TAXATION

Northern Advocate, 19 August 1935, Page 7

TAXATION

' reasons for INCREASE STATEMENT BY MINISTER WRONG IMPRESSIONS. REDUCTIONS WHEN OPPORTUNE. {.Special to “Nonnern Advocate.'’i WELLINGTON, This Day. A reply to criticism on the increase in the amount of taxation paid in New Zealand was made by the actingMinister of Finance, Mr Hamilton, in an ( interview in Wellington yesterday, “Much political capital is made out of the fact that the yield from taxation for 1934-35 showed an increase of £3,267,000 over the previous year,” he said. “The inference that is generally conveyed is that the Government has increased the burden of taxation since 1933- but a statement of all the facts will clearly show that this impression is entirely erroneous. “Critics fail to point out that this increase in the yield from taxation is not due t oany increase in the rate of taxation. On the contrary, in two important fields —unemployment and customs—there have actually been reductions in the rate. The higher returns in taxation receipts arb due almost entirely to the improved conditions of business, and a general increase in prosperity during the year 1934Sales Tax Returns. “This is borne out by the increased returns from sales tax, the yield from which increased by £323,710 over the previous year. This indicates an increase in the sale of taxable goods, and clearly demonstrates increased turnover for the business community and the increased spending power of the people. “Similarly, the increase in Customs duties of £938,583 over the previous year was due to an increase of £6,432,000 in the value of imports. Again, critics of the Government do not state that last year some of the largest items of increased taxation were due to particular circumstances. Death du-1 ties, for example, showed an unex-1 pected increase of £815,000 over the j previous year; this abnormally high yield was due to the deaths of a few wealthy people. Another Increase. “Another important item of increase was from income tax, which was £835,233 higher than in' the previous year. Here, again, it niust be pointed out that the income tax receipts relate to incomes of the previous year, that is, for the year 1933-34, when wool prices were comparatively high; but it should be remembered that for the year 1934-35 the value of the exports of wool declined by nearly £7,000,000. “In other respects, too, the total yield in taxation was clearly due to increased prosperity. The unemployment tax collected last year demonstrated that the total wages bill of the Dominion had increased £3,600,000 above the amount paid out in wages over the previous year. Local Body Decrease. “A substantial decrease in the local body taxation per head has been, and is still, taking place. In 1930 the rate was £4 8/7 a head, as compared with £3 18/4 for 1934. At the present time, v the rate of local taxation per head is lower than it was in 1926.” Referring to total taxation, Mr Hamilton said that the figures most frequently quoted in comparison with New Zealand were those for Australia. But, unless all the facts were known, the comparison was misleading. “The cost of unemployment relief in New Zealand has been met directly out of taxation,” said Mr Hamilton. “Last year it amounted to £2 18/8 a head. In 1933-34, the most recent figure available, Australia paid taxation towards unemployment relief at the rate of £1 7/11 per head. But, at the same tinie, a great portion of the cost of unemployment was being borne out of loan money. Australian Position. “Between 1930 and 1934, Governments in Australia borrowed £122,000,000 —over £30,000,000 a year. The Australian public debt has increased from £1.187,817,686 in 1931-32, to £1,237,122,393 at December 31, 1934. The Australian floating' debt at March 31, 1935, amounted to £82,513,000. “This is in striking contrast to the position in New Zealand. We have reduced our public debt during the period of depression. The present figure £280,580,000 is lower than in 1931-32, when it stood at £281,000,000, and our floating debt has been paid off. “If we omit unemployment taxation, which is definitely an emergency measure, and if allowance is made for the increased yield from death duties, which is of a fortuitous nature, general taxation on a per head basis is on a parity with pre-depres-sion years. “The Government policy throughout the depression has been an attempt to mitigate the burdens, and to spread over the whole community the losses of those most severely affected, concluded the Minister. “The public may rest assured that the present rates of taxation will not be maintained a moment after it is possible to effect reductions.”