The Press Saturday, November 5, 1921. Taxation and the Tariff.

Press, Volume LVII, Issue 17295, 5 November 1921, Page 10

The Press Saturday, November 5, 1921. Taxation and the Tariff.

As we mentioned yesterday, the Prime Minister stated in his Budget that "the whole system of taction in "operation in New Zealand requires " to be revised, as well as the Customs "tariff, and I hope," he "with "the assistance of members, to make "some very important changes and "improvements in this respect before " the session comes to an end, Legis"lotion for this purpose will be intro"duoed very shortly." Mr Massey has given no hint which will assist the public to any confident conjecture as to the very important changes contemplated, but it is hardly possible that revision can begin without some amendment of the method of taxing companies. The case against the present method' has been Bet forth scores of times during the past year, qfad we may assume that everybody is quite familiar with it, and familiar, also, with the fact that no real defenco of the method is possible. If the Government makes the change which is almost universally desired, it will lose a oertatin amount of revenue, but revenue obtained through a method of taxation essentially unjust ought to be given up, and any deficiency replaced by some juster levy. But an amendment of the law in this respect will be only a part of. the changes necessary to the establishment of a sounder basis of taxation generally. The worst feature of the taxation in this country has for many years been the exemption from direct taxation of all but a very tiny section of the people. Nobody has desired that persona with incomes below £3OO a year should pay more than a small sum in direct taxation, but it is wrong that the exemption line is not substantially lower. It is not merely that a considerable amount of revenue is being lost; nor that it is unjust that 90 per cent, of the population pay no direct taxation, the burden falling on the minority. The worst consequence of the unwisdom which drew the exemption line at £3OO is the withholding of any incentive to the public generally to keep a critical eye upon State expenditure, the encouragement of the population to believe that there is an inexhaustible supply of money for the Government's use. To this fact more than to anything else may be ascribed that continuous and unwarrantable growth in State expenditure which, receiving an enormous impetus through the deplorable folly of the National Government's financial policy, has flowered in the difficulties that confront Mr Massey to-day. If a' majority of the population received an annual reminder in the shape of a communication from the Commissioner of Taxes, of the desirableness of economy in State expenditure, there would be a very excellent prospect of maintenance of the national finances on a sound basis.

Whenever we have urged this particular reform, the "friends of the •'people,'' as those short-sighted Radicals who give the people such bad advice like to be called, have been very indignant. It is bad enough, they say, that the people should have to pay indirect taxes, and at one time they used to turn to arithmetio for support of their assertions that the payers of indirect taxation bore a heavier burden than the payers of direct taxation. It never was, because the direct taxation has always been paid by a mere handful of people, who paid their share -vf indirect taxation as well. In late years the direct taxation has risen enor-

' mously. Between 1913-14 and 1919-20 J the income tax increased by no less j than 1049 per cent., while the Customs | duties increased by 40 per cent. It is • not through fresh direct taxation that tho Government must reach out for new revenue, and it is only just that it should have recourse to Customs duties. So far as they are designed to bring in new revenue the new duties are easily defensible, although it might have been better if the Government had decided to go for a plain primage duty fixed at a percentage which would yield another million and a half or two millions of revenue. The flood of comment upon the .new proposals has begun, and, as was to have been expected, the most important of the new revenue duties are being adversely criticised. This always happens, and Governments are accustomed to discount very heavily such gloomy comments as have been called forth by the new taxes on spirits, beer, and tobacco. Far more important, to our mind, are those few new duties which are Protectionist in intention. They will not yield a great deal of revenue, but they will raise prices to the consumer beyond what is reasonable or necessary. The Forest Service. The outstanding feature of the annual report of the State Forest Service, summarised in this issue, is the almost aggressive earnestness of the Director of State Forests in emphasising the desirableness that the control on scientific lines of State Forestry in New Zealand should be placed in the hands of one authority, the Forest Service, and the necessity of establishing, without any more delay, a School of Forestry from which in time a supply of officers competent to carry out the policy of the Forest Service can be secured. In its vigorous style, and the candour with which it comments on the delayß and omissions for which the Department was wholly or in part responsible during the past year, the report strikes a note that is uncommon among official documents of its class and one that will ensure its perusal by many who would pay little attention to an ordinary humdrum record of the year's work and statement of proposals for the future. Mr Ellis gives one the impression that he is quite sure of himself; he knows exactly what he Wants and what he thinks should be done, and He expresses his views -with admirable clearness. Plrobably the mOgt noteworthy point he makes in his report is contained in his reference to the value of regeneration as compared with afforestation. "Tha problem of as- " suring the present and future timber " supplies of this Dominion," he says, "must be rolved through the conserva- " tion and re-establishment of forests " in the indigenous forest regions, and "not chiefly by the artificial formation "''ofexotic tree plantations." Speaking in Auckland last week Mr Ellis emphasised the same point. "The only " kind of forestry that should be practised on the adequate scale propor- " tionate to New Zealand's needs," he then declared, "is forestry that starts " while you have forests to start with. "The main issue at stake is the "conservation, reasoned use, and per"petuation of the use of the national " forests. All successful forestry in any " country started this way, and not by " the expensive and unnecessary method "of creating forests from aero." Id other words, after converting over twa million acres of forest land into "man"made wilderness," a process which is still going on at the rate of about 100,000 acres a- year, we ; must do what we can to preserve the fragments, and induce them to increase. The "frag''ments," by the way, are still somewhat extensive forest areas, aggregating several millions of acres, constituting a very good foundation for the new and enlightened forestry policy to which Sir Francis Bell and Mr Ellis are committed. It is evident that the Director's views as to the proper policy to be pursued were embodied in the Forests Bill which was so mangled by the Lands Committee. But it is equally evident that the progress of settlement would not have been endangered by, the acceptance by the Lands Department of the provisions in that Bill for reserving provisional State, forests. Mr Ellis expresses due regard for the interests of settlement, and makes it quite clear that he would ba no party to impeding it by the unnecessary locking-up of forested landHis plea that certain important posts in the Forest Service shall be filled without delay, and that a School of Forestry shall be established, will, we hope, receive from the Government the attention it deserves. If the Government is really in earnest in its desire to put State Forestry in New Zealand on a proper footing, it cannot rationally refuse the officer responsible foij carrying out that policy the skilled assistance that Ihe requires. Post and Telegraph Association In this issue the secretary of the Post and Telegraph Officers' Association puts forward what he describes as another viewpoint of the Association's position and relations with the Government, which we dealt with on Monday last. We use the words "he describes" advisedly, because careful perusal of his letter fails to reveal any new viewpoint. The analogy he draws between a breach of a business contract and the attitude of the Postmaster-General towards the salaries of Post and Telegraph employees is plainly an inaccurate one. The action taken and possibly contemplated by the Department is not unprecedented; it is indeed one of the few risks attached to occupancy of a Government billet that in times of depression and financial stringency the salary may be temporarily reduced. So far the only "cut'' effected in the Post and Telegraph service has been in the direction of retiring officers with a.record of forty years' ser-

vice, a step which the Association has

advocated for years past, whether wisely or not having yet to be seen. If it is found necessary to reduce the salaries of the Post and Telegraph service, in. order to effect the greater economy in administration which is at present so urgently desirable, the victims will be able to extract such comfort as is possible from the knowledge that they are suffering in common with most other Government employees from the highest downwards. There is in this no such breach of contract as Mr Combs suggests. He goes on to refer, less directly " than by inference, to the grievance which the Association entertains against the Government because of the latter's so-called refusal of official recognition of the Association. As a matter of fact the Association enjoys official recognition now, or could do so if it chose to accept Mr Coates's offer, which would enable the Association to deal with the Secretary of the Department regarding conditions of employment in the service and, if it wished, to speak direct to the Minister about them. What Mr Coates will not do is to give the Association the right to be consulted before changes in salaries or conditions are made. We reiterate our previous remark, that we do not see that in this matter the officers of the Department have any ground for complaint against the Government, and all Mr Combs' s reference to Arbitration and Whitley Councils and profit-sharing —which has no place whatever in the argument—do not shake our opinion. With regard to the Department's unfavourable balance-sheet for the past year —it went to leeward to the extent of £354,000, including interest on capital outlay—Mr Combs first tries to show that the loss was largely due to the fact that payment of the cost of living bonus extended over the full twelve months while the increased postal and telegraphic rates were in operation for only ?even months. The actual period, it may be remarked, was eight months, the new rates beginning on August Ist. A full year's experience of both the bonus and the higher rates might, as he says, bring revenue and expenditure closer together, and these might in hi 3 phrase, be "quite reconciled" if the Department did not maintain a number of non-paying mail and telephone services to the backblocks. We do not know the cost of these unprofitable country services, but we should be, surprised if they accounted for so large a share of the Department's deficit as Mr Combs thinks, and we are quite satisfied that it will not bo to make up the loss thus incurred that the Post Office employees wages will be attacked, if they are to be attacked at all. Mr Combs's statement that the home life of members of the Association is threatened is unintelligible, and his argument that the postal and telegraphic employee is efficient and is therefore entitled to sympathy and support would have more weight if efficiency were as strong a characteristic of the Department's officers and their work as was the case when the men who are now being retired were responsible for the performance of the Department's duties. Finally Mr Combs, referring to our remark as to the significance attaching to the attendance at the Association's smoke concert of Messrs H. Holland, P. Fraser, and E. J. Howard, M.P.'s, says it had a double significance in that "the other M.P's. were invited, but stayed away." Mr Combs apparently overlooks the possibility that the other members stayed away from the smoke concert in order to attend to their duties in Parliament for which the country pays them.