CUSTOMS TAXATION.

New Zealand Herald, Volume LXII, Issue 19144, 9 October 1925, Page 8

CUSTOMS TAXATION.

A criticism of the Government that is being eagerly canvassed by Labour candidates is based upon the fact that while income tax has been reduced there has not been any general measure of reduction in customs taxation. Their purpose would not be served by reminding the electors that the proportion of the total taxation derived from income tax was increased fivefold, and is still more than double the prewar ratio, while taxation through customs is still relatively less than it was before the war. With a complete disregard for cause and effect, these opponents of the Government declare that it has increased customs taxation. That could have been done only by the revision of the tariff at the end of 1921. In that year, the revenue from customs duties was £5,671,715, whereas last year it was £7,480,947, an increase of £1,809,232. A higher figure has been given on several occasions, the difference being due to the inclusion of excise duties on New Zealand products. But it is scarcely reasonable to quote simply the expansion of the revenue as proof that taxation has been increased by the Government's action. The tariff is not sufficiently high in any item to be prohibitive, and the revision has certainly not prevented importations for they amounted to £48,527,000 in 192-1, compared with less than £43,000,000 in 1921. That increase was naturally reflected in the customs revenue. Actually, the extent of the revision of duties was to increase the duty on foreign goods from 30 to 35 per cent., while that on British goods was left at 20 per cent. In operation, the increase has been insignificant. Duty was collected in 1921 on goods valued at slightly over £19,000,000, the average rate being 29.62 per cent. ; in 1924 the value of dutiable goods was £25,600,000 and the average rate of duty 29.26 per cent. Thus the effective rate of taxation last year was actually slightly less than under the old tariff. Moreover, certain taxes for special purposes serve to inflate the customs revenue. A particular case is that of motor tyres, which are now taxed, by consent of the consumers, as a contribution to the financing of main highways. Beyond that, the increases in the 1921 revision were applied almost exclusively to luxuries, and duties on common necessaries were left at the former rates.