HEAVY TAXATION

New Zealand Herald, Volume LXXIII, Issue 22388, 7 April 1936, Page 7

HEAVY TAXATION

liECOIfl) IN AUSTRALIA SIX TIMES 1910 FIGURE NOW £l4/4/- A HEAD The claim that Commonwealth taxation was higher than ever before in the history of Australia, making the community one of the most heavily taxed in the world, was made recently by Mr." S. McKellar White, president of the Federated Taxpayers' Associations of Australia. Mr. White said that from £16,000,000 in 1910, Federal and State taxation had risen to £95,000,000 in 1985, an increase of practically 500 per cent, in 25 years. Figures for-the past five years were:— Commonwealth States Total 1930-31 £50,420.101'. £35,833,562 £86,25:1,668 1931-32 53,959,012 32,748,528 86,707,570 1932-33 50,146,036 37,325,609 93,471,645 1933-34, 50,408.728 34,401.001 90,809,729 1934-35 58,754,525 36,422,914 95,177,439 The Budget estimate of Federal taxation for the current year was more than £59,000,000, a figure exceeding all records, Mr. White said. Interim Treasury returns, however, indicated that even this figure would be substantially exceeded by the cud of tho financial year. From 1914, when it was £4 14s a head, total taxation in Australia had increased to £l4 4s a head in 1934-35. For the latter year, the Australian taxpayers paid in income taxes (including unemployment relief taxes) £28,800,000. In 1933-34, the latest year for which a comparison was available, total Australian taxation a head was higher than that of Germany, Italy and the United States, and not far below the figures for the United Kingdom and France. Mr. White said that the capacity of tho community to pay taxation was not unlimited, and Governments must realise that if private enterprise was to llourish and expand, taxation must be reduced from tho present exorbitant scale. Although the incidence of taxation is not the same in both countries, figures for New Zealand in the past five years (including unemployment taxation) are as follows: — Total Per head 1930-31 . . £18,878.285 £l2 12 1 1931-32 . . 17,405.622 11 9 G 1932-33 . . 19,703.703 12 17 9 1933-34 . . 21,470,827 13 18 7 1934-35 . . 24,737,939 15 18 7

INVESTING PROBLEMS LIFE ASSURANCE OFFICES CHEAP MONEY PERIOD An indication of the problems facing life assurance companies in the investment of funds during a cheap money period was given by Mr. A. N. Lubbock, chairman of the Marine and General Mutual Life Assurance Society, at the annual meeting in London recently. "A life office is, in the main, a permanent investor and a very large proportion of our funds was invested in days of dear money," said Mr. Lubbock.

"However, as long as the present cheap money rates persist, the investment of our savings at low rates will inevitably cause a gradual reduction in the rate earned over the whole fund, hence the profitable investment of our surplus funds is a task of some difficulty for the board. Cheap money rates are undoubtedly beneficial to the Treasury, and to other large borrowers, but they present many problems to those dealing with the investment of large funds. . "In times like the present borrowers of all descriptions, if they have the power to do so, take steps to obtain a reduction in rhe rate of interest paid by them, or, alternatively, to repay their indebtedness and reborrow on lower terms. Lenders, therefore, have to take a view of the probable future course of money rates before deciding to agree to lower rates of interest or, in the alternative, to accept repayment. "A concomitant of cheap money is high security prices. At the end of 19.55 the valuation of our investments at market selling prices showed a very large appreciation over the sum at which these securities stand in our books, and, as we have not taken any advantage of this bv writing up our investments, we have this margin to protect us, and are thus to a large extejit prepared for a fall in security values when dearer money eventually materialises. A\e should, in fapt, come such an event as making the investment of new money more profitable."

THE EXCHANGE RATE JUSTIFICATION CHALLENGED STATEMENTS IN CIRCULAR - « The justification of the 25 per cent exchange rate, New Zealand on London, in law or equity, was challenged in a circular entitled "The Tragedy of the New Zealand Pound," received from Mr. J. Hislop, of Auckland, at a meeting of the Auckland Electric-Power Board yesterday. After the circular and a covering letter had been road, the board agreed to refer the various arguments to the Minister of Finance, the Hon. W. Nash, and to ask, in the event of there being any basis for the statements, whether the board would bo justified in paying its future London commitments in New Zealand currency. " In common with other local bodies of New Zealand, you are vitally interested in the value the Now Zealand pound bears toward sterling, as a largo portion of your interest payments are made in sterling," Mr. Hislop said in his letter. "If therefore the present policy of an unjustified devaluation of the New Zealand pound is to be continued, the board will be faced with very serious difficulties in the future. It may mean your future financial arrangements must bo all made in New Zealand, or a substantial increase in your revenue must bo forthcoming to meet loans raised in* London." Mr. Hislop suggested therefore that the legality or equity of the demand made on the board for exchange should be seriously considered by the board in common with other local authorities.

" On August' 1, 3934, tho Governor of tho Reserve Bank declared the rate, Now Zealand on London, to be 2/5 per cent, and this was accepted by the public as the true rate of exchange that the bank had authority to fix," the circular stated. " Nothing could be further from the truth. For riot only did 25 per cent represent the difference in value between the New Zealand and sterling pounds, but also the bank had no legislative authority to declare anything but the true rate that represented the difference in value that, if added to or taken from either pound, would bring them to parity and thus effect exchange." Tho chairman, Mr. W. J. Holdsworth, suggested that the points raised should be referred to the Minister. Tho Hon. T. Bloodworth, M.L.C.: Give him six months to answer. It was agreed to take up the matter with the Minister.