BASIS OF TAXATION.

Otago Daily Times, Issue 20069, 8 April 1927, Page 6

BASIS OF TAXATION.

DRASTIC CHANGES SUGGESTED. A LETTER FROM MR JULIUS VOGEL. (Fbom Ouh Own Coebespondent.) LONDON, February 23. Mr Julius L. F. Vogel’s letters to The Times are not at very frequent intervals, but when he writes on economic questions he invariably has something to say which the country can well afford to listen to. His latest contribution deals with the subject of industry and the State, and he points out where the deficiencies exist in the present method of taxation. "Hitherto this and every other nation," he writes, "have obtained their national income from the efforts of individuals, and the surplus of this income ha? accumulated as capital. Socialism advocates the Government taking over the whole of the work thus done by individuals and the distribution of the proceeds more or less equally; but unless it is certain that the national income would be increased and not decreased by sucb action, the average standard of living must fall. The only large-scale experiments tried on these lines, in Russia, prove that the national income falls almost to vanishing point, and those who desire evolution and not revolution must _ adhere to the existing system of combined individual earnings forming the national income. GRADUATED INCOME TAX. “It remains, therefore, to examine the question whether the Government can assist those who produce the national income, and I suggest that they can do so very materially by completely revising the system of taxation now existing. This at present fails lamentably to fulfil the primary obligation of collection proportionally from each individual. In the first place, successive Governments have pushed much taxation which should be national on to local bodies—as, tor instance, poor relief—and, although each local body may collect fairly from each ratepayer, there arc wide differences between different localities. Further, many questions arise out of indirect taxation. Why, for instance, should a man who buys a bottle of beer or whisky, made from British products by British labour, pay a heavy tax, while another buys a box of foreign oranges and pays nothing? “There is only one form of taxation which is strictly proportional, and that is graduated income tax. payable by everyone). even with nominal contributions from the smallest incomes. Every man, woman, and child receives a proportion of tiie national income, whether by direct profits, wages, or free gifts, and graduated assessment is possible; so by graduated income tax each is fairly treated. SUGGESTED CHANGES. “Local taxation should be confined to local public services, strictly controlled by the Government to ensure expenditure only on objects which will benefit all ratepayers proportionately. This proposal would involve sweeping away all excise, death duties, stamp fees, and the numerous forms of taxation devised by successive Chancellors of the Exchequer to nicot Budget requirements. The only other form of taxation to be retained would be import duties for safeguarding industries against unfair competition and to maintain and develop the system of preferential duties with our oversea dominions now successfully inaugurated. I suggest that this change would benefit tho nation by:— 1- Reduction in cost of collection of taxes. 2. Improved relations between employers and employed, who would realise that each has a fair deal and that an increased national income from production would benefit all. 3. Cessation of the unsound system of utilising the nation’s capital a 9 revenue, as, for instance, by the death duties. 4. Better control of local expenditure. 5. Reduced cost of living by removal of excise duties. G. Increased trade with countries anxious to exchange wine, tobacco, etc/, for tho products. CASE FOR EXAMINATION. “I would point out that the obligation of Governments to collect taxes impar» tiall.v from everyone has so far been lost sight of as to result in threats of in> creased or decreased individual taxes being utilised for party purposes. "In conclusion. I would submit that* while no one individual in the space or a letter ran review the whole evidence of such n basic change, I beliovo that there is a prima facie case for a prompt and exhaustive examination into our whole taxation by a carefully geleet.pl bodv of industrial, commercial, political, and economic experts, including those engaged in manual labour.”