Evening Post FRIDAY, AUGUST 26, 1938. WAR UPON SAVINGS

Evening Post, Volume CXXVI, Issue 49, 26 August 1938, Page 8

Evening Post FRIDAY, AUGUST 26, 1938. WAR UPON SAVINGS

Nothing in the Budget, nothing in the Social Security Bill, nothing in the debates thereon has tended to remove the probability that taxation will have to be increased heavily. If this were merely a problem for large payers of income tax, smaller tax payers possibly might be indifferent; but it is impossible to avoid the conclusion that, unless social security is paid for by means of "printed purchasing power" (to use Mr. Holland's phrase) then all grades of taxpayer will feel the tax screw heavily, the little tax payers perhaps more (in proportion to resources) than the big. Mr. Nash's three assumptions in introducing the Social Security Bill—that the actuarial report over-estimated by £1,610,000 the first year's charge, that the actuary under-estimated the national income, and therefore that the additional expenditure in 1939-40 is re-; duced to £1,365,000. and may\ not require new taxation —have! strengthened the impression that thej Government's tactical plan is toj under-estimate costs, over-estimate revenue, and play for just one prize, a pre-election place on the Statute Book for the Social Security Bill. Mr. Nash says that his attitude is not inconsistent with the technical procedure of Budgeting for one year at a time. But it is also consistent with either "printed purchasing power," or a heavier taxation from which no man with an investment surplus or with savings will escape. Consistent perhaps, ultimately, with both.

Mr. Lee, in last night's debate, took the bull by the horns. He is reported as saying that the Government is going to see that "some of these investment surpluses are disgorged." How is the disgorging to be effected? How else than by taxation? What else can Mr. Lee mean than that, by the taxing process, the investment surpluses of individuals are to be distributed among the needy? To the extent that they are thus redistributed among the population, these investment surpluses will cease to be; and, in proportion, the yield of taxation will cease to be. How, after that, will the needed taxation be raised? With the removal of such sources of taxation, with an exhausted taxpayer, and with an empty treasury, the costless credit specialist or the currency inflationist then will have his opportunity. Among the arguments that will be advanced for credit experiments will be the empty treasury and the exhausted taxpayer. These immediate sacrifices thus become means to credit-adventure ends. Exhaustion of the taxpayer is a step along the road; and people who adopt this means of progress cannot be expected to support the "dampingdown" plan which Mr. Nash depreciates, nor any other plan that reduces expenditure and relieves the taxpayer in prosperity, with a view to a greater State spending power in depression. Not prudence but profligacy is the keynote of a policy which seeks to abolish investment surpluses and pave the way for a new financial order.

Will the Government be steadied by any respect for conserving the taxation power of the country? Not if, as Mr. Lee is reported to say, the (Severnnifent is going to see that investment surpluses are "disgorged." Will tte*j Government be steadied by Oiiy traditional respect for the principle of thrift? Not if another Labour contributor to last night's debate, Mr. Carr, has his way, because he is reported as saying that "individual savings are economically unsound.'* It is true that Mr. Savage has minimised the meaning of certain anti-thrift statements attri-J buted to him, but Mr. Carr's position ■ seems to be quite definite. Mr. i I Holland told the House of a rumour that the Left Wing at a Government caucus demanded "pensions from printed purchasing power.'* This step can be taken either at once, with temporary relief for the taxpayer, or, a little later, over the taxpayer's dead h*sY' But, sooner or later, the meaning of Mr. Nash's Budget and of his social security speech is that such a step is exceedingly likely, and that anti-savings and anti-investment surplus members of the Government following are very well pleased with the way that things are going. They, at any rate, are not thinking in terms of one-year Budgets, and are not pushing their heads into the sand.

Many people will be disposed to accept as accurate, but not to approve, the Minister of Labour's reported statement that "even those who now imagine themselves secure for life may be sorely in need of this legislation in a short time." Mr.! Armstrong added, "surely this willj be a better country to live in when we have banished the fear of want altogether." The test question is: Will New Zealand be a better country to live in when the taxable surpluses of individuals have disappeared, when incomes have been redistributed by taxation, and when all the people draw in common out of some common fund-of-production by machinery processes that can only be guessed at? Will that be progress, or will the country pass from inequity to iniquity?. People may differ as to

how they answer this question, but the statements of Ministers—including Mr. Lee, who is a kind-of subMinister—and of Mr. Carr and others leave no doubt that the Government's war on savings is not a deferred campaign but an active one, operating under the cover of Budgeting practice, but in no way restricted by it. People who consider this is progress should vote for it, but they should be under no 1938 illusion about what is to happen in 1940 and succeeding years. For much of the light that is available, the public are indebted to the actuary, whose report the Government dared not suppress. Mr. Coates is now pressing for a Treasury report which he thinks may be equally illuminating, but which has not seen the light of day. Surely to comply with his request would be in the best interests of the sincerity of which so much is heard, and which should not be monopolised by men on the fringe of the Cabinet or just outside it.