THE BURDEN OF TAXATION

Otago Daily Times, Issue 21979, 14 June 1933, Page 6

THE BURDEN OF TAXATION

We have referred elsewhere to some general aspects of the public accounts for the financial year which was ended on March 31 last. We have shown that the receipts from the taxation that was brought to account in the Consolidated Fund were nearly £600,000 less than in the previous year. This is a matter of serious significance, but more portentous still is the fact that there was a shrinkage of nearly £900,000 in the receipts from the taxation of incomes for general purposes. If we carry the comparison a year further back, we find that in 1930-31 the proceeds from the taxation' of incomes were £4,003,606. For the two succeeding years the rate of income tax was severely increased, but so heavily have the incomes that are subject to taxation shrunk that the yield from the tax last year was £446,832 less than was produced in 1930-31 by the lower scale of taxation. The implication is obvious. The law of diminishing returns is in operation. And, since the taxation for the current year is collected on the incomes for last year, an appreciable reduction in this year’s yield is inevitable. It is not to be overlooked, moreover, that the Consolidated Fund does not receive the benefit of all the proceeds of taxation. 'The Unemployment Fund is-now wholly provided by taxation, mainly of incomes. Apparently, during the past financial year, the amount raised by the levy and by the unemployment charge was £4,020,435 — over thrice as much as in the preceding year when the total secured from these sources was £1,200,496. Necessarily, the payments to the Unemployment Fund must be taken into account in a consideration of the amount extracted from the public in taxation. When this is done it will be seen that the public provided the following sums by way of taxation during the past two years:—

1931-2. 1932-3, £ •” £

Ordinary taxation 16,189,967 15,605,206 Unemployment tax 1,200,496 4,020,435

Total .. .. 17,390,463 19,625,641 During the past twelve months, therefore, the Government secured from the proceeds of taxation £2,235,178 more than it did in the preceding year—and secured it from a public that was demonstrably poorer. Taxation to the extent of £19,625,641 implies an impost of about £l2 17s per head of the population. The United Kingdom and Australia are the only two countries in the world in which taxation is imposed on a heavier scale than this. There are definite indications, however, that some relief will shortly be extended in Australia, where the rate of taxation is now equal to £l2 19s 9d per head. A high rate of taxation is inimical to

the interests of the community as a whole. Inevitably it drains the resources available for saving and thus retards the recovery of industrial enterprise.