VIEW OF ASSOCIATED CHAMBERS

Dominion, Volume 31, Issue 162, 5 April 1938, Page 12

VIEW OF ASSOCIATED CHAMBERS

“Camouflaged Form Of Class Taxation” METHOD HELD TO LACK JUSTICE OR EQUITY “Responsible citizens must be astounded at certain of the provisions of the social insurance scheme which the Prime Minister has outlined,” says a statement by the Associated Chambers of Commerce of New Zealand, issued last night. “The method of financing the superannuation plan is nothing less than unmoral, and is a camouflaged form of class taxation for the benefit of another class, whereby those who pay the piper the largest sums are required to bring themselves to a state of neardestitution before they are permitted, to share in that to which they have contributed, and contributed most heavily,” the statement continues. “The commercial community and the taxpayers generally have no quarrel with the desire to secure the means of overcoming that economic insecuiity which prejudicially affects the workers in times of illness, unwilling unemployment, senility and invalidity but the means which are being adopted by the Government in the present instance are open to most severe criticism. The Prime Minister has said a good deal about the benefits of the social insurance scheme, but little about the methods of financing to be employed. “The people are to be taxed another fourpence in the £1 to help provide the huge sum of money needed to lioa*. the joint plan. The initial cost of this would appear to be approximately £15,500,000. Half of that figure is what a wages and other income tax of one shilling in the pound would produce based on the £5,180,000 which the Goy. ernment estimated would be paid into the Employment Promotion Fund for the year ended March 31, 1938, by means of the present tax of eightpenco in the pound. The other half, namely, £7,770,000, is what the Government will have to find for a £ for £ subsidy. Contrast With Other Schemes. “The joint plan is to be compulsory on everybody, but unless everybodj either by accident or design, becomes practically indigent, they will not be qualified to share in national superannuation at least. This becomes obvious when one considers the fact that a contributor who has been thrifty enougn to provide the means, through life insurance or other investments, of a retiring allowance for himself amounting to something in excess of £l, is either to lose his right to his national superannuation benefits, or is to have them reduced. . ~ “Tht method is without justice oi equity. The English and Australian not only restrict compulsion to persons receiving below a certain income, but they provide for flat-rate payments and standard benefits, that is, everybody pays alike and benefits alike. Other schemes provide tor higher rates of pension for the liighei contributions made through the percentage system of so much in the pound. “But the New Zealand Government has produced a distorted admixture of the two methods: It is compelling everybody to contribute a percentage of their incomes, which means that some contribute very much more than do Otliers, and then the Government fixes standard benefits .thus denying to the larger contributors a variation in benefits in accordance with the graduation in contributions. The Government goes even further, and reduces or eliminates the superannuation benefit ■to a person who has an independent income of more than £1 a week. Effect On National Income. “That is the effect as regards superannuation on the percentage basis of contribution now proposed, of one shilling in the £, according to what the Prime Minister has outlined. It would not be possible for the Government to provide the handsome benefits proposed without this grossly inequitable discrimination between incomes. “The question of whether participation in the health insurance benefits is to depend on the size of income has not been made clear by the Prime Minister, in common with a lot of other important questions that arise. There is a point to which the more fortunate members of the community can contribute to facilities for those in poorer circumstances, but they are already doing that very considerably through graduated income tax and other taxes. It has been well stated that if it were attempted to tax the rich until all incomes were equal, the incentives to working and saving would be drastically reduced long before complete equality was reached, with a consequent disastrous fall in the national income. “Further details of the whole of the Government’s scheme are needed before we can make further comment,but there would seem to be a graVe danger of the scheme collapsing of its own weight when economic conditions deteriorate, and, even apart from this, it would seem that the contributions the taxpayers will have to make, either directly or through the Consolilated Fund, to keep the social insurance scheme afloat may well be more than the initial funds that are to be obtained.”

MORE INFORMATION DESIRED

Business Man’s Comment

Asked yesterday to comment on the national superannuation and health insurance scheme announced by the Prime Minister on Saturday, Mr. P. E. Pattrick, president of the Wellington Chamber of Commerce, said that before he could make anything approaching satisfactory comment it seemed preferable to await details of the proposals which Mr. Savage would be submitting to the special committee today.

“Incidentally,” he said, “we are stilk awaiting publication- of the special actuarial report which we understand has been obtained from Mr. G. 11. Maddex, secretary of the British Institute of Actuaries, who has been retained by the New Zealand Government to bring down a special report. Both the proposals and this report, we hope, will be available to all who may have evidence to tender to the special committee set-up to investigate the proposals. "The ostensible objectives, namely, social security and immunity from fear of poverty in old age or sickness, are obviously most laudable, but before adopting any scheme designed to attain these ends lhe authorities should be reasonably assured that it is sound

in principle, equitable and capable of being financed in good times and bad. “The Government has cited the social services obtaining in Great Britain, but according to the precis given us by the Prime Minister the principle in Great Britain of relating contributions to benefits (contributory to beneficiary) does not seem to have been adopted in the New Zealand Government’s proposals. We have been told that the scheme is to be financed by a tax of 1/- in the £ (in place of the employment tax of Bd.) with a £ for £ Government subsidy. Based on the estimates for the year to March 31, 1938, that would mean approximately £7,770,000 tax and £7,770,000 subsidy, .total £15,540,000, “Some of the many questions that arise are: What will the whole scheme cost now and thereafter annually? Will the Government £ for £ subsidy be adequate to meet the cost of the social services? Will the Government subsidy be increased to make up shortages in the direct tax, as and when taxable incomes recede, as they surely will when file present level of high prices for our exports falls? “Information on these and many other questions must be answered before one can make comprehensive and useful comment.”

FRIENDLY SOCIETIES

Special Meetings Called “A local committee of the Dominion Council of Friendly Societies will meet to-night to discuss the plan outlined by. the Prime Minister,” said the secretary of the council, Mr. A. G. Shrimpton, Wellington, yesterday. "At the present stage there will be no statement by the council on the subject, although it may be recalled that many assurances have been given, by the Minister in Charge of Friendly Societies, Hon. W. Lee Martin, among others, that the Government’s proposals would in no way interfere with the work of the friendly societies. At present the council is engaged in the preparation of evidence to be placed before the special Parliamentary committee. The local committee is one formed by Wellington branches of the Dominion association to deal with emergency matters. The Government’s scheme is a matter calling for decision by the whole body, and therefore a speciaj meeting of the Dominion council will be called in Wellington following the. committee meeting to be held to-night.”

BENEFITS DIFFER

Invalidity Pensioners And War Veterans A comparison between the proposed benefits from war veterans’ allowances and invalidity pensions respectively indicates that the former are to be on a lower scale. . A man in receipt of an invalidity pension will be paid £l/10/- a week, in addition to 10/- for his wife and 10/for each child under 16, with, a maximum pension of £4. Outside this sum there will be an allowable income for a married man of £l/10/- a week, making a total of £5/10/-. On the other hand, the war veteran is to receive £l/5/- a week for himself, •15/- for his wife, and 5/- for each child, with a maximum of £3/10/-. In bis ease, however, the additional income allowable will be only £l, making a total of £4/10/-, or £1 less than that received by a person receiving an invalidity pension.

AUSTRALIAN COMMENT

“Two Great Achievements” Sydney, April 4. The “Labour Daily” says: “Two events of great importance to Australians occurred during the week-end: Labour swept the poll in Queensland and the Labour Prime Minister of New Zealand announced a national insurance scheme which will make all Australians envious. These two great achievements by Labour Governments, coming so soon on top of the disastrous defeat of Labour under Mr. J. T. Lang in New South Wales, will give electors here much food for thought. The New Zealand insurance plan will give security to every man, woman, and child in the Dominion, and is probably the greatest piece of legislation of the past 20 years. Under Mr. Savage’s plan no New Zealander need ever fear old age or sickness.”