War on the Squatter

Sun (Auckland), Volume III, Issue 744, 17 August 1929, Page 12

War on the Squatter

EFFECTS OF THE SUPER-TAX A Retrospect and the Moral (Written for THE SUX) MEMBERSHIP of the landed aristocracv is always expen.sive. Not only is there a social position to maintain at great cost, but the possession of an estate distinguishes a man from his fellows to the extent of making him a favourite target for all the political Dick Turpins who buy popularity by devising schemes for taking from the rich to give to the poor.

Communism springs from the Marxist doctrine that the possession of property is evidence of theft, and anyone who can convince himself of this is a ready recruit to the crusading army whose mission it is to restore the stolen goods to their rightful owners.

The doctrine itself is a poisonous fallacy, and belief in it engenders class war, hatred and industrial turmoil, where there should be understanding and co-operation for mutual interests and material advancement. But without subscribing to anything so extreme as the views of Marx on the subject of property, many persons whose possessions are not in danger at present, are singularly apathetic when a Government proposes to expropriate landowners. The cries of the victims fall on deaf ears. This is quite ■wrong, because if a Government is allowed to perpetrate a flagrant injustice in respect of one section of the community, no other section is really safe; it merely becomes an interesting speculation as to whose turn it will be next. A DUAL-PURPOSE TAX

There is always trouble when 1 a Finance Minister tries to kill two birds with one stone. In the present instance he proposes legislation which is designed to raise revenue for immediate purposes, and effect an economic reform, viz., the subdivision of landed properties to increase the volume of agricultural production- The two things should be dealt with separately; they cannot be combined without inflicting harsh injustice on individuals who have done nothing to deserve it, and whose only crime is the possession of land which as often as not yields a very poor return on Its capital cost. To understand the position it is necessary to dip into Jiistory. Half a century ago land nationalisation was a popular panacea for the unsatisfactory economic conditions under which the masses lived. Writers like A. R. Wallace and others talked plausibly of the evils of private ownership in land, and wanted to see it restored to the community. In the older countries of the world most of the land was held by old families, and expropriation presented serious difficulties; it could be acquired by purchase, which was impracticable, as no Government could finance the operation, or it could be taken by force, which would have provoked a civil war. Ingenious minds, however, devised a third expedient just as immoral as the second, but lacking its straightforwardness. Briefly, it was a tax on rent. Let the landowner keep his land, even if he stole it in the first place, but take and continue taking the rent for the purpose of the State till the people had the kernel and the landowner was left with the husk. The scheme instantly caught od, partly because many English, Scottish and Irish landowners were a callous, ignorant breed, who, instead of regarding the ownership of an estate as a trust to be administered in the interests of all dependent on it, preferred to rack rent their tenants and dissipate the proceeds on their own selfish pleasures. APPLIED SINGLE TAX In North America and Australia vast tracts of virgin land were being grabbed by the first comers, and those who followed found it difficult to get a piece for themselves. It Is not surprising, therefore, that a plan to make the landowner pay, by valuing his land and levying an annual charge on it, soon had plenty of supporters. No one contributed more to the dissemination of the idea than Henry George, the apostle of the Single Tax. He was a compositor, working at his trade in California, and in the old days of hand composition on newspapers which preceded the invention of the linotype, every other comp, w-as a politician of sorts or a bush lawyer, and frequently held extreme views. The more Henry George dwelt on the idea, the more it fascinated him. Here was a quick solution to the economic problem of the ages. He wrote books on it, travelled all over America lecturing and spreading the Single Tax propaganda. It was all so beautifully simple. Abolish ail taxes save one on the rent of land—customs and excise, death duties, luxury taxes —let them all go. The land would provide enough and to spare for everyone. Looking at the conditions which prevailed on the North American continent 50 years ago, with a population smaller than England’s, it is quite conceivable that then and for many years afterward, the appropriation of the rental value of the lands of the United States would have provided the Secretary of the Treasury with more revenue than he would know what to do with. But in England, where the chief sources of wealth are manufacturing, transport and money-lending, the Chancellor of the Exchequer, who was solely dependent on the Single Tax for his revenue, would find it utterly inadequate for his requirements; consequently the theory fails badly in the practical application apart from its transparent inequity. Time and again its crudeness and impracticability have been exposed, but it still lives and is advocated by a few extremists who cannot distinguish economic abstractions from the realities of wealth production. When the Liberals came in under Ballance, the situation was favourable for an application of the principle of taxing land values in New Zealand. Times were bad; the squatters were unpopular; the urban centres of population were more effectively represented in Parliament, and talk of “bursting up the big estates” was in everyone's mouth. THE CHEVIOT SETTLEMENT The land-tax was imposed, and the welkin rang with the cries qi the

victims. "Ready Money" Robinsox of Cheviot, North Canterbury, rawed like a wounded bull, and in the end the Government took over his pfeee at the valuation he complained aboir By letting the place go, he » Te ' away a fortune. The subdivision wa s a great success, despite the faetthaJames Allen, Scobie Mackenzie and other vigorous opponents of John McKenzie's land settlement scheme* said that Cheviot would prove a white elephant. George Forbes, the present Minister of Lands, got one of the Cheviot sections and did well out of it. The Liberals, however lacked sufficient faith in land-valne taxation to go the whole hog, and secured from Parliament authorin' under the Lands for Settlement Act 1593, to expropriate private owners on payment of compensation. There was a bitter and quite unnecessary fight in Parliament to secure the passages of the compulsory clang**, and small use has been made of them The mere fact that the Government is a purchaser has always brought plenty of sellers into the market. But the influence of the long-dead Californian compositor still prevails and can be traced right through all the land legislation on our Statute Book today. Time and again the Government has given another turn to the screw, and Sir Joseph Ward’! latest super-tax will be joyfully acclaimed as statesmanship by slngj*. taxers, and down-right robber'’ by men whose equities in pastoral properties will be largely wiped out It it goes through, it will depreciate very materially the values of properties from which production cannot be increased by subdivision, and it is hard to see what public interest is served by ruining Individuals, who are trying to get a living by grails country utterly unsuited for closer settlement. ALL TAXES UNPOPULAR Viewing the matter from the standpoint of taxation to provide revenue, it is common knowledge that many well-to-do farmers and pastoraUsts. thanks to the mortgage exemption, have been paying less than thenshare of taxation, and the late Government in letting them out, while imposing an increased income-tax on persons of moderate incomes, went out of its way to increase the number of its opponents. No one likes beta* taxed, and none protests more vigorously' against it than the farmer. All taxation is confiscation of private wealth for public, purposes, and as long as the Government is fair in apportioning the burden, no one has any right to kick. Various interested parties are busy digging up examples of hardship which will result from the imposition of the super-tax on land, but many of them prove nothing beyond the fact that some persons have paid too much for their properties. For instance, the man in Canterbury, whose place is valued at £28.000, and who is only making £3OO a year off it, can only be separated from his troubles by the official assignee. But as a general principle, it must be held that capital invested in farming or pastonl properties should make the same contribution to the cost of running the country that capital in any other enterprise has to bear. COMPARED WITH COMMERCE In an ordinary commercial enterprise, a taxpayer with a capital investment of £50,000 in a manufacturing or a merchandising business would expect to make a taxable profit of £5,000 a year, on which he would h« assessed at £7Bl for income-tax, lasting a net profit of £4,219, equal to » return of a little over 8 per cent on his capital, which cannot be deemed excessive when the ordinary risks of trading under competitive conditions are taken into account If this is compared with a station property to presenting a capital investment of £50,000, including £40,000 Dhi»proved value, and pasturing M** sheep, the gross return in * good year would be about £S,3BThe expenses of running O* place, including a reasonable WJJ for the owner, should not be more tM* £ 2,250, leaving a net income of £4.W If the pastora.list were assessed ** he should be for income-tax » the ordinary way, he would Pw £625, leaving a return on capita.« 6.7 per cent. At present he Pw> £467 a year in land-tax, whether M makes any profit or not, and under S® Joseph. Ward's new proposals he w pay £934, or a tax of over 4s 7d to **« £l, which is in excess of the rate payable on incomes of £19,“ and upward. M His net income of £3,166 wo f be equal to a return of 6.3 per cent, on his capital. L l 3 ® vious from this that a few lean ye with low prices foi’ wool would les the pastoralist with a very s® income. . nrfr Unfortunately very few pastoral P perties are unencumbered, and time their nominal owners have LL Sir Joseph Ward’s super-tax and their mortgage interest, some „ them will be lucky if they “ well off as their head _ herds. In short, the of Single Tax principles seemß ji to create a position similar to tn England, where the only type 0 who can afford to maintain a c estate is one who has made a J m in business, and can pay hanoav—for the privilege. )9 . There is a man in the day who was a prosperous lan in Russia before the Revolution. the Bolsheviks had finished F . jr! he got out of the country in m w His wife, a cultured lady, reac tjef frontier by a different route. came to New Zealand. After _ _ c ; hard struggle they have tjt tost* 5 ' I their own once m_-re. The ne tt ment of Single Tax may cause wonder why they left Russl • PETER SIMPI* ' Auckland. ,