THE New Zealand Herald AND DAILY SOUTHERN CROSS MONDAY, JUNE 29, 1936 THE HEIGHTS OF TAXATION

New Zealand Herald, Volume LXXIII, Issue 22457, 29 June 1936, Page 8

THE New Zealand Herald AND DAILY SOUTHERN CROSS MONDAY, JUNE 29, 1936 THE HEIGHTS OF TAXATION

In a statement made within the past few days, the Prime Minister has indicated the views of his Government on taxation. He gave the underlying ideas, but made it quite clear both that their plan of action was far from complete, and that they did not hope to do everything with one stroke. There is wisdom in this. Mr. Savage was dealing wholly with the incidence of taxation, the distribution of the burden. It is a difficult subject. It is quite easy to find inequities and injustices, but even more easy, in trying to set them right, to create a whole new crop. It is also very necessary, when planning changes, to look beyond the first results and consider final consequences. Therefore the Government is very well advised to go cautiously. While doing this it should also widen its view of the subject to include the volume as well as the incidence of taxation. The weight of the burden this country is carrying has grown very seriously in the past few years. The level of Government demands on private purses and the incomes of industry and commerce has risen steeply. The exact effect of these heavy imposts cannot be accurately measured, but on accepted principles, and by the standards of commonsense, they must have a serious retarding influence on recovery from depression and on the expansion of business. Taxation, when it goes beyond a reasonable level, is practically restrictive and psychologically depressing. Because of the second factor a measure of relief can have a good effect quite out of proportion to its actual size. The position reached by taxation in New Zealand is 'shown by the following table. In each instance the figures are for the 12 months ended March 31 in the year given. It can be said, therefore, that the present Government is responsible for none of it.

"Approximate figure. The national taxation includes the amount levied for unemployment relief in the years since collection began. Local taxation is made up of rates, licences and other charges made by local authorities, but does not include such items as harbour dues and similar charges made by harbour boards, these being regarded as being paid for direct service given. It is noticeable that up to March 31, 1935 —the last date for which official figures are available —local body taxation had not recovered to predepression levels. The reason for that can be found in the arrears of rates accumulated when conditions were at their worst and only partly recovered since. From various indications it is reasonable to assume that the amount collected in 1935-36, for which the approximate figure of £6,000,000 is given, will bring the total nearer to those of the peak years, 1928-29 and 1029-30. National taxation rose sharply in 1929-30 as emergency measures designed to balance the Budget were applied, and as direct taxation was collected on the income of the previous year. Then the total fell away under the influence of reduced incomes and a drastically restricted flow of imports. The marked increase from 1932-33 onward is attributable in part to gradual recovery and in part to new imposts, especially the direct charges on income earmarked for unemployment relief. The fact that these are specially levied for a special purpose makes no difference to the present comparison. It is all taxation. The figures are a challenge. In 1928, when the tide of prosperity ran high, taxation, local and national, amounted to £23,268,000 in round figures. In 1935, with recovery far from complete, it went well beyond £30,500,000. In 1935-36 national taxation alone was nearly £2,750,000 greater than the total of national and local in 1925-26—and the increase has been almost all in the national field. The intractable feature about levels and increases of this kind is that they tend to be accepted as normal. A degree of taxation regarded as absolutely impossible in one decade is likely to be considered normal, indeed proper, in the next, the debilitating effect on the national welfare being overlooked. There is one point, moreover, which should be especially well remembered when incidence is being considered. As taxation rises, inequities in the levying of it are magnified. The margin bstween what this individual and that individual has to bear rs magnified. When levels are low the fact that a tax weighs a little more heavily on one than on another of equal income is not very important, because the burden does not oppress either very much. As levels rise, so does the importance of these differences. Such points call directly for consideration when taxes are under review. They have their bearing on the human side of tax-paying as much as scales and exemptions have. They give one reason why the present heights of taxation should not be forgotten. Another is the slowing-down of recovery which so crushing a load as that now borne cannot fail to cause. Both can be seriously commended to the Government as it faces the task of dealing with the taxation system, j

National Local Total £ £ £ 1926 17,254,688 5,475,369 22,730,057 1927 17,437,827 5,888,021 23,325,848 1928 17,145,145 6,123,375 23,268,520 1929 17,832,033 6,347,760 24,179,793 1930 19,471,131 6,546,796 26,017,927 1931 18,878,285 6,173,101 25,051,386 1932 17,405,622 6,020,675 23,426,297 1933 19,703,703 5,743,484 25,447,187 1934 21,470,827 6,030,479 27,501,306 1935 24,737,939 6,042,033 30,779,972 1936 25,476,441 6,000,000* 31,476,441