TAXATION PROBLEM

Evening Post, Volume CXXIV, Issue 69, 18 September 1937, Page 25

TAXATION PROBLEM

COMPARISONS ELSEWHERE

NOT ALWAYS FAIR

In a lecture to the W.E.A. on Tuesday last, Mr. F. B. Stephens, M.A., 8.C0m., dealt with the problem of taxation. He pointed out that within certain limits the actual amount of taxation was not the most fundamental factor in determining the burden of such taxation on the community as a whole, but rather the character of the expenditure structure. Thus, for such transfer expenditures as pensions, the payment of internal interest, subsidies to industry, and social services in general the taxable capacity of the community as a whole was much greater than for such exhaustive expenditures as that for defence. Consequently, unless we were prepared to pay a great deal more attention to the expenditure structure and prove that in particular lines the expenditure by the Government did result in a net reduction of the national income, then discussions, on the amount of taxation amounted to little more than idle words. For the same reason, comparisons as to the total amount of taxation or of the taxation per head as between any two countries had no meaning unless some comparison of the character of the expenditure structure was made. In recent discussions reference had been made to the different rates of taxation per head in various parts of the British Dominions, but in some of those discussions it seemed to be forgotten that the national Government in New Zealand was responsible for edu cation, police, public health, and such like functions which, in other parts of the world, were the function of local governments. Furthermore, such discussions took little account of the standard of living of the community as a whole and of1 the effect of Government expenditure on the various sections of the community.

Finally, the lecturer pointed out that the burden of taxation could not be discussed apart from reference to the national income. Consequently, if at a conservative estimate the national income was in the past year approximately sf* per cent, above that of 1932----33, while the taxation had only increased by approximately 20 per cent, over the same period, then, although the total amount of taxation collected by the CJovernme: ' was greater than in the depression years, the real burden on the community as a whole was considerably less' because of the fact that it was a lesser proportion of the national income.

A keen discussion followed. The next lecture will take the form Of an analysis of the New Zealand financial structure.