THE OTAGO DAILY TIMES Thursday, June 12, 1947. NO TAX RELIEF—AND WHY

Otago Daily Times, Issue 26485, 12 June 1947, Page 4

THE OTAGO DAILY TIMES T hursday, June 12, 1947. NO TAX RELIEF—AND WHY

In presenting the sumVnary of the Public Accounts recently the ActingMinister of Finance, Mr Nordmeyer, hinted that the taxpayers of the Dominion could look forward to no alleviation of the crushing burden of taxation in the forthcoming Budget. This cautious forecast has, according to a report from Wellington, been confirmed by Mr Nash, and even though the Public Accounts show substantial surpluses in both the Consolidated Fund and the Social Security Fund —due, of course, to the unprecedentedly high level of the aggregate, taxable income—none of these surpluses will be employed towards taxation relief. The fact that these surpluses were extorted by emergency taxation after the national" emergency had passed is quite ignored by Mr Nash, though little prescience is required to understand why he is taxing for surpluses. Mr Nash foresees a time not far distant when his theories of isolation and stabilisation will be submitted to their crucial test, and he is already preparing his defences.

The first check to the inflationary spiral was announced by Mr Nash himself when he told trade union delegates in Wellington that Great Britain could not be expected to pay higher prices for our export produce. This can fairly be assumed to mean that Great Britain, herself in desperate financial straits, has served notice on New Zealand that no upward adjustments will be made in the promised future reviews of produce prices. The only result of this action can be a decrease in our overseas purchasing power unless the downward trend in the production and export of primary produce can be arrested. Mr Nash also commented on the rising costs of Government within the Dominion and on the large sums required for Social Security. A glance at the figures in the summary of the Public Accounts reveals the grounds on which Mr Nash’s remarks were based, and supplies the rest of the answer to the question of why no tax reductions can be expected. The Social Security Fund last year, though in receipt of more than £22,000,000 from Social Security taxation (£2,000,000 more than the Budget estimate), drew on the Consolidated Fund for £18,000,000, £11,000,000 more than was transferred from the Consolidated Fund the previous year. The cost of stabilisation last year was £14,500,000, nearly £ 1,000,000 more than the original estimate. This £14,500,000 an increase of £11,000,000 on the published figures for the previous year—was expended principally in an attempt to make goods available to the public at prices lower than the inflationary cost structure enabled them to be produced. What the people saved on price tickets they paid out in taxation, but even the huge sum of £14,500,000 was apparently found inadequate, and Mr Nash has intimated that the Government will be unable to maintain subsidies on their present scale. Fresh increases in commodity prices can therefore be expected, followed by efforts on the part of the workers to obtain corresponding wage adjustments. But the end of the spiral is already in sight—a limitation on the overseas prices on which our whole economic structure is dependent—and Mr Nash is not likely to overlook any assets which may assist him to meet the financial difficulties that will undoubtedly be encountered in the not far distant future.