HIGH TAX YIELD

Manawatu Standard, Volume LV, Issue 245, 13 September 1935, Page 2

HIGH TAX YIELD

LINKED WITH EXPENDITURE. FURTHER ECONOMIES. With the aggregate revenue of tho State from taxation having risen in 1934-35 to the highest point ever recorded in New Zealand, tho general taxpayer is looking expectantly to tho forthcoming Budget for relief (says a statement by the Associated Chambers of Commerce of New Zealand). Tho taxation yield has resulted without any increases in tax assessment rates except in a few minor instances since 1933- while actually there- have been reductions in Customs and unemployment taxation. While it is true that certain of tho revenue received during 1934- was fortuitous, the improvement in national revenues from different taxation items provides an encouraging basis on which to work as regards effecting tax reductions. ABOLITION OF SALES TAX. Public opinion is in favour of the sales tax being removed—and not merely reduced, because the cost of collection to the commercial community would be just as great whatever tho rate of tho tax. It has already been pointed out that abolition of the sales tax would still further improve the yield from Customs duties, excise duties and income tax. There is then the matter of Government economies which could be brought to hear in assisting tho situation. There are those who are of a mind that economies in Government are now a thing of the past. Actually, the time for such economies cannot be past so long as a return to better conditions by the Dominion is impeded by too great a weight of taxation, as at present. There is no doubt that pressure is being exercised on the Government to increase expenditure in different directions by different people, or sections of the people, who at the same time illogically want taxation reduced. However, real as the difficulties of any Government arc in such a matter, it i.s not enough for a Government to plead the weight of ill-conceived pressure on it to spend more as a valid reason for spending more, and therefore give no taxation relief. What the Chambers of Commerce have been endeavouring for years to impress on many of the genera! public is that Government expenditure and taxation are inextricably joined, and that the people cannot “have tho cake and eat it, too.” If governments were to spend a little time in educating the general public along similar lines, then they would ultimately bo relieved of much of tho worry of’ how much to yield to tho pressure for greater expenditure, and how much to resist it. It was probably a slip of the tongue by the Prime Minister when he stated publicly recently that with regard to the question of taxation reductions, “the Government would have to consider its spending programme before it decided to re June its income.” That is a supreme advantage that a public governing authority has—to be able to regulate its income to accord with its expenditure. What is really needed is a regulation of expenditure to accord with income in a way that will give relief to tho taxpayers, particularly by way of the abolition of the sales tax. This is where Government economies still require to bo considered. Despite the substantial economies which the Government has effected already , in certain directions, the net expenditure of the Consolidated Fund has been steadily increasing since 193233,- as the following table (which excludes expenditure on unemployment) shows:—

1931- 23.730,000 1932- 22.528,000 1933- 24,202,000 1934- 24,499,000 In addition to the above was the expenditure on unemployment, which was close on £4,000,000 in 1934-35, making a total expenditure of £28,411,000 for that year, as compared with £24,176,000 in 1928-29. The forthcoming Budget lias yet to reveal whether any further increases in expenditure are proposed for the current financial year. UNTOUCHED ECONOMIES.

Taxation relief could certainly he given by means of further economies in State expenditure. The recommendations made by tho National Expenditure Commission have been by no means exhausted. There are many small and large-scale economies recommended by that Commission which still await adoption, such as reorganisation of the hospital system and subsidies, reorganisation of the Public AVorks Department, tho abolition of education boards and land boards tho amalgamation of a number of Government departments, a proper curtailment of the Legislative Department’s vote, and many others, the savings on which the Commission could not definitely set down, but which the Commission said would bo far in excess of the quarter of a million pounds which the Commission specified in respect of other more readily assessable items. Tho taxpayers of the country have the right to expect that all possibilities of economy shall be exhausted. If there is pressure for increased expenditure beino- exercised, then those who hold tho scale's should not forget that improved industry commerce and trade, absorption of ’the unemployed by private enterprise, and the economic betterment of the whole country, are very nreatlv dependent on an easing of the present heavy load of taxation concludes the statement of tho Associated Chambers.