THE BURDEN OF TAXATION

Southland Times, Issue 23437, 18 February 1938, Page 12

THE BURDEN OF TAXATION

GROWTH OF REVENUE FROM INCOMES STEADY INCREASE IN 10 YEARS The recipients of income-tax demands at the present time have every cause to reflect on the increased proportion of their incomes that is being taxed back into the Treasury, says a statement by the Associated Chambers of Commerce of New Zealand. The following table shows the growth in income taxation collections, together with unemployment taxation collections —since the latter are virtually another form of income taxation: With Year ended Income Unemployment March 31 Taxation. Tax Added.

* Unemployment taxation not levied in these years. t Official estimate. In 1928-29 income taxation accounted for 18.5 per cent, of total tax revenues. Today it represents more than 21 per cent., and, joined with unemployment taxation, it represents 35.7 per cent. The increase in the amount collected in income-tax, and the increased proportion which income-tax represents of total taxation, is not, however, to be taken as being accompanied by a loosening of the taxation screw in other directions, as is shown in the following table of comparisons of tax collections in 1937-38 with 1928-29 —• the year which, previous to the record year 1936-37, was New Zealand’s best for total value of production. The figures are from an official estimate. Increase Over Percentage Source. 1928-29. Increase. £

* Decrease. • The table shows that taxation today is almost double what it was in 1928— 29. The only taxes which show a reduced yield are a number of miscellaneous minor ones, and the land tax —in respect of which the Government’s estimate of reduced yield no doubt has a good deal to do with the recent legislation providing for a hardshi ■> clause to be used to moderate the effects of the tax. REPLY TO TAX DEFENDERS Although taxation in general has never before been so high, there are those who, even in Parliament, have defended it with the argument that the community can bear it because the value of the country’s production has increased so greatly. As to that argument, preliminary figures of the value of production in New Zealand for 1936-37 are now available from the Government Statistician. The value is set down at £136,100,000, as compared with £126,600,000 in 1928-29. This means that whereas 14.08 per cent, of the value of production was taken in general government taxation in 192829, 22.89 per cent, was taken in 1936-37. Also, the part played by local government taxes is not to be forgotten. The latest year for which figures in this connection are available is 1935-36 (£6,162,000), but assuming these local taxes to be the same for 1936-37 (and the likelihood is that they will be more) the following is the position:— State Taxation And Local Value of As PerYear. Taxes. Production, centage. £(000) £(000) 1928-29 17,832 126,600 19.0 1936-37 37,326 136,100 27.4 This shows that taxation, as a percentage of the value of production, stood at over 27 per cent, in 1936-37. In other words, whereas total taxation before the war represented about 2/4 in the £1 of the value of production, and in 1928-29 3/9 in the £l, in 193637 it represented 5/5 in the £l. This is not to be confused with actual in-come-tax rates, for instance, which rise to a higher rate in the £l. On top of this, the Government is budgeting to take a further £4,354,000 in taxation during the current financial year. When the figures are examined, they fully support the contention that the present, load of taxation is excessive and oppressive. A further disquieting feature of the situation is that figures available in official statements show that none of the revenue is being earmarked for a rainy day.

£ £ 1928-29 3,310,000 3,310,000* 1929-30 3,533,000 3,533,000* 1930-31 4,003,000 4,284,000 1931-32 4,448,000 5,665,000 1932-33 3,556,000 7,656,000 1933-34 2,961,000 7,374,000 1934-35 3,796,000 8,358,000 1935-36 4,581,000 8,503,000 1936-37 6,618,000 10,843,000 1937-38 7,500,000 12,680,000t

Income and unemployment taxes 9,369,000 284 Customs and sales tax 6,196,000 78 Highways 1,814,000 146 Stamp and death duties 672,000 24 Beer duty 338,000 55 Land tax 140,000* 12* Miscellaneous 563,000* 71* Total net increase 17,686,000 99