The Press THURSDAY, FEBRUARY 24, 1938. Increased Taxation

Press, Volume LXXIV, Issue 22335, 24 February 1938, Page 8

The Press THURSDAY, FEBRUARY 24, 1938. Increased Taxation

The disturbing possibility that the public of New Zealand will be called upon in the “ not “ far distant ” future to carry a heavier burden of taxation than at present was hinted at in a speech by the Minister for Labour, the Hon. H. T. Armstrong, on Tuesday. It is, of course, obvious that the Government will have to find the extra money from somewhere if it is to proceed further with the grandiose Socialist programme that has already been outlined; but it should be reminded that it was returned to office on a promise not to increase but to reduce taxation; and it seemed to be generally believed by Labour speakers, if their recorded words can be accepted as guides to their thoughts, that Labour’s programme could be carried forward without increasing it. Obviously the Government is in a dilemma of its own creation in trying to match performance with promise. Not everybody will be able to accept with the Minister’s fine carelessness the principle embodied in one of his remarks that all the fine things that the Government is promising “ are “ worth while paying a bit of tax for.” No doubt the good things that the Minister referred to —pensions for old age, pensions for sickness, free holidays and medical attention for everybody—are objectives very pleasant to contemplate; but if they are to be achieved by the use of crippling taxation—and any increase in the present rates will be crippling—these good things will be luxuries which will be bought at too high a price, and luxuries that will often be bought for the improvident at the expense of the provident. Moreover, there is a psychological danger to be considered—the danger that if it is known that a benevolent State is to provide for- every contingency of accident, chance, and penurious old age, habits of thrift will go by the board; there will be no inducement for young persons (who, incidentally, will be footing a great part of the bill 1 for old age and othei pensions in the present generation) to provide for middle and old age; and there will certainly not be the same incentive to strive when they know that a great part of their earnings will be taken by the State to support other less industrious, energetic, and provident members of the community. Mr Armstrong lightly dismissed any possibility of abolition of the wages tax with the generality that “ Labour “would abolish the tax when it had something " better to put in its place.” Probably the same answer applies to the sales tax, which was iniquitous when Labour was in Opposition and the early abolition of which was one of the party’s most frequently reiterated, promises on the hustings, but about which Labour has been silent or, when pressed, evasive, since it became the Government. “ The thing that concerns the “people,” says Mr Armstrong, with a candour that reveals the Government’s philosophy, “ is “not how much tax they pay, but how much “they have left after they pay the taxation—- “ and you have more to-day than under the “past Administration.” Is it worth while to suggest to Mr Armstrong and his party that that is not the whole story? What should concern the taxpayer is not so much how much he has left after paying all taxes, direct and indirect, but how much he can buy with it. Increased taxation means higher costs, higher costs mean higher prices, and higher prices mean a higher cost of living, however much Ministers may argue to, the contrary or however the Government may try to legislate against that unhappy position.