The Evening Star MONDAY, MAY 1, 1922. Taxation Overdene.

Evening Star, Issue 17956, 1 May 1922, Page 4

The Evening Star MONDAY, MAY 1, 1922.

Taxation Overdene.

For the past two months (here has been a growing belief in I>vitnin that the Chancellor of the Exchequer, in the Budget to bo presented (o-dav in the TTnuse"cif (‘opinions will propfse tn lake Is in the £> oil tho income tax’. Critaiu has been showing nmnistakahlo signs of her inability to stand up to tho crushing harden of taxation which her nilers with nun nest imnibls courage but with questionable wisdom imposed on the people in consequence of the war. Hie 1 amiable object was to maintain, when Britain became a. debtor nation, tho national credit as Inch ns it had been when she was a. creditor nation, T lie task has proved impossible. The effort' won tne outside world's admiration, and thereby helped to uphold Britain’s credit abroad, but it has overstrained Britain’s industrial heart. The result has been an enforced holiday from work in many industries. meaning a lessened output and a consequent dinnnation of income. 100 drastic treatment for an ailment has lowered tho patient’s vitality; 100 heavy taxation has defeated its own purposes. While the tax gatherer was screwing the last birthing out of Jus victims, they succumbed ono by one. In many eases profits diminished to vanishing point, there being nothing to divide, between the employer and the Government, and finally as profits, became losses, industries shut down and tho unemployed, .swelling to unexampled volume, became vociferous about the promised “world fit for heroes.” In redemption of this promise out of work doles were granted. Tho drain of many millions a year for payment of lltes'e has become too much for the Treasury to endure. Though the palliative mav bo relieving much physical distress, it lias been sapping tun morai fibre of tho worker. A reduction in taxation is probably the. second sign of a reversal of the economic policy of the British Government. The first was the economy 1 campaign, which resulted in the Government accepting about two-thirds of the economies proposed in tho Gcddos Report. Ti tho brake had been put much earlier on Ihe spending departments, demoralised by the free hand enjoyed in war lime, the present crisis might have been much less crucial.

That a (risk has been reached is quite evident. The shilling reduction in the income tax cannot be justified by any reasonable estimate of the national revenue and expenditure during the financial year entered on a month ago, and will possibly involve some increase in the Heating debt. It violates all the canons of sound finance hitherto accepted by orthodox Chancellors of the Exchequer since the day when Mr Gladstone tried tho experiment of reducing the scale of taxation and thereby succeeded in increasing the 'revenue—just, as a, half-starved horse will do more, work if ho is properly fed, the extra usefulness proving of more importance than the increase in the feed bill. As a matter of fact, high authorities such ns Mr Reginald M'Kcnua and Mr Walter Runciman have expressed tho opinion that a. reduction of the income tax would give to great ,a fillip to industrial enterprise that a 5s tax would produce more than a 6s tax. Even if it does not do so immediately, a postponement ol the. eliort to meet current obligations out of revenue by giving some present relief would advance month by month the. recovery from the present depression, and would bo worth far more than the interest charges which might be involved in pulling off some of the country’s obligations to a future dav.

- Tho “ standard ” rate of the present British income lax is 6s in tho £, this applying to all taxable income above £225 per annum (the first £225 of taxable income paying 5s in the £). Only incomes of Ims Ilian £l5O per year i£los if derived from investment) an; exempt, and how closely Die income tax collector gets to tho mas.se.;. is shown by the fact that a- single pe. son earning only £2OO per annum has to pay £6 15s, while the £3OO a year man pays £2O ss. On top of this thoic is tin; super tax. charged only on incomes ex. reding £2,0(10 a year, and ranging on a graduated, scale from Is 6d to 6s in the £; but there has been no suggestion of an alterarion in. this. It j can thus be seen how grinding has been tho .‘druggie for the masses in Britain for the, past lew years. They have, in addition, been subject In indirect taxation to which they were in large measure st,rangers in the pa-l. Customs duties tending in the' diicetion ol making Britain’s lineal policy protective from a revenue point of view instead of free trade have added, to the cost of living, while, poslave rales have been enormously increased. Jt is therefore not at all unexpected to hear of reductions in these hitter and in the duties on ten and sugar being strongly urged. But there is another form of indirect taxation which has added In (he burden. Big monopolistic or semi-iiioimpuhstic. corporations handling necesoirv everyday commodities, having been themselves subjected by Dio Government to taxation of profits on an unprecedented scale, have been in a position to pass it on to the consumer; and they have done, so with a vengeance. Tho result is that people arc forced to pay extravagant prices tor, say, petrol and tobacco; the directors of companies handling these arc able to show staggering disclosed profits and to declare dividends of from 15 per cent, upwards, free of income tax. The fact is that present-day systems of taxation tend to allow strong trading organisations to become farmers of the national taxes, and it is notorious that from the world’s earliest history tax farmers have always recouped themselves handsomely for the task. This defect was long ago pointed out hero in a' pamphlet entitled ‘ 'The Excessive Income Tax Charged to Largo Companies in New Zealand and its Effects,’ issued by the principal farm stock and station companies trading in Mow Zealand. In a recent speccli in Auckland Mr Massey dealt, somewhat sketchily (unless he has not been fully reported), with tho “necessity for reduced taxation.”- If ho cannot see

his way to follow Sir Robert Homo’s expected lead and reduce the rate of taxation straight out, lie might at least strive to readjust its incidence so as to shelter the man at the bottom from the steady trickle of passed-on taxation which filters down through the too permeable strata above.