Nelson Evening Mail TUESDAY, SEPTEMBER 11, 1945 TAX INEQUALITIES

Nelson Evening Mail, Volume 80, 11 September 1945, Page 4

Nelson Evening Mail TUESDAY, SEPTEMBER 11, 1945 TAX INEQUALITIES

ALTHOUGH it did not achieve anything more positive than promises of a reduction next year the debate on the annual taxing Bill did give an airing to some of th e inequalities iff the general incidence of taxation in New Zealand. Nowhere does the burden fall more harshly than on the family man of moderate income. He catches it all ways; in direct taxation ; in levies to Build up a social security fund for those unable to provide for themselves ; and in the indirect taxation of consumable goods which the family needs and which have all generally to b e bought out of the one pay envelope. There has never been an equitable margin of tax differential for the family breadwinner even in peacetime and the figures quoted in the Parliamentary debate show that New Zealand is more niggardly in this respect than most other parts of the Commonwealth. If universal family allowances are too stiff a financial hurdle the income tax exemption for depen-, dent children should be raised from £SO to £IOO without more ado. A multiplicity of indirect taxes which make goods and services dearer all combine to impose more difficult living conditions on the family. The sales tax is one impost which has been pointed to as capable of modification to provide all-round relief, not least to servicemen building homes, furnishing them and setting up in housekeeping.

Another place where the heavy tax load is unduly repressive is in industry. Capital as an agent of production is entitled to its reward no less than labour. Only by a free flow of capital into worthwhile undertakings can that reconstruction and expansion come about which are so necessary for the provision of useful employment. If taxation continues so high that return from fresh enterprise is not worth the effort and risk involved, initiative becomes stifled at its source and we wonder why lethargy replaces brisk activity in the national economy.

The cause of the thrifty who, during their working lives, saved and invested to provide for old age and who now have income from this source taxed as “unearned” has long been pleaded without much result. These people actually save the State each year a considerable sum which otherwise would have to be paid to them in social security benefits and yet they are penalised because of a commendable desire to be independent of outside help. Most of them are of an age where it is not possible to supplement this “nest egg” by fresh earning.

Mr Nash has declined to give any taxation relief this financial year on the grounds that, though the war is

over, many of its bills huve yet to be met and that the winding up of war finance as far as possible by providing for such substantial items as gratuities and deferred pay will require most of the money originally budgeted for. The alternatives to this, he says, are either to rely more on borrowing, thus shifting u greater part of the debt to the future, or to levy increased taxes elsewhere to compensate for any concessions. Professed inability to lighten the load in some degree straight away is not convincing but, in the readjustments contemplated lor next financial year, the family man, industry and the class living carefully off modest investments deserve prior consideration.