Taxation.

South Canterbury Times, Issue 7076, 23 February 1893, Page 2

Taxation.

(.'Evening Post ) The successful collection of the income tax has removed all doubts as to the sufficiency of' the now taxation to maintain the credit of the colony. The incidence of the taxation has been materially changed, but the gross product remains sufficient to defray the charges heretofore provided for by the property tax. This is so far satisfactory that it allays the fears, which were not altogether unreasonably entertained when—somewhat rashly, as a good many people thought—the change was made. The new taxation undoubtedly reaches a very large class of persons who escaped under the property tax. This is more particularly the case with the income tax than with the land tax. The effect of the latter would appear to have been, aa was intended, to rather readjust the taxation amongst those subject to it than to bring in any large new class of taxpayers, Small holders of property in land have to a certain extent been relieved, and large holders have had their contributions materially increased We are by no means inclined to object to this readjustment so far as its principle is concerned, but in regard to the tax upon improvements and the exemptions, muob still remains to be dona to fairly adjust the burthen amongst nil who should bear it. Such readjustment is, however, perhaps more urgently necessary in respect to the Income Tax than the Land Tax. The Income Tax has brought in as direct contributors to the revenue a very large class of persons who previously escaped taxation in a direct form. With these, of course, the new tax is not popular, but its unpopularity is enhanced fay the discovery that the incidence of the now tax is decidedly inequitable •in many respects, and that a very large number of persons who should be affected by it pass untouched. We do not taean specially to refer to the not inconsiderable number of persons who have probably “ dodged ” the Commissioner of Taxes by tile returns as to their income. It is probably within the know ledge of most of those who hare paid the tax that there are a good many with incomes as large as their own who, in pome way or other, have escaped paying it. This is a matter for the Commissioner to look to. The alterations we think should ba made are within the functions only of Parliament. The tax is imposed on the admission of the principle that an income sufficient to supply the necessaries of life should bo allowed to every man free of taxation. The exemption is £3OO per annum. This is probably a very liberal, if not an excessive, estimate of the coat of living. Wo see no reason why a much lower exemption should not bo fixed, and a much larger number of parsons consequently be rendered amenable to taxation upon their incomes, but in that case the exemption should not be limited to the individual paying the tar. Exemption should also be allowed for every person dependent upon the taxpayer for support. The inequitable incidence of the present tax is shown if the position of a bachelor with a salary of £4OO a year is compared with that of th* head of a family, say of six, drawing a similar salary. The man who has only himself to support is allowed precisely the same exemption from taxation as the man who has six others to support. There is no equality of sacrifice in the two cases. The single man pays out of his superfluity, the married man has probably to deny biaunlf or his family soma reasonable indulgence in order to meet the demands of the Inx gatherer. To be a just and fair lax the exemption should apply to every adult or child not earning his or Iher own living, and dependent on the tax payer for the means of livelihood. The inequality of the present direct taxation be. comes more striking when it is remem- [ berod how much more largely the married ) man with a family is required to contribute to the revenue through the Custom-house than the bachelor who has only himself to provide for. Were the general exemption to bo reduced, but made applicable to all the members of tbe payer’s family as well as to himself, the same total revenue could probably be collected, but it would be gathered from a much larger number of taxpayers, and would in every way be a more just tax. Consideration of the practical operation of the new taxation suggests many other points susceptible of improvement, but, we will venture only to refer to one. It is fairly open to doubt whether the total repeal of the Property Tax was quite judicious. A very large amount of realised wealth which was very properly subject to taxation under the old system escapes altogether under the new. Tbe man who, reserving a sufficient income to live upon, invests bis remaining wealth in jewels, books, hofses, and carriages, costly furniture, valuable pictures, &0., pays nothing on the superfluity of wealth which he enjoys, although he does not make it contributory to his income. We do not see any element of justice in this. The objectian to the proueriy tax was that it checked and punished industrial enterprise. Merchants, manufacturers, farmers, oil the dosses who invested capifal in commercial or industrial pursuits, ! were tax-d upon their capital, whether the i investment proved remunerative or not. This was clearly wrong and impolitic. It is pleasant to know that such a system no longer obtains; but tbe property tax also touched those who invested their capital in the luxurious superfluities of life. These now escape altogether, and we can see no equitable or sound reason why they should do so. If luxuries were taxed, as they ought to be, it might be possible to materially reduce the taxation on tbe necessaries of life. There is still room for great improvement in our system of taxation, so as to render it more just and equal to all. In some respects the new taxation exhibits a considerable advance, in others a retrogression. The taxation is sufficient, but it needs much more careful adjustment amongst the people before it can ba regarded as approaching the ideal of taxation—a system exacting from all equality of sacrifice in their contributions to the necessities of the State, of which they are units, and which affords them its protection.