CORRESPONDENCE

Evening Post, Volume CXV, Issue 30, 6 February 1933, Page 6

CORRESPONDENCE

CUSTOMS REVENUE AND

EXCHANGE

(To the Editor.) Sir,—lt is an old theory that lawyers are not business men. If it should be the case that the maxim applies to me,, then no doubt the following remarks will be "so extravagant, ill-founded, and needlessly' alarming" (in. the words of Professor Tpcker) that I shall be duly and promptly taken to task. On Saturday last there '■'■. appeared in the local Press a statementby. Professor Toeker on the Budget deficit that will arise by virtue of the high' exchange, I propose to deal with one aspect only of this statement, namely, that portion dealing with the effect ion Customs, revenue. In his statement; under the heading of "Effect on Customs Revenue," the Professor, by a number of deductions, arrives at this conclusion:— \ . ". . . there need be no fall in Customs duties consequent upon a reduced volume of imports. .On the other Band, there should be an increase in Customs duties consequent upon the higher yield of ; ad valorem duties due to raising the : basis of valuation." Now if the Professor's conclusion is a sound one, then his reasoning should be correct. If, therefore, his reasoning and conclusion are correct, then" there can be little doubt that a blow is, about to be Btruck at the heads of our already harassed importers, (and, therefore, at the public), a blow more telling, more severe, and more far-reaching than even the recent .artificial rise in the exchange rate. To appreciate the position, it is-neces-sary to briefly set out the steps by which the Professor arrives at his amazing conclusions. He argues as follows:— -v; ". ■ X. At present, ad -valorem duties are based .on London invoice values. - '-'.'.-■'■■ 2. Duty (according to the .Professor) must now be levied on the value.of imports expressed in New Zealand currency. Unless this is the case, any change in the relative values of the two currencies concerned involves a consequent'change in the-rate. of duty. . . . .. . . 3. A rise_ in the rate" of exchange will therefore increase proportionately the yield of all ad valorem duties on a given volume of imports. . '."■ ] 4. The situation will become both confused and illogical, and the rates' of Customs duties sanctioned by Parliament will be reduced automatically by 20. per cent, if imports are not in future valued in New Zealand currency. . 5. The introduction of a logical system of import valuation will result in an increase ■of 25 per cent, in all ad valorem duties. Such an increase Should be sufficient at worst to balance any decline in Customs consequent itipon the reduced volume of imports. In these circumstances there need be no decrease in Customs revenue. ■ . . . Now plainly, what does this mean? At present, as I understand the position, if a New Zealand importer purchases goods invoiced at £100 in London, then £100 Is the basis upon, which ad valorem duty is paid (to avoid confusion I omit reference to the 10 per cent, that is added to the basis for assessment purposes only). Prior to the recent rise, the importer, apart from duty •or other charges, paid £110 for 'these goods by: virtue, of the exchange,, but the-, point to remember is that £100 was the basis" for payment of duty. The rate of exchange is now 325 and.the Professor not only solemnly advocates, but seriously states that the basis for duty can now no longer be^ £100 but must be-£125. , Do the public appreciate. this astounding_ proposition?: Not only is the cost of imported goods to.be raised by, 15-per cent, additional exchange, but it is to be further loaded by a complete, and comprehensive rise in the entire Customs tariff of this: Dominion.. .- • ;._.: v To_ me it"is inconceivable that' this is the intention of our Government. Such a fundamental change could only be effected by legislation, and I venture to assert that bold as the policy of the' Government has been, recently, there could not possibly be a majority backing of the House for such a suicidal measure..l cannot bring myself to believe .that the public would accept the. suggested alteration in the basis of. value made by Pro-" fessor Toeker. . ... • ■-■-:. Is. then the learned Professor merely throwing dust in the eyes of the people for the purpose of bolstering Tip the case for high, exchange, or—l wonder—is his article inspired? Is this—l- wonder—the first herald of a further plank in /the Government's policy? It is the right of not only the importing public but the whole Community to: know, and to know at once, the real truth.-r-I am, etc.>;. .•■-"-•' J. MELTZER.