NOTES AND COMMENTS.

New Zealand Herald, Volume LXVIII, Issue 20838, 2 April 1931, Page 10

NOTES AND COMMENTS.

TAXATION AND SAVINGS. "No ono who protests against the burden of high taxation goes so far as to say that all taxation is unnecessary or that it is avoidable. The real point of dispute is as to the point at which it should stop. All the purchasing power extracted from the population by # way of taxation must bo drawn either from potential savings or potential consumption," writes Mr. W. H. Coates in the Income Taxpayers' Society. "In the main, it would be true to say of the indirect taxes that they are drawn from consumption; or, in other words, that their remission would permit of those who bear the taxes indulging in a larger consumption. Direct taxation is drawn from both savings and consumption. In the lower ranges of income much of the tax must be drawn from consumption, but as income or estate increases, then the tax impinges directly upon savings. . . The real danger of high taxation is to be found in its effect upon savings. New savings every year are an essential if industry is not only to be extended, but even maintained. Normal • provisions for depreciation and obsolescence of appliances used in production often do not take care of" losses of capital arising from changes in demand, new inventions and developments of various other kinds. The investment of new capital is required to fill this gap, as well as to provide for an increase in, the annual flow of wealth." Mr. Coates adds that taxation of both consumption and savings is mostly devoted directly to consumption through annual expenditure by the State.

INTEREST AND WAGES. Tho repercussion of high taxation upon wages is demonstrated by Mr. Coatcs. "Capital, like every other commodity or service, has its price and tho law of supply and demand will operate in its case as any other," he explains. "With any given demand, and especially with a growing demand, any restriction of supply, therefore, leads directly to an increase in price, that is to say, to an increase in tho rate of interest which the investor will demand and will bo able to obtain. It is commonly thought that this result is of no interest to the worker. On tho contrary, the total product of industry is divided among those who furnish the agents of production. It is shared out in the form of interest on capital, profit for management and risk, rent of land or property and salaries or wages for workers. Given any particular volume of the product, it is clear that if tho share .of ono in tjiis division is increased, then the amount remaining for the remuneration of the others must %e decreased. It is, therefore, of paramount interest to the worker, and the wageearner in particular, that the shaje taken by capital in the form of interest should bo as small as possible. This can be achieved only if capital is plentiful and by its cheapness is forcing its way into production. But capital will bo cheap only if savings are large, and everything which discourages saving tends to diminish the supply and to increase the price of capital."

CUTTING THE GORDIAN KNOT,

The possibility of a dissolution of tho New South Wales Parliament was discussed by the Sydney Morning Herald last week. "As a general rule, a Governor will accept tho advice of his Ministers, but occasions may arise in which he may use his discretion," it remarked. "In his ! Law of the Constitution,' a classic, Professor A. V. Dicey declares that in a given contingency the Crown—and, therefore, its representatives —may go over the head of a Ministry and dissolve Parliament, irrespective of its desires. ' There aro certainly combinations of circumstances under which the Crown has a right to dismiss a Ministry which commands a Parliamentary majority, and to dissolve tho Parliament by which the Ministry is supported. The prerogative, in short, of dissolution may constitutionally be so employed as to override the will of the representative body. . . This looks, at first sight, like saying that in certain cases the prerogative can be so used as to set at nought the will of the nation. But in reality it is far otherwise. A dissolution is, in its essence, an appeal from the legislative to the political sqveroign,' namely, the electorate. Tho circumstances to which Dicey refers exist when there is reason to suppose that the opinion of tho House is not the opinion of the electors, when the wishes of the Legislature are, or may be fairly presumed to bo, different from the wishes of the nation. In such an event a dissolution becomes allowable or necessary and is in accordance with the Constitution. Later in the samo work he further emphasises the fact that tho Crown's right to dissolve is essentially the right of appeal to the people, and thus underlies all those constitutional conventions which, in one way or another, aro intended to produce harmony between the legal and political sovereign power. How do we stand in Now South Wales ? It is guite arguable that the conditions predicted by Dicey have been satisfied."