FINANCIAL STATEMENT.

Patea Mail, Volume V, Issue 478, 22 November 1879, Page 2

FINANCIAL STATEMENT.

In his Financial Statement on Monday last, the Hon the Colonial Treasurer (Major Atkinson), referred as follows to the proposed Property Tax sr—“ No taxation is pleasant* and a new' Tax is especially unpalatable, the more so, if direct in its form ; but it will, I think, be generally admitted that we nave now reached a stage at which a property tax in some shape is unavoidable. The principle of land tax has already .been affirmed by this House, and there-is much to belaid for the policy of specially taxing unused land held for speculative purposes, if it were practicable I should certainly' advocate the special taxation of unused land ; but in my opinion it is not practicable, and taking the ordinary holdings of improved land I am unable to see Upon what principle of justice or expediency it is held that this is the only fonn’of property which should be taxed. Why, I should like to know, should the farm of the hard-Working pioneer settler or the frontage of the struggling city tradesman be taxed, while bank shares, mortgages, and other such sources of wealth escape taxation. There is much to be said in favor of the pro-perty-tax upon the -.-American model, excluding incomes, ana thereby affirming the principle that realized wealth, in whatever form, shall bear its fair share of the burdens of the Slate. The Government, after careful consideration, have come to the conclusion that an income-tax is not applicable to the existing circumstances of the colony, It is inquisitorial, and unavoidably open to great inequalities, The machinery, too, for levying such a tax must be elaborate and expensive, and far out of proportion to the revenue to be derived from it. For .these reasons, and many others with which I will not now trouble the committee,,'but which can bo fully discussed upon the second reading of the Property-tax Bill, the Government have, as I have said, decided riot to include incomes in the tax. The Government will ask Parliament to merge the land tax in the properly-tax, which wo intend to introduce—thus including land in the same category as all other proper ty, making it equally, but not specially, liable to general taxation. Parliament has already approved of this principle, by directing, in the ensa of intestate estates, that real, shall be treated as personal property for the purposes of succession, and for taxation on succession. It would hardly be convenient that I should upon the present occasion discuss tire policy of a land tax, but the committee will perhaps permit me to say

a few words upon the subject, as it is one of great importance* The land tax was, I presume, imposed either—first, for the purpose of revenue ; second, to check the growth of large landed estates ; third, to prevent land being held for speculative purposes ; or fourth, for all three reasons together. With regard to the first, I would say, that as we have some twentysix millions of acres of land for sale, some five millions of which are classed as agricultural land, and as the one object which vve all desire most is the settlement of people upon the land, it is surely unwise and will tend to defeat the object wo have in view, if we impose special burdens for revenue purposes upon capital invested in land. 1 would ask, upon the second and third reasons, What justice or wisdom is there in specially taxing that class whose growth is inimical to the advancement of the colony, in order to prevent a probable abuse in the acquisition of large quantities of land, or unfair profits by a few individuals ; and in reply to the fourth reason I would say such a conclusion is unjustifiable when it results in the special taxation of a class posessing no privileges. I entirely disapprove of land being held for speculative purposes in large blocks to the injury of settlement. I desire to

see the country in the possession of a population cultivating their own freeholds, and the legislation proposed by the Government is conceived in this spirit. That there are some large estates which I should be glad to see occupied by small freeholders is true ; but, I have satisfied myself that the tendency is towards disintegration rather than accumulation of large properties, and that speculation in land to an injurious extent does not exist in such a form as to be removable by legislation, and most certainly will not be remedied by a laud tax on all land. It is a very significant fact that in hardly any country in the world is the proportion of properties to the population so great as in New Zealand. I may state, for instance, that in France, which is usually cited as a favorable instance of the subdivision of land, the propoition is X property to 7 decimal 1 people ; in Belgium, where land is probably more subdivided than in any other European country, the proportion is 1 property to 4 decimal 71 people, while in New Zealand there is 1 property to 5 people ; and when it is remembered that 90,000 persons, out of a total population of 414,000 have been brought ouf as assisted or free immigrants within the last few years, ourcase appears much stronger. This is no reason for relaxing our endeavours to improve our land laws in the direction of encouraging settlement, but it should, I think, reassure those who think that the tendency of past legislation has been to'favour the acquisition of large properties. I say, iirisa great satisfaction

to know that so large a proportion of our population has a direct interest in the soil of the country, and to this fact may in a great measure be attributed, I think, the rapid advancement of the colony, and the general prosperity of the people. The principle of the American property-tax is to tax everything a man possesses, including his income, after deducting all his outstanding liabilities. The proposal of the Government is to tax all property, whether real or personal, that a man possesses, after deducting in each case .bis just debts, and also a sum of £3OO as exemption from taxation, but, as I have said before, exclude all incomes. It is very difficult with the data at my command, to estimate accurately what such a tax will produce. We know, however, that the valuation under the Land-tax Act gives .£99,500,000 as the" improved value of real property. It is estimated that the total valueoorf r personal property is £118,200,000; deducting from this £5,000,000, on account of the £3ooexemptions, we get£113,200,000 as the net taxable amount, so far as. can now be estimated. I give this estimate with some diffidence, but 1 think I have rather under than over stated the sum which will be subject to taxation. Taking therefore £113,200,000 as the sum liable to taxation,

this, at once penny in the pound, the amount the Government propose to ask for, will give Ji470,000 as the product of the property tax." The Hon. Treasurer summarised his proposals as follows :—To be realised by property tax, L 470,000 ; by Customs, L 300,000 5 by stamps, L 16,000, making a gross increase total revenue of L 786.000, from which, however, must be deducted the remission stated above, amounting to L2G,000, together with the land tax, L147,3UJ, which it is proposed to merge in the general property-tax next year, thus giving a net increase of L 618,700. Honorable members will observe that I have not taken credit for any saving for interest of the Sinking Fund, which may be released by inscription of stock. We may obtain some relief from this source during next

year, but the uncertainly of this is so great that it would not be prudent to calculate upon it. I hope, however, when such relief comes, we shall be enabled to consideraby reduce taxation ; and, as I have said lelore, I think we may loox for this relief at an early date. It is proposed, then, by these means to raise L 618,700 additional revenue. If this be added to the revenue from present sources, estimated to amount, exclusive of the land sales, to L 2,945,900, we get L 3,564,600 as the total revenue for the year. The estimated expenditure I have taken as probably L 3,489,949, and if we deduct this sum from the revenue, we arrive at an estimated surplus of L 74,651. From these figures I think honorable members will see that the proposals of the Government, if they should meet with the approval of the House, will, without any reasonable doubt, equalise our expenditure and income. The Major thus referred to the Tariff:— The Government propose to appoint a Koyal Commission during the recess to examine .and report upon the whole subject of the best mode of fostering and promoting local industries. In the meantime the Government propose to admit many articles duty free, so as to assist local manufacturers as much as possible. Before making any remarks with respect to the articles upon which new or increased duty is to be charged, it will better to say a few words upon a question which has been much discussed—the duties upon tea and sugar. Upon these articles we dp not propose to reiinpose the duties remitted last year, but it may be necessary to reimpose them next year upon n general revision of taxation. The articles upon which we propose to increase or impose duties are ; —Almonds and nuts, chaff, corks, dried fruits, fresh fruit cither than oranges and lemons, Window glass, grain and flower, malt, split peas, hops, iron fencing, tanks, matches and vestas, preserved milk,) nails, peiTumerey, patent medicines, timber, salt, stearino, spirits, tobacco and cigars, wine, and all goods

at present charged with ad valorem duty. The total amount they are estimated to produce is about £300,000. We propose to reimpose the duties on timber and grain. We think experience has shown that their repeal has very injuriously affected the local shipping trade, and also the timber industry, which was a growing and important one, and which we are certainly not justified in seriously crippling without some compensating advantage to the State, but which we altogether fail to see lias followed the repeal of these duties. We propose to increase the duties on spirits and on tobacco. With regard to spirits, we shall ask for an increased duty of 2s per gallon, granting at the same time an allowance for such as are under proof the same as is now charged upon spirits over proof. This mode of levying the duty is, I believe, the custom in almost every other country. To make up the loss to the revenue which will result from this allowance for spirits under proof will require an addition of at least 6d. per gallon, so that the proposed increase is really only Is. fid. per gallon, or in the whole £47,000 ; giving a total on spirit, wine,&c„ of £56,000. We propose to increase the tobacco duty by Is per pound, and to authorise its manufacture in bond, granting as an encouragement to its local manufacture a bonus, for the nest two years only, of fid. in the pound upon the quantity of tobacco manufactured and duty paid in the Colony. The increase on this item is estimated at £50,000. From spirits, wines, &c., and tobacco, including cigars and snuff, I hope to obtain, £106,000. It is proposed to remit the duties on carriage makers’ and saddlers’ ironmongery, carriage makers’ leather, buggy shafts, bent carriage timber, hickory, hatters’materials, fine wire for brush making, sheet zinc, plain galvanised sheet-iron, sulphate of soda, almonds — such as are used in confectionery, phosphorous, and oil of rhodium. These remissions amount to £15,000 ; and it is hoped that, with these alterations, and, by the aid of further reductions which are in contemplation, local industries will be placed in a more advantageous position than at present. The Government also propose to abolish all light dues for vessels employed in the coasting trade. This, it is also hoped will give material assistance to that important branch of our industries, the local shipping trade. The loss to the revenue by this remission will be £SOOO. Stamp duties might be increased in several cases,

but looking to the fact that these duties are levied mainly on transfers of property, and that it is proposed to put a special tax on property, the Government have determined not to ask for any increase of the stamp duties except those upon successions, Referring to the manner in which the deficiency for the current year would be made up, the Hon. Treasurer said :—The question of the advisability of changing the time when the financial year shall end has been raised from time to time in Parliament, but for various reasons has never yet been favourably entertained. The Government have come to the conclusion that the change might now be effected with advantage to the public service, and with the general approval of honorable members. I shall therefore propose that the financial year shall for the future end on the 31st March. The first and obvious advantage that will follow the change is, that it will shorten the period during which our present estimated disparity exists between income and expenditure, and will enable us to begin a new financial year by the time our increased taxation has come fairly into force. The period of year, too, when Parliament will meet namely, about the middle of May 1 , will, 1 have reason to believe, better suit the convenience of hon, members than the time at which the House is now sitting. I have already stated that

the deficiency for the year will probably be L 951,002, but should the House sanction the proposed change in the financial year, our current financial period will terminate on the 31st March next, and the deficiency to be immediately provided against will be proportionately diminished. I estimate the expenditure for the nine months will be L 3,110,262, and the revenue for the same period, including the receipts from the new taxation, will beL2,445,200, leaving a deficit of L 665,062, to wnich I add the deficit of L 131.824 at the close of last year, and arrive at L 796,886 as the amount of deficiency to be provided for. It is now the middle of November; five months therefore of the financial year have practically gone, and we have already issued and absorbed deficiency bills to the amount of L 60,000. It is not, in the opinion of the Government, either possible or wise to attempt under our present circumstances, wholly to meet this deficiency by taxation. We are, I hope, about to take a new departure in finance, the proposals of the Government, if given effect to, insuring in the future a state of equilibrium between expenditure and income. But to secure this result, taxation of a very onerous character will have to be imposed. The committee will, I think, agree with me in the opinion that to impose special taxation, for the purpose of the current period, would be impossible. The Government will therefore ask authority to provide by

loan for such deficiency as may bo found to exist on 81st March next. It will include of course, the deficiency bills already issued. To redeem these and to cover the balance, 1 shall ask the House for authority to issue treasury bills. These latter the Government propose to have inscribed as soon as soon as . possible, under the authority of “ The Consolidated Stock Act, 1877.” I make this proposition with great regret, but I think it will be admitted on all sides that it is impossible to do more this year, and that to hamper ourselves continuously with a floating debt of that amount would be impolitic and unwise. I have said that by ending the financial year on the 31st March, it will enable the House to meet about the middle of May, which is, I think, the earliest month that will suit the general convenience of hon. members. I should have proposed to terminate the financial yearin April, as more generally convenient; but doing this would have broken up the quarters as well as the year, thereby rendering comparisons with former years almost impossible. By retaining the quarters unbroken, comparisons can be made without much difficulty. I hope the committee will agree with me in

thinking this a sufficient reason for ending the financial year in the month of March, instead of April. Should the House agree to the proposed change, I shall ask authority to continue the expenditure, during the June quarter, upon the scale of the Estimates voted for this year. This seems to me a better plan than carrying on the Government by means of unauthorised expenditure, and Imprest Supply Bills, upon Estimates which have never been seen by the House. The plan will operate in this way j The financial year ending on the 31st March, the Treasury will have plenty of time to prepare the Estimates and Financial Statement and accounts for the j'ear, in as much detail as may be desired, ready

before the House meets. Immediately, upon the House meeting, votes for the several classes could be taken on account, as in England, and the House would then know for what purpose the money was voted,- aftd the proposed scale of expenditure for the year. I shall also propose that in future cash received within the year shall be the receipts of the year, and the expenditure made within the year shall be the expenditure of the year. The only objection I know to this proposal is that a Government may hold back payments for political purposes, and so make the expenditure appear less in one year, and more in another. I should propose to obviate this by causing each department to send to the Audit Office returns, showing its outstanding liabilities ort the 31st March, within forty days of the end of the year, duly certified by the Under Secretary of each department, and the Atfdit Officer should place the returns before Parliament within ten days of its opening, if it opens after the 10th day of May, and if later, any time that may be within fifty days from the 31st March. My task being nearly done, I have to thank the committee for the kind and patient hearing it has given me, and to say, in conclusion that I am fully sensible of the grave responsibilities resting upon the Government .and the House at the present time. The Government have endeavoured to grasp the financial position of the colony as a whole 5 and our present proposals are submitted us a part of a general scheme. We feel that we should be utterly unworthy of the trust reposed in us, if we had only resorted to temporary expedients at such a crisis. The time for temporary measures has passed away. We have endeavoured to go to the root of the matter, and at once, by a resort of fresh taxation and other important reforms, to place our finance on what we believe to be a sound and enduring basis. The imposition of fresh taxation to sub an extent as I have proposed to-night, and at such a time as this, can only be justified by the necessities of the case. The position is one which

admits of hesitation. We might attempt to extricate ourselves from a present difficulty by forcing the sale of land at a price, and upon terras, which would involve laige sacrifices in the future settlements of the colony. Both our credit and our capital would ultimately suffer by such a course, even if it were temporarily successful. On the other hand, by the adoption of our proposals for increased taxation, for placing the bulk of the taxation upon those most able to bear it, and for entering on a course of careful administration, we shall permanently strengthen the one and conserve the other. We make these proposals with a firm belief in the ample resources and rallying power of the colony, and in the entire confidence that the good sense of the colonists will prefer present self-denial to any sacrifice of the permanent interests of the country. In, whatever way our plans may be dealt With, this at any rate is certain, that the colony will be satisfied with no temporary expedients, will submit to no makeshifts, but will insist upon our finances being placed on a well-defined, solid, and lasting foundation. The Colonial Treasurer concluded by moving the following resolutions:—l. That in lieu of the duties of.Customs now charged on the undermentioned articles, the following duties of Customs should, on and after the 18th daj' of November,

1879, be charged thereon on importation into New Zealand—or on being cleared from any warehouse for home consumption—namely, almonds in the shell and nuts of all kinds, except coconuts, 2d per lb ; chaff, 10s per ton ; corks, bottling, 15s pur cwt. ad valorem. Fruits, dried, 2d per lb ; fruits, fresh, other than oranges, lenions, bananas, and pine apples, 15 per cent, ad valorem ;■ glass, crown sheet and common window 2s per 100 feet superficial ; grain and pulse of every kind not otherwise enumerated, 9d per hundred lbs ; grain, when ground or in way manufactured, Is per 1001 bs ; malt, 2s per bushel ; peas, split, la per cwt; hops, 3d per lb ; iron, fencing wire, staples, and standards, 20s per ton; iron galvanised, corrugated sheets, guttering, ridging and spouting, washers, screws, nails, and wire netting, 40s per ton f iron tanks, 6s each. Matches of all kinds, 25 per cent, ad valorem ; milk, preserved, 15 per cent, ad valorem ; nails, 3s per cwt; perfumery and toilet preparations not otherwise enumerated, *25 per cent, ad valorem ; proprietary medicines, commonly called patent medicines, or any medicine or preparation of which the recipe is kept secret, recommended by advertisement, bill, or label, for the relief of any disorder or ailment, 25 per cent .ad valorem ; timber, sawn, rouglq 2s per hundred feet superficial ; timber, sawi; and dressed, 4s per, hundred feet superficial; timber, shingles and laths, 2s per thousand ; .timber, palings, 2s per hundred ; timber, posts, 8s per hundred - f timber rails, 4s per hundred ; salt, 20s per ton; spirits or strong waters not being sweetened or mixed with any article so that the degree of strength thereof cannot be ascertained by Sykess hydrometer, -fortevery gallon of the strength of proof by such hydrometer, and so in proportion for any other or less strength than the strength of proof, and for any greater or less quantity than a gallon, 14s per proof gallon spirits ; other spirits being sweetened or mixed so that the degree of strength cannot ba ascertained as aforesaid, 13s per gallon; spirits, liquors, and cordials, 14s per gallon ; perfumed spirits and Cologne water, 21s per gallon • stearine, Id per lb f tobaccos,3s 6d per lb ; cigars and cigarettes, Gs per lb ; wines, other than sparkling and Australian, 5s per gallon. All articles not otherwise enumerated, which are now chargeable with duty at 10 per cent, ad valorem , 15 per cent, ad valorem. 2nd. That the duties of Customs chargeable upon the goods, wares, and merchandise hereinafter mentioned, imported into New Zealand, shall cease and determine—namely, almonds, barbary, bitter, and other for confectionery ; bolts and nuts, cairingebolts and nuts, tire bolts, Shackles, holders, and othcriron fittings forcarriages, morocco, roan, japanned, and enamelled leather, and tanned and dressed seal-skins and goatskins, buggy-shafts, bent wheel-rims, and other bent carriage timber, hickory unwrought, hatters’ galloon and hatters’ calicoes, fine iron, brass, and copper wire, for use in brush-making ; phosphorus and oil of rhodium, sulphate of soda, saddles, ironmongery, grindery, sheet zinc, plain sheet galvanised iron.