THE PRINCIPLES OP TAXATION

Press, Volume LXXII, Issue 21775, 6 May 1936, Page 8

THE PRINCIPLES OP TAXATION

TO TBI EDITOR Or THI PKKS3Sir, —After reading his rejoinder to Mr P. J. O'Regan it is difficult to decide Whether Mr Bray is labouring under a misapprehension or whether he is attempting the time-honoured, if discredited pastime of drawing a red herring across the trail; in either case it is noteworthy that his letter fails to mention the point raised by Mr O'Regan; that is, the necessity, in the interest of industrial prosperity, of fiscal reform. It is equally difficult to understand Mr Bray's attitude towards the goldmining industry, or to acceDt his estimate that the claim of goldmining to recognition must rest upon the assumption that the provision of work is an ,4fod in itself. The buoyant state of the gold market at the present time not only refutes that statement but likewise justifies any measure of encouragement which may be given to the industry. And when all things are considered, Mr O'Regan's assertion that the only encouragement necessary in this country is the untaxing of the industry is incontestable. Admittedly the adoption of this proposal would be followed by a demand for similar relief from other industries, and it is possible a movement would be initiated culminating in the collapse o J . the existing fiscal system. It is certain, at any rate, that the abolition of any tax upon production must be followed" by an increase of the impost laid upon the unearned increment, or, in other words, an increase in the land tax. The proposal is therefore deserving of practical recognition, not only because it promises the inauguration of a just and equitable fiscal system, but also because it constitutes a further step towards the abolition of the vested interest which, by virtue of its monopoly of natural opportunity, holds the masses in economic servitude.

To the goldmining industry the proposal is of particular value. In New Zealand we have an extensive auriferous area needing only the application of labour and capital for its successful exploitation. There is no question as to the quantity and quality of the labour available, and in the joint stock system we have the means whereby the necessary capital may be mobilised; all that is necessary for the successful development of the industry is the removal of the handicap imposed by an unjust and unsound fiscal Eystem.

It should be unnecessary to point out that a revival in goldmining will prove beneficial to the whole community. The export of gold, like the export of other commodities, increases the aggregate of wealth at the disposal of the community. It is immaterial whether the gold is hoarded in a vault or thrown into the sea, or coined into money, provided the producer receives in an exchange an equivalent in goods or services. The ultimate fate of the gold will not detract from its producer's enjoyment of the necessities and amenities its sale will give him. It is probably true that banks da not purchase gold with gold. It was not always so. Before the various nations, through the medium of manipulation of currency, and with the assist-1 ance of currency reforms, embarked! upon a policy of wholesale looting, the banks did in fact exchange gold for gold. The Bank of England, for example, was bound by law to buy or sell gold on demand; the bank was also under the obligation of paying for bullion with gold coin as its notes were not legal tender in settlement of its own obligations. It is only since the abandonment of the gold standard and the consequent abrogation of this obligation that hoarding has " commenced. Undoubtedly the hoarding of gold is foolish in the extreme; it is, however, no more foolish than the outlook which in ignoring the opportunities pertaining at present to goldmining opposes the development of a lucrative industry which will not only stimulate and Kv«anrt our overseas trade, but which will give a much-needed impetus to our internal industry as well.—Yours, etc., H.J.E. May 5, 193 G.