aggravated degree to the proposition of au exclusive tax on what is called ‘realised property,’ that is, property not forming a part of any capital engaged in business, or rather in business under tbe superintendence of the owner; as land, the public funds, money lent on mortgage, and shares (I presume) in joint stock companies.” Such a tax <( would not even be a burden on that class of persons in perpetual succession, but would fall exclusively upon those who happened to compose it when the tax was laid on.” “ Future buyers would acquire land and securities at a reduction of price equivalent to the peculiar tax, which tax they therefore would escape from paying.” In other words, land will be diminished in value by the capitalised amount of the tax. Now, although a halfpenny in the pound on the selling price, capitalised at say 5 per cent., may not make any considerable difference in the market value of laud, for which there is considerable competition, especially if it is much improved, it must largely depreciate the value of lands which, owing to position or poorness of soil, are not much sought after. More especially must this be the case if the minimum valuation is fixed at one pound per acre, as the Government proposes. Now, a very large proportion of the Crown lands may bo included in tbe above category, so that it is quite passible that the colonial land revenue may be diminished by some fraction of the capitalised produce of the tax. In other words, we may easily lose on the land revenue the £IOO,OOO we gain by the land tax, and it is by no means impossible that our total loss on the one hand may much exceed our total gain on the other. In addition to this, it must not be forgotten that the tax is imposed on grounds which, if not avowedly communistic, have a leaning in that direction. Mr. Mill’s theory of the “unearned increment,” misunderstood and misapplied by the Colonial Treasurer (who seems to have dipped into various works on political economy while searching for newspaper extracts, rather than to have mastered the principles of the science), is pleaded in its justification. But whatever may be thought of the fairness of allowing the State to share in the increase of rent due to which the landowner has no control, there can be no doubt that the direct effect in a new country of a policy founded upon such principles will be to discourage the investment of capital in laud. In old countries the value of land is constantly increasing ; in new, no kind of property is subject to greater fluctuations. To talk of the “ unearned increment” in such a country as this, without a thought of the undeserved decrement to which landed property is constantly exposed, may suit the exigencies of politicians, but deprives them of all claim to be considered statesmen. Reserving further remarks for other letters.—l am, &c., Economist. Wanganui, August 31.
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New Zealand Times, Volume XXXIII, Issue 5440, 3 September 1878, Page 2
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1,375THE GOVERNMET “POLICY." New Zealand Times, Volume XXXIII, Issue 5440, 3 September 1878, Page 2
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