TAX REDUCTION.

Hawera Star, Volume XLVIII, 11 September 1924, Page 6

TAX REDUCTION.

BENEFICIAL TO WHOLE COMMUNITY.

(Contributed by the Welfare League.)

When the Prime Minister introduced the annual “Land , and Income Tax Amendment Bill” in the House, the Leader of the Socialist Party is reported to have said: “As for income tax reduction, it was. simply a gift to the people who were well placed to bear their share of taxation,” and he added that the members of his party “were going to resist the reduction at every possible point.” The idea, that the imposition or reduction of taxation only affects that class of the community which directly pays the taxes is a complete fallacy which is very difficult to kill. The basis on which this fallacy seems to vest is that the man (farmer or trader) spends more on his personal living if his income improves. This may be true of the man with a small revenue, but the people who are generally aimed at by the opponents of tax reduction are the- earners of large incomes, and it is the surplus over actual personal expenditure that- is accumulated and invested as capital, thus increased income, whether due to greater earnings or to reduction of taxation, assists the acumulations of the surplus, and provides the means for the extension of industry. Anyone who studies this ■ question impartially must at'once see that high taxation can only lfave a deterrent effect on enterprise, and especially new enterprise, and that the more surplus income taken by taxation for unproductive State necessities the less there is available for extension of industry. Furthermore, under the present system of heavy graduations in taxation, most is being taken from those who are able to use their, surplus income most efficiently. The companies, traders and farmers earning incomes larger than they need for personal expenditure are therefore building up reserves of capital which, when invested, provides greater employment for the population of all classes, both now and in the. future. This should be clear to anyone who quietly thinks over the matter, but whether clear or not we fear that the Socialist will never admit its . truth Their policy is to take from the “big man” all they can,' apparently thinking that by so doing they are eqnalismg the distribution of wealth, instead of gradually killing its creation. Nor are they fair in their arguments in support of this policy, for they persist in giving the impression that the large incomes are personal earnings, whereas by far the greater percentage of these are . earned by companies and institutions in which the small man and the thrifty worker invests his savings. . r^ie Y appear to. advocate the imposition of such penalties on industry as lated reV€nt any savillgs bein S aeeumu-

In one other way does the whole community suffer: High taxation stnkes. not only the. owners of incomes, but everyone who in any way assists towards their production The investor, the industrial director, managei, foi eman, 'workman, consumer and rent payer, all contribute their quota m payment of the tax, as it is passed on. ’ 1 -, l J ed ! 1 1 cti ? n ?f taxation is therefore ilf 0 i ll t le ' interost of the people n p,eneial, except where the taxation s . a tribute upon luxury and mobable waste, of which there is little m this small country. ■ ™