Where Taxation Pinches

Greymouth Evening Star, 20 August 1949, Page 4

Where Taxation Pinches

inevitably enters into the *■ price structure. For that reason the existing steep scale of taxation is a major cause of prevailing high prices on the one hand and the reduced purchasing power of money in the hands of the people on the other. In his Budget speech in the House of Representatives on Thursday night, the Minister of Finance, Mr Nash, made no specific reference to this simple economic fact. Indeed it could hardly be expected that he would. The high prices of goods and /services today do not result from company or producers’profits, but are due in the largest degree io the penal taxation which the Government continues to take from the pockets of everybody, directly and indirectly. No one escapes the net. In many cases the man. in the lower-income group helps to pay the taxes of the man [n the higher-income group. No greater illusion can be fostered than that any man goes tax-free. He pays through increased costs of consumer goods. It used to be the cry of the Socialists, “Soak the rich and distribute more money to the poor.” The really rich have, long ago, been reduced to an infinitesimal number. Now the burden is placed on companies, but the taxation of companies and other business firms, large and small, is reflected in higher costs of goods and services to the people. There is no denying that the Government had, and still has, in its hands the most potent instrument for cutting prices and hence the cost of living. That instrument is a reduction in taxation. Furthermore, the policy of penal taxation operates to defeat the Government’s avowed object of increasing produetion and thus the volume and value of woods and services, because the principal incentive of both employer and employee to increased effort is profit and reward for such effort.