THE TAX BURDEN

Evening Post, Volume CXXV, Issue 36, 12 February 1938, Page 11

THE TAX BURDEN

GROWTH REVIEWED

RELATION TO PRODUCTION

The recipients of income-tax demands at the present time have every cause to reflect on the increased proportion of their incomes that is being taxed back into the Treasury, says a statement by the Associated Chambers of Commerce of New Zealand. The following table shows the growth in income taxation collections, together, with unemployment taxation collections—since the latter are virtually another form of income taxation: Will! Yt : ended Income unemployment .March 31. taxation. tax nettled. 19»8-29 .... 3,310,000 3,310,000 19»9 30 . 3,533,000 3,533,000 1030-31 '. 4003 000 4,284,000 1931-32 V... 4 448,000 5,085,000 193»-33 ■. 3556000 7,656,000 1933-34 .... 2961000 7,374,000 1934-35 ... 3,706000 8,358,000 1935-36 .. 4551000 5.503,000 1036 37 . 0618,000 10,843,000 193T-3S "'.. 7,500,000 12,080,000 Unemployment taxation was not levied in 1928-29 and 1929-30. The figures for the current year are the official estimate. In 1928-29 income taxation accounted for 18 5 per cent, of total tax revenues. Today it represents over 21 per cent., while joined with unemployment taxation, it represents 35.7 per cent. The increase in the -amount collected in income tax, and the increased proportion of total taxation which income tax represents, are not, however, to be taken as being accompanied by a loosening of the taxation screw m other directions, .as is shown in the following table of comparisons with 1923-29—the year which, previous to the record year 1936-37, was New Zealand's best for-total value of production: — 1037-38 (Official Estimate). Increase Percentage over 1928-29. increase. £ Income and unemployment taxes... 9,369,000 284 Customs and sales tax • • 6,196,000 78 ■Highways"! 1,814,000 146 Stamp and death duties 672,000 24 Beer duty 338,000 o5 Land tax (decrease) 140,000 12 Miscellaneous (decrease) 563,000 71 Total net increase £17,686,000 99 The table shows that taxation today is almost double what it was in 1928-. 20, The only taxes which show a reduced yield are a number of miscellaneous minor ones, and the land 'tax —in respect of which the Government's estimate of reduced yield no doubt has a good deal to do with the recent legislation providing for a hardship clause to be used to moderate the effects of the tax. ANSWER TO TAX DEFENDERS. Despite the fact that 'taxation in general has never before been so high, there are those who—even in Parliament—have defended it with the argument that the community can bear it because the value of the country's production has increased so greatly. As to that argument, preliminary figures of the value of production in New Zealand for 1936-37 are now available from the Government Statistician.- The value is set down at £136,100,000, as compared1 with -£126,600,000 in 1928----29. This means that whereas 14.08_ per ■■■cent.' 'of the" value"; of' production was taken in general Government taxation in 1928-29, 22.89 per cent, was taken in 1936-37. Also, the part played by local Government taxes is not to be forgotten. The latest year for which figures1 in this connection are available is 1935----36 (£6,162,000), but assuming these local taxes to be the same for 1936-37 (and the likelihood is that they will be more) the following is the position:— , TasaState and ' tlon as local Value of pertaxes. production. centYear. £ £ nK°- . 198-29 .. 17,8,12,000 12fi.6n0.000 10.0 1935-3" .. \57,326,000 136,100,000 27.4 This shows that taxation, as a percentage of the value of production, stood at over 27 per cent, in 1936----37. In other • words, whereas total taxation before the war represented about 2s 4d in the £ the value of production, and in 1928-29 3s 9d in the £, in 1936-37 it represented 5s 5d in the £. (This is not to be confused with actual income tax rates, for instance, which rise to a higher rate in the £.) On top of this, the Government is budgeting to take a further £4,354,000 in taxation during the current financial year. When the figures are examined, they fully support the contention that the present load of taxation is excessive and oppressive. A further disquiets ing feature of the situation is that figures available in official statements show that none of the revenue is being earmarked for a rainy day.