FINANCIAL PROPOSALS OF THE GOVERNMENT.

New Zealand Times, Volume XXXIII, Issue 5440, 3 September 1878, Page 3

FINANCIAL PROPOSALS OF THE GOVERNMENT.

(From the Timin', Herald, August 30.) The weakest point of all in Mr. Ballance s financial scheme is that it creates a class distinction which never existed before in the colony, and which is in the highest degree undesirable. Taxation is a payment made by the people in consideration of the advantages to be derived from Government; and the theory of this principle of administering public affairs is that, as all share in the benefits of Government, so all should participate in bearing the burden of taxation. Following out this theory, every tax which has ever been imposed here has been imposed upon ail classes of the community alike. The specific amount to be paid by each individual has depended, of course, entirely upon his habits, circumstances, or mode of life, and has so far been entirely optional with himself. Thus, if a man chose to drink a great deal of spirits, and smoke a great deal of tobacco, ho paid a larger sum in taxation than one who neither drank nor smoked. If he wore six suits a year, he paid more than one who made shift with two suits. If he was largely engaged in business transactions ho contributed more largely to the stamp duty than one who never received or transmitted money, and never drew abill. If he was left a fortune he paid more in legacy duty than one who had no inheritance. If he was a frequent correspondent, the postal revenue benefited by him more than by the unlettered. If he chose to use the telegraph much, he swelled the returns from that department more than one who used it less. Each, in fact, paid in exact proportion as he brought himself under liability for the various imposts. The law made no distinctions and recognised no exemptions ; and if any inequalities fn the incidence of taxation actually occurred, it was solely, because the circumstance and habits of life of all classes were nearly equal. We are quite ready to admit that such was the case. The difference in New Zealand between the amount of taxation paid by a man with ten thousand pounds a year, and that paid by a man with a hundred pounds a year is out of all proportion to the difference between the wealth of the one and the wealth of the other, and to the difference between the advantage of the laws to the one and the advantage of the laws to the other. It was time for an alteration to be made in the manner of raising the public revenue, which would make the contribution of the wealthy more adequate to the benefits derived by wealth from Government. The proper way to do this was clearly to rearrange the taxation so as that those who use luxuries, or 'have habits which are the accompaniments of _ wealth, should pay more in proportion than those whose mode of life indicates small possessions. There were many methods of arriving at this result, without any arbitrary division of the people into classes. We dismiss from consideration the method of imposing heavy import duties on articles of luxury whilst exempting the necessaries of life. Experience has shown, as we have said, that in this country the conditions of the people are such that the rich do not consume dutiable articles in proportion to their wealth. The class who pay the bulk of the Customs duties are the class who drink the spirits; and those, it is impossible to deny, are what the Colonial Treasurer calls “the wages class.” A party of shearers who have just received payment for their season’s work, will contribute more to the revenue in a single week's “ spree ” than their employer will in the whole year. So with many other articles of luxury. If the finer kinds of dress were heavily taxed, would the burden fall mainly on the rich ? Not a bit of it. A servant girl out for a holiday, or a tradesman’s wife at the races, might' represent as much taxation as the whole family of a wealthy landowner, in their 'Sunday best. People neither drink more nor wear better clothes in this country, on account of having a superfluity instead of a competency. The case is quite different in older countries where the grades of society are more markedly defined. There the poor live more poorly, and the rich more richly than they do here. The mere personal expenditure of a draper's assistant in this colony is probably equal to that of the Governor. We know a colonist with an income of sixty thousand a year who boasted that he never spent more than two hundred. The inducements to profusion are few and slight in n new country, and, as a matter of fact, the rate of living rarely rises above a very moderate level. The wealthiest of our settlers spend no more than. those with, a tenth of their wealth. It would, therefore, obviously be impossible, without altogether precluding the poorer classes from the use of luxuries, to adjust the incidence of taxation according to the means of the people by any mere revision of the Customs tariff. The simplest plan by which to gain that object is manifestly to impose a direct taxon property. To this plan, if systematically and equitably carried out, we do not know a single valid objection. But, in order to be successful at all, it must be earned out systematically and equitably. Adopting the principle with a statement of which we began these remarks, namely, that taxation is a payment made by the people in consideration of the advantages to be derived from Government, and assuming, as we safely may, that one of the main functions of Government is the protection of property, we arrive at once at the conclusion that a tax proportionate to the amount of property protected is a just and legitimate one. What is almost equally to the purpose, it is, moreover, one which the whole community will cheerfully consent to pay. It is, moreover, just and legitimate, and will cheerfully be paid, only provided that, like all other taxes, it is imposed upon all classes alike in proportion as individuals come under the conditions which justify its imposition at all.. We. here come directly to the point in which Mr. Balianoe's financial proposals violate the fundamental principles of just and legitimate taxation. Ho proposes to tax not property, but only one description of property, namely land ; and he proposes to tax not all land, but only land above the value of five hundred pounds. He proposes to make the owners of the land pay for the protection by Government of all other kinds of property, and heproposeatomakethosewho ownmore thanfive hundred pounds' worth «f land pay as well for the protection of the land of those who own less. This is doubly a class distinction, and is not based upon any principle at all. We will give Mr. Ballance credit for having abstained from the attempt to prop up his bad finance by false arguments, or at all events by arguments the fallacy of which is not perfectly apparent, The only reason which ho gives for exempting “ improvements,” that is to say, other kinds of property than land, is that by doing so “ we award a premium to industry and discourage a system of speculation which thrives only upon the labor of others.” A more ludicrously absurd expression of ideas than that, it would bo impossible to conceive. It it means anything, it means that agriculture is not an industry, and that house building is not a speculation. It means that capital invested in land becomes profitable only by the labor of others than the capitalist, but that capital invested in any other way becomes profitable only by the capitalist’s own labor. It is, in fact, palpable nonsense, which it would be a waste of words to turn into ridicule. Every sort of investment or speculation that thrives at all, thrives upon the labor of others than the investor or speculator. Money itself, “demnition gold and silver,” as Mr. Mantalini called it, is worth nothing without the labor of others besides the owner of it. Still more stupid and palpably fallacious, is Mr. Baliance’s solitary “ argument ” in favor of exempting from taxation land up to the value of five hundred pounds. If we were not assured that ho “ stands in the foremost rank of colonial Statesmen,” we should have supposed it had been the treasurer of some village beer club, who indicted the following passage in the Financial Statement : “ We propose to follow the precedent of the Income tax in England, in exempting values below a certain amount.” What in the name of common sense has the income-tax in England to do with the land tax in Now Zealand? Above all, why, if wo must go to tho English institutions for models for our own, should w* pick out for imitation the very worst features of them ? We know without Mr Ballance telling us, that incomes up to a certain amount—two hundred a year, we think, are exempt from income tax in England; but we know also, what ho is apparently ignorant of, that that very exemption is admitted by all politicians to be utterly unjustifiable. It has been denounced a hundred times as the greatest blunder that was ever committed, tho one radical defect in the income tax, and tho particular ground upon which it has been persistently condemned as a class tax. Yet Mr. Ballance gravely assumes that, because it exists in England, it must bo right, and adopts it into his land tax scheme just as it it were the necessary .basis of any tax of property whatever. This fondness for oven tho revolting features of Home institutions is curious, and is thoroughly characteristic of the man. Mr, Ballance reminds us of the Scotchman described by Oliver Goldsmith, who, when

abroad, refused to be cured of , the itch “because it made him unco’ thoughtfu’ of his wife and bonny Inveravy.” If the system—lucus a non lucendo— of exempting from income tax incomes of a certain value, is arbitrary and inequitable, how much more so is the exemption from property tax of certain kinds and values of property. The class in England whose income does not exceed two hundred pounds a year is to some extent a clearly defined class. The class in New Zealand whose property, minus improvements, does not exceed five hundred pounds in value, is an absolutely undefined, unascertained, and unascertainable class. One fact connected with it, however, is clearly ascertained, and admits of no dispute. That fact is that it comprises a great number of the wealthiest and idlest people in the country, and excludes a great number of the most industrious and most hardly struggling. The mercantile class generally, and the whole of the class who derive their wealth by lending money, belong to it; but the farmers—who are tho very backbone of the population are beyond its limits. The effect of such an exemption, though, must necessarily be purely capricious, and to follow it further would merely lead us into a maze of inequalities defying_ classification. It is, in short, a mere haphazard piece of empiricism, void of any pretence of principle, and only conceived with some sort of blundering intention of exceptionally burdening the landed proprietors. Apart from its utter futility as a financial operation, it embodies an error in politics of the gravest possible kind. It places before one class of the community the temptation, and in their hands the power, to compel another class to pay the bulk of taxation. The great majority of the electors are people whose property, minus improvements, is not worth five hundred pounds, and who would, therefore, be wholly exempt from land tax. Is it to be supposed that these people, not feeling the burden of the tax themselves, would refrain from increasing it, so as to lighten the burdens which they do feel ? Certainly not. It is not in human nature that they should refrain. The surest way to avert tyranny is to make its incidence equal on all. The whole tendency of our legislation nowadays is to give great power to popular majorities ; and it is manifestly a monstrous mistake to begin by offering them a direct premium to abuse that power. Sir George Grey saw all this plainly, and put the whole question in the clearest possible light when he said that “ every man should contribute according to his possessions, if his share of the tax only amounted to threepence a year. It would not hurt him.” Of course it would not hurt him, but it would most effectually restrain him from action which would turn the threepence into a shilling.