OUR TAXATION

Taranaki Daily News, Volume LIV, Issue 69, 12 September 1911, Page 3

OUR TAXATION

f SOME EXTREME VIEWS CORRECTED. I, COMPARISONS WITH OTHER I COUNTRIES. WHAT THE STATE RETURNS. In the course of his Financial Statement, the Premier said: J am of opinion that in the best interests of the country it is desirable to deal with the widely made and persistent s-taltements that have been circulated in reference to the taxation of this country, statements which have been the means of creating an erroneous belief as to tke amount of taxation born by our community. It is sometimes honestly but mistakenly stated that New Zealand is the most heavily taxed community in the British Empire, if not in the civilised world. This is far from being true. In comparing the taxation paid by individuals in different countries -we are met with serious difficulties in gutting the exact position. Some countries levy more from direct .taxation than others. The revenue derived from property tax, land tax, estate duties, or income tax is collected in different ways by different Governments. In some countries there is no income tax, in others no land tax. In some, inheritance taxes are considerable, in others wholly absent. Tho incidence of taxation, direct and indirect, differs greatly in most systems, in some the poorest members of the community paying an unreasonable proportion of the whole. It is necessary to distinguish between taxation and charges for services rendered by the State. In a country like New Zealand, which owns its railways, the income of the service is regarded as revenue, and it is an error to speak of this as taxation. . Tf the total annual earnings of the railways of the United States of America (£580.(180.445) or the United Kingdom (£120,174,052) were added to the revenue of tho?e countries, as is done in New Zealand, the taxation would appear to be enormous; and so on with other State activities. Only by a careful analysis can the real amount of taxation be ascertained. A country with a small revenue per head mav' have a more oppressive system of taxation than one with a much larger per capita revenue. The status in civilisation of a country may be gauged rough!v iby the proportion of its revenue applied to useful public purposes and the eonitable incidence of taxation—that is, the proportion ref revenue collected from those best able to bear it. Judged hv this standard. W" Zealand holds a high position indeed.

FIfiUR'ES WORTH EXAMINING. Take a small business man, farmer, artisan, or laborer with four children in New Zealand owning land valued at 'lot more than £SOO, and on which a home mid business premises are erected fit a V'liie of CIOOO, or even more, and in-receipt of an income under £3OO per atjni'ni. TTe pays no direct taxation winterer to the general Government, and may contribute very little through the Customs, if he is n. teetotaler and nonsjvoker. Even if lie and his wife and children use the average quantity of. dutiable goods, including silks, jewellery, I and other articles deewied luxuries, he I will pav only about £0 8s 2d per annum. If he consumes the average amount of tobacco nnd alcohol in addition, he will nav in all £lO 5s Od in indirect taxation. If t.hev elect to go without what are' considered luxuries, he and his family will pay hardly anything at all in the way of taxation. For the amount paid, supposing it is £lO 5s 9d per annum, lie gets much in return. His children receive a free education. At £5 8s per annum. the co°t of the education of each child from the ape of five to fourteen, lie receives from the State £2l 12s yearly. If his children are. talented tlicy can win their way to anv position dependent noon a superior education. Wh«n his children begin to work thev are looked after l>v Government officials to see that thev have sanitary surroundings, get a minimum wage, sufficient air-space, and are not worked too long each day.' lie i- also sifesruanfad in manv wars during hi- working hours, nnd. if he has been M!'forf|i),ite. will at, sixtv-five receive a from the State for the rest of his life.

His lot in resnoct of taxation ami the benefits obtained- therefrom will compare favot-.iHj y with tint of «mv worker anywhere in the world. In Xcw Zealand no income tax is r*iid on an income of less than £3OO. Tlii< is a very high expimition. Tn Britain it commences at £H!O- - Japan at £.lO, and it nipiil.lv pro'(rressps there until at £IO,OOO per'annum as 4s in the pound is ta.ken liv statp - Tn Germany taxation 011 the poorer members of the community is ni"'-h higher than in this Dominion.' In adddwi to (he heavy Customs duties oil ?nd other necessaries of life, the uv-onie-tnv which they hare to pay is, oftinpnred with ours. votv sovcrc. SOME EXAMPLES.

Tferc arc some examples which should I studied in order to realise how fortunate iv« are in comparison. The Amount of exemption varies in different! State* ef the German Empire. In Prus-->ia all incomes of £45 or over, earned mi earned, must pav income-tax. In some States the exemption is onlv £2O: an ', the t<i\ is tmsesml on the total earnines of the family, and not those of the f-nther only, few escape it. It is I graded from V'i per cent, to % per cent. '"i e>i income of £45. and' increases as I lie income prows. Take the case of a. servant girl in Saxonv with a salary of £ U> per vear. Taxation on incomes I hen-ins i n Saxony at ,£2O. lint income in- ] eludes food, lodging, Christmas presents, and (il lier gratuities. The employer is j compiled by law to give the authorities a 'list of these items. Food, lodging and other things' will lie. at. the lowest, computation, £23. making the income £3B per annum, bringing the girl under class 3. The direct, tax is 4s per vear, hut In Germany the local taxation is based on the Imperial tax. Tn some tonus it is the same, in others more; thus, in Frankfort-on-tlm-Main the l«cal j-ax is 125 per cent, of the Imperial tax. ill Diitehurg 200 i>er cent...-at Elberfr'd 2.'10 per cent., at Berlin 100 per cent. In "■l'lne places it reaches .'l5O per cent. At Dresden the servant girl, in addition to the -1s direct taxation, must pav for "eneval purposes ,Is. for chnrcli' and "•hiiAl fi\ about 3s (Id: total 10s lid. If the loiol income is £4O instead of £3R. she is placed in class 4, which applies to in-omes from £4O to £47 10 s. She wiH then pay ISs i„ direct taxes. Consider I he position of a married couple in Dresden, each working, and together earning £IOO. Tliov are taxed lojielh'T. and' will pay £4' 10s out of the ,-C !>>o. H in different occupations and -eparatcly earning only £SO. each » onM liwi. f 0 p'iy income-tax amoiintin" to £1 His. nh'.v jcbalaxd taxes tiik poor I.TGIITLY. Ihit in NY-w Zealand it is not only the ponriT persons who are lightly taxed. Th-xr. who are members uf what in other countries are called the middle classes are licit'"]- oir here than elsewhere. We 1 "ill take ithe case of a man receiving £lOllO per annum, in N>w Zealand. England and Germany. In Xew Zea'and he will |ia.y £2O his Rd—that is, lid in the pound 011 £7OO-all in excess of the exemption of £3OO. A. Londoner receiving ClOfifl. half of which is earned and half unearned, will pay 011 the £SOO earned, at 0d in the pound,'£ 1.8 ss;. 011 tlio fa.ld

unearned, at Is 2d in the pound, £2O 3s 4d; total, £47 18s 4d. At Franldont-on-tlie-Main a person in receipt of a s ; milar income will pay £0(1 per annum. The German Empire is purposely taken for comparison. It is one of the greatest of world Powers, in the front rank of civilisation and prosperity. Were a poor backward State referred to it might he said l the comparison was unfair.

It is not necessary, however, to go as far as Europe to find a country whero the small man is more heavily taxed, than in New Zealand. In Tasmania in-come-tax is payable as soon as the income reaches £BO per annum. Tho exemption begins to diminish at £llO, and disappears at £4OO, so that on an income of £3OO, at which a New Zealander pays nothing, a Tasmanian pays income-tax on £270 at s'/ 2 d in the pound that Is, £0 3s Od. There is no exemption for land-tax, which is pavaMe on every pound of the unimproved value, and if he owns unimproved, land worth £SOO he will pay £2 Is Bd' land-tax in addition. DIRECT TAXATION IN AUSTRALIA. A glance may be taken at the direct [ taxation systems of other Australian States. In South Australia a man owning land of the value of £SOO, exempt from taxation in Now Zealand, would pav %d in the pound, which equals £1 0s lOd. Absentees beyond l the Commonwealth pay 20 per cent. more. If his income is £3OO and derived from personal exertion (exempt in New Zealand); he will pay exemption of £2OO or £1 17s fid. If his income is from property the rate will be fid in the pound—that is, £3 liis. In Victoria the unimproved value tax on land is %d per pound: the owner ol £SOO .will pay £1 0s lOd, as in South Australia Income tax is at the rate of 3d in the pound on an income of £3OO per annum, if such income be derived from personal exertion (other than income arising from live stock, wool, meat, milk, dairy produce, fruit, fodder and other crops arising from land under the j unimproved value of £SOOO, after allow-1 ing an exemption of £150), and fid in

the pound if arising from any other source except income from interest on Government deventures, dividends from companies, etc. A person in receipt of an income of £3OO per annum, at which a New Zealander is exempt, will pay from £1 17s (id to £3 His. In Queensland there is no land tax I except that of the Commonwealth and local authorities' rating, but income from land exempt in New Zealand is taxable, with an exemption of £2OO, above £2OQ it is 9d in the pound, so that an income of £3OO per annum derived from land would pay £3 15s in taxation. On income derived from personal exertion, the first £2OO is exempt, and 0d is payable on evcrv pound over £2OOO.

TIITE LAND TAXES. SMALLER THAN THOSE IN OTHER COUNTRIES. We hear a lot of complaints ailrout our land tax. This is not high until the graduated tax becomes payable; but it must be remembered that our graduated land tax is not imposed for revenue purposes, but with the intention of causing closer settlement by a subdivision of large estates, which will, of course, reduce the revenue derived from the graduated tax. In New Zealand an owner of land of the value of £SOO or under is, as stated, exempt from land tax, no matter what the value of his house or other improvements thereon may be. In many other countries not only is there, a .tax on land of small values and all improvements thereon, but a portion of I the increase in values is also claimed I>v the State. Tims in England the duty on inc.rea.scd value, is a tax of 20 per cent, levied on any increase in the site value. It is to be paid whenever the land is soldi or let on lease for more than fourteen years, and whenever it changes hands bv death. The duty is £1 for every complete £5 of increment value. Then there is the reversion duty, which is a -pecia.) form of increment tax payable on the detenu illation of a lease of land payable to the owner or lessor. It is £1 for every £lO of increased value. Again, there is a duiv on undeveloped land at the rate of y.d for every £1 in value. There are cert-im special! exemptions, of course, to all t::ese taxes, but their existence shows how much 'better off the landowner is ;n New Zealand. Tn Germany, on all inhabited houses and landed properties that change ownership within a period of from twenty to sixty years a. State tax of 1- per cent. ] and a local tax of 2 per cent, must be paid on the sale price—that is, 3 per cent., no matter whether it is sold at a loss or gain compared with the previous sa.le price, Tif there is a profit—th 't is. an increase over the previous sale price—there is a graduated scale pf taxes amounting to 4 per cent, on the increase of from 25 per cent, to 30 per cent., and 1 per cent, on each increase of 5 per cent, above tha.t.