THE TAX BURDEN

Manawatu Standard, Volume LVII, Issue 276, 21 October 1937, Page 6

THE TAX BURDEN

RATES AND COMPARISONS. POSITION OF DOMINION. “When speaking in defence of the present weight of taxation in New Zealand, the Minister of Finance made a number of statements in the House on October 13 which call for comment,” says a statement by the Associated Chambers of Commerce of New Zealand. “The Minister made comparisons m the matter of the income-tax paid on certain incomes in England and New Zealand, and said that in certain grades the British rate was slightly more than in New Zealand. That is so. but the Minister did not mention that British revenue from income taxation represents 34.7 per cent, of the total taxation revenue for the current year, while in New Zealand such collections represent 24.7 per cent, of total taxation revenue. The Minister cannot establish that English taxation is greater than New Zealand merely by quoting comparative rates of income tax where such English taxation is heavier. It is also the case that tax rates on certain other grades of income are considerably heavier in New Zealand than in the United Kingdom, but the fact that New Zealand rates of income tax so closely approximate those in the United Kingdom, at the. same time as New Zealand collects 75 per cent, of its taxation revenue by other means, as compared with 65 per cent, in the United Kingdom, onlv serves to emphasise how heavy New Zealand income tax is in proportion. INDIBECT TAXES.

“Then the Minister said that in New Zealand, income tax on £SOO (man, wife and two children) was £l2 9s Bd, and that in South Australia it was £22 Os Bd, but he did not explain that, in South Australia, funds for unemployment relief are secured by increased income tax rates. To make a true comparison in this case the Minister should have added £l7 13s 4d unemployment taxes to the income tax pay able in New Zealand on £SOO. This makes a very big difference, the two taxes on the £SOO man then lreing actually £3O 3s Od in New Zealand and £22 Os' 8d in South Australia. (In the United Kingdom income tax on £SOO is £8 6s Bd, as compared with £l2 9s 8d in New Zealand).

“Again, the Minister omitted to state that taxation from alj sources in South Australia was equivalent to £6 0s 6d a head in 1936-37, plus £9 4s 9d a head Commonwealth taxation—a total of £ls 5s 3d. as compared with £l9 14s lOd a head New Zealand taxation for the same year (including unemployment taxation in each ease).

“The person who pays no income tax cannot escape paying indirectly his share of other taxes, which are equivalent this year to £57 10s 8d an average family of four in New Zealand, a 3 compared with £46 5s Od in the United Kingdom. Some families will pay less, others more, than this, in each case. These taxes are reflected in higher prices for goods, commodities and services. This bill for indirect taxation has grown on an average familv basis, as follows Year IP°9, £39 6s 3d; 1935-36, £4B 8s 3d ; 1936-37, £sl 9s 9d ; 1937-38, £57 10s Bd. “Another point made by tbe Minister, in support of his statement that United Kingdom taxation was heavier

than New Zealand, was that if tho wages tax was to be taken into 00 sideration in New Zealand there would have to be an addition made for unemployment insurance payments in England; also, that taxation was levied in New Zealand to cover all services, whereas in England the local authorities had to tax to pay for services which in New Zealand were the responsibility of the central Government. However, one can leave out or consia eration both the £5,180,000 to be ram ed in New Zealand this year * or employment purposes, and the unemployment insurance payments in Eitigland, and the position still is that the remaining taxation is equivalent to £l9 2s 2d a bead of the population ot tbe Dominion, as compared with. &.L< 14s 5d a head in the United Kingdom, for the current financial year. “There is small point to be made in I the taxes raised by local bodies in England. because while the amount so collected in England and Wales in 1930-36 36 was equal to £4 0s 10d a head. ■ bodies in New Zealand eo lected the equivalent of £3 18s 9d a head in 1 same year—the latest year for which i figures are available in cither case. I The position, therefore, is as follows . TAXES A HEAD. (Excluding Unemployment.) United Kingdom New Zealand

< ‘The figure of £l7 14s 5d for the United Kingdom is an official Government return for 1937-38 Figures of taxes collected by Scottish local boon.—which would be an addition to the £4 0s lOd given above —are not available for years past. . “In this comparison, an important point not to be forgotten is that of the total United Kingdom expenditure this

year £198,268,000 .is for defence serrvc This is equivalent to 2o per V v J the total British Budget excent, of tl on ]y 4.6 per cent. of'the "Budget expenditure of the New Zealand Government for the cm rent 'ear i 9 for defence purposes. 7 “Finally, the Minister named cor- , • Qfntp organisations which pay * all \tn but omitted mention of those ‘“ 10 iot-to which latter class are StaSdS W ko* f.di.g conce‘"lt is highly disturbing to note xi 7+1,1 Minister generally confined IteLftiSw i >rcscn ! ,°rInmsea w “ , taxa tion on mduspressive w tho individual, and Snot mention when taxation is to be reduced, if a t a ”‘

£ s <1 £ s d 17 14 5 19 2 2 Local Body 4 0 10 3 18 9 Totals 21 15 3 23 0 11