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The Pamphlet Collection of Sir Robert Stout: Personal Volume

Taxation

Taxation.

Now I come to a question that is going to be discussed no doubt next session, and will often be discussed—that is the question of taxation. A voice: By Jove, you want that.) of course, there are some people who pay very heavy taxes already, by taking things that are not good for them, (Laughter.) Now, let me say what my view on taxation was. I believed that direct taxation was necessary—that if you do not have direct taxation, you do not cast upon the people the feeling of the need of economy; and so far as direct taxation is concerned of the proper kind, I was one of the Ministry that first introduced it in the colony of New Zealand, in the Land Tax Act of 1878. And what was that Land Tax Act? That Land Tax Act provided that the land was taxed, but improvements were not taxed. And it has been said by some people that that land tax was more injurious—that, in point of fact, it cast a greater burden upon the small settlers than the present property tax. I confess I cannot understand that. Why the Land Tax Act said that if a man had, we shall, say a farm of 500 acres, or a small farm of 100 acres, all that he had to pay a tax on was the bare value of the land. His house, his furniture, his stock, his implements, his improvements, his garden, his plantation, were all deducted; he paid no tax on them. (A voice; How about the mortgages?) I am going to come to mortgages by-and-by. I am very sorry to think that that gentleman knows anything about mortgages. (Laughter.) Now it has been said by some people that under the property tax which taxes a man's house, which taxes a man's watch, which taxes a man's books, which taxes a man's improvements, which taxes everything that he possesses I think, except agricultural impe-ments—that everything is taxtd, and that that is an advantage to the small farmer. Well, I never could understand that. And I would put it to the small farmer who knows anything about mortgages, and who has got any mortgage on his place, whether he was better under the old Land Tax Act. Which is the best for him? He pays, we shall say, the same rate of tax he pad under the Land Tax Act, only on the bare value of his land, but under the Property Tax Act he pays on every improvement he has made. What is the advadtage to him? I never could understand what the advantage is to him. It was said the mortgagees escaped under the Land Tax Act. When we proposed our Land Tax Act we proposed what amounted to an income tax, That would have dealt with banks, and they were the Maori mortgagees, but that was put out But do you imagine that when a mortgagee lends you money he does not calculate the interest he is to get for it? You are very much mistaken if you think he does not, I will tell you what actually happened; it is not a question of belief. It actualy happened that when the property-tax was put on the interest in many parts of this colony was raised ½ per-cent. And if it were not that he mortgagees have to pay property tax on their money, you would get your interest I believe 1 per cent. cheaper. So that practically though you may be said to deduct the value of your mortgage from your property, you are simply paying for it in another way by having dearer money, and in a roundabout way. If you wanted the mortgagees taxed directly then you should have provided for that without taxing the improvements of small farmers or the machinery of the manufacturers. In our Property Tax Act of 1885, we page 14 made that very exception. We proposed this to the House,—and you will find how the voting went if you go to Hansard—we proposed to except all farms up to £300 and ma-chinery up to £300, and that all improvements should be free from taxation. The mortgagees remained taxable, We were not able to carry it; so that you see in dealing with this question of taxation we tried in 1885 to keep this in view—we tried in dealing with taxation, as I say any practical politician will have to deal with it in the future—we tried so to shape our taxation that what you term the working bees of our hives were helped and not hindered—I mean the farmers and the manufacturers.