THE FINANCIAL STATEMENT.

Temuka Leader, Issue 2217, 20 June 1891, Page 4

THE FINANCIAL STATEMENT.

(Continued). IHOrDBNOK OB TAXATION.

■ I will now ask the Committee to grant its attention while I bring before it the question of the incidence of taxation more especially in its relation to taxed land and incomes. What ie a land tax? The popular, and, I believe, the correct answer to the question, is a tax. on the value of land, less improve-, merits. 'This is the ideal of the land tax. Tho necessity for stopping short of the ideal was to bo found iu the imperative requirements of our finance, the need for providing , sufficient revenue to meet obligations without unduly taxing the necessaries of life through the Custom*. Wo advance, therefore, lust a* far towards this ideal tax as the conditions of a sound finance will permit us, and if we stop short of what some might desire, it must be remembered that the history of financial reforms and changes •hows that tho ends sought to bo attained were seldom if ever reached at a single effort. We propose to introduce a Bill toabolish the Property Tax and to provide for a Land and Th 'to grant an exemption on improvaments up to tho value of £3OOO foreaoh owner, and also to impose a graduated tax unon all person* and. companies, the value of whose land, less than the £BOOO of improvement*, shall amount, to £SOOO. It i* estimated that the reduction of improvement. will -cause a loss of revenue of £60,000, and the graduated tax will bring in an increased revenue of £61.890. I have not considered it advisable to suggest a higher rate of graduated tax than that stated us the table*. The payment of the additional sum of £61.890 will form an important extra contribution to the revenue by the holders of large e.tates, and it will be paid by less than onnn owners. In addition to the reductions te .Wewllb, Ihe of £600; from the owners of land, and it is not proposed to .grant the exemption when .n nwner of land, less deductions ho may olainT'wlll not exceed £ISOO. Thus if a farmer has land worth £BOO, the improveSent* on which are valued at £3OO. the exemption would-make him not land worth £I2OO and improvement* £4OO. The balance would be £3OO Iu the assessment of the tax an owner will be allowed to deduct from his land the amount of any mortgages, and tho mortgagee will pay the Si on the total of hi* mortgages at the same rate as the owner on hi* land, that is Id m the £s but the graduated tax will fall entirely on the owner and he will pay this on Se full value, less the allowance for improvements. For the purposes of the tax it ie considered that the mortgagee isl a part owner of the land and that ha should share the responsibility in the matter of to which principle, however, wa make the graduated system an exception. I should here state that owners will not beesked to pay tho land tax on tho value of the interea. of any tenant who bolds a lease m which he goodwill. Xto to.nt .jU be assessed with tae value of his interest. Wo propose to graduate the_ tax_ on the fob lowin* scale s—On a total taxable value of SOOOT £IO.OOO. ill ; onjlo.m to £2O 000 1 2-81; on £20,000 to £50,000, lid; 0! £50000 to £IOO,OOO, I 4-8 d ; on £IOO,OOO and over If d. It Will interest the committee to know what a land tax is expected to yield on this eystem. Supposing the ordinary rate to be Id in the £, the result of an all-round tax of Id in the £, of persons as distinguished from companies, has been estimated by the Property Tax Department-at £177,596, and the graduated division of the tax on person* at £46 567. The all-round tax on the land It companies at Id, amount* to £27,361, and the graduated division at £15,323. If we add these amounts together we obtain a gross total of £266,847. 1 ottaoh a table giving the amount* that would be payable on estates held by person* and and from this it will be seen that more than £25,000 will be paid as a graduated, tax in resneeb of landowners, each of whom has a greater value than £IOO,OOO. These owner* are less than fifty in number. A* a strong and readily grasped argument m favor of a graduated land tax I have had published with the tables attached, another table giving the nronortion between the numbers of those who own *land and the valne held. This table deserves the most careful attention of all who really desire to see the occupation of our lands plabed in a more satisfactory condition, and it will convey a highly interesting lesson to those, who profess so believe that the landed property in this colony is so owned as to secure anything approaching the largest, possible graduation from j it. Touching the principle of a graduated land tax the Committee will probably desire to learn how'its incidence bears on wealth compared with the taxation paid by the members of the working classes. I will endeavor to show the amount of taxation paid through the Customs respectively by an artisan and a laborer, each having a family of five, the former receiving 53s a week or £lB7 per year, and the latter 89j a week or £lOl per year. The artisan would, pay in duty £l2los 4d, equal to 9.1 per cent on his earnings; while the laborer would pay £lllla 6d, or 11.4 per cent on his earnings This allows for no broken periods, or for periods of sickness, or non-employment, during which tbe earnings must cease, while paying of. duty, at least to some extent, would continue. Let us now see what, the owner of land worth £IOO,OOO would pay on a graduated land tax. Deducting tbe £3OOO for improvements, at l£d the tax will amount to £690, or about 9£ per cent on an assumed income of £7350. In addition he might pay 3 per cent on hi* income to the Customs. The result illustrates how inequitable has been the system of taxation prevailing in this country, and exhibits one efficient cause of the tendency of wealth to accumulate rapidly in the hands of a few. Assessments will be made of both the improved and unimproved value, and it is hooed that the efforts will bo more successful than In the oast tb secure a fair and even valuation, for there is reason to fear that many of the larger estotes have not been assessed at their fair cash value. It is proposed to give greater power to the lax, Commissioners in order to entire a more equitable result. Having dealt with the land tax and its incidence, 1 now come to the consideration of a taxon incomes derived from trade and commerce. Wo believe the property tax to be grossly unjust in its operation in imposing without discrimination burdens on capital whether productive or unproductive, and discouraging industry. For this obnoxious form of taxation we intend to substitute an income tax of 1% in the £. There will be an exemption of £l5O, and a deduction by way of abatement of a like amount from income* which do not exceed,£6oo. Companies will bo subject to the same rate of iuoome tax, but it will be understood in all oases where income tax is charged that it will not be levied on profits derived f cm land which is reached by the land tax. Under the heading of companies are included all j oint stock corporations,banks,shipping fire and marine insurance, and goldmining companies. There will not be any exemption in thj case of companies. Tho revenue derived will not be so large as at present, but the incidence of the tax will be more equitable, and those corporations which are in a progressive'stage will bo treated leniently, while those are making large profits will pay proportionately. Life insurance associations are at present charged Id in the £ on the amount of their funds invested in the colony, We propose t? charge an income tax q£ Id in

the £ on the income derived from personal property in the but the land tax will be charged on their land. It is estimated that they will not be so severely taxed as in the past, and the alteration will, I think, eerye os an encouragement to invest in the colony, and will afford, come relief to institutions that are serving, a moat beneficial purpose. In order to, prevent misconception it will be well for 'me to state distinctly that income tax will not be levied on any income derived from land or from money lent on mortgage. Such property will be subject to the land tax only. In charging the tax on incomes derived from professions and from occupations in which profit is not made from capital, and on salaries, we process to exempt all salaries of £3OO and under, and to deduct £3OO from all incomes, above this amount. An income of £SOO •will therefore pay on £2OO, and an income of £IOOO on £7®o, with a rate of 3d an the £ on the first £2OO over the exemption, and fid : in the £ above that amount. A person in possession of £SOO income will pky under this proposal £2 10a per annum ; one in possession of £6OO, £5 per annum ; of £7OO, £7 10a, and so on. Considering* (he comparative independence of those in possession of salaries or incomes above £3OO a year, the smallness of the rate will commend itself as fair. On the other hand, it will be recognised that the possessors of such incomes should not be asked to contribute J.he-aama proportion as those who derive their incomes from property. Referring generally to the alleged inquisitorial character of an income tax, 1 beg to .asqqre the Committee"that, i have given this my most careful attention, and 1 fail to see any reason why the assessment for an income tax should "be more vexatious to taxpayers than ‘.hat for property tax ‘purposes, and lam convinced that it will jba ’ possible to so adjust the mode of as ndt'to increase,, at all events, 'the inconvenience of'the taxpayer. I "have now to bdhg : together the estimates of land and income tax, and of amouets receivable nnder the different schedules of ' the Bill. Land tax, including land and mortgages, nnder schedules A D, £266,847 ; income tax, under schedule B, including banks,life insurance,gold mining, tire and marine insurance, and other companies (omitting the profits from land and inprtages), and companies* debentures, other than mortgage debentures, £47,300; income tax under schedule G from trade and commerce, £40,000; income tax under schedule D, profession and salaries, £15.000. These give a grand total of £369,147. Pending the resulls, however, of the triennial valuation of property shortly to be made and the return of income tax returning it will be safe to deduct from the estimate 5 per cant, as a margin, thus arriving at a total net revenue of £800,690. At the end of the present year (the new system not coming mto force until next March) the different estimates will be revised in the light of the returns, and it will then be possible to make a more accurate forecast of the receipts. The proposals 1 have the boner of submitting will tend, 1 believe, to adjust the direction of taxation of the country in accordance with the capacity of the different classes of the community to bear it. The exemption of improvements up to £2OOO on land affords material relief to-farmers and improving landowners, while it directly encourages thrift in conveying the intelligence that industry and labour no longer mean burdens. The graduation of taxation on the large estates is in accordance with the principle of equality of sacrifice, and will aet in the direction of placing a check on monopoly. New Zealand is a colony of comparatively limited area, and it is for the people to say whether the land, out of which we all must live, shall be widely distributed or whether it shall be held by a privileged number. Our policy, wo believe, raises the issna in the most practical form, while it will be seen not to be unfair when we compare the taxation contributed by the different classes. Tbe abstract fairness of an income tax on profits derived from trade and commerce has never been questioned. Our change in this respect gets rid of a number of exceptional taxes which rest on no principle, substituting a simple tax on profits realised. Tbe comparatively light income tax nnder tbe bead of salaries and professional incomes will fall only upon those whoso positions enable them to contribute it without inconvenience, the exemption of £3OO affording ample protection to all who will come within the limits of the schedule. If on tbs whole we have not got far enough in the opinion of some, or tqo far, we for that consideration which would weigh tbs difficulties of a large comprehensive change in the incidence of taxation such as providing sufficient revenue for our needs and at tbe time relieving tbe industrial classes from the crushing effect of an unjust system. If we have not accomplished all that some wished our proposals will have gijme far towards the end we have in view. Had the land tax of 1878 been retained and improved we should by this time have had perhaps the fairest system of taxation of any country under the British crown, hot tbe retrogressive step taken a year latei baa produced tbe opposite results, and we now are in the position of those who have been wandering on the wrong path, and are forced to cautiously retrace their'steps, It is in the light of this experience we submit our proposals with the full confidence that tbe country is ripe for and will accept them. oaNorosioN. Bat before concluding I consider it my duty to direct the attention of the committee to the lesson conveyed by the census returns recently . issued. Briefly, the rough results of the census as shown by the enumerators gives a population of of 623,352 persons, not including Maoris, against 578,482 persons in March, 1886, making an increase for five years of 44,870 ; but the natural increase for this period being the excess of births over deaths is 64,168 persons ; so, that the loss by excess of departures over arrivals is 19,298. The arrivals recorded in the five years wore 73,386, and the departures 83,984, giving a loss of 10,526 persons. It would thus appear that the unrecorded departures amounted -to-8736 persons. The full outgo of population from the colony has evidently not been returned to tbe Registrar-General . in .the monthly statements, and it is wed known that in tbe years 1888 and 1890, and of late the steamers for Australia were greatly crowded, owing to a disposition on the part of tbe floating population to leave, mainly for New South Wales. Now here is o loss of wealth and wealth producing ] power, which demands tbe serious con- J

Bideration of Parliament. We naturally congratulate ourselves bn the Increase of the exports bnt the reason for congratulation suffers serious abatement when the discovery ia made that more people are leaving than arriving in the colony. If we cannot retain our populatson we should know the reason whj in order that the remedy for such a state of affairs may if ppssib|e be applied. The returns of the census took us all by surprise. No one imagined .that the loss had been sa great, or that the exodus had made so large an inroad in the Now Zsalaad born population. It is not satisfactory merely to repeat the ery that ihe cessation of the public works has been the cause of this exhausting emigration. Doubtless this may bo one of the causes, but, if so there is a greater reason to shape our policy to overcome the difficulty. It appears to the Government ■ that the first thing to be done is to obtain an accurate knowledge of the facts. How many people are unemployed, why empljyment does not exist for all, whether labor should not be organised by the assistance of the Government, so that it may be more j equally distributed, and more easily find I employment—in a word, what is . wanted * in this reaped is a system coder which statistics may be furnished to a central office at frequent intervals, weekly or monthly, of the elate of the labor market in every part of the eol eny. The unemployed, evil appears to bo centred principally in, the large eitios to which men ont of work, -eem to be attracted.' As the first step in tbe treatment of a disease is to submit a ; careful diagnosis, so we : must know the, conditions surrounding tbe unemployed malady before we shall be able-to overcome it. Wo are thus naturally led to the. practical Consideration of tbe establishmentof a Labor Bureau, nnder tbe charge of a Minister of the Grown. Haying obtained our information the .next, step of course j is to,apply it so as to utilise! this wealth in the form of, human . beings ‘ who are wandering through our .streets in search of work, or who are leaving us altogether because there appears no gleam of hape if they remain. ' 1 have referred to the cessation of public works as one of the assigned causes of the., exodus ; does it not show,that the method of. carrying on public works .has been , radically vicious, when they no sooner cease than (hose engaged on thpm are compelled te emigrate f If the public works had been made subordinate to settlement they would have created - a demand for population ; on the other hand, in the way they have been conducted they have been instrumental in driving it away. I submit, as a subject for the moat earnest consideration of the Committee, that, not a mile of road or railway should be constructed by the colony in the future ; without provision being at the yame time made for the location of the people enaged in the work-on the land, if possible, in the neighborhood. This may seem a radical change in the method'of :entering into contracts, and it certainly will entail a more direct reaponsibility on the Government; but it will! transform into a sturdy settler, with a stake in the country, a large proportion of those who, seeing no prospect hero, are ready to embark for other lands. With a view to immediate relief and stopping the exodus we propose to put in hand such public jworks as are of a productive character, and for which- moneys are available. Our first duty as Legislators, it appears to, me, is to see that it is , made easier for the people to have comfortable homes. A great aggragate of wealth may be built up in tbe hands of a few, while for the many it may be pauperism ; but this is hot civilisotion, and It is net a sign of health in the State. In tbe Financial Reform Almanac for 1891 we have the following appalling statement of facts : “In London one person in every five will die in the workhouse, hospital, or lunatic asylum. In 1888, out of 79,949 deaths in London, 41,505 being over twenty, 10,170 were in workhouses, 7113 in hospitals, and 380 in lunatic asylunans, or altogether 17.663. Moreover, the percentage is increasing. In 1887 it was 20.6 of the total deaths, in 1888 it rose to 23.3. The increase was exclusively in the deaths in tbe workhouses and infirmaries. Considering that comparatively of the deaths are those'of children it is probable that one in every four London adults will be driven into these refuges to die, and tbe proportion in the case of the ‘manual labor class’ must of course ba still larger. The number of persons who die whilst in receipt of outdoor relief ie not included in this calculation. The number of pauper funerals is not given io the official retarvj s> , bill it is computed to be at least one-.third of the total number of deaths, and that in spite of millions of insurances in burial clubs and industrial insurance societies.” And this is the civiliaatfo'i «f the wealthiest city in tbe world ! Well may we question the economic and social system of which this is the product. Should we not seek to establish our civilisation in this new land on a broader basis in a deeper for humanity I Nor need we fear that to pursuing this aim we shall fail to reap that material prosperity of which Financial Statements aim of being tbe embodiment. The wide diffusion of wealth and industry among the people are the surest guarantees of a buoyant revenue and a healthy exchequer. I see only the closest relationship between a people wall placed and fully employed anjd-a State enjoying the highest credit and discharging every obligation, moral, and legal, imposed upon it. In urging this consideration we are reminded of the maxim which we believe is the essence of all .sound financial and social economy—that tbe safety of the people is the highest 1 law and demands the first consideration of the State. I have. Sir, to return my sincere thanks to bon. members for their attention.

At tbe conclusion of the Statement the Premier, in reply to Mr Bryce, said that proposed, if possible, to commence the financial debate on Friday next. Progress was reported, and tho Jocose rose at 9 p.m.