THE THURSDAY, APRIL 27, 1933 SMOTHERING TAXATION.

Hawke's Bay Tribune, Volume XXIII, Issue 113, 27 April 1933, Page 6

THE THURSDAY, APRIL 27, 1933 SMOTHERING TAXATION.

There has never yet, even in good times, been a Chancellor of the Exchequer or a Minister of Finance who could produce a Budget that would satisfy all those affected by its proposals. It was not at all likely, therefore, that, in these days of economic stress, Mr. Neville Chamberlain would escape adverse criticism with respect to the financial statement he has just submitted to the House of Commons. On the whole, however, it would seem to have met with a fairly favourable, if by no means enthusiastic, reception. The most friendly comment conies from the point of view of those who assign foremost place to the need for preserving hardly won financial prestige by balancing the Budget entirely out of revenue.

This is an aspect of the position that, especially for a great trading nation, cannot be disregarded. Great Britain’s forward position among those nations has in very large measure been gained and maintained by the care that has been taken to keep her national finance upon a sound footing. Not only has this operated strongly as an example to be followed by both individuals and institutions desirous of establishing themselves permanently in the confidence of those with whom they have commercial dealings. It has also resulted in London becoming the financial centre of the world, an advantage so long enjoyed that it has almost ceased to be recognised by a great many of those who benefit from it, not exclusive of the oversea dominions. There are therefore many good reasons why the present Chancellor of the Exchequer, especially with the coming great international economic conference in mind, should exercise due caution so as not to imperil the position that has been so hardly won and, of recent years, has been retained only by very heavy sacrifice.

On the other hand, it has also to be recognised that the continuance of the high taxation found necessary for achieving the purpose thus in view bears very hardly upon those responsible for the promotion of the industrial and trading enterprises upon which the country lives. It is the failure of Mr. Chamberlain’s Budget to provide any measure of re-

lief from this crippling burden that has occasioned the most unfavourable criticism, and therp need be little doubt that there is some good ground for the stand thus adopted. It has become quite manifest that the heavy taxation imposed to meet the emergencies of the times has reached the stage when it has begun to fail. This is an inevitable result, particularly in an industrial country mainly dependent upon its export trade, of an over-long period of heavy taxation, no matter what form it takes. Taxation of this character necessarily saps the foundations upon which national industry and trade have been built up. Economic stagnation, if nothing worse, must necessarily come when the flow of new capital arising from productive and profitable undertakings is diverted into sluggish channels in which neither of these characteristics is to be found, and that is pre-eminently the case when it is drawn off into State treasuries.

Beyond this, of course, lie the reactions upon those who still have liquid capital that otherwise might find its way out and help to fertilise the fields of private enterprise. In our cables the London “Times” is quoted as among those who have commented adversely on Mr. Chamberlain’s Budget, and the nature of that comment may easily be in, ferred from articles and correspondence that have appeared in issues recently to hand. In these urgent representations are made for the reduction of taxation and State expenditure and for the encouragement of private industrial undertakings. “There cannot be the slightest doubt,” said one editorial article, "that, when once the Budget has been relieved [of what should really be capital expenditure!, the relief should be used to reduce taxation. The reduction of taxation is far more than a mere transference of purchasing power, which is the only merit ascribed to it in some quarters. Nothing, in fact, is better designed to translate passive into active purchasing power. Indeed, without a reduction of 'taxation the Government’s appeals for wise spending and their devotion to the ideal of procuring a rise in prices by an increase in effective demand, must in many cases be altogether worthless.” This is a way of looking at things that might will be commended to our own Government.