Poverty Bay Herald PUBLISHED EVERY EVENING GISBORNE, THURSDAY, OCT. 14, 1937. TAXATION ISSUES

Poverty Bay Herald, Volume LXIV, Issue 19455, 14 October 1937, Page 4

Poverty Bay Herald PUBLISHED EVERY EVENING GISBORNE, THURSDAY, OCT. 14, 1937. TAXATION ISSUES

The Parliamentary debate on the annual taxing bill provided a number of sidelights that were of even greater interest, perhaps, than the subject matter of the actual discussion. In particular, the public was left speculating on the things that were left unsaid, the questions that remained unanswered, rather than on the various statements that were made in the course of the debate. In the first place, there was the significant silence of members of the Government party on one of the chief issues of political life. The mere fact that not one member of tiie rank and file was permitted to raise his voice in defence of the Government’s policy and in reply to criticism of the Opposition must have created the impression that the Minister was anxious that his supporters should not commit themselves, and possibly embarrass the Government by expounding conflicting views on a subject which is of paramount importance to the people. The plea of urgency might have been accepted as an excuse had it not later been

abandoned and a second night devoted to the debate solely to enable the Minister to have the use of the microphone at a favourable time. Although the Prime Minister had made an appeal for the rapid passage of the bill, it was apparently more important that the Minister of Finance should “go on the air.” When Mr. Nash ultimately did reply to the welter of criticism of his taxation proposals, his defence must have been disappointing to the public and, in particular, to the members of his own party who had been "whipped” into silence themselves. The Minister was chiefly concerned, it seemed, with disclaiming that New Zealand led the world in taxation and in refuting the contention that the burden fell most heavily on the smaller man. The first point is of little consequence, because taxation, as the Minister himself pointed out. is largely relative, but the second is not so easily disposed of. It is true that it is difficult to define an "average family,” but if the Minister went to one extreme In quoting thre men with Incomes of £30.000 it is likely that he went near to the other when he referred to an income of £4 a week, not for an individual, but for a family, while his computation of average taxation of £lO 10s a year was patently absurd. Probably 80 per cent of the total taxation is indirect, and most of this applies, in the final analysis, on a per capita basis. Customs duties, the petrol tax sales tax, beer duty, and even company income tax and land tax are all added to the cost of goods and services, and for these the public has to pay, not according to its ability but according to its everyday needs. In any case, it is difficult to understand the Minister, not merely defending high taxation, but actually glorying in it. Last night he made the amazing statement that because New Zealand is heavily taxed "it is the best little country in the world.’ If that theory is correct, why does not Mr, Nash promptly double taxation and make the Dominion even better still? Unfortunately for his argument, lie will find little support for his strange doctrine even among his most enlhusitic supporters, for he conveniently overlooks the fact that his party was elected to office on a definite pledge, and largely because oi It, to reduce taxation. Prior to the elections the Prime Minister repeatedly asserted that taxation was too high and must be reduced, but now his Minister of Finance claims that high taxation is the basis of prosperity These contradictions by the leaders oi the Government cannot possibly be reconciled. The essential point to remember in considering taxation is that State revenue can only be obtained through the industry of the people; even social credit or costless credit advocates admit that cardinal principle. It follows, therefore, that whatever the Government spends in providing non-productive services must come out of the earnings of the real producers of wealth. To the extent that the one is increased at the expense of the other, the ability tc maintain production must be reduced and the time may come when there will not be sufficient producers of wealth to sustain those who producenothing. This is the danger which is inherent in the Government’s policy of high taxation. In the current financial year it has been able to carry out its costly programme only because the value of production, as measured by world standards, is the highest in the history of the Dominion. 'Phis has enabled the Minister, not only to impose record taxation, but also to appropriate the record deposits in the Savings Bank and the exceptionally large funds entrusted to other Government departments. Recognition of this fact immediately prompts the question of what Mr. Nash would do were economic conditions other than what they are. If the yield from taxes declined, even by 10 per cent, how would he make up the deficiency? If Savings Bank withdrawals started to exceed deposits, how would he repay the people whose money he has used and, at the same time, keep on providing funds for various State enterprises? Mr. Nash’s only answer is that if overseas prices fell he would insulate the country against outside influences. Does the Minister really expect that to be accepted as an answer? Does he seriously suggest that a country which exports more than GO per cent of its primary products and imports 40 per cent of its total requirements can isolate itself from the rest of the world? If he does, he should explain how. These are questions that are inevitably bound up with the whole problem of State expenditure and State taxation, and it is because they remain unanswered that the future of the Dominion is regarded by thinking people with no little concern and considerable anxiety.