POST-WAR FINANCE.

Hawera Star, Volume XLVI, 27 July 1927, Page 8

POST-WAR FINANCE.

CONDITIONS IN NEW ZEALAND

THE GROWTH OF TAXATION

“Ever since the Great 'War we have been learning slowly, and some have not vet quite learned, that pre-war conditions will never return.’’ said Dr. E. P. Neale in an address on presentday taxation and public finance at the monthly luncheon of the Auckland Chamber of Commerce on Thursday. “'World conditions are entirely different to-day from those in 1914. A serious blow has beeir struck at Britain’s pre-war industrial supremacy by a number of changes of importance, some entirely due to the war, and others already in train in 1914. but accelerated by war-time conditions.” The war had taught economy in tho use of gold as a circulating medium. War-time habits had remained, however. and the result was a post-war level of prices which might he expected. to continue more or less permanently above pre-war levels, although with probably a downward tendency. Some' countries had paid their war indebtedness in whole or in part through an inflation of their currency. However, inflation was a dangerous process, and New Zealand had done well in not adopting this method to repay her war debts’. Some had thought that the country could have met a greater proportion of it war expenditure by taxation at the time, rather than by raising loans. In the case of New Zealand, the whole of the necessary funds could, theoretically at least, have been raised, as it had been suggested, by imposing an export tax on staple exports equal approximately tbe difference between the pre-war prices and the existing prices realised in Tx>ndon, with perhaps a_ slight reduction to allow for the increased cost of sue.i imported materials as were used in producing these staple products.

Such a tax would have kept down the cost of living, wages and land values in the Dominion, and obviated the economic ills that had followed the war. as other people besides farmers received windfalls out of the war. some means would, also have had to he devised to tax them also. Such a. scheme would have been workable. Tbe fact remained that about 40 per cent, of the public debt was unproductive. The hulk of tho increased taxation required had been raised by increased income tax. which now constituted TO.V per cent, of tho total taxation revenue, compared with 9 per cent, before the war. Land tax now provided about 7\ per cent., compared with 13 percent, before the war, and customs about 5 per cent., compared with 6 per cent. It was well that the unproductive war debt should be decreased as soon as possible for the benefit of coming generations, but the difficultv was to know just when the point was being reached when taxation was becoming so heavy as to constitute an undue burden on industry There was reason to believe that that point had been reached, if not passed, during the past two years oT depression.