The Southland Times. PUBLISHED EVERY MORNING. Luceo Non Uro. THURSDAY, JUNE 14, 1923. THE FRAYED LIFE-LINE.

Southland Times, Issue 18967, 14 June 1923, Page 4

The Southland Times. PUBLISHED EVERY MORNING. Luceo Non Uro. THURSDAY, JUNE 14, 1923. THE FRAYED LIFE-LINE.

There are grave dangers attendant on the casting of an insecure life-line to a friend in difficulties, because a strain on it so often leaves its object in a worse position. This fact has become painfully obvious in connection with the long range controversy that has been in progress between Sir Joseph Ward and the Prime Minister on the subject of the income tax in New Zealand and in Britain. The argument, it will be remembered, was opened by Sir Joseph Ward’s speech at Bluff on May 30. To Sir Joseph Ward’s statement that the income taxation in this country is heavier than it is in the Old Country, Mr Massey replied by quoting the super tax which is applied in Britain and also pointed out that the standard quoted by Sir Joseph Ward for the Old Country was the rate fixed by the new budget for the current year, while the New Zealand rate was the one fixed last year. The protagonists proceeded with the discussion and Sir Joseph took the line that he had been referring to the heavy burden imposed on industry by the taxation of companies compared with the treatment of companies in Britain. It is interesting now to find some of his friends rushing to his aid with the declaration that in . the original attack delivered at Bluff, Sir Joseph Ward made it clear that he was alluding to companies, and not to the taxation of individuals. If the point was made perfectly clear, if Sir Joseph “made it quite evident that he was dealing with the incidence, not its volume, and that he was concerned for the companies, not for the individual,” Mr Massey’s position is not as strong as his replies have made it appear, But did Sir Joseph Ward make it so clear at Bluff that he was referring to companies? We quote the passage from the report of Sir Joseph’s speech: This is the only portion of the Empire that has not decreased the amount of loan moneys borrowed for war purposes. England has reduced her indebtedness to the extent of £500,000,000 since the signing of the Peace Treaty. This Dominion has absorbed nearly £100,000,000 since the war, and added enormously to its borrowed money. England has an income tax of 4/6, New Zealand’s is 7/4.

Prior to that remark, the report makes no reference to companies, and the first mention of companies actually comes very much later, after Sir Joseph has dealt with money raised by loans. There is nothing in the passage we have quoted to give any one a hint of the speaker’s intention to compare the company taxation in New Zealand with that applied in Britain, and we fail to find anything in the report of the speech to connect this passage with the subsequent statement concerning the burden of taxation on companies. It is noticeable, too, that at the time the Liberal comment on the speech did not make this connection. Another effort to extricate Sir Joseph is directed at the point that Sir Joseph compared the new scale in Britain with the old scale in New Zealand, and we are now informed:

Mr Massey’s latest retort is to compare the amounts paid by taxpayers here and in England under the new scale—of course Sir Joseph dealt with the old scale, and with the maximum of 7/4, not 5/-.

This is what some of the Liberal apologists are pleaded at times to call a “smoke screen.” A careless reader would infer from this delightfully naive statement that Sir Joseph was dealing with the old scale in each country. His reference to a 4/6 standard in Britain showed beyond all doubt that he was quoting from Mr Baldwin’s budget for the current year which promised a reduction of 6d in the standard rate, and the comparison with a rate of 7/4 in New Zealand fixed the date of the scale for this country, the year that has closed. Mr Massey has foreshadowed a reduction in the standard this year, and it is, therefore, obviously unfair to compare the 4/6 with a New Zealand scale of 7/4. Again we find the life-line causing trouble because it is too weak for service! Mr Massey in his latest effort on this subject made comparisons in tabular form, taking incomes of £350, £5OO, £lOOO and £5OOO, and showing that the actual tax paid in each case was lower in New Zealand than in the Old Country. The reply to this is an excellent cample of party criticism: A cempariron with the United Kingdom on the higher ranges of income is unr-aeenaJJa. Ther* are

wealth in this country with unearned incomes of over £5OOO and wherever they appear! the imposition of taxation on the individual would catch them. It is noticeable that no notice is taken of the lower incomes mentioned. We are also told that the super tax was designed to penalise “excessive wealth” in the Old Country and yet the Finance Act of 1922 passed by the House of Commons applied the super tax to incomes ranging from £2OOO upwards. From this we are to take it that an income of £2OOO represents excessive wealth. On the broad question of the taxation of companies in this country we are in hearty sympathy with Sir Joseph Ward, but in this discussion with the Prime Minister we are afraid that he has come out badly, and his discomfiture has been increased by the cavortings of his friends.