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Evening Star, Issue 17958, 3 May 1922, Page 4

I.v redemption of his promise, Mr Massey has appointed a comTaxatlon In inittco, consisting of NSW Zealand, twelve gentlemen, to inquire into and report to tho Government on tho incidence of taxation in Xcw Zealand. With tho personnel of tho committee wo havo no fault to find, except perhaps that no room has been found on it for a professor of economics and at least one representative of organised Labor. Were there one Labor representative, no matter how unorthodox might bo his views on national finance and taxation, it is certain that ho would bring into real prominence a factor on which wo ourselves have often laid stress —viz., the difference between tho real and the nominal incidence, of taxation. Tho Government may aim a blow at tho man clad in financial armor and hit him; but in many cases the blow glances off the armor, and ite real strength is spent on an unarmed onlooker. There seems to bo a tendency among business men to regard our various forms of taxation as being contained in watertight compartments, whereas our whole social and economic structure bar, boon reared on an entirely different plan, embodying and requiring a steady How throughout an intricate circulating system. To track the real incidence of taxation is a much more difficult and complicated task than to treat tho matter as if it ended with iho actual assessment put upon any particular class of taxpayer. It would perhaps have been bettor had Mr Massey given his definition of the incidence of taxation when announcing the appointment of tiio committee. Tho omission of a Labor representative and of an economist from among the number available at our University suggests that ho takes the stereotyped view of tho matter. Neither has ho slated whether the committee will be authorised to investigate tho amount of taxation desirable (which the Government might consider an infringement of its own prerogatives), or merely to suggest how tho present amount might bo redistributed. Tho former matter undoubtedly requires expert investigation. Britain has provided invaluable lessons recently on this subject, culminating with tho new Budget. Mr Reginald M'Kenna touched on this subject when presiding at tho meeting of a prominent London bank. Ho said :

It would not, bo easy—l doubt if it would bo possible—to define tho limits of a nation's taxable capacity. Too much depends upon the human factor, which varies so greatly in different people. One man will exert himself to the utmost though the tax collector

should take from him 10s in tho £ of all lie earns; another will he disheartened if he ho mulcted of but 5s in the £!, Wo cannot doubt, however, that, taking tho nation through, there is a, limit beyond which, if taxation continues so high as to give, only a. very small return for additional effort and for the risk ot additional capital, it will become a matter of general occurrence' that the effort will not be rondo and the capital will not he risked. . . . Everyone is agreed that taxation of the poor on such ;i ccalc as to deprivo them ot tho means of obtaining tho necessaries of life is morally wrong. But it is not generally accepted that excessive taxation of t);o rich is economically wrong.

Other views will, of course, bo held by many on tho nature of the committee’s duties, but it is to bo hoped that the persistence' of the expected complaints of those, say, who want racing clubs to bo relieved of their present burden of taxation will not push broader issues into the background.