NATIONAL POOL

Evening Post, Volume CXXVII, Issue 71, 25 March 1939, Page 10

NATIONAL POOL

REPLY TO MINISTER

CONCLUSIONS OF CHAMBERS

OF COMMERCE

"DOUBLE COUNTING"

The Minister of Finance questions our published conclusions as to how the national pool is divided between wages and salaries, Government and capital, says a statement by the Associated Chambers of Commerce of New Zealand. The Minister does not, of course, question the accuracy of the figures concerning the value of production, which we used as a basis, because these figures are produced by the Government Statistician. Mr. Nash elects to use 'instead the official figures of aggregate private income, and on this basis he reaches some conclusions of his. own, but we cannot agree with those conclusions when arrived at on such a basis. We were dealing with national production, and how it was divided. Figures of aggregate private income are not figures of production; they are, as the Government Statistician himself says, the sum total of the' incomes of all the individuals of the-.population, plus the undistributed portion (inclusive of State taxation) of company profits. Contained in the total are wages and salaries, and, indeed., monetary payments from all sources, including pensions and superannuation. NOT VALUE OF PRODUCTION. The total of all such payments does not express the wealth produced by a country 'at any given period. State pensions, for instance, as well as the wages and salaries of large numbers of Government employees, sustenance moneys, and so on, are paid out of the taxation of other incomes. Aggregate private income, as given by the Government Statistician and by the Minister, considers incomes before, and not after, taxes'are paid, but includes incomes that have already come out of the taxation of other incomes. Therefore, to total private income is not to total original wealth, because of the double counting involved in the former. If a man possesses a horse and a cart, he does not count them, then put the cart before the horse, count .it in again, and arrive at the conclusion that he possesses one horse and two carts.

We do not question in any way the accuracy of the Government Statistician's figures of aggregate private income, but they were never meant to be used—and cannot be used—in the way the Minister has tried to use them, as expressing the national pool of

original wealth. v The Minister does not mention State or local body taxation at all, or attempt to offset our presentation of it as a percentage of the value of national production. It is because his aggregate private income figure is wrongly employed by him to start with that Jie cannot proceed to this point. Through aggregate private income including, as we have already stated, incomes created by the taxation of other incomes, the Minister, of course, finds it impossible to express total taxation as a percentage of that aggregate.