ECONOMIC PROBLEMS.

New Zealand Herald, Volume LXVII, Issue 20481, 5 February 1930, Page 9

ECONOMIC PROBLEMS.

DIFFICULTIES IN ECONOMY*

HEAVY TAXATION BURDEN. INDUSTRY IN AUSTRALIA* [BY TELEGRAPH. —OWJ* CORRESPONDENT.] ! . WELLINGTON. Tuesday. The world knows Dr. Otto Peltzer, who arrived from Sydney to-day, as a breaker of athletic records, but athletics with him is merely a pastime, and in private life he is a highly qualified and keen student of economics. Dr. Peltzer is a graduate of the University of Munich, famous for its faculty of economics, and a lecturer in economics at Wiskcrdorf College, Saalfied, Central Germany. When not engaged on the running track he spends his time analysing the social conditions of the country ho is visiting. "Germany is suffering from excessive taxation consequent on tho war," said Dr. Peltzer, "Every class is affected, the worker as well as the employer. You have an income tax here also, but there are exemptions for thoso whoso incomes fall bqlow a certain amount. In Germany everybody pays. The worker who earns 150 marks (£7 10s) a month —that is the average wage of a bank clerkpays 10s in income tax. Reduction of Savings. "The rale is progressively higlief With larger earnings. Wo also have a trade tax and a turnover tax of 1 por cent. It uoed to be 2 per cent, on all deals, whether they aro profitable or not. By these and other taxes the whole of Germany is heavily burdened and individual savings are reduced to nothing. Therefore, for municipal and Government developmental works, when loans have to be raised, we have to go outeide our own country and pay a higher rate of interest than if we raised them internally. "Another aspect of our dangerous economic position is that we now have to import many kinds of raw materials which wo formerly produced in areas that were ceded to other nations by the Peace Pact. Oiar agricultural interests in the east, now part of Czecho-Slovakia, were lost to us„ as were also dairying areas in the north of Denmark, and minerals and coals in the west. Before the war, for instance, we exported a great deal of surplus beet sugar. Now this has to be imported. • Australia's Tariff Policy.

"The high taxation needed to pay our reparations, the cost of the armies of occupation, and the war pensions have also added to the burden. Then there is the loss of productive colonies, and our former customers are developing their manufactures, and thus we are facing _a double loss that, may not be realised in New Zealand. The only chance Germany has to regain what she has l_o=> is to keep down the costs of production and that is why wages have not been raised since tho war, although the cost of living has increased 50 per cent." Dr. l'eltzer does not see much hope

for Australia's high tariff policy. The big levy on imports had raised tho cost of living there, and although the workers received a good wage nominally the real value 'of their earnings was. considerably less, and this had led to industrial discontent. The: wealth of Australia -was still mainly derived from agricultural and pastoral resources, and the farmer there had to bear tie burden of the high tariff and at the sa.me time sell his products at what tho rest of . tho world would pay for them. If the world's parity fell Australia must suffer. Political Interference.

The Australians would have to learn that they were not, a world in themselves, but, like every other country, a component part «f a much bigger world. Thero was too much political interference in economic activities in Australia. They already had to pay a large interest bill for external loans, and this, in addition to the tariff burden, made for economic instability on a fluctuating world market. Protection was nil right in the initial stages for an industry that had a chance of developing., but there should be a periodical survey of industries that were being helped in this way. If Australia paid more attention to a policy of land settlement anil less to the development of secondary industries her future welfare would be more reassuring. The progreiis of industix and the general air o!f prosperity in Japan surprised Dr. Peltzer. The people there had incentive and enterprise, and in Spito of setbacks the future of Japan seemed to be very bright.