AN UNPOPULAR TAX

Evening Post, Volume CXV, Issue 38, 15 February 1933, Page 8

AN UNPOPULAR TAX

-• All taxation is.unpopular with the people who are called upon to pay it. At this time of the year the tax .which becomes most unpopular is that payable on incomes towards the end of the month. But the new sales tax has even exceeded that impost in the general .condemnation which it has) called forth. That is not because it is heavier. It is, in its aggregate demand ,on the taxpaying community,' lighter than income tax, and v.cry much lighter than the Customs tariff. . There are two particular reasons for the popular resentment. The first is the knowledge that the tax is imposed to mend a breach in the Budget which has been made by the high exchange subsidy given to primary producers. A sales tax was recommended a year ago, but it was not adopted. It might have been necessary to adopt it this year even if exchange-had not been raised, but the new weight of exchange on .the Budget made it imperative that any remaining . taxsource should be tapped. If the | tax had been required to meet the, ordinary deficit in the Budget it would have had to be accepted. It would have been a hardship still, but-unavoidable. The^same reasoning applies to it as "Mr. Downie Stewart applied to the high exchanged 1 If our currency depreciates through ' natural and unavoidable causes, he , said,. everyone must submit to it for better or worse; but when that depreciation is brought about by Government action, and without any regard to tho factors thatjhave hitherto rogulatedthc , value ,of our currency, it, produces a sense of injustice and-, splits the com- ' munity into hostile camps at the very | time when national unity 'is essential. The sense of injustice roused by arti- | ficial inflation is greatly 'aggravated Iby the sales tax which is imposed to | meet in .part the exchange charges on i the Budget. A further reason for resentment is that the sales, tax in its general incidence is mainly a burden on the towns. Certainly the primary producers will pay it in so far as their general requirements are included in the taxed range of goods, though their particular requirements are excluded. But the loss of business which must result from any new handicap to trade will bear almost wholly on the town-trading community. With the most liberal exemptions possible this must still be the effect if the tax is "to produce any revenue'at all. The tax will lessen the purchasing'power of the people's money, in this way also aggravating the effect of high exchange. It 'is not reasonable to assume that merchants or.traders will be able to carry it themselves, though they may endeavour to make it as light as-pos-sible. Thus business is bound to suffer more or less,' and at a time when everything possible should be done -9 give an impetus to trade. These disadvantages were not explained'away in the speeches made last night in defence of the tax. All that cpuldbe said in defence, indeed, was that it was unavoidable. That must be admitted under the existing circumstances;', but those circum-stances-are the direct, result of the GbverrimeritV inflation policy. As a temporary expedient the sales tax must be' accepted, but the- Government must not assume that, it is accepted willingly. Tt will continue to be a source* of annoyance, and public satisfaction will not "be restored until the tax is removed by removing the cause—the artificial high exchange.