The Tax Burden.

Press, Volume LXIX, Issue 20834, 19 April 1933, Page 8

The Tax Burden.

A short message from London yesterday reported two points made by financial journals commenting on the Exchequer accounts for the year 1932-33. To mention the less important but perhaps; more novel one first, the figures show that the proportion of .customs, and excise revenue • to the ' total is increasing. Between 1931-32 and 1932-33, for example, it rose from M per it. to about 41 percent,; and although the new duties could, hardly be expected to have any other effect than this, it exhibits none the less a dangerous fiscal tendency-—that Is, towards the unscientific irregularity of consumer taxation. The want of novelty in the other point, unfortunately, only emphasises its seriousness. It is no new thing in recent years for sluggish? or failing revenue, even under-'increased pressure, to demonstrate that capacity to pay is ominously static or even shrinking; that . the danger of exhausting it by .heavier exactions is real; and that the way of wisdom is to give it relief, during, which it may recruit itself. But the latest figures are extremely . significant. Though sixpence was added to the income tax rate for 1932-33, the yield was £5,000,000 less; and surtax, increased by 10 per cent., produced " £7,000,000 less. Nothing could better illustrate the dangerous inelasticity of the relation between " national budgets and taxable income. Though it is disturbing enough that Mr Chamberlain's estimate wr disappointed and that the yield under an increased impost was actually less, it is still more disturbing that shrunken taxable resources flowed in still greater proportion into the services of the State and therefore away from industry, its profits arid reserves and expansion. Income figures for last year are not available; but Dr. W. H. Coats, addressing the Manchester Statistical Society some time ago, estimated that the national income for 1931 was £3,842,000,000, probably £500,000,000 less than in 1929; and he argued that the burden on this reduced income —a very unevenly distributed burelen-r-was .so oppressive that it coulcl not be left Unrelieved without; danger to the' economic structure. He pointed to the risk of capital so punished - taking flight, even over the barriers of exchange, and thought that, without relief, such «< : '' process feata. slew

savings to funds needed to maintain and replace the equipment of industry. The ultimate effect, of course, would be to induce money scarcity and scarcity interest rates, with inevitable repercussions upon labour; so that excessive taxation of " the rich " would end by crushing the. poor. This is an economist's warning of the long-run issue of present tendencies, if they remain unchecked; he is not speaking of what is here, or near at hand, necessarily. But without doubt the lines are set in this direction and cannot be followed without increasing distress and eventual ruin. And this is as true in New Zealand as anywhere else.