Cost of Production

Hawke's Bay Tribune, Volume XII, Issue 244, 28 September 1922, Page 4

Cost of Production

AS AFFECTED BY HICH TAXATION. ARGUMENT IN FAVOUR OF REDUCTION. THE PREMIER’S OPTIMISM. (Special to “Tribune.”) Wellington, Sept. 28. Some important observations on the freezing industry were made by the Prime Minister in the House last night in reply to Mr. H. M. Camp null (HauKe’s Bay), wiw had referred to the urgent need oi bringing down the co>t oi freezing operations. ‘1 do know, ’ said Mr. Massey, ‘‘that we have got to reduce the cost ot production if we are going to compete successfully in the markets ot the world. There was one argument put forward by the member tor Hawke’s Bal which struck me particularly, and that is that proprietary companies owning freezing works must make a profit of 8 per cent, before they can pay. a dividend of 4 per cent.. That is entirely the position. Let us suppose that a company was paying income tax at the rate of 8/- in the £. The maximum rate is 8/9, but we will assume that they are paying 8/- in the £. Of course they have to pay land tax as well, and we can put the land tax down at 2/- in the £. That makes a total of 10/- in the £. As the result of having to pay such a heavy tax they must charge higher rates for freezing stock on behalf of settlers. The profits of settlers themselves are reduced, and no benefit is gained by that. It is only another argument in favour of reduced taxation. 1 hope that the bill before the House will lie only, the beginning in that direction. 1 hope it will be the beginning also in reducing the cost of living and in reducing the cost of interest. Concerns who find financial accommodation for producers have to pay interest at the rate of 7 per cent., and, therefore, they must charge a high rate to their clients. You reduce income tax and a reduction in the interest rate will follow. 1 lielieve that what is coming is a general reduction in the cost of living, the cost of interest and the cost of production. 1 hope that what we are doing will go a long way towards bringing the country back to a state of prsperity. Mr. Howard: My word I you are optimistic to-night.