Chapter XXVI.

Why the new Method would be the Reverse of Oppressive.

It is often stated that the land could not bear the whole taxation of a country, and at first sight the assertion appears to be an eminently reasonable one. But this arises from the mistake of overlooking the page 58 fact that the land already bears a much heavier burden. Those who have carefully read the preceding pages will not have missed the contention that the land now bears the whole of the annual ground rent charge. In all probability this amount in New Zealand considerably exceeds the whole of the taxation. "Then the taxation also comes out of the land, because all wealth arises from the application of labour to land; this term including all "natural opportunities." The two levies just mentioned, viz., the ground rent and the taxation, both come out of the annual produce of the people's industry. Single Taxers propose that for the future only the ground rent shall be taken up, and that all the taxes shall be repealed. This, then, amounts to a great lightening of the present burdens, and cannot, therefore, be called oppressive.

But take some figures which apply to New Zealand. A reference to paper "B 20, 1892," in the appendix to the "Journals House of Representatives," and entitled "Land and Income Tax Department,—Report by the Commissioner," we shall find on page 4 that the unimproved value, as at 1st November, 1891, of all the land owned in the Colony was £75,787,895. This may be token as the selling value of the land as an income-producing investment. The income which land produces is ground rent. It will yield this to the investor or working proprietor, over and above the living which can be made by using it. If this was not so, the tenant could not exist and pay rent as well. If it was not so, the working proprietor who had as large a loan as possible on his land could not pay the interest. If it was not so, the working proprietor whose land was unencumbered would not make interest on the capital which he had embarked in its purchase.

It does not follow that all the land in the return is—and it is not necessary to the following contention that it should be—let on ground rent to cultivators. But the selling value would not be there if a possible ground rent did not exist as its basis. Now, an owner may either let his land, and take what cash income it will bring, or he can work it himself, and thereby, as has been shown already, make the ground rent in addition to the living which a tenant could make. For the present purpose, therefore, it amounts to the same thing, viz., that the whole seventy-six millions is, as stated above, an income-producing investment.

The question to be considered next is, "What is the probable ground rent which it may be expected to yield?" This is a question of percentage. Scarcely any capital has been lent on mortgage at less than 6 per cent. A mere loan carries with it no prospect of gain to the mortgagee through a possible increase of selling value. The owner would benefit by such a rise, and therefore purchases are, on the whole, made at a price which contemplates this prospect, and are, to that extent, based upon a higher ground rent than is at present obtainable. For this reason the rate of interest must be estimated at less than 6 per cent. If it is taken at 4 per cent., it will probably be about the mark. Now, 4 per cent. on £76,000,000 comes to more than £3,000,000, and page 59 it may be very fairly assumed that this sum represents approximately one of the burdens which the land of the Colony bears, and actually yields in money or in kind, to the owners.

In addition to this tribute to private individuals, the State is raising about £2,500,000 annually by taxation (apart from railway, and post and telegraph revenue, which cannot be classed as taxation). The total burden, therefore, which is now imposed on the Colony under these two heads is £5,500,000. Single Taxers contend that the whole of this is really a burden upon the land. It certainly comes from the annual industry of the people, and there is nothing for them to obtain their living and their savings from except the land(including, as the term does, all natural opportunities).

Do Single Taxers propose to increase this burden? No; on the contrary, they propose to reduce it by £2,500,000, the amount of the present taxation. They propose to gradually divert the £3,000,000 of ground rent from the pockets of a section of the community to the respective coffers of the Colonial Treasurer and the local bodies. It is, therefore, apparent that, whatever charge can be brought against them, it cannot be shown that their proposals would increase the total burdens of the people. It will also be impossible, for those who deny that taxation comes out of the land, to show that the burdens upon land would be increased.