The Pamphlet Collection of Sir Robert Stout: Volume 12
The Progressive Land Tax
The Progressive Land Tax.
Sir,—The business of the session having practically closed before I had an opportunity of submitting the whole of the Progressive Land Tax resolutions to Parliament, and the subject itself being one of such vital importance, I am compelled to ask you to permit me to complete the statement of the case—so far as its initiation is concerned—in the columns of The Age. The first resolution of the series will doubtless meet with almost universal affirmation. The second—in support of which I now propose to submit some figures and arguments—is specifically intended to reduce the size of estates to a practicable, workable, and profitable limit. Although not actually passed into law, Parliament has fixed that limit at 640 acres in the possession of any one individual. My proposal is to adopt the same area, and from that point to make it increasingly expensive, in proportion to the size of the estate, to hold more than the quantity of land considered sufficient by the legislature. In doing so, the profits accruing to the individual are necessarily made subordinate to the general interests. General interests means the permanent settlement of people, the employment of labour, the use of machinery, the improvement of the land, and increased production. If these conditions are fulfilled in the case of large estates, there is no object to be gained in breaking them up. If, on the other hand, indisputable facts prove that the land as held in large estates is not yielding its increase, is not furnishing homes and work for a large population, is not keeping up a steady demand for our manufactures, and is not adding by the production of which the land is capable to the wealth of the community, then I think all reasonable mortals will agree with the second resolution, which reads as follows:—
"2. That a direct tax should be imposed on all alienated lands, such tax to be progressive, increasing by one unit of taxation per acre for every 1000 acres owned by any individual."
The fourth resolution fixes the unit at 3d. per acre. The amount would of course be an open question. If the principle be conceded, there is an end to unwieldly, and so far as the State is concerned, unprofitable estates. A glance at the last statistics, page 20 viz., "Production," issued by Mr. Archer, will furnish abundant proof, were any more wanted, of the necessity of an immediate change. Out of 10,711,745 acres in occupation, of which 8,868,540 acres are already alienated, we have 963,091 acres under cultivation, and 7,156,062 in estates of 500 acres and upwards. The real interest in the inquiry lies in the comparative value—to the community—of the 963,091 acres held by improvers and cultivators of the soil, and the 7,156,962 acres held by those who neither improve nor cultivate. Mr. Archer supplies this information in a form which tells with fatal force against the larger estates. 7,156,962 acres are held in farms or estates of 500 acres each and upwards, by 2452 persons, and the balance of the sold land, viz., 1,713,578 acres is divided amongst 32,144 occupiers. Of the total amount under cultivation, viz., 963,091 acres, 258,117 belong to estates of 500 acres and upwards, and 704,974 acres to the small estates. In estimating the difference in value to the nation of land differently employed, the advantage possessed by the large landholder should not be forgotten. All, with the exception of the 258,117 acres, will rank with station property, and the 6,902,845 acres of purchased and unimproved land should really only be credited with its proportional share of the 32,459,274 acres allotted to squatting—or 21 per cent, of the returns from stations. Compared with the returns from land in occupation under the wise limit sanctioned by Parliament, these returns are indeed startling. Nearly 93 per cent, of the land under cultivation is in farms of less than 500 acres, and these statistics show a total of 76,990 persons employed on 963,091 acres, and only 5816 persons on 324 million acres. Of machinery and permanent improvements on the farms of £12,988,445, and on stations of £1,928,080, only 21 per cent, of which, or £41,000, is the fair proportion of the sold but uncultivated lands (6,902,845) held in large estates, as against nearly 13 millions sterling in value, represented by less than one million acres of land held in small farms. The remainder of the value of these large holdings, in a national point of view, consist of about one-fifth of the cattle, sheep, &c., on land unconnected with stations, or 1,194,306 head of live stock, as against 4,777,327 head on the small farms, in addition to the produce and permanent improvements. Surely these statistics of Mr. Archer's should be sufficient to convince every man of the advantage to the colony of comparatively small farms. This second resolution will effect that object. Its operation will be to make the retention of large estates too expensive to be profitable. It will cause them to be subdivided, and make them carry a fair proportion of population.
The following table will show at a glance what the operation of the tax of 3d. per acre, increasing by 3d. with every additional thousand acres held by one individual, would be. Its application, page 21 as proposed, would be 3d. per acre for the first thousand acres, minus 640 acres exempted, 6d. per acre for the second thousand, 9d. for the third, and so on in regular progression. That is to say, an estate of 3000 acres would be taxed as follows, viz.:—360 acres at 3d. in the first thousand equals £4 10s., 1000 acres in the second thousand at 6d. equals £25, and 1000 in the third thousand at 9d. equals £37 10s., or a total of £67 per annum for an estate of 3000 acres. See the following table:—
In all cases the 640 acres are deducted from the first thousand acres.
In the third column the totals are given not only of the tax on the particular thousand, but also of the thousands preceding it. Thus 1s. 3d. per acre does not mean 1s. 3d. on 5000 acres, but 1s. 3d. on the fifth thousand; 1s. on the fourth; 9d. on the third; and so on backwards. The whole being, added together, and an acreage struck, it is seen at a glance what an estate of any given average (in thousands or units of taxation,) from one to eighty thousand, would have to pay yearly. I have run page 22 out the averages up to 80,000 acres, just to show the utter impossibility of there being so vast an estate as 80,000 acres in the colony. Those who call this a proposition to confiscate should first furnish Mr. Archer with statistics on a par with those furnished by the occupiers of small estates, or, holding still to the same proportion, upwards of six times the value of the machinery, improvements, &c., now returned from cultivated land. National rights are paramount to individual rights; taken in the proportion of 32,144 finding a living on the small farms, these "principalities" should carry an additional population of 192,000 souls, and £77,930,670 in improvements.
The advocates for the unlimited acquisition and unconditional possession of land had better study the statistics before venturing on the epithets usually applied to any proposition to tax ourselves.
But it may be objected that the operation of this tax would make a radical change in our social system, and in the exceptional position of those who have benefited by the lax legislation of the past, that evasion would be resorted to, and that capital would quit our shores. With reference to the latter there is no danger whatever. Capital will always flow to where industry establishes itself, and our worst enemies cannot say we are a lazy population. Besides, the petulant capitalist would at least have to leave the land behind him, and as we could not possibly put it to a worse use than he now does, any change in that respect would be a national advantage. The first objection is far more serious. Country cousins to the faintest trace of relationship would, no doubt, suddenly find themselves owners of snug 640 acre farms. As they were all members of the same family, dividing fences would he unnecessary, and matters would go on as they do now, &c. &c. If any such tricks were attempted, annual returns, showing the average production, acre for acre, with the small farms, could be demanded; if they were not up to the local and general standard, collect the tax, no matter what parchment arrangements might be in existence in the bosom of the family. If the returns showed a fair equal average, the primary object would have been achieved, and the rest would be a mere matter of revenue. Besides, as I before hinted, it is proposed to constitute the various local bodies the tax collectors, and this in itself would ensure the work being done well and cheaply. The proposition is for the shire officers to collect the Land Tax,(?) paying one-half over into the general revenue, and the other half to the shire, the Government paying half the actual cost of collection. This would make local government a fact. Now it is only so in name. The construction of the necessary public works would then be wholly independent of official caprice, and wealth would have to pay its fair share—more than it has ever page 23 done yet—towards the roads and bridges which it regards as its own. But to return. This resolution would be the basis on which, in any case, a very large and most justly levied revenue would be raised. Of course any division of the territory now held in large estates must necessarily be hypothetical and speculative. Thus, for instance, I do not believe there will be one estate in the colony with as many as fifty thousand acres within twelve months after the adoption of this resolution. How many there may be of 40, 30, 20, 10, or even 5000 acres, it is quite impossible to say.
It appears from the statistics that there are 7,156,962 acres held in estates of 500 acres and upwards. Assuming for the purpose of making a rough approximate estimate, that these estates are above 640 acres each—the point at which I propose to commence the tax—we may take the following figures to represent what the tax would amount to at different averages, that is to say, estates of more than 640 acres, but whose general average would be 2, 3, 4, 5, or any other number of thousands. Thus, for instance, 7,000,000 acres amenable to this tax, would, at an average of 2000 acres in each estate, or £29 10s., yield a total revenue of £98,333. At 3000 acres average, viz., £67 per annum, the yield would be £156,311. At 4000 acres, £117 per annum, it would amount to £204,750; and at 5000 acres average, to £251,300 a year. I think it would not be unfair to take 5000 acres as the general average, and although the direct revenue from the land would only amount to £251,300 a year, still it should be borne in mind that the sub-division would open the lands of the colony to at least 150,000 more settlers, and in a few years add sixty millions to the wealth of Victoria. Of the probable, or indeed only possible, reception of the proposition in "another place" it is not my intention to speak here. The only question with which I care to concern myself is whether the proposal itself is a just one, and if so, does sound policy and a proper appreciation of the lessons taught by local and foreign facts justify its prompt application to this colony? Has the time arrived to leave off bolstering, and commence the work of reconstruction? I think it has, and hence these proposals at the present time.
The third resolution, "That land to the extent of 640 acres, in the possession of one individul, be exempted from general taxation and subject only to local rating," is more a matter of detail than its predecessors. The point at which a Land Tax changes into a tax on industry is one open to argument, and, possibly, to modification, but that such a point exists is admitted by all political economists, statesmen, and writers, both of the past and the present. Sir James M'Culloch, in 1871, fixed it at a rateable value of £25 per annum. That appeared to me to be a tax, not on land, but on industry. Taxed at ¾d. per acre prior to page 24 selection, it was subject to 4½d. directly after, or, in other words, the Land Tax was ¾d. and the labour tax 3¾d. Parliament was not slow in estimating at its true value this insidious proposal; and, to the lasting honour and credit of the Legislative Assembly be it said, that the attempt to impose additional burdens on labour was swiftly and scornfully rejected. The complete figures as furnished by Hansard in the report of Sir James's speech corroborate this view. Out of £95,000 which he proposed to raise, £82,000 was to be taken from labour, and £13,000 from land, or 86 per cent. from the one, and 14 per cent. from the other. The present proposal is to take the whole of the tax from land and leave labour untouched; and even then, to begin at the almost nominal tax, of what with the 640 acres exemption would only amount to a fraction over one penny per acre on the first thousand acres, and to progress, ever widening, deepening, increasing, but in regular progression, until in mere self-defence the land monopolist is compelled to disgorge.
The industrious reclaimer of the waste lands of the colony ought to be allowed an ample margin, that would admit of his bringing up his family properly, and living respectably himself. A fairly well-to-do class of yeomen is of infinitely greater value to a new country like this, which may ere long be called upon to beat off an invader, than a few exceptionally rich and wholly useless colonists. For this purpose perhaps 640 acres is not too much. It is quite true that, with a direct income of say £6125,000 a year, local taxation would be considerably lightened, and Parliament would be spared the annual nuisance of attempting to adjust local claims so as to present some few features of common fairness; but I think society at large owes some reparation to those who, up to the present time, have been forced to cut the roads and build the bridges.
The third resolution, "That 3d. per acre be recognised as one unit of taxation," fixing the unit of taxation at 3d., like the preceding one, is an open question. 3d. may be too much or it may be too little. The principle will be adopted with the carrying of the first and second resolutions; and I have no hesitation in saying, that in the acceptance of those resolutions lies the future well-being and prosperity of this colony.
John Woods.Parliament Houses, 26th November, 1873.