THE OTAGO DAILY TIMES FRIDAY, SEPTEMBER 11,1925. MUCH ADO ABOUT LITTLE.

Otago Daily Times, Issue 19582, 11 September 1925, Page 6

THE OTAGO DAILY TIMES FRIDAY, SEPTEMBER 11,1925. MUCH ADO ABOUT LITTLE.

The terms in which members of tho Labour party spoke of tho proposed reductions of income taxation, in tho course of their .stonewalling of tho annual Bill for the imposition of land tax and income tax, may create the impression in tho minds of persons, who are not acquainted with the fact, that the Bill offers generous concessions to a small class of taxpayers. This would, however, ho a distinctly erroneous impression. It was .stated in tho Budget that “the question of taxation and its equitable distribution” had “engaged tho attention of tho Government with a view to further relieving industry of the burdens imposed on it by the high taxation of war years.” But tho promise that was offered in tho Budget is redeemed to only an insignificant extent in the provisions contained in the Bill. Tho Minister of Finance has estimated that upon tho scale of taxation that is proposed the income tax will yield £36,000 less than last year. Having regard to the conservative basis on which estimates of revenue are framed, we question whether tho receipts from income tax will be at all lower this year than they wore last year. Wo appreciate the difficulty of reducing taxation when the cost of government is increasing and when, in particular, there is a huge interest bill to meet, and it may be surmised that this difficulty has weighed very seriously with the Minister of Finance. At any rate the remissions of income taxation that are proposed are so inconsiderable as to be certainly not worth the pother that tho Labour party is, clearly with the view of creating electioneering capital, making about them. They range from a reduction of a penny in the pound upon incomes of which tho taxable amount is under £3OO to a reduction of 4 2-3 pence in the pound on tho highest incomes which with few’ exceptions are levied on companies. Upon a taxable balance of £SOOO, under the schedule which the Labour party stigmatises as a device for benefiting the wealthy, a concession of £6 18s lid in taxation is offered! In tho case of an income of £IO,OOO tho concession amounts to £l9-1 8s lid, which will in most cases bo received by companies. This concession is so small that we should say it is hardly worth while offering, and that is the criticism which we would make about the Government’s proposal. But the cry which the Labour party makes about despoiling the industrial classes in order to confer favours on the wealthy members of the community is simply unadulterated claptrap. A high rate of income tax reacts unfavourably on industry. It diverts to the use of the Government money that would otherwise be employed by the taxpayer in such a way a.s would promote employment, and it may be taken as almost axiomatic that (his money is not utilised by the Government in a way as economically sound as that in. winch it would be utilised by the taxpayer.

And, as Sir James Parr remarked in the course of the discussion which the Labour party initiated, any reduction of taxation “must percolate right through the strata of society and benefit the workers.” That is undeniably true, even although the representatives of Labour in Parliament may not choose to admit it.