TAXATION

Otago Daily Times, Issue 18547, 6 May 1922, Page 10

TAXATION

MUCH TOO HEAVY. VIEWS OF MR J. T. MARTIN. UNSOUND FINANCING. A HEAVY BURDEN OF DEBTS. , (Fbov Ode Own Uohrebpondent.) ’ WELLINGTON, May 5. The greatest, hindrance to progress and the resumption of heavy trading, said the president of the Wellington Chamber of Commerce (Mr J. T. Martin) to-day. “Members,” he said, “will recollect that this chamber, in common with other chambers, has continually pressed the Government for a readjustment o£ our taxation. Resolutions have been passed asking . the Government to set up an expert committee of business men to investigate the sources of taxation, and propose a more equitable system than that in vogue. The committee has now been set up; and I hope it will succeed in bringing clearly before the (Government the many disabilities under , which we are labouring. Our taxation is the highest of any of the British dominions, as the following figures will clearly show. Taxation per head of population: Commonwealth of Australia and all State ,Governments. —In 1914. £4 14s; 1918, £7; 1921, £l3 Os 7d per head. New Zealand ' (excluding Maoris). —In 1914, £5 10s; 1918, £ll 3s 9d; 1921, £lB 11s Id per head. , South Africa.—ln. 1921, £8 4s 9d per’ head. Canada. In 1921, £5 per head. New Zealand revenue from taxation for 1920-1921 is as follows: Customs £ 8,408,726 Stamp and death duties 3,745,902 Land tax ... ... 1,683,796 Beer,,duty 360,525 Registration and other .fees ... 220,985 Total ...' £14,424,036 Income tax £8,248,945 Therefore the whole papulation of New Zealand, which at the September quarter of 1921, was 1,228,833, provided £14,424,036, .while .44,597 income taxpayers provided the sum of £8,248,945, of which some companies provided * nearly £5,000,000. The figures I have, quoted,” added Mr. Martin, “show that our present, .taxation,- particularly in its oppressive application to companies, restricts the natural flow of capital, prevents the accumulation of funds for increased industry, imposes a barrier on enterprise, and removes that stimulus'for success whyoh is surely always needful in every business and calling. It is an uneven game, in which one party—the -Government —takes practically half the profits, and never shares in any .of the loss,'demands its share at the end of the financial period, and leaves the other party with all the-risks and responsibilities of carrying stocks. .The partnership is a bad one, and w-ill always bo unsatisfactory so long as the sleeping partner—the Government—exacts unfair advantages from the other party. Money, in the general accordance of that word, becomes in the hands of companies, financial institution®, and individuals exceedingly more reproductive than in the hands of the Government. If unfettered by, heavy taxation, and accorded’ reasonable, opportunities for successful working, capital will flow in freely to institutions connected with, the development of farming and city industries, but immediately those- institutions become hampered in their operations, , and obliged to pay away half their profits to the Government, capital,, which is always peculiarly sensitive to outside controlling influences, will quickly disappear and seek ether channels where it is better appreciated and .cared for. How then arc we to reduce taxation? Certainly not,along the lines of increased borrowing, no matter how, favourable the borrowing conditions of T rates of interest. The interest alone to-day on our national debt, together, with pensions and- .allowances, is over • £11,009,000, and the last £5,000.000 will increase it by over a quarter of a million annually. 1 This is nearly equal to , our pre-war, .‘revenue from all sources, the revenue for ,1914 being £12,229,'661.- No,- the solution lies in a heavy reduction' of „ Government expenses and increased'‘production of bur primary and manufactured products. It 'is frankly admitted that the Prime Minister is, working hard 'to reduce" the Government expenses, and deserves tile thariks of this country for. what he has already achieved, but I am confident he- must go a great deal further before a reasonable return for the capital involved, in- all thq State departments. It is our duty as cjtizems to insist that the Government should reduce the expenditure to t(ie utmost limit, consistent with its obligations and -thVv-,,supply, of in-* dispensable, services. ,Ou«, revenue in. ' four years hajs, increased 89 per cent.,, while .ourexpenditure has increased 100 per cent., the figures being:— ‘ Year. Revenue. Expenditure. 1916-1917 £18,367,547 . £14,058,770 1920-1921' ... ... £34,260,962 £28,068,730 Mr,- Martin also ■ observed-that.-the - experience of the past 18 months has shown us that this. country is struggling under an enormous amount of loan -money. That financing has been altogether too flexible, and that credit has: been given to an almost unlimited; extent. I.t would , appear as- if merchants,; .bankers, f -stock and . station agents,- financiers, and others who: have been working away quietly, each in, hi&l own domain, for the past 12 months, puzzling over the effects of the fall in prices, of our and wondering why in so short a period so many ■ should lose the fruits of years of industry, and are suddenly awakened to the fact that it .-was largely attributed to our system,'of financing on small margins.-. In 1914 the ’total amount outstanding in mortgages in New Zealand was £100,442,297, and in March this year it had *■ readied the r enormous total of £229,806,724. In the last 11 months alone we registered £32,531,565,-' and - discharged only, £12,328,987.- In ' other words, ,we increased our mortgages by £20,202,579. In Victoria, in the year 1900, they registered in mortgages £13,529,579, and released £14.697,097., In the United States a census of farm property- in -1920 shows that out of £3,535,631. farms 2,074,325 are free . from mortgages; that land and, buildings valued at 13,775,500,015 dollars carry only 4,003,767,592 dollars in mortgages. Thor* is probably nO country in the world where farmers, station owners, and others have been able to finance big undertakings on,so little paidnip capital as in New Zealand, but this reckless financing- has-come to an end, and in future, mercantile companies and financiers will exact a greater margin of security on advances than ever they have done in the. past.