DUTY ON CEREALS.

New Zealand Mail, Issue 39, 21 October 1871, Page 12

DUTY ON CEREALS.

The proposal of the Government to impose an import duty on flour and grain is one which has very naturally received the approval of the people of Canterbury, and the disapprobation of those of Auckland and Westland. We may say at once that we do not feel called upon to support the proposal because it has been made by the present Ministry, nor to consider the principle involved from either a Canterbury or. a Westland standing point. We look upon a bread tax, imposed exclusively for revenue purposes, as the most odious and least defensible of all imposts. In our opinion a tax on imported cereals can only be defended on piotecti\e principles, or as a temporary expedient, to meet a temporary and exceptional state of affairs, which has arisen in part, though not exclusively, from the legislation that has taken place in Australia relative to the same subject. The New Zealand farmer naturally assumes that it would be a suicidal policy to permit grain to be imported free of duty from 1 Australia, so long as Australia continued to levy a duty on grain the produce of New Zealand. The political economist on the other hand asserts that such a fact should not he taken into the reckoning ; that we should buy our flour and grain in the cheapest market, and that if we get them from Australia, that country must take commodities, the produce of New Zealand, m exchange. This assertion is a onesided truth, and whether wholly true or wholly false, it does not meet the views and objections regarding this policy entertained by the agriculturists of this colony. They consider, if a cargo of wheat is imported into Australia from New Zealand, say in virtual exchange for a cargo of wheat imported into New Zealand from Australia, that the tiansaction, however profitable it may prove to commission agents and shippeis, can he of no possible advantage to the great body of producers and consumers of either country ; and that so long as a duty is imposed on New Zealand grain in Australia, the farmers of the two countries cannot enter the commerce market upon equal terms. Without entering into the discussion of this question ot reciprocity, which, in the opinion of the economists, involves as great a fallacy as that of protection, we are prepared to maintain that it has been too hastily assumed that protective duties must necessarily, and for all time, have the effect of in-c creasing the price of the domesti article. They would not have this effec t in the long run to any appreciable degree provided natural facilities existed for the home production of the commodities upon which import duties were levied. We think it has also been too

hastily assumed that a duty on imported grain would only benefit the graingrower at the expense of every other class in the community; for it would really directly benefit all classes dependent on the agricultural class for support, and indirectly more or less every individual member of the community. Moreover, when it operates as a protective duty, and not as a source of revenue, it enables those whose prosperity is thereby promoted to consume more largely dutiable articles, and this indirectly augments the revenue. But when it operates solely as a revenue duty it diminishes to that extent the fund expended on other dutiable articles, and so far defeats the object for which it was imposed. A duty on breadstuff's can only be defended on protectionist principles. Any tax which will encourage production, and stimulate the industrial energies of the people, must necessarily tend to augment the national wealth, and for that reason can be easily borne. Any tax which will not do this, and which is only imposed for revenue purposes, may have the very opposite effects, and in proportion that it does, it is felt, however small, to be oppressive.

But a revenue duty imposed on imported breadstuffs is highly objectionable on other grounds. Such a way of obtaining a revenue runs altogether in the wrong direction. The customs revenue, without a large and permanent increase in the population, has already reached its limits. Whether the truth be recognised or not, the time has arrived when absentees, mortgagees, and the monied and property classes generally must contribute their fair share of the public burdens. Moreover, the most popular defence urged on behalf of import duties completely breaks down if imposed on the absolute necessaries of life. When imposed upon luxuries, and upon articles not indispensible, they do in effect constitute a species of voluntary taxation. He who chooses to go without the taxed article is not obliged to pay the tax. But obviously this is not the case as regards a duty on breadstuffs. The admission of breadstuffs and raw materials generally, into a country duty free, is justly considered as a most effectual means of protecting home manufactures from the evils of foreign competition. When viewed in this light, a duty on imported cereals appears still more indefensible. Yet we are disposed to think that under the very exceptional circumstances which at present exist in this colony, exceptional treatment is required. _ New Zealand does not require an import duty on grain in order to encourage its home production, which is the object for which protective duties are levied ; but it requires the imposition of these duties in order to encourage its home consumption in preference to the foreign grown article. In truth some temporary, artificial, legislative expedient is required to divert the grain trade of Canterbury and Otago into what would prove its most natural and effective channels. We know of no better expedient for this purpose than the one proposed by the Government. This had not come on for discussion when the foregoing remarks were written.