LOWER TAXES

Manawatu Standard, Volume LIII, Issue 251, 20 September 1933, Page 4

LOWER TAXES

BY STATE ECONOMIES. RESTORING BALANCE. A reduction in taxation as a means of assisting national recovery in New Zealand is a device so sound that there is still hope of its being adequately dealt with by the Minister of Finance in his Budgetary statement when Parliament meets (says a statement issued by the Associated Chambers of Commerce). The far-reaching effects that would attend such a stef) would amply compensate for the tardiness of the Government in the matter to date. At the same time as substantial reductions—running into millions—in Federation taxation are being promised in Australia, New Zealand trade and industry are being burdened with an excessive weight of taxation that is acting as a drag on the economic machine and accentuating unemployment. It is a British characteristic to bear taxation with fortitude, but while taxes are inseparable form the debt obligations of the • country, outside that sphere they are controllable and adjustable, and are without the virtue of inevitableness. The people do not exist for the welfare of the Government ; Government is established for the welfare of the people. BUDGETING FOR DEFICIT. Admittedly it is a Federal surplus which is to supply the means of taxation relief in Australia. The New Zealand Government, on the other hand, is deliberately budgeting for a deficit of millions, so that if relief for New Zealand taxpayers is to be dependent on a surplus there is nothing to anticipate. That being the the question is what taxation relief can be effected by other means, since whatever the superior resources of Australia may be, and whether or not she is moving out of the depression more quickly than New Zealand, does not affect the urgency of the case in the Dominion for accelerating the wheels of trade. It goes without saying that the reason why taxation in New Zealand is ns heavy as it is, is because of the high costs of Government. The people can no longer afford to buy all the existing Government services. It is a wry truism that once a tax is imposed by a Government it becomes almost im-movable-—and the more indirect the tax the greater its tenacity. This is largely due to the fact that, crowding in behind the taxes and buttressing them to the last chink, is the body of services which the State maintains at the cost of the taxpayers. Only by relieving that pressure from behind can taxation be eased. “SAVE THE SERVICES.” One of the difficulties facing the Government in its work of economy, therefore, is the natural resistance of established State services. This does not mean that Government departments have not lent loyal aid in effecting administrative economies in their respective branches, but the sum of savings made is of small account alongside the task that needs to be undertaken. A policy of “save—but save the services” is not sufficient for the needs of the situation. There is an economy point beyond which State departments are not likely to go, since their own existence becomes involved. It is then the work of the

Government to deal with the curtailment or elimination of departments which the country can no longer afroid. There is little evidence that the work of economy has been carried beyond the point at which State departments stop, and it cannot be said that tne limit in economy has been reached. At the time the sales tax was mtroduced it was plainly stated on .beiialr of the commercial community that the tax coulcl be justified only by economies in State exepnditure to an extent that would relieve the total tax burden. No such relief has been given. It is still possible to give a much-needed fillip to trade by making Government economies equivalent to, say, the estimated yield of the sales tax, and then removing the tax. It is axiomatic that wealth is capable of far more profitable employment by private hands than when it is poured on the relatively barren soil of the State, which gives in return many services which are unproductive. A fact too little appreciated is that private trade, industry and commerce, and not the State, is the economic employer, and that the restoration of balance lies in the contraction of State activity in order to permit the expansion of private enterprise.