THE LEVEL OF TAXATION

New Zealand Herald, Volume LXXI, Issue 21879, 15 August 1934, Page 10

THE LEVEL OF TAXATION

Latest Budget forecasts suggest that while the outlook is more cheerful than for some time, there is not likely to be any concession that will lighten the crushing load of taxation under which the country labours. Some weeks ago modifications of the customs tariff were introduced by resolution. While they included reductions in the duties on various commodities, it was stated that an increase in the yield, overall, of £90,000 was expected. There fore no real concession to the taxpayer can be claimed. It is instructive to consider the yield of taxation in the past few years, particularly in relation to the amount collected in income tax. The latter can be taken as a rough guide to movements in business, professional and inves-. ment incomes, though the lag due to the fact that taxation is collected on the income of the previous year must not be forgotten. The figures showing the position in recent years appear in the following table: —

Income Total tax taxation 1929-30 . . £3,533,764 £19,474,115 1930-31 . . 4,003,606 18,599,980 1931-32 . . 4,447,814 16,189,967 1932-33 . . 3,556,774 15,605,206 1933-34 . . 2,961,243 17,059,829 The figures show at first a fall in the return from taxation accompanied by a rise in the yield of income tax. Depression was having its efl'ect on customs, excise, stamp duties and other items immediately responsive to adverse conditions, but payers of direct taxes were being assessed on the.better incomes they had enjoyed in earlier years. Then both revenue and income tax showed a fall in 1932-33. Last year, while the yield of income tax decreased further, total taxation rose by nearly £1,500,000. A new item had entered the account —the sales tax. Its yield in 1933-34, the first full year of its incidence, was £1,847,333, while from the date when it was imposed to March 3i last £1,885,586 was collected by this medium. It must also be remembered that while all that has been discussed was happening, over £9,690,000 was contributed by way of direct levy for the relief of unemployment. The effect of taxation at this level on the pace of recovery from depression should have first consideration when Budget plans are being shaped. It is not a far-fetched hypothesis, but plain common sense, that there could be no more effective stimulant to revive confidence and encourage business activity than a generous and boldly conceived measure of taxation relief.