THE FINANCIAL STATEMENT.

Oamaru Mail, Volume III, Issue 727, 8 August 1878, Page 1 (Supplement)

THE FINANCIAL STATEMENT.

(Br TttKHUUrH-j Wnzisorosr, August Cth. At the evening sitting' of the House of Reentatives, th« Colonial TreaunrerJ (The Hon. Mrßallance), delivered the Financial Statement. In the following report, the first part is only a brief abstract, and shillings and pence are omitted from alt Hr.m* stated. The portion of the statement harimrreferencatotherrogress of the Colony, Taxation, and the Tariff are given in f aIL The Colonial Treasurer first explained the steps taken daring the recess to simplify the public accounts. In stating the ordinary expenditure and income for the post year, he excluded the Provincial liabilities, which were afterwards explained separately. EXPESDrrURE. The total ordinary expenditure for 1877-8 was L3.030.2-tl against an estimated expenditure of L3.20tJ.188, so that upon the votes of last Session there was an unexpended power of expenditure |to the amount of L 175,946. There was a small excess under the heads of Law and Justice and Native Departments, while under the head of Education there was an excess of L 29.261, arising from various causes, some of them being exceptional, but the total stated did not include all the disbursements of the year. Taking the Land Bevenue paid to local bodies under the Financial Arrangements Act, together with L 465,093 of surplus Land Bevenue paid to Counties, and other items, there was an amount of L 725,307, which brought the year's expenditure upto 1*3,755,340. Adding the gold duty and license fees given over to local bodies there was a total disbursement from the Consolidated Fund during 1877-8 of L.3,069,240. HAWKE BAT AJTO CANTERBURY LASD REVENUE. As to the retention of certain sums out of the surplus Land Bevenue of the Provincial districts of Hawke Bay and Canterbury, the Colonial Treasurer said: "An estimate has been formed in the Surveyor-General's Department, that the cost of bringing up the arrears of surveys outstanding on the Ist January, in the Provincial districts of Hawke Bay and Canterbury, will be about L 5700 and Ll 27,000 respectively. These arrears had not been prowled for among the Provincial liabilities, and as the surplus Land Fund was the actual proceeds of the land to be surveyed, it appeared to the Government that that fund wan the prope.source from -whence to defray the charge. The sum of L4..1-J In lOd (being all that wa3 available) in the case of Hawke Bay, and of L127.1W Iss 3d in the ca.se of Canterbury, were accordingly retained for the purpose of meeting the charges referred to ; and we propone that a sum shall be appropriated each year according to the estimate required for arrears of survey within the year in the Provincial district*, untti either the money be exhausted or the surveys completed. The estimate of tha work to be dune this year will require L.'!-t,5t2 la loil, and thid has been placed on the Estimate for appropriation. Ws propose that the amount in excels of this anm be placed in the bank as a fixed deposit, the accruing interest to be handed over to the Counties together with any balance of the principal not required for the work. revenue- 1877-8.

Tho Surplus brought forward from the prerionn year was estimated by the then treasurer at LMH.ii-0. Of the sum so estimated only Id - '3.UO hail proved to be realisable being Ii r i,.UO o.j 8d less than the estimate. The revenue of the current year was estimated by the late Government af, L3.15.V.85, consisting of ordinary revenue, L2.-ri3.IKO, uid territorial revenue, I,BU<>,;"V2->. The net revenne aetmiUy collected amounted to T.3.!>'ts>.3ls, consisting of ordinary revenue, >vnd territorial, L1,")81>.5»'2. showing au excess on the estimate of L761,b.J0. It would be interesting to the Committee to know that the the Exchequer had received from the Colonialisation of the Land Revenue was LDt.7-10. The Customs revenue reached LE.tKl.'Jfi-t, or an excess of L7-,%t over the e-i&tmate. _On Stamps there waa an excess of L157,0fi8, chiefly lite to legacy duties, though the largest amounts yet accruing from a single estate w.->s nut paid withm toe year, a t-choical dimcaity having caused delay. O.lur ex-esses over (wiimibtesw-ri- I'osr.d 1.»'."..«, T-le'-raplis L'J:'.«l. Land r n ferl,7drs, a dmi cellancons 1,15.071!. I'll- iucom.i fi'oui rati..'ays win estimated at I.liUO .CD. hut he! o-.ly p.-',,•!.-d f.odl'vl.io. .-.co-.-.--i 1..; ;. d.-.iiu-i.cy < ' .""'CM Tl.i. iv.-uh. -1 Von, ci-i-i-:t : lin s ,:,.,•. h vi ■; ho n op. „..,| ihrrri •; ti,,. ~.,,. ~, t:„...- ■...-■ h,;..-.id dto have ho-n. ■ w \ -.'■.. ..-rpri'dl -I'-" !. .iI-<■ 1 i l-o--o!-t'.ol' d. ■'./ \vr. ■'•..•' ■ j:ia ..I' i ..■,-.;:; '.•'. '■'■' ' '•!■. fi-.:.i 1.0.-i i . a- ! -t IVovho.id h.'-dri . : ;o- t.U- b.I ri ' t'io u"„:i;, a.-r..- , . i .'.■;; ■.,.;.' 17- ■'■', .-i. i »"■• so ,;. L-i,i :,t. t!c ■ r i.t • :' - vo,-„: ,-..-:.:.,.!. \K ID i. ..,-.i.c-.h .; toe; -ucis from •;. ■ t.■!,-..! j. -.t ret n- ■ I to, Ll.-ie r mains I. i7l'. 31'.' Ss ;,.!, :-. o-o«>ii: ; r * i'-0 th- excess ot M-cii.-ts nv T .'xi.'ndi'.ure. To this we mM t.!-oass..t... "o.alisV.h" L I I. 100 :;•'.»!, i.r.ildn.t..-._.. 77J I- '.•■:. The h. luiit.i,-:. to 1... provided fi -out of thi- -um conisr. of -'.) \>v con!., ot r.md l-'iiud and other nc neys, payable to C-uni.ics or av .ilahie for sj.eei.il services, L-7 1 .),1:'.-l 17j -d. and the ordinary Dopiut-m-'iital S-rvics !,!_'[.bin l< Hid. These situs .mount'.> r,l''o,:'.'V. 1',).-, an-1 -leductiu-: ti.t'm fr.m tlie lia!a;.ce of U's -Jd there repairs Id'.'li !i:> !oi -.'.. Tin-: .si;i:i'Li:.s of Ttti-: vkau L< it -,S. Consid- fin-,- that the cifect of the tituvticuu c alines a.-, thecloso of 1,-i.st session wis t> pn>-(liu-H :v lar:,'c estimated deli- t-■ ncy, tii< surplus is as unexpected as it is gratifyir.g. Tlie questi >n then an.-.cs, 110-.v- should we .lisncse of it ? The Government believe that if the railway system is to he extended and carried on without interruption until it connects every part of eni-h Island, public loans must be largely oided from Home and other .tcnrct:s. I refer here only to railways which should be under? fciken by the Colony. For several years a moiety of the St .snip Duties was set aaidr for tiia purpose, but, as I think rightly, the policy was discontinued. A surplus seems to be exactly one of the services from which such aid ouijht to flow, and we propose to place Li0l),000of th-t surplus of the past year to the credit of the t'ublic Works Account, leaving a balance of LriO.-ICS to the creilit of the ordinary account of the I'resent year. If the Committee ajrprove if this mode of applying a surplus, any extraordinary increase ou the estimate of land revenne Nl in the future be applied to supplement the d available for tho prosecution of public F * THE LAST LOAJT. After explaining the positio-i of the Provincial Liabilities Ac«-oV.nt. tie Colonial Treasurer deScribed the rrusingof the 1.3,500,000. The Bank of England undertook to issue the loan for a commission of i per cent. The adopted Was par, with a "> per cent rate of interest, and the total amount subscribed for was eight milliun and three-quarters. TheL3.;300,000 raised included one million under the Act of IB7tf, to m»et the advance on short dated debentures Tailing due at the end of this _»nd the beginning of next year; and L 3,500,000 toiler the Act of last session. L 300,000 out )f the loan was appropriated to Provincial labilities, leaving LL > ,200,000 available for mblic works. The guaranteed debentures re(ased were still ti> remain available as a security on which to obtain temporary advances in London. Out of the appropriations last year or public works. L 1.167,583 had been extended, and LX.'J26,157 remained nnacpended. The total amount of loans !«t raised for immigiation and public forks since the Pubt'c Works Account «w created in IS7O, was L 13.700.000. This iluount has been supplemented by a moiety of t»mp duties, L204,t ; 07, and contributions and KWHfers amounting to L 75.963, showing a oUI of LI L 010.620. The expenditure op to

the revenue for the present year, the results of alterations that might be proposed in the tariff would not be taken into account, bat he would deal with revenue ta be raised under the existing law. From taxation L 1,490,000 was expected, L 1.329,000 of that being from Customs, and L 170.000 from stamps. Under the head of receipts for Bervices rendered, L 1,112,145 was anticipated. These items would make together a tr.fcU of ordinary revenue amounting to 12,602,145. Included in this was L 71.000 from railways, or L 148.000 in excess of the receipts under that head during 1877-8. Making whit was believed to be a moderate estimate, L 1,220,077 was rel down as territorial revenue. From receipts specially applicable, L 230.215 was estimated as receivable. These figures showed an estimated revenue of L 4,062,037, or, including the fees payable to loctl bodies, estimated at L 200.000, a total of L 4.262.037. Add the balance of the surplus of last year, L 20,468, and the whole estimated receipts for the year were L 4,252,505; and deducting the estimated expenditure, L 4,193,500, there would be a surplus of L 88.006, available to meet supplementary Tates or contingent expenditure. The public works account and the public trusts were next briefly referred to, and the Treasurer then spoke of THE PROGRESS OF THE COLOST. The most gratifying feature, he said, is the remarkable increase of exports for the year ending December, 1577, which stand at L 6,327,472, against L 5.673.465 in the previous year—an increase of L 654,007. The import?, unnaturally influenced in 1874 to ntm-ards of JiS,OOO,OOO, have fallen to L 5,973,418, indicating probably a more healthy condition. The quantity of wool exported in the calendar year 1877, exceeded that of the preceding year by about four and a half million pounds weight, the value showing an increase of L 263,122. Tha value of gold exported in the past financial year was L 1,475,669, against L 1,407,247 in the previous year; the increase being L 60,422. The export of grain slightly declined in the year ending December, 1877, the return being L 290.415, against L 344.142 in 1576. The hon. gentleman proceeded as follows: — REFORM OF THE TARIFF. I have now to state the proposals we intend to make respecting the tariff. Sir, every observer of the effect of the system of ad valorem duties which was applied to a multitude of articles in 1873 has been led to condemn it It is a remarkable fact that the revenue derived from these duties has shown no increase in the returns of last year, standing at the amount derived in the year when the change took place. Allowing for the portion of the year during which the measurement system prevailed, I have had returns compiled to enable the Committee to see at a glance the non-progressive character, notwithstanding the unprecedented prosperity of the Colony of the revenue collected under the ad valorem system. A comparison wil! demonstrate the position. In the year ending June 1575, during tbe whole of which the ten per cent ad valorem duties were in force, the revenue derived from this source was L36M.555. For the year ending June 1375, the revenue from the same duties was ottly L 330.770, a fulling off of L33 ; 758. During the same period all the other great items of revenue showed a large increase, presenting a remarkable contrast to those subject to the «(/ valorem system. The d"ty_ on tea, for instance, increased in the same time from, in round number*. LGS.OOO to LSO.OOO ; on sugar, from L 114.080 to L 131,000 ; and on goads by weight, from L 63.000 to L 77,000. We may. or may not, accept the theory th.it these different results are to he only accounted for by a larce proportion of fraudulent entries at the Custom Home for which the a<l rnhvci system gives superior facility; but the figures I have stated of themselves point to the necessity for reform, and justify the Govenimeut in proposing a change, even though necessarily incomplete in the present session. The object we have in view is to change the <vl rafnnm in to .specific duties, but we cannot, with the ilata and time at our command, do more than make a beginning this year. It is not part of onr proposals to increase the total revenue, but to make the specific duty yield as uear as possible the amount derived under the ad ra'trrr-m.. The following are the articles on which the change* will take place.—WVo!paeks. corns ti.k.«, tloiir hags, i':ir'>.m.ite of soda, cream of tartar, tart-iric :icM. fish (potted and preserved), jr.ms, b ttled fruits, mustard, pi'-ktes, sauces, starch and blue, !?ad pioir.-', naphtha, mils, wrapping paper, and paper hues. w:i- formerly »n_the free ii-t. b-ii we have indu-ie-l it l> reait-e of its .ti'>i; to oth-r .tn'ia'!•■ r i'. : ;-l-'s. The t-.t..i v.-ve;iue rec-ive.l fro-i r., s.. articles !:,,:t ye -r v..,; !.-j:;.-J'.'l. reel w- a ■.:.'■ •■ipir- about the same -. . oimt under sp.-i.jii-: dnt ; -s. To complete the li-*-. we t. . '■,.■ '.■; ie ..0.,t! ..ed shov, rh» revenue fr'm who;. ! ~; ;-,,;.;■ «-.i-. and ■r.WATioy. f;• -.v; .v-p.u.i -h .v- .p: ■- i '. of t:i.v-;-.-.n. Ti.l£.e;s-> i .is decid-d, ;.tni tie country Las eu- ■ hr-d, the d-ci-io-j th.it oar taxa-.ion !>■ .-a--; ivifh urn-quat pressure <-n different cl.i-ses 'f f'e ro.Tne--.itv, an-i that the t.he.e his :;rri>-,.d whr-n v.- sh-edd a idr-s ..u-se!v-s to the ra>k of i-..i Iju-titi- tiie i>:r.!eii whHi the C;>:.>"V is e.ilied ui'-n to siist dn. In one re-:>?•-■' the tfm- for r.eiorr.plishi:.,,' this object i.-.i-.M h:»r.:tv lie More favourahle thin it U at this rnooi'r.t. It is in periods ( .f prosperity v/e are fr-'i.-!: t-> i-on-i.ier what, in of tax iti.-r.. i% ji;st as we!! ns what is . x;>edieiit, and wiiei. i-h.-ii;-; s c;\.i !>' »-tt eted with !*a-t an; rehension of !inf:iv..iir:r.blrt re-tiLs. The col-'iii::!.'s.-ttion of Ehe huel reveou* has p!a red in the ha:ids of the (Jovernruei.t and t!ie_ _Him..c a powerful reserve force capable of immediate ext -nsion in emergencies ; hut we m:tst also re cog: isH that it is •* force which may be easily a'.V.sed. The GoVrnimirtt accept the p-isition that this great source of income should not possess entirely the character of ordinary revenue, or be dealt with as if it were a fountain never to be exhausted. Atticheii to the revenue from the land sdes. there are obligations wl.dch we cannot over look. In the changes we intend to propose it mijjbt bt comparatively easy to remit a number of taxes which are either oppressive orirksome, making good the loss to the Exchequer by increasing the hind sales, but the unwMoni of thus diVripating onr _ capital without regard to the primary interests of beneficial occupation, would be at once apparent. We assume then. Sir, that the Land Fund was not coionialised in order to supply deficiencies in tha ordinary revenue, or to prevent a reconsideration of the question of taxation. If this view of the character of J;he Land Revenue be generally entertained, we shall be able to approach the question of a change in the incidence of taxation with our minds free from consideration about the probable amount likely to be derived from that source in the future. Exceptionally favoured years in re spect of land sales will mean simply that a targe auxiliary aid to the prosjeutionof public works will be forthco-ning. With this distinction between laud and general revenue understood, I may at once state that we do not see our way, even were it desirable, to_ propose large remission without, at the ssme time, providing a means of compensating the revenue. Ou this point I will have something more to say as I proceed to develop our proposals, and I •hall refer now to the reductions. It often follows that if the remission of Customs duties are gradually and judiciously made, the consumer is relieved, while the revenue soon recovers itself. This experience, however, does not apply to total remission ; but I would point out that the revenue derives less benefit from a great number of trifling duties than trade t, istains injury";by their irrpoait'or. Having brie&ya llnded to theprinciples on which we have proceeded, the Committee will be prepared to hear onr proposals. We propose then to abolish altogether certain Customs duties which either fall on the life or clog the wheels of more complex and costly collection. The list the duty on grain, the duty on floor, ■Minna and fl<)^^^^^^^^^^^^^^H ■K^^2t,L2o6^^^^^^^^^H

special consideration. A reduction of duty in the first place might possibljr tend to prevent or retard the cultivation of sugar in tha Colony. To whatever extent it would in this way operate it now offers prospective protection. The benefit in thus encouraging the establishment of the industry is perhaps more hypothetical than real, for it is probable that in but_ few instances is the amount of protective duty to be placed in comparison with the climate, the price of labour, and the circumstances in determining the success of such an industry. Whether this will ever be a sugar growing country or not, it is likely to have an increasing commercial intercourse with those countries which can produce sugar under the most favourable influences, and the exchange of productions with _ them will be stimulated by the invitation to reciprocity which we hold out by the reduction in our import duties. The reduction in the price of sugar would probably largely influence tho success of the fruit preserving industry which at present exists, and will become important if our manufacturers are able to compete with those of other countries. I should not omit mentioning that a reduction of duty would be a direct relief to the beer drinkers and the brewers, whose responsibility to the Treasury I shall refer to presently. But, Sir, sugar is one of the common commodities of life, an article of food necessary to the comfort and happiness of all, and the Government have had no difficulty in deciding as to what should be done in this matter. The duty on sugar is now a penny per lb, and we propose to reduce it to a halfpenny. The estimated revenue from sugar this year is L 137.000, and the relief to consumers under our proposal will be L 68,500. We estimate the increased consumption will reduce somewhat the low to the revenue on this item, but the effect will probably not be great during the present year. WINE. The duty on Australian wine also we propose to revise. Before the year 1873 memoranda were sent, some from this Colony to the Secretary of State, urging the right of our Legislature to establish differential duties on articles the product of the Australian Colonies. Honourable members will recollect that the question wa3 urged with more than usual energy, indicating that the matter was thought to be one of some importance to the Colony. The result of the correspondence wis that in 1873 the Imperial Legislature passed the Australian Colonies Duties Act, which enabled any or all of the Australian Colonies to establish with each other and with New Zealand differential duties applicable to thennatural productions; but, strange to say, no action up to the present has been taken by this Colony to give effect to a _ system about which at one time it displayed unusual earnestness. Yet it has appeared to the Government that the reasons for a reduction of the duty on Australian wine are as strong to-day as they appeared in 1871. The quantity of Australian wine imported into tha Colony in the year 1877 was 12,075 gallons, yieldiug in duty, at 4s a gallon, L 2415. _ The amount of the duty is almost prohibitive, and it 3 reduction on this article would, from the stimulus given to increased consumption, probably not entail a loss to the revenue. We propose this year to reduce the duty to 2s a gallon, estimating the same amount of revenue as when the duty stood at the higher rate. The Government are not without hope that the reduction of duty on Australian wine will tend to promote a spirit; of reciprocity in the sister colonies towards New Zealand, and that some of the duties! which prevent the development; of trade, ar.d limit the export of our productions thither, will be reduced or abolished. We believe that will be the c:ise at least with New South Wales, whose Po.stm wter-General recently paid a visit to our shores, and whose de&tre to see established a closer commercial alliance and a more friendly intercourse between the tv?o Colonie.s, was earnesfy expressed. I have now to deal briefly with auother article of the same class. If it be tr::e that duties should bear some proportion to value, and that luxuries should be taxed higher than articles of general consumption, the Committee will, I trust, concur in the equal ju-tice of increasing the duty on sparkling wines from -U to tjs a-gallon. This duly is that fixed in nms; of the Australian f'olonies. ami is a reasonable demand on these v.ho will p-.y it. As there is not likely to be a drcline iii the quantity consumed, we expect 1,1300 additional from this source, or a tot.nl revenue hot:! this description of wine of L 4990. 'l'o .-ma up the effect of these changes, we propose to aholish altogether the duties on a -_;r-.-.-: r number of the conveniences and neeess.'iie.s of life, with a Jos.; to tha revenue and a i-.'-in to the consumer of f/H).7"3">. The rerai=->:-t. n: 2-1 a ;.i..--i:id on tea is 1/J5,030, and trie ivid"cri-«:ii'i'i.ue srg.tr duty from 21 to 1A i a :-,;:]:.: —ii! !>■_>:...;'u the consumer to the c.cterit •■: T. ■'.-.'<y\ The re , oi--< ; o R <ii: Australian ••.-!■'.■• i !.l"07, tho .i::iount being recovered r > -':■• •,■»•.••■:!!:■•-' i.i the iner-wsd mns-iiiii-ii'-n. '!':.-; i- •! •.•:.ou:it of :.-i\—.tioi! thus is !.;:r.!oo oi-iu round :■!;•.-,ib L rs. Ll 17,000. As I :-. ~. <':.■ .-.-.-:: .:■ tho Committee, iirariy the ';■■ lilies whi-ri »!■•■ oonsuice-l pvinc-lpaiiy y the ;_'i-.-:.t body of the pconie._ i r . ; ;., s-.-uo oac--, a number of articles ■• ;.: u yiei i h-.r-iiy ai.y i-._-.enuo is struck oil ; ... <-r.':- r.-^a :^'.V:: ''.i'«^ict L of'the relief ._!:■: r-:,. !I ,v r.i....T.r --a their iv.iy to :.:'-rd ii: ■■'■■ ;e-.:--nt y-ar, aud we think l'-e ('oin.- ii.lee will at, once recognise the rii-f has :>n:".i r-;!v. ri with no niggard ;.:>.,.i., :-.i.ii sJ i • c -.»e rave i.-jt passed the bounds of i.ru-i .-iif'e. As the rcnussioiis are ir.t-j;:<led ■ i «!(';■■ ji'.ee from Mie J-t of January, IS7-S, the !..s.-- i'< tli - rev-line in the present financial year will he ah. ut L-iS.OQO. LAND TAX. And now, Sir, I shall ask the attention of the Comr.iittee t-i the proposals we have to mike on the .-uhjet of fresh taxation. The policy of or-enim: up for settlement the lands of the Colony by means of railways, roads, and other works, executed out of loans c .r-.tr.-'cted iii the foreign market, ho.s entailed np-u the Colony a heavy responsibility in the form of interest, which has reached on :■'.". t.tr.i •!- :'.■•>. a sum of about a million and a quarter annually. On tbe other baud, one of the mo-t niarke I "effect* of that policy has been to enhance the value of all property, especially laud, which derives a permanent benefit fr>in the railway system and other means of communication. Ths increase in the value of land is d*.ie to the additious which the population has received by means of assisted immigra tiim in a degree scarcely inferior to that conferred by public works, and as the same cause will continue in existence, a similar result may con fidently be expected. This exemption of this accumulating wealth of land from contributing to the general revenue of the Colony has been condemned by the House as unju3t to those who have been paying on the perishable necessaries of life the principal portion of taxation. We propose, therefore, to extend the taxable basis, with a double object of establishing more firmly tbe finance and credit of the Colony, and of fairly adjusting the fiscal burdens according to the capacity of the different classes to bear themj; and here I may take the opportunity of disclaiming and repudiating the charge which is sometimes made that the Government have in contemplation a class tax. The very contrary is the fact. We hold that the system which we propose to correct has worked unfairly in the past, that it has favoured the escape from taxation of the greater portion of the wealth of the Colony, andhasimpli»nted a strong sense of injustice in the minds of the wages class. The readjustment we hope to effect will tend to efface the inequalities I have referred to, and instead of promoting hostility between classes, will remove the cau>es which have been gradually estranging them. The worst enemies of _ the privileged classes are those who, while crying out against class legislation, are intent on preventing any settlement of the grievance, for the longer the readjustment is delayed the more violent will be the remedy when tbe_ time comes, as come it must, for its application. We believe that no form of wealth is more legitimately called upon to contribute a portion of the public revenue of the Colony than the value of land minus improvements, which I shall call the commodity increases ag^fl^^^^^^^^^| progress dustn^^^^^^^^^^^^^^^^^^^^^^^H

hanced value which labour gives to the land itaelf. A man in making improvements will know that he is not at the same tine swell, ing the exactions of the tax gatherer, bat that the reward of his industry is altogether his own. We propose to follow the precedent of the income tax in England, in exempting values below a certain amount. Every holder will be entitled to claim an exemption to the extent of lioOO on the total value of all his holdings, and no one will be called upon to pay the tax the value of whose property is not more than that sum. The leaseholder, except where the lease is held from the Crown, will have a right to deduct from bis rent at Che time of payment the amount of the tax. The minimum unimproved value of land will be fixed at a pound an acre. The. measure we shall introduce to give effect to these proposals will provide for a system of assessment within each county and municipality, setting forth the improved and unimproved value, and it will empower the local bodies at their option to accept the valuation required under the Rating Act. The Committee will observe that the owners of landed property will not begin to contribute under the tax tmtil two deductions or exemptions of a very material character are made. By the exemption of improvements, the industry of the improvement settler escapes taxation, and by not taxing the first LSOO of unimproved value the settler commencing with small means is left unburdened until in making a start in life he rise 3 above his difficulties, while the class character of the exemptions is destroyed by making it universal. I now come, Sir, to the question of results after having explained the principle and basis on which we propose to proceed. The present local valuations for rating are probably not entitled to the most implicit confidence, but they constitute the only data from which I am able to estimate the value of improved land in the Colony. The annual valuation of Highway and Local Boards this year, is L 2,343,249, and the municipalities 11,467,746, giving a total annual value of L 3,810,999. The highway valuations are incomplete, and the annual valne may, with moderation, be taken at L 4,000,000. This, capitalised at 5 per cent., gives L 70,009,000 as the improved capital value of the real property of the Colony. It may be more, as the valuation seldom reaches the market value, but we accept it as the basis. I deduct for improvements threesixteenths, or 115,000,000 ; and for the exemption of JLSOO, another 115,000,000 ; leaving L 50,000,000 of a taxable value. Under our proposal, the estimate of the amount deducted for exemptions I have taken at what may be considered the minimum, so that the revenue expended and which we think ought to be derived from this source may not prove excessive, or be more than to meet our requirements. The principle being kept in view that in imposing a new tax before all the statistics relating to it can be collected, it is preferable to obtain less not more than the amount of revenue anticipated. We propose that property under this head shall contribute a half-penny in the pound, which, on L 50,000,000, will yield to the revenue a sum of 1104,166, or, in round numbers, say 1100,000. The net gain to the revenue will, however, cot reach that amount by 110,000, the estimated coßt of valuation and collection. The G-overnment believes their proposals on this subject will be received as characterised by fairness and moderation, as founded on a principle just in itself, and so applied as to inflict the least hardship on any class of the community. JOINT STOCK COMPANIES. We propose, Sir, to equalise the burdens of taxation still further by imposing sn income tax on Joint Stock Companies transacting business in the Colony. The first and greatest objection to a general income tax —that of the declaration—does not apply to Companies whose profits require to be published. The capital, moreover, invested in Companies differs from the capital a private individual employs in his business. The first being generally the accumulated savings of the investor, over and above what he requires in his trade or profession. In the credit and prosperity of the Colony these companies directly participate, while many of the shareholders live out of the Colony, and, without effort or responsibility to other forms of t ixation, continue to draw away their profits. We think, Sir, that to impose a tax of 3d in the £ on the net profits of all Joint Stock Companies, registered or trading in the Colony, will not show any want of appreciation of their v?.lne or enterprise, or in the least discourage this form of co-operation, but that, on the contrary, more than a corresponding benefit will lie returned in the prosperity and contentment of the people. A careful estimate of the paidup capital and profits of the companies shows an annua! income of LBOO.OOO, and 3:1 in the £, or 1J per cent., will yield LIO.OOO to the revenue. There is a large proportion of the companies which pay no dividends, and any attempt to tax the paid up capital by means of an increased stamp duty (an alternative plan) would fall with gr»at severity ; but no company showing a net profit for disposal at the end of the year can reasonably object to pny in taxation so small a percentage as 3d in every £ of their income. We have no doubt, Sir, but that the companies will admit we have treated them with consideration, and with a due regard for che important interests involved. BKCIt TAX. I have referred to the relief given to the brev/sis by the remission of one-half the sug:ir diities. The quantity of sugar returned as u-ed in tl>.» bi K'veries of the Olonv in 1876 was 2,271,600!b, yielding in duty 1,9405. Sup posing the same qoautity consumed, the relief to this industry is I ATM. The total duty paid by the brewers under the existing Tariff ou the materials, malt, hops, and sugar, is abjut 2s Sd per hogshtad. If the average value, per hogshead be L 5, the duty paid but f.lightly exceeds 2h per cent., and with the remission on suga-, the duty will be reduced to less than 2 per cent. Now we are able to compare the uosition of the beer drinkers in the Colony with those of the Mother Country, where th<s different taxes on materials and licenses constitute a duty of from 18 to 23 per cent, on the trade prices of beer. If the positioa were reversed the Colonial consumer would have no right to complain, for the wages test would still be in his favour. At present he almost escapes taxation on this article. The amount of dnty paid by the brewers on malt in 1876 was L 2654, and on hops L 4832. Now the importations of malt are declining, L 1593 having only been collected on this head last year, and on hops L 4136. and in a few years it is probable the whole of the malt used will be produce! within the Colony. The production of Colonial hops is also progressing, so that the duty derived from the importation of this article is not likely to be maintained. It will thus be seen that from all but a revenue point of view these facts are satisfactory. Well, sir, we think the bear - drinker will concur in the great moderation of our proposals if we him to contribute a beer tax of l£d a gallon. It may be said that the consumer will not pay the tax at all, but that it will come out of the profits of the brewer or of the reta'ler. It is only in accordance with sound economic doctrines to suppose that all such changes ultimately affect the consumer only, and I do not wish to reason away the conclusion. How then will he stand ? He may certainly save his tax by drinking so much less beer, but as the habit of indulgence is stronger than self-denial, there is no ground to anticipate in that respect an appreciable falling off. tax on beer will tbeii stand at 6£ per cent., in addition to the 2 per cent, at present contributed indirectly on the materials, or a total duty of 8J per cent., a percentage considerably less than one-half the duty received from the same source from the people of England. I estimate the consumption in the Colony at 5,000,000 gallons, though there is some ground for thinking it may be more, but as our statistics are incomplete, I have taken the lowest calculation. This quantity at ljd per gallon would yield a revenue of L 31,250, or say, in round numbers, L 30.000. We propose to allow the brewers a drawback of the duty on all beer exported from the Colony. The mode of collection will be arranged to give the least trouble to the paver of system of sta.mx^jj/m^ttK^^^^^^^^^M

spects incomplete. Nor should it be forgotten that the work of effecting a thorough reform is not to be achieved in a single year. While we think the new taxes proposed will be sufficient with continued progress and the increasing nature of the revenue to yield all that will be demanded fram the same sources, we are not without hope that the state of the revenue at the end of the present financial year will enable us to make still further remissions on the necessaries of life and to proceed yet a considerable distance in reducing the length of the Tariff.Sir,_orki 2 2:3-the" :3 -the principal aims of the Government, since the termination of last Session permitted them to devote attention to the question, has been to render simple and clear the financial position, the magnitude of the public accounts, and to remove unnecessary distinctions and establish others which may appear natural and obvious to bring into a focus and under survey the whole field of Colonial finance. The credit of a British Colony depends as much upon the openness and publicity given to its financial operations, even to their weakness and defects, as upon the traditional honesty and industry of the race. It is at the same time a fortunate circumstance that, looking back over the field, there is nothing to disturb the faith which is reasonably reposed in our continued industrial commercial and financial prosperity. The changes we propose to inaugurate we believe are strongly calculated to accelerate this prosperity, which moves only with certain steps when public right and justice are respected and jealously guarded. To maintain, for instance, those inequalities of taxation which we propose to remedy, would benefit no man who intended to remain and make hi 3 permanent home in the Colony. It would be vain to expect that all interests can be blended in mutual compromise, or to suppose that human nature can be changed, to break down the lines of demarcation between the allies of resistance and the advocates of progress, but we can easily imagine progressiveness arising from the constitutional conflict of both elements, the common object being the welfare of the Colony, and the difference only as to the means by which that object may in the highest degree be obtained. The policy I have the honour to submit on this occasion embraces questions of the largest interest to this Colony. We have proposed to free commerce from unnecessary restrictions, and to relieve it from the ban of a system which offers a premium to dishonesty, by making it difficult of detection. We have given indirect encouragement to industries which are taking root in the Colony, by striking off the duty on articles used in manufacture. Foreign trade will be encouraged by the offer of reciprocity which we advance, with a stipulation leaving it to be determined by the mutual interest ot those concerned. Some luxuries are brought further within the range of taxation. Gn articles of every day consumption, and among the necessaries of life, we have proposed that the duty shall be either altogether remitted or substantially reduced; the accumulation of wealth in the foimof real estateand joint stock capital will be placed for the first time on the same level as tea and sugar, and be made to contribute a fair and not burdensome proportion of the revenue of the Colony. We are convinced, sir, that these proposals, if adopted, will give a fresh impetus to the march of progress in New Zealand, as they will show a country inviting labour as well as capital from all parts of the world by the justice and liberal character of its legislation. It cannot be doubted that the Colony possesses inexhaustible resources ; it is true that nature has bestowed upon it the most lavish gifts, but the bounty of nature must be matched by the beneficencegof our institutions, and of the equity of our public policy. To this end our purpose has been directed, and we ask the Assembly to give it form. The Treasurer concluded by moving—(l) That towards raising the supply granted to HerMajesty,thereshallbe le\iedandeharged on and after the 7th day of August, 187S, on all ale, beer, porter, or other malt liquors brewed or made in New Zealand, an excise duty of per gallon, which duty shall be paid by brewers or other wholesale vendors of beer by means of inland revenue stamps, to be affixed by them or their agents or servants, in such manner as the Commissioner of Customs may direct, on every hogshead, barrel, keg, or other receptacle, in which any ale, beer, or porter, or other malt liquor is contained, when sold or removed from any brewery, cellar, warehouse, or other place in which the same may be made or st ired. 2. That in lieu of the duties of Customs now charged on the undermentioned articles, the following duties of customs shall on and after the seventh day of August, one thousand eight hundred and seventy-eight, be charged on their importation into New Zealand, or on being cleared from any warehouse for Home consumption—viz., Bi-carbonate of soda, 2s per cwt; cream of Tartar, Id per lb; tartaric acid, Id per lb; iish, potted and preserved, Id per lb (or reputed package of that weight) ; sardines, Id [jar half tia ; jams, jellies, and marmalade, Id per lb (or rsputed package of that weight) ; bottled fruit-. Is per dozen ; mustard ,;2d per lb ; pickles, quarts (or reputed packages of that quantity), 2.5 per doz: pickles, pints (do), Is per doz ; sauces, 2 s per doz (reputed pints, and so in proportion per doz of greater or less reputed quantities) ; starch, 4s per cwt ; blue, Id per lb ; lead and composition piping, 2~ per cwt: nail-;, 2i do; wrapping paper, brown, 2s do ; do other kinds, 3-i do ; paper bags, (is do ; woolpacks, 2s Gd per doz:-u ; corn-jacks, 91 do do ; flour bags, 3d do do : boots and shoes, men's No. G .and upwards, 12s do ; youth.?', N s. 2 to 5, 10.-: do do j boys', Nos. 7 to 1, (>s do do ; women's, Nos. 3 and upwards. 8s do ; gins', Nos. 11 to 2, 7s 6d ; girls', Nos. 7 to 10, us ; children's, Nos. oto G, 3s; women's Listing and stuff boots, S3; goloshes of all kinds, 2s Gl; slippers, men's, women's, and children's, No. 7 upwards, 5s ; wines, sparkling, Gs per gallon. The resolutions were agreed to, and the House adjourned at 9 15.