COSTS AND PRICES

Manawatu Standard, Volume LVIII, Issue 227, 24 August 1938, Page 3

COSTS AND PRICES

THE TRADING SITUATION. WEIGHT OF TAXATION. WELLINGTON, Aug. 23. “There has been a steep fall in the value of farm produce since last year without a corresponding fall in farmers’ costs. It was this divergence of costs and prices that caused such difficulties for our fanners during the slump, The difference between them is widening again.” This is the keynote of a warning regarding the present economic situation in New Zealand sounded by Sir William Hunt, chairman of directors of Wright, Stephenson and Co., Ltd., in concluding a review of the company’s accounts for the year ended June 30. “As shareholders know, the business of the company is mainly with New Zealand farmers, and in the handling of farmers’ stock, wool, and produce,” remarks Sir William Hunt. “A company such as this cannot prosper unless its farmer customers aro prospering, too. Attached to the last two balance-sheets was a chart showing the relationship of pastoral and dairy produce export prices to wages, and wholesale and retail prices since 1901. This has been brought up to date, and accompanies this year’s balance-sheet. “The graph shows dearly that there has been a steep fall in the value of farm produce since last year without a corresponding fall in farmers’ costs. It was this divergence of. costs and prices that caused such difficulties for our farmers during the slump. The difference between them is widening again. The chart does not deal with taxation. TAXATION INCREASES. “Land and income tax combined tako nearly half the net income of large 'companies in this Dominion, and in some cases more than half. This country had high income and land tax just after the war, but a deduction from taxable income was then made to allow for land taxation, and there was no double taxation. • Now high graduated land tax has to be paid, and is not deductible from taxable income, which means double taxa-, tion. After the war the aim of the Legislature was to reduce taxation, but now only increases are in sight. “The proposed social security legislation means more taxation, and it is becoming quite evident that this country must face up to more expenditure on defence, otherwise its future safety is in danger. No one can complain of taxation for efficient defence. In these days the country that does not keep itself strong is inviting trouble. Strength, however, means all-round efficiency. Is the expenditure of much of the present high taxation producing efficiency? “The prosperity of New Zealand depends upon the prosperity of its best customer, Britain. New Zealand has no other market for meat and dairy produce except Britain, and i Britain is also the largest buyer of | New Zealand, wool. Britain is the | world’s greatest trader,' and her prosperity depends very much upon world prosperity. “World conditions, both financial | and political, were never in a more uncertain state than they are to-day. As a leading economist recently put it: ‘There is only one thing certain about the future, and that is its uncertainty.’ The British market, too, is very keenly competed for. Butter is New Zealand’s largest export line. , With the exception of New Zealand, every country exporting butter to I Britain is subsidising the producer, and the subsidised competitor is the ; hardest competitor to meet. Recent ! shipping experience on the Pacific is an instance.”