The Auckland Star: WITH WHICH ARE INCORPORATED The Evening News, Morning News and The Echo. FRIDAY, MARCH 12, 1915. THE WAR TAX.

Auckland Star, Volume XLVI, Issue 61, 12 March 1915, Page 4

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

FRIDAY, MARCH 12, 1915. THE WAR TAX.

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It seems to be the intention of Government to impose a war tax, and we have already explained our attitude toward this proposal. In our opinion it is better that the heavy financial calls made upon this country by the war should be met by raising a certain definite portion of our revenue to meet these demands and earmarking it fOT that specific purpose, and this can be done most easily and effectively by levying a*special war tax. But the precise form this should take is a matter for discussion, and, as our readers are aware, a number of suggestions on tliis subject have already been put forward by our prominent public men. The proposal that seems to have attracted most attention is Mr Harold Beauchamp'e scheme of a uniform tax of one per cent levied on impc te and exports alike; and, though it has been severely criticised, this ides sccjih to have met with a good deal «f favour in. certain influential quarters. It seems necessary, therefore, to point to some of the obvious defects of Mr Beauchamp's plan, and to suggest some practicable alternative.'

Generally speaking, Mr. Beauchamp's suggestion i s objectionable for two important reasons; at leaet, it infringes one of the fundamental principles of taxation in two distinct ways. * It is not equitable to tax luxuries and necessaries on the same scale, because thie means tbat the people who can afford to spend money on the superfluities of life have t'6'bear a proportionately lighter burden than the poor. Further, it 13 not equitable to tax impor't3 ! "and exporfa' '"{miformly on the same scale, because under any given circumstances the producer of exports and the 1 rtJnftumer of ■■Jntports San never be on the same footing in regard to such taxation. Take the position of affairs in New Zealand to-day. A tax on importe would chiefly affect the wageearner, who is thready struggling with difficulty against the rise in the cost of living due to the war. We may reject at once the argument that one per cent, import duty would be too small to affect local prices. 'It would - be' enough to afford a pretext for importers to raise prices againet the consumer: and experience has shown that this is always possibly The poorer datees then, who have suffered most through the war, would be still further burdened by an import tax. But an export duty would fall upon the producers of our staple exports, who, ac they must frankjy admit, have already made large profits, and stand to make still more, through the rise in prices produced by the war. ; A tax of one per cent, on export value* would represent but a very minute fraction of the gains secured by the rico in wool, frozen meat, and dairy produce consequent on the war. The' sacrifice 'that'our producers would have to make would therefore be lighter—out of all proportion —than, the, bu/deo thrown on 'the -nines' of the people' an import duty levied on the eanuc scale.

.••■What, is wanted,; under..such circumstances is a form of taxation that will fall most heavily on those best able to pay, and, if it is based on expenditure, will affect the consumption of luxuries rather than the cost of the necessaries of life. Taxation, the text books all agree, should be equitable, and it should be levied in such a way as to produce the least, injurious effect, upon the conditions and circumstances of the great mass of the people. For these reasons it seems obvioue to us that the most satisfactory form our war levy can take is cither a Land and Income tax or a tax on luxuries, or both combined. The taxation of luxuries ie universally accepted as an equitable form of impost, so long ac it is not unduly oppressive; and the enormous annual outlay on eports and amusements in thie country should provide an ample ntargin here. As to an Income tax, this 13 generally regarded by fiscal experts as "securing most, effectually the.just incidence of taxation; for, with reasonable exemptions, income represents fairly enough ability to contribute to the charges of the State. The case for an. increased Land Tax is more complicated, but it is possible.to support it by pointing again to the large profits secured by our agricultural and $aetoral producers through the rise in the prices of our staple exports due to the war.

We need hatdly point out that in making these suggestions w e are simply adapting the principles of taxation laid down by all the most eminent authorities on the subject. But quite apart from the theories of .experts we..have practical precedents to hand that we are justified in following. In November laet Mr. Lloyd George informed Parliament that to finance the war it would be necessary to increase taxation; and he proposed, therefore, to double the income tax, to put a halfpenny' per halfpint on beer, and to put 3d. per lb. extra on tea. Aβ to the income tax, the Chancellor of the Exchequer hardly needed to remind the House of Commons that this tax originally Avas a war tax. that it wae justified in the.first instance by, tb.e.- necessities- of war finance, and Jthat.it has always been increased in war time. Parliament promptly showed its appreciation of the justice of Mr. Lloyd

GeorgßV jmd ?thougji ,>«**•[ was some debate- over the concession* made to*the brewers to balance ibV'Seertax, and jthe.; difficulty- qf ■'< getting, at« tie teetotaller even by'a iea tix/N;tie (Bouse finally accepted the new Budget practically, without demur. Here, surely, ie an example that we can well afford to" follow. Opinions may differ as -to whether tea is a luxury or a necessary in this country; but the case" for an increased Income Tax seems to us to be completely established; and if thie were supplemented by a tax on luxuries judiciously levied, we believe that our war finance could be arranged with very little additional-hardship tor burden to the very great majority of

our people.