LIMITING TAXES

Evening Post, Volume CXVIII, Issue 114, 10 November 1934, Page 9

LIMITING TAXES

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"SO FAR, NO FURTHER"

NOVEL PROPOSAL

(By tho Associated Chambers of Commerce.)

Of no small interest to New Zealand as a 'heavily taxed 'country is the vote to bo taken in ono of the American States this month on an innovation m taxation, namely, a proposal to limit tho ic^enues collected by tlio State Govoniment during any one two-yearly period. It is proposed that the limit of revenue shall bo "a sum'reasonably estimated to equal the product obtained by multiplying the* number of inhabitants of .the State by tho sum of 22.50 dollars." In addition, tho proposal would limit tho expenditures of the State, from these revenues to an amount not to exceed 22.50 dollars per head of the inhabitants. With many Government departments becoming an end in themselves, iit is not improbable that such a pioposal as this would inspire a? much horror as approval among those engaged "in spending the levenues of tho State, but sineo it is the taxpayers who have to bear the but den of the, cost of government, it is they who have the right to call the tune. Much is heaid.of the financial genius of governments in walking the Budgetary tight-rope, but little of the sacrifice of the taxpayers, who provide the wherewithal Occasional talk of a taxpayers' "strike" as a protest against excessive demands is an idleness of word*, but a scheme for a per capita tax limit is a practical if novel expression of taxpayeis' determination for reform.

The issue before the electors of this American State is whether government is to continue its age-old practice of estimating its expenditure and then demanding the tax revenue needed to meet it, or whother government shall be allowed to finance only .those sorvices for which the taxpayers are prepared to provide. How dependent government is on taxes is shown by the fact that in New Zealand, for instance, State venues other than taxes, for 1933-34, provided only 15 per cent, of the sum | required to meet expenditure for that year. Of this "other" revenue, it| could even be shown that the contri- j bution represented by th© profits of | the Post and Telegraph Department | (which is a 'monopoly) is an additional i form of taxation, because if the de- ] partment were not required .to hand its i profits over to the Exchequer, thoso | profits could be returned to tho people | in reduced charges for services. How-1 ever, apart from tlys, and even when allowance is made for the bringing in , of State reserves (£2,000,000 in 1933-, 34) the taxpayers are still overwhelmingly, the piop and mainstay of Government seivices. REVERSAL OF PRACTICE. The manner in which increasing use has been made 'of that prop is shown by the fact that general Government taxation per capita of population of New Zealand has grown from £5 5s 2d in 1913-14 to £13 18s 7d in 1933-34. Whereas the population, over these 20 years, increased by 43 per cent., taxes per capita increased by 164 r'por cent. From another angle, whereas general Government taxation in 1915-16 represented 8 per cent, of tho national income, in 1932 33 it represented 19 per' cent, of the national income. ] It is not the fact (as may be thought) that the taxes which are raised in New i Zealand specifically for unemployment relief are alone responsible for the increase in taxation per capita. Quite apart from unemployment taxes, taxation per capita has increased ginco 1932----33 and,is still increasing. In this connection, tho table given below -will probably bo illuminating to many people: — TAXATION PER CAPITA (EXCLUDING UNEMPLOYMENT TAXES).

• 1931-32. V-- ,1932-33. .': 1933-34. "/JI9S4-3S. 1v (Actual): (Actual) ■".'. (Actual) '(Estimated) £io/i3/s,iS:pfilo/4/21;.;:;...eii/i/*:-.»;*l?'' Bf's ■■-.'' Hyhile.a 'number |;.of: ppiflts;- arisenforl c6nsiderlati6n,Stlie ■applieq.tiori'-to'Grby-; er)nmentV"q£';'a: ; sbheine/o'fVtaSc .liniitar: tiqni appears to hold "out the'pfospect ■o'f^prof6u^d/.befiefitßi^-'Aftpr:'.the ; ':;iitii:* vicihg'of 'the nationall -debt had^beeri pydvid'edifqr, sV;6'pveriiments.-wioifld>h'aye'. to deal with remaining services ias best 'they could and-cut; their,coat accord;-. ing/ftp:': tho -cloth^provided ;lthoiri..;:. lll' the ■'.' case ■of New •; Zealandj■'•' after'••'■:-pt,P/-' for'; debt, service's, ..the expenditure vqn; the'remaining seirvices, at present''.cost-.-ing ■'-' '■'■' (excludingi' ■■; uHemploymont): &13,S0'Qfi00; would -have-to-be adjust-ed'-to- meet the; revenue/ instead nowy'the .revenue being adjusted-to meet the 'expenditure. ■. iv.'■>..-■■. '?•».'-.:-:■.■■>■'■':■ o"'r > Taxi limitation; appea'rß.'toVbo Va^field offering 'wide; Bcbpe '■■ for muchvaunted Government -^planning."| ,: Itmight wellbe'Baidithat'planning-begins at. home,1 and;if g'oyornmentsr-^general and local goyirhment .both—were to ■g° fully into. tlio-possibilities 'of p.laaniiig:' fexpenditure andKseryices;'undej;; a per' capita tax limit, or'a fixed percentage of the. national .income,-ithey: would/not. onlyl be giving .planning a real meaning, but- they would also; :be : getting to work on one '.of, the- chief obstacles to economic betterment—high taxation, i