The Press SATURDAY, FEBRUARY 14, 1959. Taxes and Enterprise

Press, Volume XCVIII, Issue 28820, 14 February 1959, Page 12

The Press SATURDAY, FEBRUARY 14, 1959. Taxes and Enterprise

The average man dislikes taxes because he sees how they directly reduce his spending money. He is not sufficiently aware, when he bothers to think about it, how much more his standard of living may be lowered when the means of production are too heavily taxed. That is why the revelation of the effect of crippling taxation on hill-country enterprise by a leading farmer and by a spokesman of the aerial top-dressing industry deserves general attention. Because of taxes, including confiscatory death duties, the turnover of the aerial top-dressing industry has declined by 25 per cent, in some districts and up to 70 per cent, in others. One does not need to be an economist to know that the result of this will be lower production, and less money for the farmer, less eventually for the whole community, and, incidentally, less for the taxgatherer, unless he is foolish enough to raise rates still higher, and thus still further reduce the field for his exactions. Farmers are a striking example of this process of State erosion, because they are now suffering also sharply reduced incomes from the sale of their products and have an almost intolerable burden in death duties should a farmer die and leave a mortgaged property to his son. In

addition, of course, many have to meet the additional charge of an extra year’s social security tax over the next three years. But, although the effects can be more simply seen in farming, they are not confined to farming. They affect enterprise of every kind. The high level of taxation has two aims—to hold back internal inflation while overseas income is falling and to provide benefits for some sections of the community. Both aims are defeated when the production on which depends the national income and the general level of prosperity is reduced. Mr G. M. Robertson, president of the Aviation Industry Association, talked sense when he said: “ It “would seem quite simple and “ logical to me that we should “ look first to making that [the “ national] business a more “ successful one ”. It is hard to believe that the present Government did look first in that direction, or even looked at all. It is now confidently expected that the Minister of Finance (Mr Nordmeyer) will reduce taxation; but even if he is much more generous than is imaginable, he cannot undo all the harm that has been done. He cannot, for instance, catch up a year’s lost fertiliser on the hills or the loss of good men from aerial top-dressing.