LAND TAX ACT.

New Zealand Mail, Issue 383, 14 June 1879, Page 6

LAND TAX ACT.

(From the New Zealand Tli-es.)

We have often contended that an income and property tax was what the country desired and what the House of Representatives wished to impose last session. It had been generally admitted that direct taxation in some form or other should be imposed, and by a resolution of the House of the previous year the Ministry was pledged to bring down a property and income tax. However the Ministry wilfully neglected this duty in order to gratify their animus against land owners, and to " burst up " big estates, attempted to impose a land tax, a companies income tax, and a beer tax. After Ministers had announced their determination to stand or fall by their financial policy as a whole, they made the painful discovery that the two latter taxes could not be carried. The Ministry then reconsidered their determination to stand or fall by their measures, and wisely resolved to continue to sit instead. The land tax measure, though passed, was very hardly dealt with; three members out of four who took part in the debate upon it resetted that an income tax had not been brought in with it, and it was only for want of a better Bill imposing direct taxation that the measure ultimately became law. Recent events have amply justified all the criticisms passed upon the land tax. Valuers have sent in extreme valuations based upon the inflated prices realised by property some months ago. After expenses have been paid and all the reductions made, instead of the tax bringing in £IOO,OOO as calculated, it will probably not realise much more than half that sum. Great delay will also be caused by the number of objections, many of which must go before the assessment courts, thereby increasing the cost of collecting the tax. The mistakes and errors which have been made, have had the effect of rendering the land tax exceedingly unpopular, and we feel satisfied that any proposal to increase the tax will receive no general support during the coming session. Further direct taxation will be needed to meet a diminishing land revenue and a greatly increased departmental expenditure, even if the colony should succeed in avoiding the heavy cost of a native war, and we believe that a general property and income tax will meet the requirements of the colony, and will also accord with the wishes of the moneyed classes, who in any case would have to pay most of the tax. We do not understand property to include goods or chattels in the ordinary sense, but the tax we would recommend would be similar to the one which has been in vogue in England ever since 1842. No more successful tax than it has, we believe, ever been devised ; it has been altered no less than nineteen times since it was first established. At its establishment it was fixed at 7d. in the £, at which rate it was maintained until 1854, when it was raised to 14d., and was further raised up to lGd. in 1855. Since then it has varied from lOd. in 18G0, down to 2d. in 1874 ; was again raised to 3d. in 1870, and sd. , in 1878. It was finally raised another 2d. in the present year. This last rise was estimated to bring in an increase of no less than three millions of revenue. The actual receipts from the tax in 1878 were £5,820,000.

A tax which accommodates itself to the varying necessities of the revenue in the way in which the income tax in England has done, must commend itself to any statesman who has before him the exceedingly difficult task of providing an acceptable means of replenishing empty coffers. The principle of the tax has recently been described by the " Lyt;'telton Times" in terms which appear to us to be a model of clearness and precision. The writer says :—" The " tax is levied upon all incomes above a " certain rate, which is fixed as the mini- " mum of income sufficient to provide for

" the necessaries of life. But in assess- " ing the tax, income derived from landed cl property is dealt with differently from " income from other sources. Land is tl separately valued, and on the yearly " value thereof owners pay a certain rate, " and occupiers a lower rate. If the <£ owners are also occupiers, they pay " both rates. The income returns made " under the law imposing the tax are " secret, and every facility is given, in " the case of valuations of land, to tl the owners aud occupiers to appeal " against what they may consider as ex- " cessive valuations. This short sumi: mary, divested of all details, describes " correctly, we believe, the principle of " the English property and income tax. " or, as it is properly called, the income " tax."

It may be well to explain that the tax is limited to incomes over £l5O, with a deduction of £l2O for all incomes between £l5O and £4OO. This is the tax which we would fain see introduced into New Zealand. The limit seems a fair one, and the only point which requires consideration is the proposal to levy a smaller tax on professional incomes or salaries than on those which are derived from funded securities landed property. Learned men have argued the point on both sides, both in favor of and against any such exemptions ; but common sense teaches that the man who receives £3OO a year for his daily work is far less able to afford to contribute his quota to the State than he who receives £3OO a year interest on money invested in land or other securities. A rough-and-ready distinction could easily be made. For instance, the difficulty might be met by increasing the exemptions in the case of unstable or precarious incomes up to double the limit assigned to the capitalist. Merchants and others who would be puzzled to assess the proportion of their income which might be deemed a reward for their professional services, would surely know approximately how much they would have to pay a gentleman to conduct their business if they fell sick or went abroad. For the purposes of the tax such an approximate estimate would be quite near enough. We do not attach much importance to the pretended inquisitorial nature of the tax, nor do we consider that the temptation to make false returns is so great as to prove demoralising to a nation. In practice it has been found that the number of those who defraud the revenue is comparatively small, and it is quite likely that any other direct tax which could be imposed would be equally open to evasion in particular instances. The growth of the proceeds of the tax in England has been very startling. Speaking from memory, we believe that some sixteen or eighteen 3 T ears ago an addition of one penny of income tax in Great Britain rjroduced barely a million, it now brings in about one and a half millions. There is not a single tax in the whole country which admits of alteration to meet the requirements of the national Treasury so readily as the income tax, which has fluctuated from 7tl. up to 16d. aud down to 2d. and again up to 7d. within twenty-five years. The history of the income tax affords a brilliant examplo of a successful attempt to make all sorts of property contribute their share to the public revenue. It has also stood the test ot a thirty-six years' practical trial in Great Britain ; New Zealand statesmen might therefore well be content to profit by the example which we have adduced, and follow it.

We stated the other day that we felt sure that no increase of the land-tax would be agreed to by the House. A rumor reached us yesterday from a well-informed epiarter that any increase of the land-tax which may be proposed during the coming session will be limited in its application, and wid be so fixed as not to affect properties of any less value than £ISOO. On properties below this value, the tax will be maintained at one half-penny. This is must remarkably clever finesse. It is evident that the number of persons owning propert} 7 exceeding £1 500 in value must be intiuitely less than of those own £SOO worth only. Consequently the number of interested objectors would be gre itly diminished under the present proposition, if it were carried into effect. The worst feature in the proposed graduation of the landtax is the indirect effect it will have in closing the laud market aud in reducing the laud reveime, not only temporarily during the present depression, but also permanently. The Ministry have already shown a fixed determination to "go for" the unfortunate landowner, and any inclination they may show of following up the attack will but strengthen the feehng of distrust already aroused in the minds of monied men and capitalists. The latter will doubtless be very chary about risking investments in a country where the legitimate interest on their outlay .seems likely to be absorbed by the State in the name of the public. There is no sale for Crown lands now; the market is not likely to revive if the Treasurer should try to conceal the failure of the laud-tax by ,; piling up the agony " on the large landed proprietors.