Nelson Evening Mail THURSDAY, APRIL 26, 1923 TAXATION

Nelson Evening Mail, Volume LVI, 26 April 1923, Page 4

Nelson Evening Mail THURSDAY, APRIL 26, 1923 TAXATION

THE question of taxation is one that has engaged the best brains in all countries, but so far no one has been able to evolve a system of payment that is completely satisfactory economically, or that is really equitable. There is no need to agree with all that a well-in-formed writer on the subject says in the Quarterly to be interested in his survey of the subject. He says the signs that the rales of income tax, super tax, am*, death duties are excessive in Britain are too numerous to be avoided. To avoid crushing income tax, every Jcgi limate. device is used, such as the registration of estates as companies, the creation of trusts for maintenance and education, and family division of property. Large super-tax payers are frequently unable to meet the demand for the dutv. and it is significant that in such cases the revenue authorities are glad to get what they can on account, and refrain from proceedingsc to sell up defaulter*. As regards estate and death duties, there is so-called evasion, but it docs not prevent the rapid breaking up of landed estates The operation of these duties has contributed materially to the agricultural revolution which has been accomplished-—not to the advantage of the industry or the population. Death duties on the highest incomes, translated into terms of an annual charge on income formed in the period from 1903-04 to 1913-14 a burden equivalent to that of all other taxes combined. Of the large incomes more than one-half Ts paid away in income tax and super-tax. If death duties in terms of income are included, something like two-thirds is paid. If the bulk of effective saving for investment and capital accumulation comes from these incomes (as the writer argues it does), it is clear that the first measure of relief should be applied to the hundred million pounds or so an nually produced by the super-fax and death duties. The idea that the Stale has a right to share in a dead man's estate before any of the successors or beneficiaries is too consonant with democratic theory to encourage any hone of successful attack on the principle. Ye' in practice the taxes have become more harmful and oppressive than any other form Of taxation in proportion to the revenue they produce. As to praduation, or progression, 0/ 'differentiatiai) in taxation, the question for practical men now i whether, under the m< ue.ico of economic theory and poht.ca prejudice, these principles have not been carried to such an extreme as to threaten the whole- basis of the industrial and commercial system, I hero is need for a fresh examination of all these system to find how far their productiveness is being affected by the present conditions. Consideration should be given to the deliberate conviction of the whole business community that a, considerable reduction and simplification of these imposts is an essential preliminary to any genuine revival of confidence and eventual prosperity. _ If the contribution of the British

that by far the larger portion of it is already being returned to them in the form of subsidies to services from which they alone directly benefit, such as relief of the poor, Education Acts (including provision of meals), Old Age Pension Acts, Housing Acts, Public Health Acts, National Health Insurance and National Unemployment Insurance Acts, and the Ministry of Labour. Tho expenditure ofithat Ministry in 1921-2 was. million pounds. Tho latest return of services grouped under Public Assistance, with the addition of the Ministry of Labour, would show an expenditure of something like 250 millions from Parlimaentary votes and grants alone.: and a figure 0f.400 millions (which did not include tho Labour department. cost) was accepted in a debate of April, 1922, as the total expenditure in the year 1921-2 under these heads from taxes and rates. The number of beneficiaries was roughly estimated at 30 million persons out of a total population of 48 millions! What must be the effect of such a system on the productive, and therefore the tax-paying, capacity of the wage-earners? Mr Geoffrey Drage has not exaggerated the financial danger in calling it a "rake's progress' to bankruptcy. What is undermining public finance is the war-fostered development of State socialism. There is all the difference in the world between modified resort to unusual measures and an exaggerated continuation. Polio wing the attempt to meet, conditions of distress and to effect a general improvement in the standard of living of the poorer classes, there has been a policy of "social betterment" pushed to a point at which it is seen to be leading to the impoverishment of the whole community, by drying up the capital funds indispensable to industry, and by discouraging the productive energies of the workers themselves. From a period before tho Armistice social policy, says the "Quarterly," has largely been inspired by tho idea that revolution in Britain is only to bo averted by a lavish distribution of pecunary advantages to the wage-earners.

The review maintains that this idea is not only a delusion, but is a libel on the intelligence and good sense of those classes. It is inclined to think that there is a growing perception of tho truth that the wage-earners are tho worst sufferers from a taxation, of the wealthier classes, which restricts and diminishes employment; and that tho working man, if ho understood the facts, would resent the position of parasitism to which he is being reduced —a position of increasing independence upon tho other classes of the community. "Every five pounds spent in endowing unemployment out of. the taxes, or building houses out of tho rates, drives another workman out of employment for a week." '

Expert investigation of tho position and of possible methods of reform should he followed by early and resolute Government action. This, it is maintained, is absolutely necessary if the situation is to be saved, and some measure of economic and social health restored to the community.