FINANCIAL STATEMENT.

Thames Star, Volume VIII, Issue 2957, 7 August 1878, Page 2

FINANCIAL STATEMENT.

[By Telegbaph.] Wellington,''' Tuesday. \ [The first portion of the Colonial Treasurer's Financial Statement having been published in our contemporary's columns, we have referred to the salient points of it elsewhere, and complete the Statement by giving the portion not previously published.] "■■':.' FBESH TAXATION. ' ■", ' Now, sir, I shall ask the. attention of the Committee to the proposals we have to make on the subject of fresh taxation. The policy for opening up for settlement the lands of the Colony by means Of railways, roads, and other works executed out of loans contracted in the foreign market has entailed upon the Colony a heavy responsibility in the form of interest, which has reached on the total debt a sum of about a million and a quarter annually. On the other hand, one of the most marked effects of that policy has been to enhance the value of all property, especially land which derives a permanent benefit from the extension of the railway system and other means of communication. The increase in the value of land is due to the addition which the population has received by means of assisted immigration in a degree scarcely inferior to that caused by public works, and as the same cause will continue in existence, a similar result may confidently be expected. The exemption of this accumulating wealth-land from contributing to the general revenue of the Colony has been condemned by the House as unjust to those who have been paying on the perishable necessaries of life the principal portion of the taxation. We propose, therefore, to extend' the taxable basis with the double object of establishing more firmly the finance and credit of the colony, and of fairly adjusting the fiscal burdens according to the capacity of the different classes to bear them; and here I may take the opportunity of disclaiming and repudiating the charge Which is sometimes made that the Government have in contemplation a class tax. The very contrary is the fact: we hold that the system which we pro pose to correct has worked unfairly in the. past, that it has favored the escape from taxation of the greater portion of the wealth of the colony, and has implanted a strong sense of injustice in the minds of the wages class. The re-adjust-ment we hope to effect will tend to efface the inequalities I have referred to, and instead of promoting hostility between classes, will remove the causes which have been gradually estranging them. The worst enemies of the privileged classes are those, who, while crying against class legislation are intent on preventing any settlement of grievances, for the longer the re-adjustment is delayed the more violent will the remedy when the times comes, as come it must, for its application. We believe that no form of wealth is more legitimately called upon to contribute a portion of the public revenue of the colony than the value of land, minus improvements, which, for brevity, I shall call the unimproved value, as no other commodity increases so rapidly ia value. From the increase of population, and the natural progress of a country by exempting improvement, we award a premium to industry, and discourage a system of speculation which thrives Only upon the labor of others. Now, Sir, there are two methods by which the unimproved value of land may be found. The first is classification with a fixed and arbitrary value attached to each class, as in Victoria where the distinction is arrived at by estimating the sheep carrying capacity of the land. At first sight this system appears simple and easy of application. It has the obvious effect of discouraging the holding of large areas, unless the quality of the soil is good, and there is abundance of capital to work it. The principal objection to it is that with a given number of classes it does not recognise the position value of urban and suburban property, or sufficiently distinguish between the capacity of the holder of poor laud, and the holder of rich land to contribute the tax between property in proximity to railways and roads and property isolated from material lines of communication ; but perhaps the strongest objection is that the tax is comparatively stationary, and does not bring under it the increment of unimproved value which takes place between one period, and another. The system to which these objections do not hold good, and which has recommended itself to the Government after much consideration as _ the fairest, is framed on a direct valuation according to the market value, deducting, improvements. Here every holding would have its own special value derived from position and quality, including accessibility to market, situation in towns or suburbs, the productive capacity of the soil and other natural advantages. The principle, then, we propose is to tax the actual value to sell, minus improvements embracing both town and country, with a valuation every third year, the natural increase of wealth I thus ascertained from one period to another will indicate one peculiar and remarkable kind of progress, mainly that arising from the general prosperity of the community; apart from the enhanced value which labor gives to the land itself, a man in making improvements will know that he is not at the same time swelling the exactions of the tax gatherer, but that the reward of his industry is altogether his own. We purpose to follow the precedent of the income tax in England in exempting values below a certain amount. Every holder will be entitled

to claim an exemption to the extent of £500 on the total value of all his holdings, and no one will be called upon to pay the tax the value of whose propertyis not more than that sum. The leaseholder — except where the lease is held fronl the Crown — will have the right to deduct from his rent the time of payment the amount of the tax. The minimum improved, value of land •will be fixed at a pound an acre. The measure we shall introduce to give effect to these proposals will provide for a system of assessment within each County and Municipality setting forth the improved and unimproved value, and it will empower the local bodies at their option to accept the valuations required under the Kating Act." The Committee will observe that the owner of land property wilt not begin to contribute under the tax until two deductions or exemptions/of a very material character are made. By the exemption of improvements the industry of the improving settler escapes taxation, and by not taxing the first £500 of unimproved value the settler commencing with small means is left unburdened, until in making a start in life be rises above his difficulties, while .the class character of the exemption is destroyed by making it universal. I now come, sir, to the question^ of results after having explaified the principal and basis on, which we propose to proceed. The present local valuations for rating purposes are probably not entitled to the most implicit confidence, but they constitute the only data from whicbr I am able to estimate the value of improved land in the Colony. The annual valuation of Highway and local boards this year is is £2,343,249, and the municipalities, £1,467,746, giving a total annual value of £3,810,995. The highway valuations are incomplete, and the annual value may, with moderation, be taken at £4,000,000, This capitalised at 5 per cent, gives £80,000,000, as the improved capital value of the real property of the colony. It may be, as the valuations seldom reach the market value, but we accept it as the basis. I deducted from the -improve, ments three-sixteenths, or £15,000,000, and for the exemption of £500 another £15,000,000, leaving £50,000,000 of a taxable value under our proposal. . The estimate of the" amount deducted for exemption, I have taken at what may be considered minimum, so that the revenue expected, and which, we think, ought .to be derived from this source, may not prove excessive or be more than to meet our requirements, the principle being kept in view that in imposing a tax before all statistics relating to it can be collected it is preferable to obtain less or not more than the amount of revenue anticipated. We propose that property under this head shall contribute a half penny in the pound, which on £50,000,000 will yield to the revenue a sum of £104,166, or in round numbers say £100,000. The net ■ gain to the revenue will, however, not reach this amount by £10,000, the estimated cost of valuation and collection. The Government believe their proposals on this subject will be received as characterised by fairness-and-moderation, as founded on a principle just in itself, and so applied as to inflict the least hardship on any class of the community. JOINT STOCK COMPANIES.

We propose, sir, to equalise the bur-' dens of taxation still further by imposing an income tax on Joint Stock Companies transacting business in the colony. The first and' greatest objection to a general income tax—that of false declaration—does not apply to companies whose profits require to be published; the capital moreover invested in companies differs from the capital a private individual employs in his business, the first being generally the accumulated savings of the investor over and above what he requires in his trade or profession. In the credit and prosperity of the colony these companies directly participate, while many of their shareholders live out of the colony, and without effort or responsibility to other forms of taxation, continue to draw away their profits. We think, sir, that to impose a tax of 3d in the pound on the net profits of all joint stock companies registered or trading in the colony will not show any want of appreciation of their value or enterprise, or in the least discourage this form of cooperation, but that, on the contrary, more than a corresponding benefit will be returned in the prosperity and contentment of the people. A careful estimate of the paid up capital and profits'of the companies shows an annual income of £800,000 and 3d in the pound, or l| per cent, will yield £1.0,000 to the revenue. There is a large proportion of the companies which pay no dividends, and any attempt to tax the paid-up capital by means of an increased stamp duty (an alternative plan) would fall with great severity, but no company showing a net profit for disposal at the end of the year can reasonably object to pay in taxation so troall a per-centage as 3d in every pound of their income. We have no doubt, Sir, but that the companies will admit we have treated them with consideration and with a due regard for the important in. terests involved. v "BBEBTAX. I have referred to the relief given to the brewers by the remission of one half the sugar duties. The quantity of sugar returned as used in the breweries of the Colony in 1876 was 2,271,600 lbs, yielding in duty £9,465. Supposing the same quantity consumed, the relief to this industry is £4732. The total duty paid by the brewers under the existing tariff on the materials malt, hops and sugar, is about 2s 8d per hogshead. If the average value per hogshead be £5, the duty paid but slightly exceeds 2| per cent., and with the remission on sugar the duty will be reduced to less than two per cent. .Now, we are able to compare the position of the beer drinkers in the colony with those of the Mother Country, where the different taxes on materials and licenses constitute.' a duty of from 18 to 23 per cent, on the! trade prices of beer. If the, position were reversed the Colonial' consumer I would have no right to complain, for the wages list would still be in his favor. At present he almost escaped taxation on this article. The amount of duty paid by the brewers on malt in 1876 was £2654, i and on hops £4832. Now, the importations of malt are declining, £1503 , have only been collected on this head last year, and on hops £4136, < and in a few years it is probable the whole of the malt used will be produced within 1 the colony; the production of colonial i hops is also progressing, so that the duty i derived from the importation of these i articles is not likely to be maintained. It i will thus be seen that from all but a < revenue^ point of view these facts are j satisfactory. Well, sir, we think the i beer drinkers will concur in the great s moderation of our proposals. If we aak i

him to contribute a beer tax of l|d a gallon, it may be said that the consumers will not pay the tax at all, but that it will come on(, of the profits of the brewers or of ret ruler. 'It is only in accordance with sound economic doctrines to suppose that all such changes ultimately affect the consumer only, and I do not wish to reason away the conclusion.; How then will he stand? He may certainly save his tax by drinking so much less beer, but as the habit of indulgence is stronger than self-denial, there is j no ground to anticipate in that respect an | appreciable falling off. The fax on beer j will then stand 6| per cent, addition to the 2 per cent, at present contributed indirectly on the materials cf total duty of 8J per cent., a per centage considerably less than one half the duty received from the same source from the people of England. I estimate the consumption in the Colony at 5,000,000 gallons, though there is some ground for thinking it may be more, but as our statistics are incomplete I have taken the lowest calculation. This quantity, at l£d gallon, would yield a revenue, of £31,250, or say in round numbers £30,000. We propose to allow the brewers a drawback of the duty on all beer exported from the Colony. The mode of collections will be arranged to give the least trouble to the payer of the tax, the system of stamps prevailing in the United States recommending itself by its simplicity and directness. The Customs Department wili assume control of this item of inland revenue, and I-do not expect any considerable increase- to tbe staff in consequence. I submit this tax to the Committee as one which, while touching with great lightness ; the contributor is calculated to strengthen, as it will augment the finance of the Colony.

FINANCIAL RESULTS. Sir, I have approached that point when I may bring together our differentproposals, and present the results in a condensed form to the Committee. The annual amount of the land tax I hare estimated at £100,000; the income tax from Joint Stock Companies, will, 1 expect, yield £10,000 ; from beer brewed in the colony we hope to obtain £30,000; and from sparkling wines, say £1000; these different sums make a total in fresh taxation of £141,000. Deducting from this the total of remissions £117,000, there is a margin of £24,000, which the new taxes are calculated to bring in above the revenue remitted. Sat there will stand against this margin the departmental expense incurred over the land tax, which will probably be not less than £10,000 the first year, but as the land tax, and the tax on joint stock companies will hot come into force before Ist January next, the result for this year must be modified accordingly; the amount receivable- from these taxes during the present financial year, will, therefore be £55,000. The beer tax will be receivable at once, and will yield for eleven months £27,273; for the same time the increase on sparkling wines will give £1000, making a total from the new taxes in the present financial year of £83,273. Deducting from this the estimate of the loss from remissions for the half-year, £58,000, we have a surplus of £25,273, and if we subtract the £10,000 estimated departmental cost of collecting the land tax, there remains a net surplus in favor of revenue of £15,273. Now, Sir, although we do not ask that the total of taxation should be increased, we propose that this margin should be allowed to stand. It would be over refining the position to make the remission and the new taxes exactly equal; the data is as I have said before, in many respects, incomplete, nor should it be forgotten that the work of effecting a thorough reform is not to be achieved in a single year, while we think the new taxes proposed will be. sufficient with continued progress, and the increasing nature of the revenue, to yield all that will be demanded. From' the same sources we.are not without hope, that the revenue at the end of the present financial year will enable us to make still further remissions on the necessaries of life and to proceed yet a -considerable distance in reducing the length of the tariff. Sir, one of the principal aims of the Government since the termination of last session permitted them to devote attention to the question, has,been to render simple and clear the financial position. The magnitude of the labor requires time for its entire accomplishment, but I trust it has been within my scope to state with some precision and accuracy the actual state of the public accounts, to remove unnecessary distinctions, and establish others which appear natural and obvious to bring to a focus and undersurvey the whole field of colonial finance. The credit of a , British colony depends as much upon the openness and publicity given to its financial operations even to their weakness and defects, as upon the traditional honesty and industry of the race. It is at the same time a fortunate circumstance that looking back over the field there is nothing to disturb the faith which is reasonably reposed in our continued industrial", commercial and financial prosparity. The changes we propose to inaugurate are, we believe, strongly calculated to accelerate this prosperity, which^aoves only with certain step when public right and justice are respected and jealously guarded. To maintain, for instance, those inequalities of taxation which we propose to remedy, would benefit not man who intended to remain and make his permanent home in the colony. It would be vain to expect that all interests can be blended m mutual compromise, or to suppose that human nature can be changed to break down the lines of demarcation between the allies of resistance and that of advocates of progress; but we can easily imagine a prqgressiveness arising from the constitutional conflict of both elements, the commonobject beingthe welfare of the Colony and the difference only as to the means by which that object may in the highest degree be obtained. The policy I have the honor to submit on this occasion embraces questions of the largest interest to this Colony. We have proposed to free commerce from unnecessary restrictions, and to relieve it from the ban of a system which offers a premium to idishoDesty by making it difficult of detection. We have given direct encouragement to industries which are taking root in the colony by striking off the duty on articles used in manufactures. Foreign trade will be encouraged by the offer of reciprocity, which we advance without stipulation, leaving it to be fur-, ther within the range of taxation. On articles of every day consumption, and among the necessaries of life, we have proposed that the duty shall be either altogether remitted or substantially reduced. The accumulations of wealth in form of real estate and joint slock capital will be placed for the first time on the same level as tea and su&ar, and be made to contribute a fair and not burdensome

proportion of the revenue of- the colony. We are convinced, sir, that these pro* posals, if will give a fresh impetus to the march of progress in New Zealand, as they will show a country inviting labor as well as capital,from all parts of the world by the justice and liberal character of its legislation. It. cannot be doubted - that the colony possesses inexhaustible resources. It is true that nature had bestowed upon it the most lavish gifts, but the bounty of nature must be matched by beneficence of oar institutions, and the equity of our public policy. To this end our purpose has been directed, and we ask the Assembly to giro it fo ; rra. The Treasurer concluded by moving—l. That towards raising the supply granted to Her Majesty, there shall be levied and charged, on and after the seventh" day of August, one thousand eight hundred and seventy eight, on all ale, beer, porter, or other malt liquor brewed or made in New Zealand, an excise duty of one penny and' one half penny per gallon, which duty shall be paid by all brewers, or other .wholesale vendors of beer, by means of inland revenue; stamps to b^ttgjxed by them or by their agent«<*rt&rvants, in such a manner as the Commissioner of Customs may direct, on every hogshead, barrel, keg or other receptacle in which any ale, beer, porter of other malt liquor contained when sold or removed from any brewer, cellar, warehouse, or other place in which same be made or stored. 2. That ia lieu of duties customs now charged on undernamed articles following duties of customs shall, on and after seventh day August, 1878, be charged thereon on importation into New Zealand, or being cleared from any warehouse for home consumption, viz., bicarbonate of soda, 2s per cwt.; cream of tartar, Id per pound; tartaric acid, Id per pound; fish (potted) preserved, Id per pound, or reputed packages-of that weight; bottled fruits, Is per dozen; mustard, 2d per pound ; pickles, quarts, or reputed packages of that quantity, 2d per dozen; pickles, pints, do., Is per dozen; sauces, 2s per dozen or reputed -pints, and so in proportion per dozen: of greater or less reputed quantities; starch, 4s per cwt.; blue, Id per pound; lead and composition piping, 2s per cwt; nails, 2s cwt.; wrapping paper, brown, 2s per cwt.; wrapping paper, other sorts, 3s per cwt.; paper bags,"6s per cwt.; woolpaeks, 2s 6d per dozen; corn sacks, 9d per dozen; flour bags, 3d per dozen; boots and shoes, men's, No. 6 and upwards, 12s per dozen; youths' No. 2to 5,30s per dozen; boys' No. 7tol, 6s per dozen; , women's No. 3 and upwards, 8s per dozen; girls' No. 11 to 2, 7s 6d per dozen; girls' No. 7 to 10, 6s per dozen; children's No. 0 to 6, 3s per dozen; women's lasting and, stuff boots, 8s per dozen; goloshes of all kinds, 2* 6d per dozen; slippers, men's and women's, No. 7 and upwards, '5s per dozen; wines, sparkling, 6s per gallon. The resolutions were agreed to, and the House adjourned at 9.45 p.m.