THE AGENT – GENERAL'S DEFENCE OF THE COLONY.

Temuka Leader, Issue 2325, 3 March 1892, Page 4

THE AGENT - GENERAL'S DEFENCE OF THE COLONY.

The following is the text of Mr Perceval’s letter on New Zealand taxation which appears in “ The Times ” of January 12th: — Sir, My attention has been called during the last few days to an article published in your issue of November 9th, about three weeks prior to my arrival in London, which purports to review the Land and Income Assessment Bill passed into law during the last session of the New Zealand Parliament. The articles appearing in your paper under the heading of “ The Colonies ” are, no doubt, extremely interesting, both by reason of the information they contain and the attractive style in which they are written, and I, therefore, regret that the one to which I now propose to refer contains much that is inaccurate and, I fear, misleading. The article in question commences by informing your readers that the Bill under revision proposes an income tax of Is in the pound on certain incomes, and a tax of Id in the pound on the capital value of land; and you conclude your article by consoling your readers with the assurance that the Bill cannot pass into law this year, as the amendments of the Legislative Council were of so searching a nature that the Lower House threw out the Bill. As a matter of fact, the Bill does not fix the amount of either of these taxes, leaving this to be done by an annual Bill, as is the case with the English income tax. Again, so far from the Legislative Council mutilating the Bill, they passed it without the alteration of a single word, as, the measure being a money Bill, they had either to pass it as a whole or reject it. This was in soma respects unfortunate, as many amendments had been made in Committee of the Lower House, the lauguage of which might have been made clearer if subjected to the scrutiny of a revising Chamber. I draw attention to these inaccuracies a g they show that the writer apparently possessed only a superficial knowledge of the subject; but my chief grounds of complaint are the incorrect deductions drawn by him, and the wrong impression which the article gives of the new Bill. As a matter of fact, the volume of taxation is not increased at all, but the incidence is altered in the direction of increasing the amount levied on what is termed, for want of a better word, “ the unearned increment,” and decreasing the amount levied on the product of industry. But a stranger reading the article would gather that the colony, “under the influence of a strong labour vote,” as you put it, had suddenly adopted a policy of unduly taxing landed property and foreign capital. This Wild be quite an erroneous opinion. The new system of taxation taxes mortgage money and foreign capital no more than the old system did, and the only additional burden placed upon land amounts to £75,000. This sum represents the amount estimated as receivable under the graded tax, and when it is borne in mind ihat this graded tax is levied on properties over the value of £SOOO, and that the total value of these properties over £SOOO is estimated at £45,000,000, the additional contribution demanded from the land does not appear very crushing. The article gives an example of the taxation payable by the owner of an unimproved estate worth £30,000, and draws the disnjal conclusion “ that if the Bill passes into law the mortgage system of New Zealand must come to an end on estates which exceed £SOOO in capital This and similar conclusions indulged in by your contributor presents a very alarming picture no doubt. As a matter of fact, without troubling your readers with figures, the owner of the estate referred to in the article will pay very little, if anything, more under the new Bill than he would under the old property tax. The mortgage money on his land will be taxed no more than formerly, and although the landowner will pay the additional amount payable under the graded tax, he will get exemptions on his stock, farm implements, buildings, and improvements, which will possibly and most probably, result in his paying less taxation than before. In the case of settlers owning land under the value of £SOOO the taxation payable under the new Bill is considerably less than before. One great objection made to the propetry tax was that it did not discriminate between the various kinds of property. English capital, the merchant’s stock-in-trade, land being worked productively, and land held in an unimproved state, were all treated alike, and made to pay a uniform tax on their capital value, irrespective of the income produced to the owner, whilst professional incomes escaped altogether. The new Bill enables a discrimination to be made between the taxes payable by various classes of property, and imposes a tax on professional and business men. The amount of taxation levied on property of all descriptions in the colony only produces about £350,000, while £1,500,000 fa levied through the Customs, and the proportion is not altered by the new Bystem, It will be seen, therefore, that property only contributes about one-fifth of the total taxation raised from property and Customs, and of this £350,000 contributed by property the only additional impost On land is the £75,000 estimated to be recovered by the graduated tax, and which is diverted from other descriptions of property. When it is home in mind that landed property in the colony has been enormously enhanced in value by the expenditure of borrowed money in the construction of public works, the interest on which is borne by the whole body of taxpayers, it does not appear unreasonable to slightly increase the burden placed upon land. , , As against this extra burden, also, the large concessions made to landowners in the direction of exemptions have to be taken into consideration, so that, except in a comparatively few cases, the new Bill results in a decrease rather than an increase of taxation. . , „ x „ It must be borne in mind that there is no grade on incomes or property other than land. Hence, money invested on mortgage pays no more than formerly. It is recognised in the colony that tho cheap foreign money is necessary to develop the resources of the colony, and the tendency is rather to dimmish than increase the tax levied on capital invested in ways 9tker than tho acquisition of un-

improved land in large areas. It is certainly not intended that loan companies or banks carrying on their legitimate business should pay more than formerly. There are, no doubt, weak points in all systems of taxation, and a tax has yet to be devised whicli will please all classes of a community; but the new tax Bill, bearing in mind the system it replaces, is not deserving of the wholesome condemnation heaped upon it. I will charitably assume that those who have assailed it in such unmeasured terms have done so without sufficiently comprehending the principles on which it was grounded, or the conditions which led to its introduction.

An important thing to remember is that the Bill is a machinery Bill to enable the necessary returns to be collected, and before a tax is struck under it the Treasurer will have before him all these returns, so that he will know to a pound what the new tax will produce, and whether the Bill .presses harder than was intended on any particular class; and with these data he can, without departing from the principle of the measure, make any necessary alterations. Your readers may undoubtedly rest assured that the people of New Zealand, after having demon strated to their E nglish creditors that they can, without fresh borrowing, pay their way, and at the same time increase their exports and area of settled land in the marvellous manner they have done during the last few years, are not going to injure themselves or to take away the good impression which the improved conditions of the colony have made by the adoption of “ hasty ” or “ ill-considered ” legislation. I am, sir, your obedient servant, Westby B. Perceval, Agent-General for New Zealand. Westminster Chambers, 13 Victoria street, S.W., Jan. 7th.