The Pamphlet Collection of Sir Robert Stout: Volume 29
Advantages of Direct over Indirect Taxation
Advantages of Direct over Indirect Taxation.
Under Customs' Duties, or indirect taxation, the tax-payer does not know how much of the unjust burden he bears: the Government does not receive the whole sum composing that burden: importers, retailers, and protected producers become instruments for collecting the whole sum—paying a portion only to the Government, and keeping the rest as their recompense; so that they are virtually farmers of the page 41 revenue, charging their own commission by agreement and combination among themselves, as Chambers of Commerce regulate charges by mercantile men on private transactions. The fact of an exorbitant and unjust contribution being levied on him is not a transaction clearly manifest to the consumer; and he is unable to insist on getting "peace, order, and good government" in quantity and of good quality enough for the money. The opponents of taxation reform in the direction of taxing property and income, when they make light of the burden inflicted by indirect taxation, only adduce the actual duty, and leave out of account the percentage added to the burden by private agents for its collection, who are exempt from control, either by Government or by the tax-payers through their own representatives.
Under income and property tax, whether paid directly into a Government office, or collected directly by official tax-payers, the person who pays knows exactly how much he pays to the State; and the whole of his payment goes into the public Treasury, excepting the cost of collection; which is under Government control, and therefore, through their representatives, under that of the tax-payers themselves. Every person can thus more accurately calculate how much improvements to his property will cost him, in proportion to the benefits derived from his increased contribution to the ways and means of the Government, and its consequently greater ability to distribute those benefits amongst all in proportion to their payments. Every person, consequently, will be more interested in watching Government expenditure, and more on the alert to secure representatives willing and able to direct the expenditure on the principle of "the greatest good of the greatest number," and contribution to cost of Government in proportion to benefit derived.
All those who arefavourable to the above programme, or to the chief part of the eight proposals contained in it, must earnestly combine, to agitate for the attainment of these objects: because the opponents of such reforms, although not very many in number, are very powerful in wealth, and in the present possession of the majority of political and literary power. Rich people, with a very few honourable exceptions, will use every effort to oppose the Reform in its main features. Not only large landowners, but those who derive large incomes from the collection of rent, interest, and cost of land, and other mercantile transactions large in individual quantity or in number, will array themselves against it. Bankers and money-lenders in the Colony, will thus generally oppose it. The newspapers now published in the Colony, which are chiefly maintained by advertisements of the wealthy folks' dealings, and therefore carried on so as to favour the wealthy, will, with very few if any exceptions, defend the present system of indirect taxation against the direct taxation of property and income.
The majority of the members of both Houses of our Parliament, and of the influential and high-salaried officers of our Civil Service, will also, I fear, oppose the desired change. I shall indeed rejoice, if those fears should prove ill-founded. But my own impression is, that most of the elections are still won by the influence of the monied interest. The last ones, in 1875, were evidently carried for the most part in that direction. It is a fallacy to suppose that, because the people of New Zealand nominally possess almost universal suffrage and the ballot, the wishes of the majority of the people are really represented as against the minority of large land monopolists, dealers in money, and persons largely benefited by political public works and ample supply of labour.