The Press TUESDAY, AUGUST 24, 1948. Taxation And The Exchange Rate

Press, Volume LXXXIV, Issue 25581, 24 August 1948, Page 4

The Press TUESDAY, AUGUST 24, 1948. Taxation And The Exchange Rate

Whether the Government’s decision on the exchange rate was in fact the carefully considered and longprepared step Mr Nash has claimed it to be or whether it was the snap decision which every appearance suggests, it is clear that all the figures and estimates in the Financial Statement and the departmental estimates have been drawn for the exchange rate as it was, not as it is now. Many of these figures will require alteration; some more, some less. Nothing is more certain than that the taxation figures must be revised. Although Mr Nash has offered taxation concessions in the £lO rebate on individual income tax assessments, the reduction of the sales tax on passenger buses and the removal of the gold duty, the total taxation for which he has budgeted is slightly higher than that of last year. But it will be levied against a national income sharply reduced by the revised exchange rate. In drawing up his Budget, Mr Nash estimated the 1948 receipts from exports, in New Zealand currency, at £174,750,000. Of the national income which can be taxed, there must now be a reduction under this gross heading of nearly £35,000,000. In short, the Budget has been drawn and taxation fixed on a set of figures which have been made meaningless by the exchange decision; and the effect is to conceal a very heavy increase in the general impact of taxation. It can only be assumed that Mr Nash cannot, and will not, proceed on the figures he has presented. To do so would make nonsense of his assertion that in the Government’s opinion “ the prolonged financial “strain of the war calls for some “ equitable addition ” to the taxation relief so far granted. Mr Nash must find some way of easing the weight of the taxation he has imposed; and he will also have to solve the connected problems of its inequitable incidence.