The Auckland Star: WITH WHICH ARE INCORPORATED The Evening News, Morning News and The Echo. SATURDAY, NOVEMBER 13, 1909. A FISCAL MISTAKE.

Auckland Star, Volume XL, Issue 271, 13 November 1909, Page 4

The Auckland Star: WITH WHICH ARE INCORPORATED The Evening News, Morning News and The Echo.

SATURDAY, NOVEMBER 13, 1909. A FISCAL MISTAKE.

Tor the cause that lactct attUtanem, For the wrong that need* r—ieUnwe, tor the future in the iiatmnow. And tin good that we out 4m.

Wβ are not surprised that the proposal to levj an additional one per cent Customs d.utv~ on -all dutia-ble goods imported iato the Dominion hae already evoked a good many protests throughout the country. The objections to this expedient are stated clearly enough in the resolutions adopted yesterday by the lcwal Wholesale Merchants' Association at a meeting convened "to discuss the new 'lax. One fundamental principle of taxation universally accepted by economic and fiscal experts is that no tax should be levied in such a <way that it will cause unnecessary trouble or inconvenience to the taxpayer, or in such a- form that it will give a very small return to the Treasury in proportion to the expense entailed in collecting it". The Premier's one per cent Customs duty certainly seems to. infringe this principle. As the Wholesale Merchants' Association points out, the charge is so small that it must be exceedingly difficult for either wholesalers, retailers, or middlemen to readjust tiheir prices in accordance with it, and it is at the same time vexatious •because it will constantly involve making special declarations and -producing original invoices in some cases for goods that have been months or years in hand. It is, of course, certain that the consumer, | not the Tvh-olesale merchant, will pay the tax, -which will be merely "passed on" to the general public. But the point U that the form in which the levy is made is cirm'berfiome, troublesome, and expensive, and i≤ therefore calculated to produce the minimum of Tesult -with the ■maximum of inconvenience and delay. Considering all this, and in view of the fact that the total amount anticipated from this source is only £50,000, one is naturally inclined to ask if no reasonable substitute for this impost could be devised. The Wholesale Merchants* Association suggests that the sum expected from this source could be raised more easily and equitably by putting a duty of 2d. per lb. on tea. The arguments in favour of such a tax are, of course, that it is easily levied, and that it would press very lightly on the consumer. Moreover, it must be remembered that tea is taxed to the extent of sd. per lb. even in Kngland, which boasts of its "Free Food" policy, and that Xew Zealand is the only section of the Empire that lets in tea and sugar free. To all" this the Premier replies that a tax on tea would infringe the principle of the 'free breakfast table" already laid down .by the Liberal Government. The answer, of course, is that so far as Tree Food" is concerned, even Free Trade England raises enormous sums every year by Customs duties on tea and sugar, coffee and cocoa, and other articles of consumption. Not even the one Free Trade country in t-he world thinks it necessary to illustrate the "Free Food" principle in such extreme form as Protectionist New Zealand. And the reason, of course, is that, as the Cobdenite3 admit, minim 11. taxes on imported necessaries of Tile fulfil almost ideal fiscal conditions; because they are paid almost unconsciously by the consumer with a minimum of trouble and expense to the State and to all parties concerned. The "Free Breakfast Table," we know, is a good popular cry; but we may well doubt if it is worth our while to cling so obstinately to a principle' of purely theoretical interest which is ignored by the Cobdenites themselves, and which necessitates the use of exceedingly cumbersome, expensive and unsatisfactory methods of taxation as an alternative.

The true inwardness of bhe situation was to some extent revealed 'by the Premier yesterday, when ie told a Christchurch interviewer that "for the first six months of this year our Customs revenues showed a drop of £200,000." Surely the natural inference is that the wholesale remission of import duties, for wihich Sir Joseph Ward takes credit, has been to some extent too generous and indiscriminate. The removal of the duty on sugar was certainly a popular move; but part of the advantage gained by the consumer has already been lost through the price of sugar being raised by the monopolist company which controlsour supply. Generally speaking, It is bad fiscal policy to remit a duty which presses very lightly upon each individual member of the general public, and yet produces a lturg« gross return; and the Premier has apparently realised that something will .have to 'be done to fill the gap. We agree entirely "iwith. Sir Joseph Ward that in view of the expansion of our public needs, the State' 3 outlay on .public purposes must constantly increase. More especially for the purposes of national defence it will ~bc necessary to raise a larger revenue immediately; and if the means suggested by Government are rejected, it is for their opponents to propose some practicable alternative. Mr. Massey, as usual, in attempting to reply to the Premier, takes up the wrong line of argument. It is not for him to say how the money is to be raised; he is content to object to the Premier's new taxes on the .ground that being -wealthy and prosperous; the country ought to be able to get on -without them. This strikes us as' simply futile; for tie natural growth of a young country. lenden % constant iav

crease in, its public expenditure inevitable j and when 3ir. Massey talk's about; our "good seasons," he apparently forgets altogether that it has been the heavy fall in the prices of some of our best staples that has produced the period of financial stringency through, which we have just painfully struggled. However, there is little to be gained by proving once more that Mr. Massey fails to grasp the situation. We admit that the money we need must be raised by extra taxation, and we are not particularly wedded to the suggestion for a 2d. per lb. tax on tea. 'But, in view of the falling-off in our Customs duties, the universal acceptance of the principle of taxing food imports for Tevenue, and the many practical objections to this proposed one per cent primage duty, we suggest that it would be unwise for. Government to pledge itseK unreservedly to the "Free Breakfast table" theory, if this means cutting off a. lucrative source of revenue with but slight benefit to the general public, and the substitution of vexatious, expensive and relatively unproductive forms of taxation.