BUDGET FINANCE

Southland Times, Issue 23000, 21 September 1936, Page 8

BUDGET FINANCE

GROWTH OF TAXATION.

GOVERNMENT’S INTENTIONS.

The stated intention of the Government to start where Seddon left off and the extent to which it has advanced along that road is examined by Professor A. H. Tocker, professor of economics at Canterbury College, in an analysis of the Budget in The New Zealand Financial Times. In matters of public finance, remarks Professor Tocker, there are many taxpayers who devoutly wish the Government could and would start where Seddon finished. “Seddon took office in 1893, and died in 1906,” he states. “The figures below show w'here we stood in matters of public finance in his time, and where we stand to-day:—

‘lncluding unemployment taxes. Increase During Depression. “Since Seddon became Premier in 1893, population has been multiplied by 2.', taxation by 13, debt by 7|, taxation per head by 5.?, and debt per head by 3 1-3. During the 14 years of the Seddon regime, taxation per head increased by £1 1/-. During the last seven years, only half as long, and years of severe depression as well, taxation increased by £4 2/- per head, a rate of annual increase eight times as great as in Seddon’s time. For the coming year, a further increase of £3 a head is estimated. This is 40 times as great as in Seddon’s time. Then the average yearly rate of increase in taxation per head was 1/6. In the light of modern practice the finance of the Seddon Government must be regarded as extraordinarily conservative. “The effect of these changes on the real burden of taxation may be indicated by comparing total taxation with the official estimates of the total value of production. The latter are available only from 1900-1, and up to 1934-35. Taxa- Produc- Percenation tion tage Taxation of

“Between 1900-01, about the middle of the Seddon period, and 1934-35, the total value of production trebled, taxation was multiplied by eight, and the proportion of production taken in State taxation was multiplied by nearly three. In 1934-35, State taxation took more than 25 per cent, or 5/- in the £l, of the total value of production. Figures for total production are not available, and hence comparisons cannot be made for 1935-36 and 1936-37, but the proportion is unlikely to be less, and may be greater, for these years.” Restriction of Production. Concluding after examining the effects of present taxation, Professor Tocker states:—“We cannot get the money required for the present scale of expenditure by direct taxation on high incomes in New Zealand. Such incomes do not exist in sufficient number and size. Indirect taxation, the onlymeans by which revenue can be got in sufficient amount, is passed on in higher prices and hence restricts production, which is the source of all taxation.

“Does this mean that we have reached the limit of taxable capacity and are even now tending to dry up the sources from which our taxation is drawn? If not, how much further can we go? Or would we be better off as a community if we made drastic changes, limited ourselves to essential public services, and cut our taxation and public expenditure really heavily ? This is the sort of question which the Budget sets, and has set for some time past, to all who have the vision to look a little ahead along the road we are travelling.”

Taxation* Net Debt Population £ ir. £ m (1000) 1892-3 2.34 38.14 689 1906-7 4.26 62.14 950 1913-14 5.92 91.69 1126 1919-20 16.25 193.91 1207 1928-29 17.83 256.65 1460 1935-36 25.48 282.56 1553 Estimate: 1936-37 30.22 — 1561 “The position per head of population is as follows :— Taxation* Net Debt 1892-3 3.4 54.5 1906-7 4.5 65.4 1913-14 5.3 81.5 1919-20 13.5 160.6 1928-29 12.2 175.8 1935-36 16.4 182.0 Estimate: 1936-37 19.4 —

Production 1900-01 3.04 33.9 9.0 1910-11 4.84 52.8 9.2 1919-20 16.25 93.1 17.4 1928-29 17.84 126.6 14.1 1932-33 19.61 83.8 23.4 1934-35 24.78 97.0 25.5 1935-36 25.48 — — 1936-37 30.22 — —