POSTPONEMENT OF RELIEF.

New Zealand Herald, Volume LXIV, Issue 19743, 16 September 1927, Page 10

POSTPONEMENT OF RELIEF.

A general revision of the tariff is not a task to be lightly undertaken, so that the present proposals by the Government must be regarded as setting the standard of customs taxation for several years. But on this occasion there is a special reason for examining the tariff in the light of its effect upon the current year's taxation and revenue. That is the statement by the Minister of Finance that additional taxation of incomes would be covered by tariff remissions. Mr. Stewart himself admitted that it was doubtful whether the balance would be struck in individual cases, but, even if consideration is confined to the general results, his defence amounted to an admission that any concession of taxation under the tariff, estimated at £IBO,OOO, will be recovered from income tax payers, from whom £150,000 to £200,000 will be obtained. Examination of the tariff schedules, however, leads to the conclusion that tha bargain is far from being as fair as the Minister promised. Alterations in duties, including subdivisions as well as main items of the schedule, are proposed in about 250 cases. In about 200 instances the foreign tariff is to be increased, generally by the addition of 5 per cent, to the existing duties; in a score more the duties on British goods also are to be increased ; while reductions are proposed in 39 cases.

Of the last, seven are postponed until next year, and in the meantime the foreign rates are to he raised. The Minister states that tiie principal purpose in raising the general tariff is to divert trade to British goods, which will be admitted at the lower rates of duty. That result is certainly to be desired and may he confidently expected. but its realisation may he only gradually achieved. In the meantime, the higher duties will he to a large extent the effective rate of taxation. Thus, so far as the present financial year is concerned, there is the certainty of additional taxation of incomes and a substantial prospect of additional customs taxation through the operation for over six months of higher duties on foreign goods. The latter effect might have been avoided by reducing the preferential tariff instead of increasing the foreign rates, but since the Government decided against that course, and a temporary

increase of taxation is almost inevitable until the course of trade responds to the new duties, it is left without justification for its action in increasing the taxation of incomes. The Government's policy has now been fully disclosed. It has secured a modification of the income tax schedule which has aggravated the anomalies it professed to remove, and, whether incidentally or deliberately, will demand a substantial additional levy from taxpayers ; it has proposed a revision of the tariff which, however great its merits as a permanent fiscal instrument, will require in the remainder of the current year a substantial additional levy from all classes of indirect taxpayers. Hence, once again, the Government has failed to propose any relief from the burden of taxation.