TAXATION AND POVERTY

Sun (Auckland), Volume I, Issue 124, 16 August 1927, Page 8

TAXATION AND POVERTY

Sir. — The root cause of poverty is bound up in the evil of taxation; then why not abolish taxation? Apart from the war. there is, and never has been in the history of New Zealand, any necessity to impose taxes or rates of any kind whatever. It is even arguable whether our war charges could not have been met without the levying of taxes. Had this Dominion, ab initio, refused to sell any land outright, but, instead, disposed of land subject to the payment to the State of the full economic rental, the country could have paid its way on this revenue alone. Rent, paid to the State, is not a tax. The definition of a tax has been well expressed as the taking of wealth from the owner. Rent, on the contrary, is the taking of wealth by the owner. In the one case “owner■sliip” is implied as vesting in the payer; in the other case it vests in the payee. Had the system I advocate been always in operation, what would be the position to-day? The latest figures give the valuation of the land of the Dominion as £339,000,000. This, however, is not the full, or economic, value, but the depreciated value subject to present land taxes and rates (on land). To get the full economic value

the land taxes and rates must be capitalised. If this is done the total unimproved value of the land of New Zealand will be found to be over £442,000,000, and the rental on a 5 per cent, basis over £22.000,000. This rental is, therefore, a little more than sufficient to replace the tax and rate revenue of the Dominion, which, together, amount to £21,647,380. What would be the effect of the chance? Users of land (which means everyone living in New Zealand) under present conditions pay (1) rent in some shape or form, (2) taxes and rates, equal to another rent, and under our “protective” policy (3) a surcharge in higher prices for the benefit of specially privileged industries. Under the system I suggest the only payment would be No. 1 (paid to the State). Just how this reform would abolish poverty (except in the case of those who prefer to be poor) would take up too much space in this letter, but that the combined effect of relief from taxation together with the freeing of land to production (which would result), would operate in this way is not, and cannot, be denied by economists, chough few of them are willing to admit it. The change cannot be made in a day, but we should set our faces toward the goal by gradually increasing the land values tax and using the resultant revenue to reduce and finally abolish all rates and taxes. LAND ECONOMICS.