THE FINANCIAL POLICY.

New Zealand Times, Volume XXXIII, Issue 5449, 13 September 1878, Page 4

THE FINANCIAL POLICY.

TO THB EDITOR OF THE NEW ZEALAND TIKES. Sir, —In my last letter I pointed out some of the effects which the special taxation of “ realised property” would tend to produce in a country situated as this is, and I will now deal with some other branches of the same subject. Passing over the inconsistency of the proposal to raise £IOO,OOO a year by direct taxation, while £255,000 is still to be paid to counties, municipalities, and road boards, in aid of rates, it is evident that the financial policy of the present Government will, as a whole, press very unequally, aud therefore very unfairly, upon town aud country. In the country land constitutes the bulk of a man’s property, aud therefore the proportion of his income which the State takes from him for local purposes, iu the shape of rates, is very much larger than what it takes from a man whose capital is employed in a borough. This “ inequality of sacrifice” It is now sought to make greater. In addition to such considerations it must be remembered that while every sixpence expended in roads and bridges iu the country of necessity benefits the towns, the expenditure in borough improvements is of scarcely any ‘ advantage whatever to the country districts. In saying this I am by no means advocating the narrow-minded doctrine that the interests of town and country are antagonistic; on the contrary, I believe with Mr. Herbert Spencer in what X may call the physiological unity of the social organism; but just as in cases of starvation the muscular system' suffers first from want of food, while the brain. and nerves fulfil their functions seemingly as well as ever, so will it be with a community. Starve the country, with the idea that what is thus saved may benefit the towns, and you may indeed produce the excitement due to a stimulant, but not the permanent prosperity * duu to healthy assimilation. Proper nourishment, conveyed by appropriate organs, is tbe essential condition-of individual and social vitality. In this country at least it is mainly by the application of capital and labor to the soil that those products which support the towns are gathered in. Every bale of wool, every drove of cattle, every flock of sheep,, every bushel of corn, every ounce of gold, aud indirectly no small portion of our borrowed millions, comes from the country, not. from the towns, aud constitutes the raw material out of which the industry of the towns produces wealth. For the towns to support a policy which wall tend to diminish those supplies on which their prosperity depends, is suicidal. For a Government to take advantage of popular ignorance of economic laws in. order to gain support for itself, is infamous. But, argues tbe Colonial Treasurer, one of the most marked effects of the Public Works policy “ has been to enhance the of all property, especially laud, which derives a permanent benefit from the extension of the railway system and othermeansof communication.” This is perfectly true, aud had the Government proposed to impose a property and income tax, nothing could have been said against the justice, whatever might have been thought of the expediency, of the proposal. As the Public Works policy has increased all incomes either actually or potentially, all might fairly be made to contribute to the revenue, if more revenue is required. As it is, I entirely deny not only the expediency but the justice of attempting to add to the revenue by direct taxation, in order to relieve a class who have reaped all the advantages of the Public Works policy aud shared innoneof itsdrawbacks. If the reduction of Customs duties were a substantial advantage to the workingmauinstead ofbeiugatransparentsham, I should still maintain that in existing circumstances he had no claim to.special consideration. With the fear of a dissolution before their eyes, members of the House of Representatives dare not say so ; but they are as well aware as I am that no class of the community has derived more pecuniary benefit from tbe Public Works policy than the worki g class. From the time when Sir Julius Vogel—with'that firm grasp of sound economic principle and clear perception of surrounding conditions, political and physical, which distinguished him—initiated his great policy to the present, wages have increased from 50 to 100 per cent, on what they Were formerly. Not only so, but during*the whole of this period the working man has had the command of the market: he could pick and choose his employers aud employment ; fie could within large limits-work hard or not as he pleased, I do not complain of this state of things. It was the result of natural laws, and an indication that the policy of introducing capital and labor had at anyrate added to the “ happiness of the greatest number.” Jhat a policy may be adopted which will continue to produce this result is certainly my most earnest wish. At the same time it must be remembered that while the working man got his “ unearned increment”.* all in a lump, and the same thing applies to merchants and shopkeepers to a less extent, the landowner had to wait ; not only so, but in hia case more than in that of any other employer of labor he was brought into direct competition with the Government. I have no hesitation in saying that any man who has spent ten thousand pounds in the improvement of landed property since 1870, has spent at least two thousand of that amount iu the payment of an increased rate of wages consequent upon the Public Works policy. That is a considerable portion of the “ unearned increment,” paid by way of a tax in advance, into the very pockets, of the working man, who may therefore very fairly be excused from not knowing that he was such a victim of injustice till he was told so by Sir George Grey and his allies. It is too true that notwithstanding this flash of prosperity the bulk of the working class is not permanently improved iu position; but whose fault is this £ Certainly not the fault of legislation or of capitalists, or of the Constitution—unless it be that of the constitution of man himself. It is the old story—You may have your cake or you may eat it, you cannot eat it and have it. The present Government seem anxious to make the people of this colony lose sight of this very elementary fact. The suggestion. really is, that those who have eaten their own cake are entitled, to have a share of other people’s. Children and savages are apt to act upon such notions, and the result is that the feast ends iu a fast. These who, as a matter of abstract justice, are more entitled to relief than any other portion of the community, are persons whose wages or salaries have not shared in the general rise produced by the expenditure of borrowed money, such as the members of the much abused Civil Service, persons in receipt of fixed incomes derived from outside-sources, aud generally those whose expenses have been made heavier while their resources have remained as they were since 1870. However, it has been well said that “ the object of taxation is not to redress the inequalities of fortune, but to provide for the necessities of the State,” and I am not advocating the claims of this class to any exceptional treatment. All , I contend for is that compared with these people the working man’s share of the gain caused by the Public Works policy is very great indeed. Were tbe former as powerful as the latter at the polling booths, their cause would probably have been advocated as warmly by Sir George Grey and his followers.—l am, &c.. Economist. Wanganui, August 7.