MR MASSEY ON TAXATION

New Zealand Times, Volume XXXIII, Issue 7851, 13 July 1911, Page 5

MR MASSEY ON TAXATION

(To the Editor ” N.Z. Times.”) Sir,—lt is duo to the leader of the Opposition to say that he has at last placed something in the nature cf a definite policy bctoro the public. In so doing he at least performed one useful service—he has given us something to criticise or approve, "With your permission I would oftor a few comments on one passage in the speech delivered by him on Thursday night last, and i propose to show that the .same is ok* viously incorrect. Replying to an interjection, Mr Massey said: “You may tax any individual, but in every case laxation will find its way back to the rank and file/’ This sentence is merely a paraphrase of one used more than one© by Sir William Jlussell: “Impose taxation how you will, the mass of the people must ultimately pay it/' If the statement is trite, it moans simply that the method of taxation is a matter of indifference—that, no matter how levied taxation is a -burden, not merely on the actual payer, but on the mass of the people. If such is the case, why, may I ask, does Air Massey object to the taxation of land values'' Why do some of his followers, oven at this late day, tell us that the old projverty tax was a preferable impost? Why do Australian pastoralists send deputations to Air Andrew Fisher to protest against the land tax? Why does the "PastoralisU'* Review” denounce the Federal land-tax as confiscation? Why did English aristocrats exhaust their vocabulary of abuse on the Lloyd George budget? Why do> certain ironmaster*; in this country clamour ic incmisdd duties? Why did a coterie of sawmillers a lew years ago thunder for increased duty on Oregon pine? The answer is obvious: Because the method of taxation iy not a matter of indifference. Importers never denounce tariff taxation as confiscation, because they know well that no matter how high the taxation, the public must pay. Land do 'so characterise ianclvaluo taxation, because they know that the land-tax is an impost that cannot bo passed on, that it tends to cheapen land, that it tends to open avenues ci employment, and consequently to lessen the •competition amongst labourers for wages, and, that if carried far enough, it means the end of land monopoly for ail time- Accordingly those gentry, no matter what Mr Massey may say to the contrary, are well aware that tho method of taxation is not, cannot he, and never was a matter of indifference. look at the question historically wc find a complete refutation cf Air Massey's contention. Every great political and social movement in history is more or less connected with controversy about Laxation, Study, the history of England for instance—the government of the Conqueror, tho struggle for Magna Clrarta. the struggles between the Stuart and Tudor Icings and their Parliaments, culminating in the Revolution of IuSS; the imposition of tho land tax in 30-93; tho movement for the repeal of tho Corn Laws. Every ono of those movements raised the question of taxation, and it requires no argument to show that repeatedly taxation has been used effectively to cope with grave social difficulties. Moreover ns time goes on it is evident that the public mind is becoming enlightened in connection with the problem of taxation. The discontent that led to Wat Tyler's rebellion in the fourteenth century was largely owing to the imposition of a poll-tax, an impost which no man pretending to statesmanship nowadays would dream of defending. It is a historical fact that the \nndow-tax which existed in England from 3635 until 1851 was the direct cause of bad ventilation and lighting. It is likewise true that the chimney tax or hearth-money, levied from 1663 until 1659, had the effect of inducing men to build houses with as few chimneys as possible. Nowadays of course' those obnoxious taxes are forgotten beyond recall, but they arc interesting as indicating how far men ■have advanced towards better principles ‘of taxation.

It was often complained against Walpole, who was Prime Minister of England from 1721 until 1742, that he did little or nothing by legislation to promote the welfare of England. The verdict of history, however, is different. It is true that Walpole attempted little by legislation, but his name stands forth in history as the first and probably the greatest of English Peace Ministers. How did he earn his renown? I reply that he did so through a proper appreciation 'of the importance of taxation. He saw .that indirect taxation hampered industry and prevented the development of comImerce, and accordingly he remitted duty after duty, thus giving the energies of the people greater and freer scope than had been afforded them at any earlier period of history. Says Green in his "Short History of the English People”:—

As Walpole was the first of our Peace so he was the first of our Financiers. He was indeed far from discernling tho powers which later statesmen have shown to exist in a sound finance, but he had the sense .to see what no minister had till then seen, that the wisest course a statesman can take in the presence of a great increase in national industry and national wealth Is to look quietly on and ; let it alone. At the outset of his rule ho declared in a Speech from the Throne that nothing would more conduce to the extension of commerce "than to make the exportation of our manufactures and the importation of the commodities used in the manufacture of them as practicable and as easy as may bo.” The first act of his financial ■administration was to take off the duties from more than a hundred British exports find nearly forty articles of importation. In 1730 ho broke in tho same enlightened [spirit through the prejudice which restrictjed the commerce of the colonics to the another country .alone’ by allowing Georgia land the Carolinas to export their rico •directly to any part of Europe. The result was that the rice of America soon .drove that of Italy and Egypt from the market

Coming to more recent times, let tis 'take the case of the Corn Laws. Sir Robert Peel took office in IS4I as head of a Government pledged to maintain the import duties on corn. So terrible was the suffering caused by dear food, however, that a few years later these taxes were temporarily suspended by tho Peel Government. The ensuing benefits were so apparent and far-reaching that public opinion simply would hot allow the reimposition of the suspended taxes, ; and Sir Robert Peel made public profession of his conversion to freetrade. iSpeaklng in tho House of Commons in justification of his change of opinion, he declared (I) that wages had not varied with the price of food, and that high (prices did not necessarily imply high wages; (II) that employment, (high wages and abundance contribute directly to the diminution of crime; and (III) that by the abolition of the duties, industry had been promoted and morality improved. Speaking in the same connection Mr Gladstone, who had theretofore been a Conservative and a supporter of protection, declared Ms conversion to freetrade as a matter of "imperative public policy.” I ask the reader to note the far-reaching consequences of the two opposing principles of taxation, as testified by these two statesmen, and then contrast their declarations with the absurd contention promulgated by Mr Masspy last Thursday night. "Of course, Mr Massey has heard of Adam Smith. Probably. like most politicians, he has not read him. Otherwise it Is impossible to believe he would think so lightly of the method of imposing taxes. Smith teaches, first, that labour is the source of all wealth, and that the best-paid labour is the most effective. "The wages of labour.” he , writes, "are the encouragement of industry, which, like ©very other human quality. improves in proportion to the encouragement it receives.” Secondly, h© maintains that, inasmuch as every man is a better judge,of his own business than the State, all artificial interference with trade is injurious; and thirdly, that If the law is to be respected, it must be effective, and in order to be effective it must cease to prohibit actions which are not morally wrong. Consequently Adam Smith condemns the mercantile system of Europe. How does, ho propose to change it? Simply by changing the method of taxation! I would recommend Mr Massey to read Smith's chap-,

ters on taxation. He wall find therein ample justification for tho Lloyd Georges Budget, for the author of “The "Wealth, of Nations” actually tells ns that indus--try would be encouraged by the valuation and adequate taxation qf land! Whether then wo test Mr NLassey’s statement by the principles of political economy or by the lessons of history, wo. shall easily find that the method of taxa-l tion is not a matter of indifference; that taxation rightly applied may be used as means of achieving social benefits of the most far-reaching character: and that, wrongly applied, it _is capable of nroducing the deepest social unrest and. distress. It was the great French states-, man, Turgot, who condemned indirect taxes as a device for plucking quills from the goose without making him squeal.— I am, etc., P. J. O’REOAN. July 9th.