Poverty Bay Herald PUBLISHED EVERY EVENING GISBORNE, FRIDAY, MAY 28, 1937. THE NATIONAL ACCOUNTS

Poverty Bay Herald, Volume LXIV, Issue 19336, 28 May 1937, Page 4

Poverty Bay Herald PUBLISHED EVERY EVENING GISBORNE, FRIDAY, MAY 28, 1937. THE NATIONAL ACCOUNTS

The fact that tlie last financial year eonelu'leil with a ampin.-; in the national accounts of £472,000, t lie second largest figure in the past, de-

cade, is, at least, strong presumptive evidence of the orthodoxy of the financial policy of the I.a hour Govcrnnient, but an analysis of the position does not indicate the healthy outlook that might be expected at first sight. On the contrary, it discloses

that the cost of government, as of most other things in the Dominion, has reached an excessively high level and, worse still, continues to rise. In

his review of the figures, the m-ting-Minister of Finance staled that tin surplus of £-172,000 was mainly due to the savings in expenditure, but the correct position is that, it was the result of further inroads into the earnings of the people. The total income of the State last year was £31,147,000, of which no less than £2(5,041,000 was derived from taxation which reached Ihe highest level in the history of the country. Compared with 1023, the Government had at its dispostil increased funds

amounting to more than £8,50(1.000,

while the receipts from taxation increased by nearly £10,500,000. It is a point for comment that receipts from sources other than taxation were actually less than in the worst yoat of the depression, this fact indicating the almost total reliance of the Station the svstem of taxation which the

present Government is pledged to reduce. The expenditure by the Government lust year aggregated £30.075,000,. establishing another high record for the Dominion and exceeding the 193.3 figures by more than £8,000,000. Ail the figures that have been quoted are exclusive of the unemployment fund which, on a conservative estimate, would add anothei £5,000,000 to both taxation ami expenditure, bringing the taxation per head of the population to more than £2O and easily establishing a world record.

It 'lias already been said that the maintenance of the State services arc almost entirely dependent upon taxation, and this point demands further consideration in the light of the official figures. Compared oven with the Budget estimate, which was prepared when one-third of the year had expired, the receipts from taxation show an increase of more than £900,000, and the greater part of the total was paid indirectly by the community as a whole. Compaiod with the previous year there was fin in* crease, of £5,385,000, and all the indications are that, there necessarily will be further demands during the current year. The main source of taxa-

tion revenue is not the wealthy individual, but the average member of

the community who pays in even direction. The largest single item was customs duty, which last year returned £9,500,000, £399,000 more than the Budget estimate, £1,400,000 more than in the preceding year, and £3,500,000 more than during the de-

pression years. The sales tax, another imposition which a fleets all people, rich or poor, in very much the same proportion, yielded over £3,000,-

000 hist year compared with £1

817,00(1 in 1933-34. The receipts of Hie main highways fund, another item that is contributed to by all sections,

rose from just: over £l/100,000 in 1933-34 to £2,500,000 last year. The

income tax, which often is erroneously regarded as a direct tax—the fact that approximately 'half is paid by companies being overlooked—last year yielded £0,019,000, compared with the Budget estimate of £(>,00(1.000 ami £1,531,000 in the previous year. On the other ham!, the laud tax, of which so much was heard, was a quarter of ft million below the Budget

estimate and returned only .£!,000,900. Taking the figures ns n whole, tinoutstanding feature, and it cannot be too frequently stressed, is the evidence that the cost of State activity is borne by the masses of the people, the only really productive taxation being that which is distributed over the whole community.

The figures last year inevitably do

mnnd some thought n.s to Ihe prospects of the future. The Government is pledged to reduce taxation and to alter the incidence of it so that it becomes direct instead of indirect. Of the total revenue last year all but £4,000,000 came from taxation, so that with the maintenance of expenditure tit the present level the prospect of any reduction appears to be remote. The possibilities of altering the incidence also seems to be negligible, since direct taxation, other than that on incomes, last year failed to come up to expectations. 'flic yield from the ltmd tax is likely to be lower oti account of reduced valuations and since income tax is already the highest in Ihe world it cannot reasonably be increased; indeed, last year’s increases were obtained mainly at the expense of the smaller man. There is the further problem that next year’s expenditure is likelv to increase since provision must be ’made for a. full year's charges for higher salaries and the shorter working week, Mr. Semple has announced that more is to lie spent on public works, and there is at. least a half-promise of increased pensions. All the indications, therefore, are that the next Budget will demand still more, not from the socalled wealthy man, but from the community as a whole; not. from direct taxation, but from taxes levied on necessities of life. The bald Diet is that increased cost of government means increased taxation and an increase in the cost of living. Ihe public already has some experience of the truth of this statement, and if it is only realised that further increases are in prospect, the present financial position of the Dominion will be studied by all sections with additional interest and with a greater measure of anxiety.