HIGHER TAXATION FEARED.

Horowhenua Chronicle, 4 May 1938, Page 3

HIGHER TAXATION FEARED.

FARMERS AND SOCIAL SECURITY CASE PRESENTED TO SELECT COMMITTEE. (By Telegraph—Press Association.) WELLINGTON, May 5. “We would emphasise that in our opinion to proceed with the scheme along the lines of the present proposals is imprudent financially. The prospect of a possible £15,000,000 increase in general taxation at some future time is a possibility which cannot be viewed other than with the gravest misgivings.’’ This statement was made to-day by the president of the New Zealand Farmers’ Union (.Mr. W. Mulholland) to the select committee on national health and superannuation.

Mr. Mulholland recalled that the attitude of the union with regard to nation al health insurance and superannuation was expressed in the following rcsolu tion, which was carried at its last conference in 1937; —“That the Government be asked to introduce a national scheme to cover sickness and old ag-" 1 which shall be: (1) National, (2) adult, (3) contributory, (4) absolutely protected.’’

The Farmers’ Union strongly supports a universal contributory super annuation scheme, Mr. Mulholland add ed. By a superannuation scheme I mean a scheme into which the beneficiaries

pay a sufficient sum in contribution 0 year by year so that their payments to gather with the interest earned thereon provide a sufficient fund from which the benefits can be paid. They accrue to the beneficiary by right and are hr property —lie having provided the fund bv which they are established.

The Farmers’ Union is profoundly disappointed at the Government’s proposals for national superannuation. The proposals are not for superannuation at all, but are proposals to provide finance to pay pensions on a considerably increased scale and on a much wider basis to various members of the community, including the relief of unemployment by the payment of sustenance. .V number of these proposals will have the effect of keeping in idleness people who are physically well able to provide for themselves.

The proposal that a large share of the finance shall be provided by the Consolidated Fund (estimated by Mr. Maddex at nearly - £10,000,000 out of approximately £18,000,000 for the first year for the combined health and pension scheme) means that the main burden of the scheme is going to fail upon those sections of the community already suffering from the increased cost /o! d\ ing—namely, those breadwinners with a number of dependants. Li' the Arbitration Court takes the cost of living as its guide in making awards some oi these will, it is true, be able to pass these increased costs on by obtaining uicrcase.' in wages. Industry ::i ui.l pass them on in increased ios!s o; products and services until they reach the producer for export, lie is nimbi.,to pass them any further, and will eon seijuently have to shoulder the louden Danger to Stability, Mr. .Maddex estimates (hat the soctal security contribution of Is in the £ owages and other income is going to provide £7.500,000, Mr. Msilhoiland pro ceeded. The present tax is 8d in lie £, so that there is only one-tit ini of thai which is new money (£2,51)0,000) or, allowing for another £OOO,OOO for exemption now to be abolished, say, £5, 1.00.000, to finance a new expenditure oi £9,000,000. Mr. Mulhollaml proceeded. The addition of another £9,000,000 to the Government’s imposts, with its attendant repercussions in increases in costs, and further internal devaluation of the New Zealand pound, will probably cause such a demand on the overseas exchange as to create a very grave danger to the stability of New ■ Zoa hind's financial position overseas. Mr. Maddux’s estimate that the Is in the £ “social security’’ contribution plus (he registration charge of £1 per year would produce £S,uUO,(!OO is basec on the assumption of the taxable “mi tional income’’ of £150,000,000, which ~e indicate:; Ims never before been at aim'd. 1 would point, out that to e-u mate tor the future on the im o. 11, ini oiiic of the h ighe.'.t year ia hi.-', w. h i-.h.-.a export tin nice ewe i moi to ■ oi’ tile income in normal years. Fear of Inflation. 1 would emphasise the unwisdom depending on a largely mere;;-..;;:; :■•• lmua) income to keep the finances o this or any other similar scheme sow;.. Mr, .Mulhollaml said. If Ihe scheme m carried out under Government contro' and there should be a fall in the Urn aide national income at some future date, the temptation will always be I" the Government of that time to main tain the benefits by overdraft from tin Reserve Bank. It should be stressed that a scheme such as the one propose would be likely to generate inflalio’. unless it were operated with cxlrctm care. •Sustenance for the relief oi unom ployinont should not be included in a superannuation scheme, or be regard*) as part of a pension scheme. If U i? desired to institute a form of uneraplovment insurance, it should be done specifically under a scheme for Unit purpo>> We recommended that the present, pension system should continue i force until it can bo gradually elimin ated by the operation of the Supermini! ation Fund. There should be no income or othei limit to those entitled to benefits from

the SV.pcranmmt.ion Fund —lhey havinj. paid for (-hem are unconditionally on titled to receive them.

'l’here are qnile a large number 11 people covered by existing' superannuation funds —public and private —whic. are of great value and to which in ,! :c aggregate very large sums have beei contributed. The eont ributors to thesefunds must be fully safeguarded -o iha they will sutler no penalty, nor lens o privileges or benefits, through Ihe operation of a general superannuation scheme. Jly union would oppose 1 verv strongly any scheme' which elid not tally provide safeguards for these -.-eople.