TAXATION YIELD

New Zealand Herald, Volume LXXII, Issue 22191, 19 August 1935, Page 11

TAXATION YIELD

REASONS FOR INCREASE IMPROVEMENT IN BUSINESS REDUCTIONS WHEN POSSIBLE i [by TELEGRAPH —OWN' correspondent] WELLINGTON. Sunday "I have noticed considerable comment and criticism on the increase in the amount of taxation paid in New Zealand," said the Hon. A. Hamilton, acting-Minister of Finance, in» an interview in Wellington to-day. "Much political capital is made out of the fact that the yield from taxation for 1934-35 showed an inciease of £3,267,000 over the previous rear. The inference that is generally conveyed is that the Government has incieased the burden of taxation since 19.;>3-34, but a statement of all the facts will clearly show that this impression i:i entirely erroneous. "Critics fail to point out that this increase in the yield from taxation is not due to any increase in the rates of taxation. On the contrary, in two important fields —unemployment and customs —there have actually been reductions in the rate. The higher returns in taxation receipts are due almost entirely to the improved condition of business and a general increase in prosperity during the year 1934-35. , Greater Business Turnover "This is borne out by the increased returns from sales tax, the yield from which increased by £323,170 over the previous year. This indicates an increase in the sales of taxable goods, and clearly demonstrates increased turnover for the business community and the increased spending power of the people. "Similarly, the increase :.n customs duty of £938,583 over the previous year was due to an increase of £6,432,000 in the value of imports. Again, critics of the Government do not state that last year some of the largest items of increased taxation were due to particular circumstances. Death duties, for example, showed an unexpected increase of £815,000 over the previous year; this abnormally high yield was due to the deaths of a few wealthy people. "Another important item of increase was from income tax, which was £835,233 higher than in the previous year. Here again, it must be pointed out that the income tax receipts relate to incomes of the previous year, that is, for the year 1933-34, when wool prices were comparatively Ugh. But it should be remembered that for the year 1934-35 the value of the exports of wool declined by nearly £7,000.000. Larger Wages Bill

"In other respects, too, the total yield in taxation was clearly due to increased prosperity. The unemployment tax collected last year demonstrated that the total wagts bill of the Dominion bad increased by £3,600,000 over the amount paid out in wages in the previous year. "A substantial decrease in the local body taxation a head has been, and is still, taking place. In 1930 the .rate was £4 8s 7d a head, as compared with £3 18s 4d for 1934. At the present time the rate of local taxation a head is lower than it was in 1926."

Referring to total taxation, Mr. Hamilton said that the figures most frequently quoted in comparison with New Zealand were those for Australia. But unless all the facts were known the comparison was misleading. "The cost of unemployment relief in New Zealand has been met directly out of taxation," said Mr. Hamilton. "Last year this amounted to £2 18s 8d a head. In 1933-34, the most recent figure available, Australia paid taxation toward unemployment relief at the rate of £1 7s lid a head. But at the same time a great portic'n of the cost of unemployment was being borne out of loan money. Australia's Public Debt "Between 1930 and 1934 Governments in Australia borrowed £122,000,000 — over £30.000,000 a year. The Australian public debt has increased from £1,187,827,686 in !1931-32 to £1,237,122,393 at December 31, 1934. The Australian floating debt at March 31, 1935, amounted to £82,513,000. "This is in striking contrast to the position in New Zealand. We have reduced our public debt during the period of the depression. The present figure—£2Bo,sßo,oo0 —is lower than in 1931-32, when it stood at £281,942,090, and our floating debt has been paid off. "If we omit unemployment taxation, which is definitely an emergency measure, and if allowance is made for the increased yield from death duties, which is of a fortuitous nature, general taxation on a per head basis is on a parity with pro-depression years. "The Government's rolicy throughout the depression has buen an attempt to mitigate the burdens and to spread over the whole community the losses of those most severely affected," concluded the Minister.

"The public may rest assured that the present rates of taxation will not be maintained a moment after it is possiblo to effect reductions."