The Star. MONDAY, DECEMBER 17, 1917. EDITORIAL NOTES.

Star (Christchurch), Issue 12193, 17 December 1917, Page 4

The Star. MONDAY, DECEMBER 17, 1917. EDITORIAL NOTES.

A TAXATION ANOMALY. "When it was decided some years ago that taxation should be levied on unimproved land values, and that improvements should not come within the scope of the operations of the Land Tax Act, the Dominion hmquestionably adopted a rational course, and one which has since received the endorsement of other countries. Imitation is the most sincere kind of flattery, and in this connection ' New Zealand, in its reforming days, certainly led. It is certainly an incentive to landowners to improve their holdings if they know that such improvements will be exempt from taxation, and already the adoption of this cardinal principle has had far-reaching effects. Tliat the principle is a thoroughly sound one is now admitted even by many of those who in biygone days stood out valiantly against any differentiation between the unimproved iind the improved values in connection with the levying of taxation. In the cities we know that the adoption of this principle has resulted in blocks formerly held for purely speculative purposes being turned to some "useful account, and to-day the area held " until the market improves" and until the enterprise of neighbours enhanced tho value of properties, is very much smaller than it was twenty years ago.

Considering the general acceptance of the. principle, it is surprising that Parliament did not adopt the same principle in connection with the Land and Income Tax Act, 1916, and the Finance Act of last year. In connection with this tax, under tho heading of

" exemptions," property owners nre allowed to deduct 5 per cent interest on the unimproved value of their land, but no similar allowance is made in the case of improvements. "Where is tho consistency? Wo will s'upposo that a man owned 1000 acres, which, in its unimproved condition, is valued at £6 per acre. On this sum, £6OOO, be would be allowed to deduct from bis income the sum of £3OO as interest on the money invested. That is quite right. But no enterprising farmer would permit his holding to remain in its native state. If by cultivation, the erection of buildings, fences, etc.. he increases

the by £2 per acre-—quite a reasonable amount—raising the val'ae per acre to £B, he would receive no allowance in the way of interest for the £2 per acre devoted to improvements! He would be taxed on that nmount. Is this the way to encourage farmers and others to improve their holdings? Ts this not in flat contradiction of the principle of taxing on unimproved values? We think it is, and it is strange indeed that Parliament permitted even a National Government in sore .straits for sources of income, to so far infringe, the principles which ruled the Dominion's taxation measures for years. e know that this is not a time to talk of decreasing taxation : the demands of the future will probably render necessary an increase rather than a reduction. But is it not possible to. be consistent and to raise the money required without infringing those principles which we fnndlv believed were as unchangeable, as t-h° laws of the Modes and Persians? "We maintain that -very inducement should bo held out to those holding land to improve the areas under their control, since by that mean--, alone can the wealth of the community be increased. Is the Government doing its part in penalising those who improve their property >* \Y» think not.

ANOTHER TUNNEL. The obtuseness of the Ilailwav Department m refusing to make the best possible use of the present, tunnel connecting Lyttelton and the Plains ,has drawn pointed attention to ways of overcoming the serious handicap under which the province is labouring, and under which it is likely to labour unless those controlling the Railway Department can be persuaded to depart;, from their course of foolishness. The meeting held on Saturday evening, under the presidency of Dr Tliaeker, 3J.P.. should do something to focus attention on a matter of supreme importance, and the. deputation which will wait, on Sir Joseph Ward on Wednesday will, we feel sure, make, out a sufficiently strong case to enlist the wholesouled support .of the Minister of Finance. Sir .Joseph Ward was .one of the most successful Ministers, of Railways which the Dominion has had. As a shrewd and practical mm mere .'a l man he. must, have already realised the disabilities under which the province has laboured since his colleague) put into operation his "revised time-table."' and Are. are satisfied that no part of the blame can be, laid on his ,'jhuulders. Put of course the final word lies, we suppose, with the Minister at. the head .of the. Department, and in his wisdom, or unwisdom, Mr Merries has seen lit. to impose on the people of H'lis province something in the na.ture of a, crushing penalty. As was pointed out by the speakers on .Saturday corning, the results have already proved disastrous, and unless the disability is removed forthwith the province is threatened with still more dire consequences, which will inevitably reduce Lyttelton to a port of secondary importance, of course to the advantage of other centres, which have not to contend against the same conditions. The views hold by the commercial community were excellently expressed by those who spoke, and the calm analysis of the position must have carried conviction to all who listened to their remarks. There was nothing wild or inflammatory in the utterances of the speakers: they approached the question in a quite dispassionate frame of mind, and consequently their summing up must carry all the more weight.

One of the speakers dwelt strongly on the, advisability of driving another tunnel through the hills, which would render possible, road traffic W:th the Fort, and we are satisfied that unless the Railway Department is amenable t.o reason the proposal should receive the earnest- consideration .of the City Council and the local bodies of the province. Now, it, must be. borne in mind that when the project to make tho tunnel was undertaken hy this province the population of the. districts north of the Rangitata did not total 4000, of whicih the city of Christehurch claimed bet-ween 500 and 600. By the time the work was put in hand in 1861 there had been a considerable increase in population, but even then it was very small indeed compared with what it is to-day. The- cost .of constructing the tunned was £195,000, and tho work took live years to complete. It- is safe to say that no community in less lihan twenty years a fields foundation, and with such a small population, ever carried so gigantic, a work to a. successful conclusion, and nothing but the untiring zeal and unflinching courage of the Superintendent, Mr William Sefton Moorhouse, made the project possible. The construction of a tunnel fifty yeaj-.s ago was carried out with the aid of implements which would receive no consideration from the engineers of to-day, and under modern conditions the work could undoubtedly be winded out in a much shorter space of time. As Mr Bourn stated on Saturday, the Otira tunnel will bo completed within twelve months, and it would consequently be possible to requisition all the elaborate machinery now in use there for driving a tunnel through the hills for road traffic. "With the achievement of perfection in motor traction, the scheme becomes doubly alluring, inasmuch as by this means goods could be conveyed direct from the ship's side to the warehouse., thus obviating one, if not two, handlings, and saving a large sum annually in breakages. The advantages must commend themselves t.o the whole mercantile community. Very possibly the expenditure of a. quarter of a. million sterling at the outside would suffice for the construction of the tunnel. Then we would be independent of the vagaries .of imported railway managers and unsympathetic Ministers of Railways. The money could possibly be obtained at 5 per cent, certainly at 6 per cent, and consequently the charges would be but £12,500 or £15,000 per annum—a mere bagatelle, considering tho liabilities which are being incurred in other directions. The suggestion put forward by Mr B.ourn is certainly worthy of earnest and sympathetic consideration, and we commend it to the whole community a,s a, practical solution of the disabilities under which the province is labouring.

The races in the Empire, are many. There a.re many languages, ma.ny religions. But ail the subjects look up to the Crown as that which binds them together in a union, all the firmer because the trammels are so light.—The Lard.