REVENUE ASPECT

Evening Post, Volume CXVIII, Issue 9, 11 July 1934, Page 6

REVENUE ASPECT

INCREASE EXPECTED' '

CURRENCY FLUCTUATIOtNS

The revenue aspect of the tar^/and the question of currency fluctu'aiftns were also touched on by the Min^teir.

"An important object of the ; 'Nevr Zealand Customs tariff is the collection of revenue," he said.' y ""£h& amount received during the last financial year .was approximately £6,48p(,0f1Q.> This formed- about 38 per ceutibf $nc total taxation revenue 1 of ';tbei Generally speaking, it.ias^beenv-,f(>ttna necessary to retain reyenue';"dutlev at their present -level. In so'me.v-dasei, hbweveiv, it •is considered . that:"the. existing rates of duty are 'having/an adverse effect. It is proposed insuch, cases to make reductions:which;at:.is hoped will have the effect, of increasing .the revenue.,. .->■'■'. '...'•■ r):f^-.

:.' 'After a consideration. of- jtie increases and decreases made in the rates of duty, and the probable, increase, in. trade; due to the stabilisation",1 of, the tariff and the improved' condition^ generally, it is estimated that the', effect of the modifications on the items affected .will be an increase ii; : ,th» revenue of about £90,000. ••'- •- .' -

"The relation of fluctuations in;the currency of various countries toy tariff protection is one', of- the matters ■> that have beeu receiving the consjderatiou of the Government. It is generally: recognised by economists that; when! the currency of a country, is deprceiatirig an advantage accrues to manufacturers in that country, but that^ sooner or later, after the exchange has been, stabilised, internal conditions' ■' adjust themselves to the- influence- of external conditions. Some factors which enter into production costs undoubtedly "adjust themselves more slowly y■'■; thaii others, and it is impossible to-.sa'y/when complete adjustment L haa 'tak^ii^taee. It is evident; also, that the pTi'ceVof imported ■ raw" mat'ei-ials;' plan^>-etc., and of m,miv ; local raw lnaterwlSi-im-mediately tend to respond' to the effects of-, exehange^inodiflcations. F-rbm'-,: in-forinfttian'sjippUedto-me I am satisfied, that >itt f'tue:-majority of-"- cases-^ raw materials form at. least 50 per cent, of'the total factory cost of goods; jriaiinfactured i'nS'New Zealand, and insofar as the manufacturer's costs . are . increased by:oie-influence of the exchange on such materials his advantage to that 'extent is/immediately lost. '

*' When T 'these-' conditions, , following depreciationiof the currency, h'at^'been in operation in a country for. some time ifc'is inipossible^to say mth Say'iSfegree of accuracy the extent of-.tlie^adjust-ment which has taken place.'-'Hence it ;is considered impracticable to deal satisfactorily with the ', question'; by means of-jai; tariff, particularly in ~a--comparatively low tariff country • like New Zealand. .\',,O''"\\i '■ v .'~ CONVERSION RATE. >f > ' "There, has been a considerable amount of '-controversy as to thfejbasis that should be adopted for the conversion for duty purposes of values:, not expressed in New Zealand- currency. As a matter of principle, I,agreV^with.the view of the rTariff-Commission ttWt values for duty should be assessed in the currency of the .country levying duties. For our" purpose's; however, the question- is- a 'practical one):-^ As will be seen from'the report oiv'th'i ■ Commission, the evidencQ\and data received and the calculations and.'determinations made by them were based oh the existing system. ; ;It!' is thefe'fore proposed at present to retainthis" system. If the values were to Tjq calculated in New Zealand currency- it would, generally speaking, be necessary; to; reduce the rates of: duty byaboirt 20 per cent. . , .--• ';'■■" v; anNISTEK'S AUTHORITY. ".-"Exception has from time to-time been taken to the powers of interpretation and decision, granted to the Min< ister by. Parliament under various Cus-. tonis Acts. ■ If these powers did-'idt exist, the only other tribunals; to which recourse could be had would be the Courts. This was -the position prior to 1907, : and, as a result -Of?'; th© position 'thus created, the adrninist*s» tion of the tariff was rendered^,"molfe complicated. It was found also;that general exemptions, in -the tariff were interpreted :to- cover goods that were not intended to come under those headings when the legislation was Jassfed. At the present time many of the tariff items are set out in general terms'. It the powers granted to the Minister were not retained, it wouldobe necessary in many r eases to,; embart.upon i far greater 'enumeration of "articles |n the schedules than there is at present. Every item in such an enumeration might form the subject of Court prb» cecdings,.;aud, when one' considers ■ thjt rapid and complex .changes which; tak* place both industrially and cominerciaU ly, it can be realised• that^to revert t» the former position would be a retrograde step. In my opinion the existing system has, on the whole, v-trprked very satisfactorily, and it has i-educed to a minimum the delay and uncertainty in the clearance and classification of goods. ' vv ■.'

"The Tariff Commission in itsirppo.rt sets out; at length and in unmistakabli terms * its conclusion that the Ipresent' system, should be retained. - ; -:. .;

"It _ is-usual when reductions harf made in Customs duties to afford: iaxr porters time to dispose of sU>cli;s,J.;of goods upon which duty at higbierrrates has been paid. If this were-nbt done it would mean that merchants 'holding such stocks would be placed at'- ; a^dis; advantage through having to .cpjnpete with goods admitted at the lowe>. rates of duty. In cases where-.the re'duetion. in duty does not exceed aboufc 5 .per cent.ad valorem it is not con'si&red ■that the.matter'is of sufficient importance, to warrant this special^-aetionj but in other cases it is proposeithatj except in special circumstances) •%»

lower duties or exemptions should not take effect until November 1, 1934. SURTAX AND PKIMAOE. "Except in special circumstances, it is not considered satisfactory that Customs duty should be levied by way of .general imposts such as surtaxes and primage. As honourable members will recollect, it was agreed at Ottawa that the,.primage duty at present imposed would be abolished as soon as revenue conditions, permitted. The Government, has given full consideration to this matter, but it is regretted that itis. not. at .present possible to dispense with the revenue thereby received. ■ "As regards the surtaxes, these, as honourable members are aware, have been abolished so far as the United Kingdom and non-self-governing colonies are concerned in accordance with the Ottawa Agreement. The result is that the great bulk of our dutiable imports are_ not now liable to this surcharge. It is proposed,-in the meantime, to retain the existing surtaxes for the purpose of negotiating agreements with other countries as was done last year in connection with the agreement with Belgium. .: "There'are many other matters connected with the proposals now before the House that will require consideration, but concerning whicK I do not think it is necessary to make any statement at the present time. These I propose to:deal with at a later date."