Poverty Bay Herald PUBLISHED EVERY EVENING GISBORNE, FRIDAY, SEPT 25, 1936. THE TAXATION BILL

Poverty Bay Herald, Volume LXIII, Issue 19129, 25 September 1936, Page 4

Poverty Bay Herald PUBLISHED EVERY EVENING GISBORNE, FRIDAY, SEPT 25, 1936. THE TAXATION BILL

Perhaps the most .striking point in connection with the Land and Income Tax Bill now before Parliament was the comment of the Minister of Finnnce that one amendment was justified because otherwise “the Government would be giving extra payments in one direction and taking them away from another section of the community.” Just what Mr. Nash intended to convey is not clear, for if he carried the same principle to its logical conclusion he would find it extremely difficult to justify a large part of the present taxation, which, in the blunt language of the Prime Min ister, is based on the assumption that some people have more than they need while others have not enough to keep them in comfort. Were taxation levied according to ability to pav, there would be much less cause for complaint, but the truth is that this aspect is considered hardly at all. In the first place, the Government’s programme of expenditure bears no relation to the ability of the country to meet it. Instead, the Government merely decides what it wants lo do and then calls on the defenceless public to foot the bill. Despite the pledge that taxation would not be increased, it is nearly £5,000,000 more than last year and reaches n total exceeding £.10,000,000, equal to at least 25 per cent of the total value of production and to about £lO 8b per head of the population, a figure whielt has no parallel in any other part of the world. Even as the total taxation fails to consider the capacity of the country as a whole to pay, the incidence of it. gives little heed to the circumstances ,of the individual contributor. Mr. Savage has repeatedly emphasised yie need for reducing indirect taxation and placing the burden on the sholders of those able to carry it.. This principle has not been followed, however, for indirect taxation has actually been heavily increased and the result is that approximately 75 per cent of the total taxes are paid by the community at large, and not, directly by the so-called wealthy class.

Details of the various taxation proposals of Die Government, reveal similar weaknesses, the general tendency being merely to take away from one section to give to another without consideration of what should be Hie guiding principle of ability to pay. Thus with the income tax, for instance. this year’s increases will not paid, in the main, by those at the top of the scale but by those at the bottom. In some cases tho smallest taxable incomes of all will pny double the previous tax, while some of the. larger incomes will actually pay less than before. Inequity and hardship are even .more pronounced in the company tax and land tax. The company tax makes no recognition of the financial position of the shareholder, and it is possible for an individual with nri income of only £IOO or £2OO from such a source to he, called on to pay taxes of more than 10s in the pound. The land tax entirely disregards the income of the taxpayer; lie may, indeed, have no income at nil, but must still pay the tax. The Government lias stated that it is merely restoring the graduated tax, but the actual effect of the new measure

is to increase it, in some instiuicos, hr nearly 100 per cent compared with whet it was previously. It takes no account of disparities in values in different localities and even makes it possible to tax one property twenty or thirty times as much as an adjoining one producing an equal income. The Minister has exempted superannuation funds from the tax because “it would destroy the principle of the extension of pension payments,” lmt what of tho independent individual who has provided for his own pension? He nmy have invested his savings in property in the hope of being able to support himself in his F

old age. The Government has prevented him from increasing rents to meet higher costs and now demands land tax from him even though his real income is negligible. Is there any real difference in principle between the man who provides for his own pension and tho one who is provided for through a superannuation fund? The very least that the Government should do is to provide- a hardship clause in connection with (he land tax.

A further point which the public would do well to bear in mind is that this year’s expenditure, in some directions at least, is “only a start.” Although the total taxation already demands £2O a year for every man, woman, and child ins the country, next year’s bill, if the Government continues its programme, must be much heavier still, and It is not too soon even now to ask what: sources it is proposed to tap. Many of the estimates for the current year are for part of a year only —in some eases for four months—-and it follows that the costs in a full year will be much heavier. This year there were unexpended loan funds for publ-c works, lull where is the finance to come from in future if the Government, is not going lo borrow? This year the cost of pensions was under £n,noo,f)oo, but when the national insurance scheme is launched-—ami it will, not by any menus displace pensions—the Si alewill require to find £7,000,000, while the total cost, to the community as a whole will amount to £14,000,000. The prospect is sufficiently alarming to demand that tho Government and the public should- take careful stock of the. situation and try and visualise the ultimate results of this growing burden of taxation.