The Unearned Increment.

Te Aroha News, Volume II, Issue 60, 26 July 1884, Page 6

The Unearned Increment.

(From the Auckland " Star," July 18.) Do those people who cheer to the echo the adyocates of a land tax know what it means? ]S umbers, wo know, are in a state of Egyptian darkness on the subject ; they speak of it as " the honoured. Inkermann," and seem to have about as clear a conception of its meaning as had the dear old lady -who went into raptures over " that blessed word, Mesopotamia. " To such we fear all attempt at explanation will prove vain. But there arc large numbers of intelligent men who are carried away by the plausible cry of taxing the land and sparing tho people — " beizing the unearned increment," and at one stroke redressing all the inequalities of life. We are reminded of the existence of the latter class, and of the fact that many of them may labour under serious misconception in regard to the subject, by the following list of queues propounded by \ correspondent signing himself "Enquirer" :— Will you kindly tell what is meant by the unearned increment ? 1. Is it that all properties, large or small, are to be taxed on their increased value, whether by influx of population or expenditure of public moneys? 2. Is there to be compensation on a reflux of population and decreased values ? 3. Will it apply to original buyers only, or will those who have paid enhanced prices have to pay ? The "unearned increment," as our correspondent indicates in his iirst question, is that part of land value which has accrued from growth of population and execution oi public works. To get at the true proportion, the whole of the land on which the city of Auckland is built would be appraised at its "prairie value." or "unimproved value," and the difference between that ant 1 the present market value would constitute the unearned increment. In answei to the second question, those whe favour a land tax do not propose te give compensation from the State fund* when property falls in value ; but (te answer the last question in tho same sentence) to tax all land owners, whethei they have profited by population and public works or not (exempting only improve ments). The land ,tax would apply equalh, to city and township allotments as to large estates in the country, and, indeed, "« ould press mo&t heavily in the cities, where the growth of value, unearned by the owners, has been the greatest. To illustrate : The country magnate, with a " run " of 100,00( acres, if taxed on the unearned in crcment, might pay no tax at all, because his property would be just prairie land, while the working man who own; a city allotment of 33ft frontage will be taxed on its increased value. Such is the principle, and it must bo confessed thatlooked at in this light, the land tax doe; not deserve to be credited with "bursting up " powers. Its direct tendency is rathei to tax the town, where lands have beer greatly enhanced by the increase in population, for the benefit of tho country. It will, of course, bo seen that thero arc a great variety of ways in which tho lane tax can be applied, so it is necessary to fine out from candidates their particular pro posals on the subject. All the utterances of Auckland candidates have been very indefinite, and thencr, no doubt, arises the lack of information in the public mind. In oui replies it must be understood that we have taken as tho model Sir George Gray's Land Tax Bill. A Canterbury candidate, who claims to follow Sir George Grey in regard to the land tax, thus statec his views the other day :—": — " As to the mode of incidence, he did not approve of an acre age tax, nor a progressive tax, but a tax or land values. A standard value should be fixed, say £6 per acre, and then it should be considered how much the land had benefited through the unearned increment, i.e., ar inex'eased value caused not by the expenditure of the owner's capital or by hi. c ndustry." This corresponds with oui illustration of the working of the tax ; and it w ill be seen that the progressive land ta>(which w the only method of " bursting up' : large estates and encouraging peasant proprietary) is directly repudiated. Working men need therefore be in no doubt as to what is meant by taxing tho "unearned increment." It means, as against the property tax, that the wealthy classes are to be relieved of the present severe impost levied upon them, and that, unless there is a liberal exemption, the industrial classes and small property owners are to be taxed much more heavily than at present. In addition to the Land Tax, it would be necessary, for revenue purposes, to have an income tax, as announced by Sir George Grey in the Governor's speech prior to the defeat of his Govermont, and again advocated at his recent meeting in Otahuhu. Under that tax, as Mr De Lautour explained at Ponsonby, he proposed to take the bare amount on which a working man could live without luxuries, as the minimum. That is to say, supposing £100 a year to bo the standard adopted, a man who received £3 a week would pay on £56 in addition to any assessment under the Land Tax. In England employers of labour are made responsible for returns under the income tax with respect to all men in their employ.