The Evening Star. FRIDAY, DECEMBER 1, 1922. LABOR’S ARITHMETIC.

Evening Star, Issue 18139, 1 December 1922, Page 4

The Evening Star. FRIDAY, DECEMBER 1, 1922. LABOR’S ARITHMETIC.

Their advocacy of a State*’bank baa got some of the Labor candidates into deep water. It appeal’s that in Wellington on© aspirant for Parliament has committed his ■views to paper, and thereby has done the community the service of exposing the careless manner in which lie, at least, handles figures. The method! appears to bo to dig out a dump of figures from some official source, deduce from them certain “facts” without first bothering to ascertain what exactly the figures convey, and then triumphantly to allege that something shady has been going on, and finally to ask insinuatingly; “ Who gets the spoils?” Invariably the moral is that if private capitalistic financial concerns were replaced by a State bank all would be well. We have our doubts. A State bank of the sort which is being advocated would be instituted by no one but rash and inexperienced! tyros in finance j and under their administration its career would be meteoric, 'brief, and probably more disastrous to an unfortunate community than 1 any other plank of extreme Labor’s policy in operation, not excepting oven the confiscatory land policy. Accuracy in dealing with figures is a sine qua non for successful banking. When the State bank advocates cease to misuse figures in the way they are now doing it will bo time enough to concede them som,o elementary knowledge of their subject and perhaps listen to their arguments. In soma Wellington electorates 'leaflets have been issued by, or on behalf of, a Labor candidate bearing such ingratiating titles as ‘A Colossal Bribe’ and ,‘Who Gets the’ Spoils?’ One allegation is that a rebate of 20 per cent, in the income tax was given by the Government to the banks, the amounts being set out, also to insurance companies and certain industrial concerns, both shipping and coal mining. The accuracy of the amounts was at once challenged, on© banker terming the figures “grossly inaccurate and totally unreliable.” ThCre is one very obvious reason for this: the compilers of the leaflets have confused published profits and taxable incomes, assuming them to have identical meanings. Then, having taken a totally wrong figure as the taxable amount, the amateur arithmeticians have used the wrong formula in calculating the taxation payable, apparently oblivious of the fact that the law makes special provisions for calculating the income tax payable by banking companies. Other blunders have been perpetrated, of which that made in the case of on© particular bank will serve as an illustration. One leaflet quotes the profits of the Union Bank as £536,261, and on this figure it Kiys that the bonk obtains a reduction in income tax of £39,525 16s 2d. Now, the only thing wrong with these figures is that the profit quoted is the result of the bank’s “whole business,” most of which is outside New Zealand. It should be obvious to the simplest intelligence that a 'bank is not taxed in New Zealand on profits it makes in Australia and London. The figures quoted for the Bank of New Zealand, National Bank, and two insurance companies are also quite wrong for similar reasons. The criticism of the taxes paid by insurance companies is based on the assumption that it ia concealment of profits for such institutions to amass reserves out of profits expressly for the purpose of meeting the very contingencies for which Insurance companies were devised —in the case of a fire insurance company, a big conflagration ; in the case of marine insurance, heavy losses at sea. Again, present dividenddistributions to shareholders are mad© to work ou,t

as 'high as 80 per cent, by the ingenious method of calculating them, not on the present capital, but on,the original share capital, ignoring the fact that the capital has naturally been periodically increased with the growth of a concern over halt a century of sound 1 management. Throughout Labor’s campaigning excursions into the realms of economics and finance there has rup a pernicious vein, a blond of ignorance and irresponsibility, which, on being exposed, should), form in itself the best refutation of those levellers’ claims to power so that they may put this coublry on its legs again. They would speedily have it on its bock. That they have no fixed financial policy, only a haphazard and aimless tearing down of all structures that have been laboriously built through centuries of work, is suggested by the way they contradict one another. Thus, while in one part of Dunedin, Mr Munro was saying ho did not know how land or income could he taxed to such an extent that it could be called confiscation, in another 1 paid of the town Mr Gilchrist was saying: “If I had tho power to-mor-row 1 would! tax incomes to extinction beyond £2,000. I would) tax beyond £2,000 to the extent of 20s in the £. Any family that cannot gab along on twenty hundreds a year 1 ought to abdicate, and) I would use tho wealth to sot going our public works and to develop the undeveloped country of How Zealand.” That is unadulterated confiscation'. It would, if given effect to, not greatly accelerate tho rate of public works development. There might be something of a haul the first year; thereafter there would be a swift declension to nil. Capital would depart, unemployment would be more the rule than tho exception, and tho worker would curse the day he assisted to put into power the disciples of crazy finance.