FINANCE AND TAXATION.

Taranaki Daily News, 14 June 1923, Page 9

FINANCE AND TAXATION.

ONE VIEW AND ANOTHER. (I’roin Our Own Correspondent.) „„ Wellington, Juqp 8. J he second exchange of interviews between Mr. Massey and Sir Joseph Ward in their controversy over the financial position of the Dominion and the incidence of its taxation has left neither side with any conspicuous advantage. The Prime Minister, like the chivalrous gentleman he strives to be, has thanked Sir Joseph Ward for giving him an opportunity “to clear up some of the more or less important points connected with the finances of the country,” and Sir Joseph, not to be outdone in courtesy, has said, in effeet, that he is satisfied Mr. Massey has mis-stated the facts in ignorance, and not with any wilful intention to deceive. In Thursday’s papers the Prime Minister told the public that the taxpayers in England today were paying “double what would be paid in New Zealand during the present financial year.” He scoffed at Sir Joseph Ward’s suggestion that the higher graduated income tax at Home was paid by the plutocrats alone. “Who are the plutocrats?” he asked derisively. “All recognised authorities on economics have repeatedly stated that nothing interferes with the prosperity of a country so much as the imposition of heavy taxation which the people are barely able to pay.” The authorities, i't is scarcely necessary to say, were quite correctly quoted. PROMISED REDUCTIONS. There was one passage in the Prime Minister’s statement to the papers, however, which was not quite happily framed. “It became necessary for the Government in the following year,” Mr. Massey said, after mentioning 'Sir Joseph Wards retirement from the position of Minister of Finance in the National Cabinet, “to .put up the income tax to 8s 6d on account of the extraordinary liabilities which had been left for us to meet.” These words naturally would convey to the average reader that Sir Joseph was in some way to blame for the existence of these extraordinary liabilities and that he had left the Cabinet without making provision for them. This cannot be the idea Mr. Massey wished to convey, but his words were capable of a construction that would have cast a very grave reflection upon Sir Joseph’s administration of his high office. The really important part of the Prime Minister’s statement, however, was that dealing with the reduction of taxation. He hoped to reduce the maximum income tax “approximately to 55.” while lowering taxation in other directions, and he hinted at the removal of the tea and sugar duties. These achievements would be accepted as a reasonable instalment of the good things to come. ABSOLUTELY INCORRECT. In an interview with a representative of the New Zealand Times, published in that journal this morning. Sir Joseph describes the Prime Minister’s statements concerning English and New Zealand taxation as “absolutely incorrect.” “Mr. Massey previously stated.” he said, “that England paid 10s fid in the pound income tax‘compared to 7s 4d in the pound now imposed for income tax purposes in New Zealand. Anyone would suppose from Mr. Massey’s statement that in England it was a flat rate of 4s 6d in the pound income and an additional fis in the pound flat super tax. making 10s fid in the pound. This statement is totally contrary to fact. In England the income tax is 4s fid in the pound, and the super tax is imposed upon what is called the zone system. This zone system commences with Is fid in the pound on the first £sflo beyond £2OOO of taxable income. The fls in the pound referred to by Mr. Massey is on all incomes in excess of £30.000, the zone system operating on a sliding scale between £2OOO and that amount.” Sir Joseph’s contentions appear to be in accordance with a lavman’s reading of the provisions of th** English Act, but possibly Mr. has some authority for putting a different construction on their language. COMPANY TAXATION. Dealing with company taxation. Sir Joseph plainly is on sound ground. “Another important difference between the English and the New Zealand tax is/' he says, “that the former is chiefly an individual tax. In New Zealand last year companies paid 72 per cent, of the total tax and individuals only 28 per cent. Companies in New Zealand are widespread, and consist very largely of industiral concerns employing a large amount of labor. They are paying in this country fully two-thirds more than they would be paying under the English system. In England the corporation tax is not one shilling, as stated by Mr. Massey. It is sixpence, and it has a slight, but not material, effect compared with the gross amount levied either at Home or here.” In regard to Mr. Massey’s statement in regard to war liabilities Sir Joseph is emphatic. “Before I left the National Government,” he says, “I not only made full provision for the whole of the war lia- I bilities incurred in New Zealand, but also for the total expenditure of the Dominion, including the loans raised in Sir James Alien’s time, and there was no liability whatever in connection with the war’s general expenditure either in England or in New Zealand.” This is where the controversy between the two authorities stands at present.