REVENUE FROM TAXATION

Southland Times, Issue 24181, 18 July 1940, Page 8

REVENUE FROM TAXATION

ESTIMATED AMOUNT OF £54,000,000 z MR NASH MAKES REPLY TO FINANCIAL DEBATE (From Our Parliamentary Reporter) WELLINGTON, July 17. Figures showing that of the £36,000,000 which is to be found by way of dir,ect taxation,, wage earners whose incomes are more than £4OO a year will provide £25,000,000, were quoted by the Minister of Finance (the Hon. W. Nash) in the House this evening when replying to the financial debate.

He said that the revenue from taxation was estimated at £54,000,000, of which £36,000,000 would be direct taxation and £18,000,000 indirect. “Of the direct taxation,” said the Minister, “£25,000,000 will come from people who get more than £4OO a year. Their total incomes are £56,000,000. The total income of those getting under £4OO is £129,000,000 and they pay £11,000,000. In other words, those over £4OO pay 44 per cent, of their total income, and those under £4OO pay 9 per cent.” Mr Nash said that indirect taxation was derived from Customs, sales tax, highways and beer. Sales tax could not be defended in its incidence. “We have often criticized it, but I do not know of a fairer way of getting £5,000,000,” he said. The Customs tax in the main was down this year. The major part came from luxuries, such as tobacco, spirits, motor-vehicles and petrol. The taxation burden was fairly well spread, Mr Nash said.

The National Security tax did tend to brin ■ an element of hardship into some homes, but the Government had made provision through the family allowance to meet that as much as possible. The curtailment of imports inevitably meant that there would be less goods for consumption unless they were produced in New Zealand, Mr Nash continued. If the goods were not produced all the purchasing power in the world would not make them available. RESERVE BANK CREDIT Only to the extent that they could not borrow, would the Government use the Reserve Bank credit. The Reserve Bank credit would have a most damaging effect if used to a large extent. Increased taxation would inevitably reduce the demand for goods by reducing purchasing power, but it would be mainly extra goods that would not be bought. If they made large sums of money available and threw them into the purchasing pool without producing the goods to be purchased, they would do great damage to the economy of the country.

“What is the good of giving the people more credit when there are no goods behind that credit to be purchased?” he asked. “Even the building of houses creates economic difficulties if you build them with Reserve Bank credit.” Mr Nash added that the housing programme would have to go on, nevertheless, because homes were essential. Already they had put £10,500,000 into circulation by building homes, and the consumable return was represented in the rentals, £250,000. Referring to overseas securities, Mr Nash said that all the Government proposed to do at the present time was to ask those who had securities or cash overseas to register. The Government had two rights to take the cash—by paying current exchange rates and taking securities at the market value. Mr C. A. Wilkinson (Ind., Egmont): At the present low value?

Mr Nash said that the answer to that was that the Government had overseas assets and it would be foolishness to depress them by setting out to realize the securities of individuals. If the need for overseas funds for war purposes compelled them to do so, they would realize the securities, but individual owners could rest assured that it was as much in the interest of the Government as in theirs to get a good price. The securities would not be realized until realization was absolutely necessary.