A GIBLIN POLICY

Evening Post, Volume CX, Issue 112, 8 November 1930, Page 10

A GIBLIN POLICY

♦ TAX EXPEDIENTS AN UNACADEMIC PROFESSOR. SALES TAX SOUND The author of the "Letters to John Smith," which caused much interest when summarised in the "Evening Post" some little time ago, is Professor L. F. Gibliu. In those "Letters" Professor Gibiin declared that the overpayment (relatively to production) of persons in the organised industries necessitated the 'under-payment of persons employed in the soil industries. Ha said that Australian production -was not sufficient to pay to ail persons the wages paid in the organised industries; and that recipients of those wages received them only at the expense of primary production. In short, lie declared it proved that Australian wages cannot be maintained. Professor Gibiin is not one. of those economists who prove that wages must fall, and then sit back to let the thing work its own wicked way out. He is an economist who is prepared to examine the situation, with all the limitations that are imposed on it by party politics, and to 1 propound taxation expedients designed to open out the easiest road back to safer ground. On 29th October, in the Central Hall, Melbourne, he told a gathering of business men and others what he considered would bo a practicable —not an ideal—* '' let-up'' policy. TO RESTORE PRODUCTION. "Our best efforts will not succeed in balancing budgets all round at the present time," said Professor Gibiin, who is Ritchie Professor of Economics at the Melbourne University, and who lectur-. ed under the auspices of the Melbourne Chamber of Commerce. He advocated "some monetary policy which will lead to a 'let up' of the depression and the restoration of production." Without this, he said, there was no real hope of balancing budgets. Total revenue, State and Commonwealth, would be reduced, Professor Gibiin estimated, by about £40,000,000, as compared with 1928-29, taking into account the revised Customs revenue but not the increase in direct taxation. Of the national expenditure, one-third was devoted to interest and sinkingfund, one-third to upkeep of the ''business" undertakings, and one-third to pensions and purposes which could be regarded as charitable. The first could not be altered appreciably, nor could the second, except in the direction of economical working and salaries reduction, while pensions could not be withdrawn when the practice of paying them had been operating 20 years. BRITISH DIRECT TAXATION HIGHER. A 10 per cent, cut in the salaries ot the entire Public Service, the utmost that could be made, would yield no more than £10,000,000, leaving still a deficiency of £30,000,000. To meet this deficiency three ways lay open to the Government —to tax luxuries, to increase income tax, and to impose emergency taxation. The conventional idea of a luxury was alcohol and tobacco, which were taxed £2 14s a head.in. Australia, as against &i 6s a head in. Great Britain. If the Australian tax were raised to the level of the British, £10,000,000 would be added to the revenue. Moreover, Treasurers might exercise a little more imagination with regard to luxuries and broaden the basis of the definition. It should be remembered, too, that Australians might not be so addicted to these luxuries as people overseas—(laughter)—and might not be prepared to purchase whatever the cost. Australians paid £6 a head in State and Federal direct taxation; British people paid £9 a head. As England had more higher incomes, Australia could not be expected to raise her taxes by 50 per cent., but she could probably increase direct taxation by 30 per cent., which would yield £7,000,----000 to £.8,000,000 more towards balancing the Budget. The third possibility was to impose' taxation which would strike at everyone's standard of living or comfort. Taxes on tea and sugar, successful in Great Britain, would not work in Australia, where wages were bound up with living costs measured by; the price of such items as tea and sugar. Taxes on these items were immediately reflected in increased production costs. UNIFORM TAXATION ADVOCATED Other taxes, however, were open to Australia, Professor Gibiin continued, such as a stamp duty on wages and the rather ingenious sales tax, which, despite its cumbersomeness, was sound, as its effect on food and items reflected in the cost of production was small. Its effect was to make an all-round cut in the standard of living without affecting industry. Assessment and collection of one direct tax in all States, divided in. units between Commonwealth and State, and spread over the whole year, with provision for discount for cash payment, was a system simple of adoption. State Treasurers to-day were so harassed that they would be prepared to forget their "fancies" and sink their differences, and a conference of Commonwealth and State representatives might well agree upon uniform taxation. Professor Gibiin advocated a uniform taxation system throughout the Commonwealth, pointing out that State Governments could not arrange their finances until they knew what the Commonwealth proposed, and that sound public finance was impossible in the present circumstances.