BEARING UP

Evening Star, Issue 23745, 28 November 1940, Page 16

BEARING UP

NEW ZEALAND PEOPLE HEAVY TAXATION BURDEN AN AMERICAN'S VIEWS The bearing up of the people of New Zealand under an enormously increasing taxation burden is regarded by Professor James H. Gilbert, an American economist now on a visit to this country, as being remarkable. Describing New Zealand as a laboratory for the study of economic experiments, he stated in an interview with the Waikato ‘ Times ’ that the Dominion has been courageous enough to pioneer in many fields of economics, with the result that it was a place of interest for overseas economists. Professor Gilbert, professor of economics at Oregon University, U.S.A., has been in New Zealand for two months studying taxation. It has been apparent to him, he stated, that industry had withstood the increasing taxation burden. His conclusion was that the wonderful soil and climate, the bountiful rainfall, and adequate natural resources, combined with the unusually intelligent, alert, and vigorous nature of the neoplo, who tvere largely of British origin, had kept the country prosperous even in the face of what would have been considered 50 years ago as an impossible tax burden. TAX ON UNIMPROVED VALUE. “ The most interesting feature of taxation in Now Zealand is the land tax on unimproved values,” stated Professor Gilbert, in making comparisons between the systems here and in America. Other New Zealand taxes, such as Customs duties, excise duties, income tax, and sales tax, wore used in America also. Referring to New Zealand’s land taxation on unimproved value, he said that in America the property tax was the chief source of State and local revenue, but the United States tax was on the laud and all improvements, merchandise, live stock, farm implements, and so forth. In New Zealand he had found that the taxation left all but the land itself free from charges. In many localities, such as Hamilton, rates were also levied on the unimproved value. To American economists this was the most interesting phase of the Dominion’s taxation system. He added that it was a concession to Henry George’s single tax theory, a principle which had been rejected in the land of its origin, but which had taken root to a limited degree in New Zealand and in Australia.

MERITS OF DOMINION SYSTEM. In reply to a question seeking his opinion of . the Dominion system, Professor Gilbert said it had many merits. “ It takes the penalty off labour and encourages the making of improvements,” ho said. “It enables the community to share in part by the growth of the community itself. I consider, however, that it is a principle which should not bo pushed too far, and. as an economist, I would oppose the application of, a single tax in its extreme form.” Professor Gilbert added that it was difficult to estimate how the aggregate burden of taxation in New Zealand compared with that in America. There wore so many different forms of taxation in the two countries that to estimate the total burden was an impossible problem. One of the features of the New Zealand and Australian systems which was most surprising to Professor Gilbert was the proportion of total revenue received from Customs duties. As a British country, Now Zealand would be expected, he thought, to follow more consistently the freer trade policy of the Mother” Country. Instead, the import duties wore distinctly protectionist and from 35 per cent, to 40 per cent, of the total national revenue was derived in that way. In America, less than 5 per cent, of the total came from Customs, although the United States was considered to be one of the world’s greatest protectionist countries. SALES TAXES COMPARED. Differences in the sales tax in New Zealand and in America were also described by Professor Gilbert. In the Dominion it was levied on manufacturers and wholesalers and passed on to the consumer in the form of higher retail prices. In America, on the other hand, the levy was on the ultimate sale to the consumer, who paid the price of the article pins a sales tax charge in every transaction he made. The New Zealand system, Professor Gilbert considered, was more convenient in administration and less irritating to the consumer and to the dealer. In order to examine the large volume of data he bad collected in the Dominion during bis visit. Professor Gilbert said he, wonld_ reserve further conclusions on taxation in New Zealand. He intended writing a pamphlet on the financial system of New Zealand and he expected it would be published within about a year. The income taxation in' America was complicated as a result of the national tax and the levy made by the individual States. Combined, the income tax was fairly high. OLD STATEMENT RECALLED. Professor Gilbert was interested to discover that in the ’eighties it was argued in the New Zealand Parliament that taxes had reached a limit and that people could not pay more. It was said that the. Budget must be balanced by reducing expenditure. Since that time the burden had been enormously increased. Professor Gilbert, who has been professor of economics at Oregon University since 1915, specialises in the study of taxation, money, banking, and public and private finance, He will return to America shortly.