THE £5,000,000 LOAN.

Observer, Volume 3, Issue 78, 11 March 1882, Page 410

THE £5,000,000 LOAN.

It is now pretty certain that this Colony will raise a further loan of probably fi Y e millions. This means either a serious blow to the liberal cause and the further impoverishment of the over burdened taxpayer, or it means the inauguration of a new system whereby the country will be benefitted and the prosperity of the masses insxired. This entirely dejjends upon whether the loan is spent upon woirks of Colonial and not of jwivate interest and whether additional taxation required to pay the interest of the loan is placed upon the right shoulders. The question on whose shoulders the additional taxation should fall is so simply answered that we are surprised that the representative wisdom of the Colony has not, long ere this, made it a sine qua non, in the distribution of former loans, that those who directly benefitted by the public expenditure, should pay according to the benefited received.

It may appear at first sight almost an impossibility to allocate and fairly estimate the direct benefit derived by individuals out of a Public Works expenditure. In reality however as we said before the thing is most simple. In the first place there must be a Land Tax pure and simple. Every owner of land whether town, countx'y, or suburban, should be compelled to furnish the Government say on the first day of January of each year, with a description of the land he owns or occupies and the actual value he places upon it. This is very simple, for everybody knows to a penny what they consider their land to be worth.* To protect the Colony from false returns the Government should "be empowered, to purchase, if it chooses, at the owner's valuation. This system of forfeiture works well in the Customs and prevents fraudulent returns under the ad valorem duties, so it wonld doubtless "work equally as well in the matter of land returns. The Government having got in all their returns "would totalize the amount and levy a tax according to their need. It is estimated that a tax of one half per cent., i.e., ten shillings in the hundred pounds, on the capitalised value of the land of New Zealand, would return a sum equal to the whole amount already raised through the Customs, a tax of one per cent, would realize a sum sufficient to carry on the different departments of the Government and also pay interest on loans.

Supposing for the sake of illustration -we assume that the latter tax of one per cent, is imposed and Customs duties done away with, how would it affect small farmers and land owners ? A man •with a property worth £500 would pay £5 a year tax, but he would be relieved of all Customs duties, under which, if he is a married man with a family, he must at present pay three four or five times that amount. A man with a property worth three million pounds (the value placed upon a property owned by one individual in the Middle Island) would have to pay thirty thousand pounds a year, whereas under the present system te escapes with the same Customs duties as the owner of the £500 freehold, plus an abortion of a property tax which he hardly feels. Now as regards the new loan, supposing that by the expenditure of it, the owner of the £500 freehold, finds the value of his property enhanced by £500, when the time comes round for sending in his valuation of his property, he is compelled to recognise this "unearned increment" and consequently he is taxed upon £1000, thereby paying for the actual benefit he has derived from the public expenditure. The great question of the future is the correct incidence of taxation, and intimately connected

with the correct solution of this difficulty is the settlement of the land question.' Two things are perfectly clear to right thinking men, one is that it is manifestly unjust and improper to raise the bulk of the taxation of the country through the Customs out of the pockets of the day labourer and others who have no realisable property, the other is that every man should be taxed according to the benefit he derives from the State. Liberal.