TO MEET LOWER VALUES

Taranaki Daily News, 28 April 1930, Page 15

TO MEET LOWER VALUES

COSTS MUST BE REDUCED’

FAR-REACHING TAX VARIATIONS,

MR. W. J. POLSON’S PROPOSALS.

(Special to News.) Invercargill, Last Night.

Speaking under the auspices or the New Zealand Farmers’ Union as Dominion president, and also as a member of Parliament, Mr. W. J. Polson, M.P., was greeted by a large and enthusiastic audience when he opened his tour of the youth Island with an address at Invercargill last night. Contending that in the present position of the country it was essential for public men to discuss frankly and fearlessly any possible remedies to meet the circumstances of unemployment and falling values, Mr. Polson devoted the early part of his address to outlining interesting proposals for changes in the taxation system, with a vie., to taking a definite and drastic step to effect a reduction in costs.

Mr. Polson first drew attention to the fact that exports for the past year had been less in value than the imports, the figures being £49,167,000 and £49,450,000. There might not seem to be a great margin of difference here, but it had also to be remembered that there were invisible exports totalling over £10,000,000 as well. These included the amount of interest sent abroad to pay for loans issued outside New Zealand and capital sent out of the country, in the form of dividends earned in New Zealand. During the previous two years there had been an excess of exports over imports of £11,000,000. The country had been on the. right side then, but now it was on the wrong side, and unless prompt steps were taken New Zealand might find itself in a similar unfortunate position to Australia to-day. i “It is,” he said, “useless to attempt [patching a battleship with a postage ’stamp. We need fundamental remedies and must apply them if we are to face falling values, curtailed production, financial stress, unemployment and stagnant land development.” AUSTRALIA’S MISTAKE. There was a fundamental difference in such a policy compared with the policy introduced by the Labour Party in Australia, where the Government seemed more nxious to protect wages than to reduce costs. The fear of any wage reduction coupled with the immediate necessity for taking action to prevent national bankruptcy had resulted in the imposition of the highest tariff wall in the world, which was bound to have three ill effects. Firstly, to replace the amount of between £8,000,000 and £10,000,000 lost to the Customs from reduced imports Australia had to increase direct taxation. Secondly, it would : reduce the buying power of her best customer, the Mother Country, by over £30.000,000, because Britain supplied the bulk of the imports to Australia on which embargoes had been placed. More’ over, when Britain sold less she must of necessity, Hiy less.-’ Thirdly, it would increase, instead of decrease, costs, because every addition to the cost of living added to costs of production. Air. Polson proposed to re-adjust taxation in New Zealand in a sounder way than had her sister Dominion. He proposed to attack the problem of costs and reduce them, thus tending to increase production and meet the effect of lower prices for exportable goods. All costs in New Zealand, he said, were too high. The cost of government was too high, .• so was the cost of money, the cost of labour and the cost of the people’s general requirements. The speaker proceeded to point out that the farming community had done its best, and he quoted returns of the sown grass lands of New Zealand to show that production had actually increased from an almost reducing area. “But,” he said, “it is useless for farmers to endeavour to cheapen production if costs generally are not to fall also.”

MAINTAINING LIVING STANDARD.

He was satisfied that production could be doubled, but he was also satisfied that costs had to fall first. At present New Zealand maintained a standard of living established at 45 per cent, above the pre-war standard, the result being that higher wages were required to enable men to'live in similar comfort. “Let me be perfectly plain in this matter,” he said. “I do not wish to interfere with that standard of comfort. The work of trade unionism for a century has been in the direction of emancipating labour from the appalling conditions of poverty and squalor of the early Victorian era, and just as we look back now and decline to recede from the progress that has been made some future genera? tion will look back on the progress of the next: 100. .years and . declare our standard to-day to be only another stage in the emancipation of human beings. I wan': to emphasise that I am not attacking wages, but I am holding out a hope for dealing with unemployment and at the same time maintaining the Standard of living of the people. Mr.. Polson said it was perfectly obvious that'if costs' could be reduced wages would, automatically fall as the cost of living also- fell. In 'this connection he referred to the position of Lancashire, whose idle people were facing ruin because the wages problem had been tackled before that of ' costsij. It was possible to escape from a similar state by adopting the methods of some of New Zealand’s competitive neighbours, whose system of taxation relieved the

necessities of the people and piled taxes on to luxuries.

REDUCED CUSTOMS DUTIES.

His remedy, said Mr. Polson, was to reduce by £2,000,000 the cost of the people’s everyday requirements and of the tools of trade of the nation. Jn New Zealand dutiable imports were valued at £24,689,000. The value' of imported foodstuffs, apparel, metal manufactures, glass, china and other necessities was over £1.4,000,000 last year. Hence a £2,000,000 drop a duties, on necessities would.be equivalent at least to a 10 per cent, reduction in -their retail price. The immediate effect would be a cheapening of costs,, and this effect would be cumulative, because manufacturers would then be able to produce goods with a margin of profit that was impossible to-day. More people would be employed, and not only would the standard.of living be. maintained but the worker would hayeiSonie guarantee that his job ; wouhl be secure because the unemployed would be absorbed, into production. On the other, hand, if £2,000,000 were to be taken from the Customs revenue, it would be necessary to provide for at ,least,,,p.. similar sum as. revenue, from spine. other source, He realised that his proposal to tax certain luxuries would not be popular with certain classes, but he believed the bulk of the people would understand that at a time of national crisis it..was a.just .and sound plan. He proposed first to levy an amusement tax ,as .suggested •by a leading New Zealand paper, of one penny on every form of amusement irrespective of the price of the ticket. This would be in addition to the present amusement tax. which did not comeinto operation until the price of admission exceeded 2s. The extra penny was calculated to bring in about £1,060,000 a year. . Secondly, he proposed a tax on the .gross liquor sales of hotels and the abolition of the present licensing fee, under which the smallest hotel, paid .£4O as also .did the largest. There was no. justice, in that, system, but‘there would be under his suggestion to tax upon the monopoly value based on the gross liquor, sales of each individual hotel. Thirdly, he would provi i increased taxes on foreign motorears, imported silks and similar merchandise, which- were not necessities. Fourthly, the gross receipts of foreign film corporations should be taxed. Many people did not understand that these concerns often extracted as high as 66 per cent, of the -gross takings of picture halls as their share. He realised that such a tax might be unpopular; indeed, it was the picture corporations more than anything elr»c that brought about the downfall of the Bruce Government in Australia. Fifthly, if necessary, he would increase the totalisator tax, having in mind that it was the people and not the racing clubs that actually paid the tax. “Those, who can afford to gamble ,can also afford to pay a little more for the privilege,’’ he added. RESTORATION OF PROSPERITY. ■ These taxes he had. calculated would bring in more than £2,000,600 per annum, Mr,. Polson continued, and it might then be possible stiff further to reduce Customs duties.: and costs. ■. The point about the proposal .was, that no man rfee.d pay< tion unless.

posts were all purely luxury taxes, imposed on those who desired to gratify some particular propensity or taste. The effect on New Zealand would be the restoration of prosperity, and unemploy>ment would dwindle. .To bring such reforms into effect, however, it was necessary to have the co-operation of all and also to have a clear bargain to maintain the standard of living. That bargain could easily be made because labour had the bulwark of the Arbitration Court, wliose awards were based .on the cost of living and directed towards the maintenance of an equable standard of comfort. The existing awards would not be altered until justified by the lowering of costs. Hence wages would be the last factor to be effected by his proposals. - . ■