THE New Zealand Herald. AND DAILY SOUTHERN CROSS. WEDNESDAY, AUGUST 7, 1878.

New Zealand Herald, Volume XV, Issue 5218, 7 August 1878, Page 2

THE New Zealand Herald. AND DAILY SOUTHERN CROSS. WEDNESDAY, AUGUST 7, 1878.

A tax of lid per gallon upon beer ; a tax of id in the pound upon land ; and 3d in the pound upon the incomes of joint stock companies ; the abolition of ad valorem duties ; the remission of the taxes upon a number of articles ; the reduction of the duty upon tea from 6d to 4d, and upon sugar from Id to id, are the principal features of the Financial Statement last night laid before the House of Representatives. Mr. Ball&nce, the Colonial Treasurer, has not only the gratification of having a fair balance to the credit of the colony for the past year, but he has the further benefit of having made what is said to be the best Financial Statement which the House of Representatives has listened to for the last seven years. The Statement shews a careful consideration of details which, in one so young to political life, places him at once in a prominent position as a financier. Fortune has been - gracious to the Grey Ministry, and its members have shewn they are prompt to take it at the flood. Without don bt, the great question of the day is the equalisation of taxation, —that the burthen of taxes should be proportioned to the back of the bearer. Strictly speaking, the true basis of this principle is that of a law which shall make every citizen contribute to the State according to his ability so to do. The man who consumes imported articles, taxed through the Customs, may to a large extent avoid that impost if he so pleases, especially in the articles of luxury —spirits, tobacco, tinned preserves, and the like. Of these a man may consume exactly what he pleases, but there is nocompulsion on him to consume them. His means and substance—his annual income, may be a fair, or 83 nearly a fair 'basis as any that could be reached, and the first step has been taken in that direction in the levying of a tax on land, and on the income of Joint Stock Companies. As a principle of taxation, such as the whole history of. property and income tax in England shews, from the time ofjPitt downwards, the taxes on property and income (that is, income from property and from all other sources) are, on principle, wedded together, but the peculiar position of a colony—the existence of large and numerous sections of land owned by colonists, but producing no annual revenue while still increasing in value because of the added increment arising from the progress of the colony, renders it difficult to assess a value except by the value to sell. There is one flaw in the arrangement, and the attention of the Colonial Treasurer and his colleagues ought to bo directed to it. Mr. Ballance provides that a leaseholder shall, on payment of his rent to the lessor, have the right to deduct from his landlord the amount of the tax he pays. This is in accordance with property and income tax laws in Great Britain, except that a tenant has also to submit to a lessened amount of taxation for mere occupation. But if this righteous principle of deduction from the rent of the lessor or landlord is permissible, as we think it is, what of the mortgagee, who lends money on an estate and receives interest every year 1 In principle and in justice, what is sauce for the lessor of land ought clearly to be sauce for the money-lender, who has a direct interest in the estate, and receives the interest of the money he invests thereon. To be just, the borrower ought to be entitled to deduct from the interest he pays to the lender an amount equivalent to that which a landholder is to be empowered to deduct from his landlord, —that is to say, a proportion of the tax on the land equal to the interest which the mortgagee holds therein shouldbe deducted from the interest paid to him. This is practically what iB done in the income tax levied on the profits of joint stock companies. That tax of 3d in the £1 will reach the absentee holders of companies' stock, and wo know that many private mortgagors, absentees and others, draw large sums from freeholders here in the shape of interest, and pay nothing whatever toward the revenue of the colony, the Government of which protects and improves their interests.

The beginning of a process of reducing the number of articles which are subject to Customs duties is a wise proceeding. Great Britain's dutiable articles comprise only about eighteen or twenty in all, while here we have some two hundred and fifty. What has been so well begun in the direction of sweeping away a number of small and vexatious imposts which individually yield insignificant amounts to the revenue, can well be continued in future years. - The adoption of a general ad valorem duty is in itself pernicious, because of the opportunities which it affords to unjust traders, and nothing could more effectually prove this than the figures which Mr. Ballance specified last night. The 10 per cent, ad valorem duties yielded in 1875 .£364,558 ; in 1878, these duties produced only £330,770, shewing a falling away of some 10 per cent. As the colony progressed greatly during the three years in population, and wealth, and purchasing power, it must follow that this reduction is due to fraudulent dealings. Some years ao-o it was known that some person or persons in Auckland imported playing . cards, on which high duty is exigible, in bales of blankets, and undersold all .other importem. False invoices can be produced at tfie Customs. There are two ways of salting invoices ; one above the real value; for the customers, another far below it } for the

Customs. That "this has been done to an extent which is\ really alarming (in view of the commercial morality it discloses), is the inevitable conclusion to be drawn from the falling off in the ad .valorem duty; especially when all fixed duties rose in the aarae time" from 20 to 22 per cent. "VVe believe the Statement and the proposals of Ministers -will meet with the approbation of Parliament. There are numerous ether points in the Statement which merit notice, but cur space forbids further extension of theso remarks. We shall return" to the subject.