“New Tax Proposals Could Mean Higher Basic Wage ”

Press, Volume CVII, Issue 31520, 7 November 1967, Page 28

“New Tax Proposals Could Mean Higher Basic Wage ”

(N.Z. Press Association) AUCKLAND, Nov. 6. The basic wage could rise if the report of the Taxation Review Committee was adopted, a former chairman of the Economic and MonetaryCouncil (Mr E. D. Wilkinson) said in Auckland today. It was obvious, Mr Wilkinson said, that the committee had given careful consideration to means by which increases in the cost of living, induced by increased indirect taxation, could be counterbalanced. “Even so, I think it may be found difficult to resist claims by the Federation of Labour

for an increase in the basic wage,” he said. Mr Wilkinson expressed surprise that the committee had recommended ending tax incentives for export promotion without suggesting some more positive incentive based on the results from export promotion. The efficacy of a capital gains tax, recommended by the committee, was, in his opinion, very doubtful. It would be quite inequitable unless the taxpayer was allowed to set off capital losses against capital gains. But losses might not be recouped in the future, said Mr Wilkinson. Would the taxpayer then be allowed to set off a capital loss against income taxes? “The equity of a capital gains tax could be more apparent than real,” he said.

: “For example, is it equitable, or economically desirable, to 1 tax a company on a gain > realised on a sale of a pro- ; perty where all the proceeds . of the sale are required for > the purchase of another pro--1 perty which is necessary for t normal development?” The president of the Con- • stitutional Society (Sir ‘ Matthew Oram) said the . Government should have the j courage to adopt the com- ‘ mittee’s report in full. , The report seemed to him J to cover the need for a cohesive, over-all scheme , eliminating anomalies, injusj tices and disincentives. > “111-Conceived” t The changes suggested by 1 the Taxation Committee were 5 described as “ill-conceived, • ill-timed and illogical,” by the president of Auckland Federated Farmers (Mr W. R. Martin) today.

Mr Martin said the proposed tax reform stopped far short of coming to any conclusion, other than borrowing. The report was ill-timed in suggesting a consumer tax in present economic conditions, and it completely ignored the basic fundamentals of consumer tax, which depended on the growing consumption of goods. Mr Martin added that the committee had failed to explain how any of New Zealand’s problems would be solved, in view of its depressed overseas income.