THE TAX COLLECTOR'S PROSPERITY

Evening Post, Volume CXXIII, Issue 2, 4 January 1937, Page 8

THE TAX COLLECTOR'S PROSPERITY

Whoever prospered or failed to prosper in 1936 the lax collector evidently had a most successful year. The taxation collected through the Customs Department in Wellington amounted to £5,288,230 for the calendar year. This included Customs and excise duties, pclrol and tyre taxes and sales tax. < Customs revenue alone was £3.293,070 and the sales tax £1,081,830. It is not possible from these figures to estimate accurately the New Zealand revenue for the financial year, as the periods are different, and Wellington's proportion of the tax collections is not fixed. But, assuming thai Wellington collects more than a fourth and less than a third of the Dominion taxation under these headings it is safe to predict that even the optimistic Budget forecasts will be exceeded. Mr. Nash budgeted for £9,100,000 from Customs duties and £2,900,000 from sales tax. He will probably get more. These estimates, it should be noted, are on the high prosperity level. That is to say £9,100,000 can be expected from Customs duties only when the Dominion is importing freely. Also £2,900,000 from sales lax means that the people are buying freely. And the Government is taking its toll all the time.

Customs duties and sales tax were estimated I>y the Finance Minister to yield together £1,376,000 inore than last year. Yet, in addition to this anticipated greater yield, the Government decided to exact almost £2,000,000 more by direct taxation. This cannot he excused as remodelling the system of taxation. In Opposition the Labour Party declaimed against all indirect taxation and particularly against the sales tax. One of the charges made against other Governments was that they had taken more and more from indirect taxation and given relief to the payer of land and income tax. Labour gave a definite promise to alter this, at least by abolishing the sales tax. Yet what has it done? In its first year of office it lias increased income and land taxes, and part of the income tax increase will lie paid by persons with moderate salaries. It has given no relief from Customs duties and sales tax which were formerly denounced as inequitable exactions from the worker. When the prospects were seen to be such that the yield from the existing tax scale would probably exceed last year's revenue the Finance Minister did not lower the rates. He kept them up and the Government will probably take £1,500,000 more from consumers than was taken last year.

It is clear that the Government has one leading idea in finance—lo spend as much as it can collect. This may serve well for a time; but it will weaken the foundations of prosperity. Every penny extracted by these forms of taxation diminishes the . spending power of the people. It comes out of somebody's purse, and it very definitely helps to boost the cost of living upward. Customs duties and the sales tax are snowball taxes. The 5 per cent, collected by the Government becomes almost 10 per cent, by the time it is paid by the ultimate consumer. Even if we accept the Government's own theory that prosperity can be induced by adding to spending power, this heavier taxation is wrong because it intercepts the additional money. It would be sounder by far for the Government to examine some of its spending schemes and consider whether it could not return some part of its rising revenue to the payers in tax remissions. j