THE TAXATION PROPOSALS.

Gisborne Standard and Cook County Gazette, Volume V, Issue 627, 30 June 1891, Page 2

THE TAXATION PROPOSALS.

INTERVIEW WITH THE PREMIER. Last week a representative of the N.Z. Herald interviewed Mr Ballance on the new system of taxation. In order (telegraphs the representative) that some materials may ba obtained, I this morning waited on the Premier, whose courtesy I have to acknowledge in giving me an hour of his time, although pressed with claims on all sides. The following report gives the substance of the conversation which took place:— One provision of the Statement is that all improvements are to be taxed over £3OOO, and I asked what would be regarded as improvements? • Houses, grassing, fencing, draining, everything visible or unexhausted,’ replied the Premier. ‘ The term unexhausted, as applied in the English Acts, has a definite meaning. You will see tha definition of improvements in the Act of 1878, and our definition now is nearly the same. It may not be quite the same; we will, perhaps, vary it a little, because we have the experience of South Australia in working the same system, so that we are not binding ourselves down to any cast-iron plan. Then we are not groping in the dark on this question. We have the experience of South Australia, where they are working it. We have the experience of the English Government in tha Irish Land Act, and we have our own experience of 1879.’ What would be improvements in a town ? Would machinery be considered improvements ’

No. Machinery we do not tax at all. The profits yielded from machinery are taxable under the income tax. Stock-in-trade also comes under the income tax, and therefore is not touched. Buildings themselves are ranked as improvements, but of course are excepted upto £3OOO. Thera may be buildings in the large centres which are above the value of £3OOO, but then there is a reduction, no matter what their value i». Supposing a building was worth £6OOO, it is taxed for only £3OOO In framing our taxation proposals we would, if possible, have cleared away improvements altogether, and have exempted them entirely from taxation, but it would make too big a hole in the revenue, and we could not think of it. Our estimates, however, to ba obtained will give us the exact data, Before we put the taxation proposals into effect next year we will have the returns of income, and a’l the

correct information necessary, so that when we apply the tax we will know exactly what we are doing. Our data at present are necessarily incomplete, therefore we will have to get the retnrns in before we will know exactly the full amount we shall have. It may be then that instead of the income tax being a penny it will be necessary to have only three-farthings or seven-eighths of a penny. We may not want ail the money that a penny tax would give, and of course there will be a pro rata reduction all round. Speaking of the operation of the laud tax I pointed out that under the Land Act a man might take up 640 acres of first-class land, and another might take up what would be the equivalent of that in value, namely, two thousand acres of second-class land, Supposing, however, each man spent £3 per acre In improvements, the man who had taken up the first-class land would escape

taxation under the exemption clause, white the holder of the second class land would have to pay, 'Not necessarily,’ replied the Premier. 'lt all depends on value. I am prepared to admit, of course, that in every case the proposal may not work out quite fairly and equitably, but it will be a great relief. It is quite plain that wo could not go as far as wo'intended to go, because that meant that we would have to forego £BO,OOO, and we could not do that unless we had framed a graduated tax of three or four times the amount, and that would frighten people altogether. That is the position. We have gone as far as we could go. Still, it will be a relief,’ I remarked that I had boon talking on 1 this subject to a farmer who lives at Mangere, and who was strongly opposed tft the ' property tax, From wbat he said I gathered 1

that the people of that locality believed they would come off better under the land

and income tax than under the property tax. The only fact that made them hesitate in giving tho Government proposals full support was that they did not know that this was not the thin edge of the wedge for an increase of taxation, and that, considering how easy it was to extend the taxation, it would be a dangerous power to give to a Government.

It can only be called the thin edge of tho wedge for overgrown estates. Those people who ore afraid this land tux may bo extended have always political power in their hands. The question is, what is the best thing for New Zealand ? Is it best to encourage a groat number of farmers to go on the land, or to encourage a monopoly of big estates? Wo think it is best to encourage tho small farmers. How do you propose to ascertain the revenue from produce as distinct from tho revenue from land only, because many of tho companies say that they cannot ascertain it from their books ?

We will adjust them. We will lay down rules to adjust that, and it will be for them to show their books.

Supposing a company owns a large number of properties, will those properties be treated separately under your scheme of taxation ? Will the company be entitled to a reduction for each property, or will the properties be assessed together in one lot ?

They will all go together. Under the graduated tax that will make it fall heavily upon them.

No doubt it will come very heavily upon large companies, but we don't think they could be encouraged, if it means the encouragement ot big estates.

But some of the companies are hampered with their large landed properties, and want to get rid of them. On the contrary, tho Premier answered, we find some ot these companies going in and buying small sections of land. We have proof ot that, proof that would frighten you. Some companies have been mopping up lands as fast as they can, getting men to go in and buy for them, and then transferring the sections to themselves. There is the cause of the people leaving New Zealand, and having to go to other countries. We know that a number of small properties in Canterbury have been acquired in this way and passed into the hands of one or two banks. The proof of this is absolute, and beyond doubt, and it will be brought out in the financial debate. I don’t wish to anticipate anything which will be said in the debate, but the proof will be given, the names, figures, and how the land passed into the bands of those companies. We do not dread any alarm front the people who are mopping up the land and acquiring big estates. In answer to another question, the Premier said the graduated land tax on values over £5OOO would tall entirely on the owner, and not on the mortgagee. Will income derived from shares bo taxed under your scheme ? Certainly not. Will mortgages on stock and its produce be charged at the same rate as mortgagee on land? Only registered mortgages will pay. Money which is advanced not under registered mortgages but under stock or chattels will pay under the income tax. Mortgages advanced on stock or lives will pay under the income tax. It is only land mortgages which will pay the same as land, All others will bo treated as coming under the income tax. Under our proposals, of course, nothing will be taxed twice. Is it always possible to discriminate between income derived from land and that which comes from other sources of revenue ? We think it is quite easy. A company will pay the land tax, and the question Is to adjust what income they derive from other sources. We don’t think there will be any difficulty about it. They do not think in the Property Tax Department that it will be difficult. Under our system there 1s no taxing the same article twice. A man does not pay on his cattle or sheep if be pays on the land, That will cover all. Where people are engaged in trade the land will bo ascertained definitely and positively and put on one side, and the remaining profits (from another portion of their trade will be taxed as income. Of course that is a question of balance-sheets. Some companies believe they will find it very difficult to state it exactly, but we will have data to adjust with those companies. It is said, that when you go above the £3OOO exemption, your land taxis simply the old property tax. We admit above £3OOO the taxation is upon property as well as upon land, but even taking the higher amount, it is not unjust to those affected when compared with other classes who pay. That is the justification of a graduated tax upon large estates. Then, too, the opinion in England is growing in favor of a graduated tax upon Incomes. Now, if a man has £lOO,OOO, or £105,000 of property, that man only pays about 12 per cent. If the land which he holds is yielding seven per cent, he pays only about nine per cent. If you take a working man you will find he pays 11 per cent. There is a good deal of apprehension, that changes of legislation such as this will frighten capital.

That is the old ery. There is capital here in superabundance, but there is no outlet for it.

People are all afraid. People are not afraid. The thing te absurd. Down South the other day a man got £35,000 at 5 per cent., when a small man would have had to pay 7 or 8 per cent The cry of frightening away capital is absurd. It is the investment of capital in large estates, which has done the mischief. I say that the past borrowing of money for public works in this colony has not brought as much harm as the investment of capital at a low rate of interest for the building up of huge estates. If you wish to discover the real cause of people having to leave New Zealand yon will find it there—in the mopping up of the land, and the growth of large estates. It te that which is killing New Zealand, and it is that we want to

put an end to. If you relieve the middle class of farmers and the small farmers, that will not have the effect of driving capital away; it will instead encourage capital. Who are those who are raising thia cry about capital ? The big people, not the small men; If you take off the tax on improvements and relieve the small taxpayer you will cause capital to flow in the direction of land settlement. We relieve the industrious settler, and put the tax upon tho lazy classes and those who are acting injuriously to the State. But are they acting injuriously to thg State P

Well, that is the question. We say they are. If the building up of largo estates io injurious to the State, and I contend that it is, I say that that is fatal to every country, and that it will be fatal to New Zealand if it is allowed to go on.

Have you calculated what will bo produced by the different provincial districts ? No, we have not gone into that. But undoubtedly Auckland must come out well. There is a larger number of small settlers in Auckland than in any other provincial district, and therefore that district must come out well. To those who say that our policy will affect the large estates, we reply that they will affect the small estate* by encouraging them. How will the taxation prcposal affect trading companies as compared with the present taxation? Trading companies will have to pay much less, a great deal less, and in two ways, strange to say. Companies maxing a moderate profit of say 10 per cent, wilt pa* less of course. The companies making nothing will pay Infinitely lass. Those companies which make a paying profit, say five per cent., will pay a great deal less than at present, whilst those companies making twenty per cent, will pay a little more. But a prosperous company, that is one making ter, per cent, and not many are or ought (S pay more than that, will pay less. Looking, of course, at the number of companies that make nothing, and at those which straggle on for years without paying, our proposals are much more favorable than the present system. The great grievance against the property tax exists there. Yes, wo tax nothing till it Is on its legs. You must sec that under our scheme the small farmer will be enormously benefited;

The interviewer spoke of the Labor Party and their attitude on this subject. “ The Labor Party,” said Mr Ballance, ■' are the most reasonable men iu the Legislature. They are most earnest men, and devoted entirely to their work. They spend their time thinking out these problems, and show great earnestness; in fact I never saw so much earnestness in a party. The char acter of our Legislature hrs been enormously raised by the labor party. ” The Naiioral Liberal Association’s platform in Dunedin was mentioned, when the Premier went on to say “ they did not think the thing out. They crushed everything they could into the platfoim, and went too far. I agree with an advanced platform, but this platform was not scientifically arranged, and there was no order in it. To talk of limiting the rate of wages and the rate of interest is perfect nonsen-e, became it cannot be done. That is not the direction in which the working classes should go. The thing is to get employment available for the people. What' is the good of getting a fixed rate of wages if the people are walking the streets out of work? The leaders of the people must not bo discouraged in their work. They must be reasoned with and discussion is what will Bet things right. It is a great thing to see the people of the unions reasoning out these questions, and setting themselves to discuss them. lam in sympathy with most of these things in the platform of the National Liberal Association, because I want to see the people raised. Will there be any modification of the Government proposals, do you think ? In passing through committee they will possibly be modified. No Bill goes through committee without modification. We cannot afford, however, to allow any of the sources of revenue to suffer, and we hope that the modifications will not be of such a character that we shall lose revenue. We expect that the principal modifications will come next year, because the opinion of the Tax Department is that the estimate will be found to be above the mark rather than under it. It may be, as I have said, that the tax on income, instead of being a penny, shall be only three-farthings or seven eighths of a penny, because we may not want the penny, and there will be a pro rata reduction all round We think we have made a full calculation of everything. Some people indeed think we have gone very greatly under the mark in the matter cf the income tax, and that it will bring us more than £40,000, but we must wait to get the data complete. When I estimated our land tax of 1879 I made it £lOO,OOO, working without any data at all, and what do yon think It brought us? £99.000. That was a close calculation, wasn’t it! and that tax was only a half-penny. A penny would have brought in £200,000. That was a land tax pure and •imple, without any tax on improvements or Income. That would have been a perfect tax. and when the property tax was proposed I prophesied that they would have to go back w such a land tax.

INTERVIEW WITH SIR GEORGE GREY. The representative of the Hawke's Bay Herald had an_ interview with Sir George Grey, who expressed himself strongly opposed to the taxation of improvements, and said he could not agree to that part of the Ministerial scheme. On its being suggested that if Sir George Grey were to move against the taxation of improvements he would be backed up by 6 large number of the Opposition, he Baid : I scarcely think it would be necessary to act in that way, I believe that the Government, if it were shewn that the House and the country were opposed to the taxation of improvements, and that such a tax would be injurious and impolitic, would give way, and modify the Bills accordingly, I do not think there will be any attempt on the part of the Government to force their proposals. I think that the intention is to try and make it really good and useful, and not to embarrass anybody. I think the members of the House are quite determined to advance their views in that way, and to do the best for the country without making any unnecessary disturbance. I am sure the measure will be fairly considered, and if the Government cannot accept the alterations the measure will just be dropped. The Government will no doubt nrge that the tax on improvements must be imposed in Order to raise the necessary revenue ? They cannot urge that until they have exhaueted all other means, and until they have shown that it is the best of all that is to be worked out. The interviewer mentioned the reduction of the interprovincial rate of postage to one penny. Sir George : That is what I have always been fighting for myself, and I cannot abandon them on that. In previous years when I gave them notice of that they usually prevented me from bringing it forward. The answer to the objection that a loss of revenue would result from having a penny instead of a twopenny postage is that it will repay itself. One probability that I have not heard alluded to is that there will be a great increase in letters between lovers. I believe that alone will be enormous, They will spend the same money to write double the number of letters. The penny postage will be an enormous boon. It will bring us into touch with the whole world. I shall not interfere with that of course, I cannot do so, having tried to get it adopted, What do you think about the Labar Bills ? r I do not care about the Labor Bills for the moment. The arrangement made in Australia was not one of these. The thing has to be Cunsidered, and it will not be well to take up too many subjects to raise quarrels among people who are now united. No fair labor bill can be made until there is a fair representation, and until the people are united, The moment we get the power in that way we shall make the labor bills ourselves, AH ths elections in New South Wales are being fought on those terms. Nothing is thought of but the abolition of plural voting, so that there may be fair representation. When we have the perfect means of legislating such as is really required by the country, let us take up all these labor bills in turn. If on the other hand there were an evident effort made to spread disunion amongst the masses by saying that the question first to ba considered was that of Freetrade and protection, or anything of that kind, everybody would, have gone fighting on that and have left aside the material work of getting the power to make themselves felt in the government of the country. I have no doubt, however, that the labor bills will contain great improvements, and let the people get those improvements by all means. Do yon think that the financial policy of the Government will have the effect of breaking UP the big estates ? I should think perhaps they would be pbliged to do it. People would not like to go an paying, taxation for lends which yield them nothing, and which they were holding for speculative purposes. But the main object is to get the people that which justly belongs to them—that is a fair part of the unearned increment. Sir George was questioned as to what stand he intended to take up, but said he would let some of his friends speak first. He complained that by an arrangement between Government and Opposition as to the order in which the speakers should range in the debate, some of bis friends had been unable to B*‘ a chance to speak,