WAR TAXATION

Otago Witness, Issue 3183, 17 March 1915, Page 62

WAR TAXATION

PROBABLE FORMS DISCUSSED

AN INTERESTING CALCULATION

LFeom Ouh Own Correspondent.) WELLINGTON, March 10. Taxation possibilities, with special regard to the prospective imposition of a war lax or taxes, me discussed in an interesting special article in the Evening Post: —“In IbK the New Zealand Government's revenue was ±H2,2ya,sdi. rhat revenue was mainly derived from two sources—taxation and “ services " and the greater of these is taxat.on. Taxation in 1914 produced £5,9U3,U34, and " services ” (railways. Post and Telegraph, and certain special services) produced £0,551,913. Now tnat we are laced with a largely increased expenditure on war, it is too much to hope tiiat the revenue from, railways and other public services will expand in a degree nearly equal to the new demands; therefore it becomes imperative to increase taxation, ana tnat need is intensified by the slump (caused by the Act) in Customs revenue, which shows for the 11 mouths of the current financial year a decrease of over £200,000 compared with the corresponding 11 months of last year. Of the £5,918,034 derived in 1914 from taxation, Customs and excise duties produced 60.05 per cent., the land tax 12.9? per cent., income tax 9.37 per cent., death duties 10.37 per cent., ether taxes (including totalisator tax), 7.24 per cent. This gives at a glance the main heads of’ revenue derived from taxation. REDUCED CUSTOMS BURDEN. Various reasons may ba advanced for an increase under each and all of these heads. The proportion of Customs revenue to the total taxation was in 1914 60.05 per cent. — the lowest for many years; in 1905 it was 72.67 per cent. This decrease is duo,_ of course, to remission or reduct.on of various Customs duties. In many casts the duty has been reduced, but increased importation duo to prosperity, has caused an increase _ in the revenue produced by the dot;/, which increase would have been much greater had the duty remained unaltered. Thus in 1900 the Customs duties produced a revenue of £2 16s lOd per head of population; in 1913 they produced £3 4s Id per head of population; but had the ratio between imports and duties been the same in 1913 as it was in 1900, the revenue produced would have been £4 6s 2d per head. To put it in another way. The Customs revenue per head of population increased from £2 16s lOd in 1900 to £5 4s Id in 1913, or at the rate of 13 per cent.; yet in the same period the proportion of Customs revenue to total imports decreased by 26 per cent. This lightening of the Customs burden was, of course, a wise and bcncficient thing. At the same time, it indicates a way —one of the ways —in which the screw may be tightened to tide over a time of emergency. THE FARMERS’ PROSPERITY. In the next division —land tax —there is a double reason for giving the scrcw_ another turn. The man on the land is in the best position to pay. Higher Customs duties fall on the ordinary worker, whoso food bill has been so greatly increased, and the farmer who profits through that foo,< bill should bo prepared to assist liberally through the land tax. Under the ordinary land tax a small land owner is exempt from tax up to £SOOO unimproved value; where the land exceeds £SOOO in unimproved value a graduated tax begins to operate, rising to nearly 6d in the £1 (to be exast 5 5-6 d) where the unimproved value exceeds £200,000. Within this graduation a third principle of taxation operates. Where the unimproved value exceeds £30,000 the rate of graduated tax is increased by 25 per cent., or one-quarter. (This figure —£30,000 —is the work of the Massey Government; under the Ward Government it was £40,000). In recent years both the leading political parties by their land tax measures have recognised that people who hold in single ownership a largo value of land should be compelled to pay for the . privilege. This principle finds application, though inadequately, in the upper grades of the graduated land tax, and particularly in the 25 per cent, addition, which is really a super-tax. Those levies represent special taxes on the holding of large quantities of highly-valued improvable land. In the past a number of landowners have found it profitable to pay the taxes and hold the land, instead of subdividing it. With the rise in wool (another consequence of the war) they will be still more strongly fortified in their position, and their burdens should be increased proportionately. They are certainly not the class of taxpayer who should escape. INCOME TAXES HERE AND ABROAD This again brings us to income tax, and it is apparent that earners of incomes, large and small, will have to put their hands deeper into their pockets. It is too big a subject to deal with in the tail end of an article; but it is worth while recalling here that the British Consevatiyo Unionists, when they opposed in peace time Mr Lloyd George’s efforts to increase the super-tax on the higher incomes, always maintained that this kind of super-taxation should be reserved as a war tax. Now that war has come they have lived up to their professions. Mr Lloyd George’s doubling of the income tax has been accepted without cavil, and rich people in the Old Country are now paying very heavily into the national exchequer-. No doubt they will not shirk similar burdens in the Antipodes. The small income-earner, also, has his burden to bear. From the point of view of exemption, our income tax is more liberal than the Australian income taxes. Here the exemption is £3O0 —that is to say, no one earning less than that is called on to pay income tax. In Victoria, Queensland, South Australia, and West Australia the exemption is £200: in the Old Country it is £l6O. Under the old rates of income tax in the Old Country, as soon as a man earned an income of over £l6O a year he entered the ranks of income tax-payers, with a levy of 9d in the £ When the Now Lloyd George scale fully operates ho will pay Is 6d in the £. In New Zealand he

would not pay a tax unless his income was over £3OO, and he would then pay at the rate of 6d in the £. If one examines tho Old Country income tax at the ton end of the scale lie will find that, in the case of income tax and super-tax on an income of £IOO,OOO, the peace levy was £12,622, and tho war levy will be £25,245, or more than one-quarter of the income. MR BEAUCHAMP’S SUGGESTIONS. TRADERS’ OBJECTIONS. CHRISTCHURCH, March 11. Mr J. B. Laurenson, president of the Canterbury Industrial Association, in an interview as to the war tax proposal suggested by Mr Beauchamp, said he did not think it a fair proposal. It would be impossible in a majority of cases for importers to pass the tax on, so it would mean for them 1 per cent, less profit. The tax would not be so unfair to the exporters, but still it would not be reasonable. Exporters might have to face an exceedingly heavy loss on goods exported. Such a tax, also, would not touch many large institutions. The fairest tax would be a graduated one on incomes.