The New Zealand Times (PUBLISHED DAILY). FRIDAY, NOVEMBER 28, 1879.

New Zealand Times, Volume XXXIV, Issue 5824, 28 November 1879, Page 2

The New Zealand Times (PUBLISHED DAILY). FRIDAY, NOVEMBER 28, 1879.

The late Attorney-General, Mr. Stout, lias “ gone for ” the Property tax. He is of opinion that it will discourage thrift, interefero with local industry, crush struggling city tradesmen, weigh heavily on the holders of land on deferred payment, aiid that the only person who will escape taxation is the land speculator who has mortgaged his land. We have neither space nor inclination to follow Mr. Stout throughout the whole length of his arguments. In point of fact, he argues that money invested in land is more worthy to be taxed than if the same money were invested in other property. But he wishes to make an important exception in favor of the small holder. He is indifferent whether a man has spent money, time, and labor in improving a small property, or whether he has bought the property already improved. Mr. Stout believes, apparently, that an immigrant with a little capital desiring to invest his money in the colony, who buys an improved property, worth it may be thousands of pounds, but of which the original unimproved value of the land is only worth say £SOO, should understand that he will not be called upon to pay land tax to the coffers of the State. But if he invests in two or three thousand acres of unimproved waste land of the Crown, and spends the greater part of his capital in buying and stocking that land, ha will be regarded as an undesirable settler, and his outlay and enterprise will be discour--1 aged by extra taxation.

An extensive agitation has been lately got up in England in favor of a wholesale emigration of tenant farmers, with a little capital, from England toKew Zealand. If this idea should take root and should bear fruit in the form of an increased immigration of ex-tenant farmers, it is quite likely that ready-made farms in the more fertile parts o: the colony will meet with an easy sale. The old settlers would be in many cases glad to part with their land, and would at once seek for further landed investment. The difference in the taxation which the old settler would have- to pay as the holder of a small improved farm, or of a very large unimproved farm, under Major Atkinson’s proposals and under those proposed by Mr. Stout, is very noticeable, Under the Property Tax Act the outgoing farmer would pay just the same amount of tax, whether he held his improved farm or the proceeds of its sale, or a lot of rough waste land newly purchased from the Crown. Under Mr. Stout’s and Sir G-. Grey’s system, the same farmer would pay little or no tax unless he ventured to go in for farming on a larger scale, or to ti.ke up a considerable area of rough land, knowing that he would be unable to make a living out of a smaller area until, by years of patient industry, he had improved the land so that one acre would yield as much as three acres at the date of purchase. Mr. Stout asks, how is the land speculator affected ? Suppose a case of a speculator who has bought 500 acres of land. He has done nothing with it save mortgage it to almost the full amount of its value. By this proposed property tax he would pay nothing, whilst the holder of the 500 acres alongside of him who has improved his land, erected a dwellinghouse and farm buildings and fences, will have to pay a heavy tax, perhapii double his road rates and county tax.

We venture to take exception to this argument. We will assume that the land speculator has invested £IOOO in the land, and has mortgaged it for say £7OO, at 10 per cent. Under the property tax the absentee and the mortgagee would have to pay £2 18s. 4d. between them, instead of £1 os. lOd. as at present under the land tax. The absentee will be also equally liable for road rates and county rates as his neighbor, the bona fide settler. But there is little likelihood of the absentee’s money being spent in opening up the property. He will be called upon to pay half the cost of fencing his neighbor’s land, and the absentee has invariably to pay very high rates for all work done for him. The fences when erected will be of no service to him, because the gates leading in to the property are carefully left open so long as there is any grass for his neighbor’s cattle to eat. The speculator will have to pay £7O a year interest on his borrowed money, and will lose interest on the remaining £3OO. The absentee may also be called upon to pay special road or county rates, rabbit rates, river board rates, and hospital rates. The absentee has no friends; his interests will be always neglected, and his neighbor’s interests will be well looked after. To people who are thinking of speculating in rural land in Hew Zealand since the introduction of local self-government in 1876 we can confidently repeat “Punch’s” advice to people about to marry—“Dont.” Under the property tax we consider the risk even greater than under the existing Land Tax Act, because, if through the gradual opening up of the country the absentee’s land becomes more valuable, in proportion as it increases in value, it will be taxed higher and higher. One of the most extraordinary arguments adduced by Mr. Stout is as follows :

Let me take an industry now in its infancy, but destined, I believe, to be a very large and important one—the "woollen industry. Under this proposed system the pastoral tenant will have to pay a tax on his sheep. If he shears his sheep and sells his wool to the wool merchant, the wool will become the merchant a realised property, and the merchant would have to pay the penny on the value of the wool. Then the wool merchant may sell it to one of the factories and it is converted into tweeds, and then the factory owner would have to pay a tax on tweeds ; for here again it is the realised property of the factory owner. But the tweed manufacturer sells it to a clothing maker and he makes it into coats, and being made into coats, it is his property—and on these he has to pay the tax. Then the coats get to the retail dealer, and the coats pass into his stock-in-trade, and he also has to contribute to the revenue. Last of all, one coat is bought by an artisan, but even then the tax-collector is not satisfied, for it has to be valued, for is it not part of the realised property of the artisan ? In effect, then, before a person wears a coat made from Otago wool, it may have to pay six taxes—six times taxed 1 Contrast this with an imported coat made in England. In such a case there would at most be three taxes—beyond the importer only—that on the importer, the retailer, and the wearer.

It is difficult to repress a smile when reading the above. Judging by our knowledge of the system adopted in commercial circles in New Zealand, we should doubt whether the wool-grower would have received payment for his wool by the time the coat was on the back of the weaver. If this surmise is correct, it follows that under the Property Assessment Act each of the above-named individuals would, when valuing his property, strike off the debt due to him, and the State would be the only loser. If we assume that the wool in the coat had trebled in value on its way from the sheep’s back to the wearer’s, and that no one had paid cash at the time of selling, but that the wool-grower had taken an advance upon his clip, then the wool escapes taxation, and everyone who has dealt with it will pay so much the less property tax by reason of having dealt with it. For instance, if the manufacturer pays Is. per lb. for the wool, and sells his cloth at 3s. per lb., he will in most cases have parted with the money paid away as wages and also sundry three months’ bills, given as payment for the wool, but covering only a third of the amount which is due to him by the merchant-tailor. He will certainly deduct the sums which he owes from his property when valuing it, and as certainly decline to count upon the sums due to him until the bills have been met. Each dealer will only have to pay extra property tax on the profit he derives from the sale. If he derive no profit he pays no extra tax, unless like the historical dealer in cheap brooms, he has stolen the article. If he has paid for it he has more wool or cloth, but so much the less property iu the form of cash to tax.