ADDITIONAL TAXES

Evening Post, Volume CXXIV, Issue 55, 2 September 1937, Page 17

ADDITIONAL TAXES

REASONS FOR IMPOSITION

In his review of existing taxation the Prime Minister states that the first Budget of the .Government "made it clear that the readjustment of the scale of taxation was deliberately designed to yield sufficient revenue to meet increased pensions,, and the granting of pensions to invalids for the. first time in New Zealand" (says a statement by the Associated Chambers of Commerce of New Zealand). •

This is apparently meant to convey that the extra taxation imposed on the country was to " enable humanitarian benefits i^ be bestowed, and that therefore the people should have small reason to complain about that taxation. The Minister of Finance put the case more directly in his Budget statement in August of last year, when he said that "to provide the £1,710,000 required for pensions,'l propose to obtain a further £1,000,000 from income tax and slightly more than £800,000 additional from land tax."

When the .weight of taxation is such trlat the amount taken in taxes (excluding unemployment taxes) by Government has increased from £21,550,000 in 1935-36 to £26,940,000 in 1936-37, the facts as regards the extra taxes are of considerable interest and importance to the country,' and it is difficult to understand the statement, first by the Minister of Finance, and now by the Prime Minister, that taxes were raised to pay for increased and additional pensions. The table of estimates attached to the Minister's own Budget when he brought it down showed that ■the increased revenue from the.1 then existing taxation was anticipated to be, oi. account of general buoyancy, £2,660,585, while the estimate of improved yields from other items of revenue brought up the total ordinary incease to over £3,000,000. The cost of increased and additional pensions being estimated by the Minister at £1,710,000, it cannot be agreed*: that he had to increase taxation for the sake of pensions.

Then again, it was not necessary to increase taxation to pay for the higher wages end r>'.uced working hours in the Public Service; the Minister's estimate of additional charges for the year in this connection were as follows:— Restoration of salary and wages cuts in the Public Service, £470,000; cost of reducing working hours in various State services, £150,000; paying standard wages to the men engaged in land development work under the Small. Farms Scheme, £204,000; wage cost of Native land development schemes, £233,000; total. £1,057,000. These charges, combined with the increased cost of pensions, still left £327,000 out of the £3,000,000 accruing from the improved yield from old taxes. The real reason why taxation was increased was because of expanded departmental expenditure in other directions, and the transference to the Consolidated Fund of charges formerly borne by the Unemployment Fund and Public Works Fund.