LEGION'S SCRIP SCHEME.

Timaru Herald, Volume CXXXVII, Issue 19623, 18 October 1933, Page 4

LEGION'S SCRIP SCHEME.

To the Editor of “ The Tlmaru Herald '* Sir.—l believe that the thing required to cure unemployment in New Zealand is that the Government's policy shall be reversed. It is useless to change the system without changing the policy, and it is unnecessary to change the system, in order to change the policy. To cure unemployment, the community must be organised on the basis of sound com monsense, with a proper balance between supply and demand, and a proper balance between primary and secondary production. This policy of intelligent organisation of our economic system, is the key to the solution of the problem and any other short run palliative is merely papering over the cracks instead of getting at the root causes. Two such palliativesthave been suggested in your

paper in the last few days. The Legion has suggested its scrip scheme by which the unemployed are to be given 10/- a week more, the necessary money to be raised by a direct tax, which will fall most heavily on those who are obliged to use money, as opposed to those whose status in life or type of business enables them to use cheques and credit. That is the burden to be borne by the poor and by the retailers. Twelve-thirteenths of the money raised is to be paid to the unemployed, and one-thirteenth is to be pocketed as profit by the issuing authority. The second palliative, which was suggested by myself, is that the payment to the unemployed shall be increased by 30/- per week, and that the money necessary shall be raised by a tax on those best able to pay it; that is on those whose incomes exceed £3OO a year, the amount of the tax to be 5d on 10/- which the Legion informed us was but a small matter. My plan is simpler and fairer, but what do I read in Saturday's paper. I read all the old stock-in-trade platitudes which seem to be displayed lrlggledy, piggedly whenever the conservatively minded are criticised. My proposal is classified as “entirely destructive," “a systematic attack on constructive measures,” and so on. Routine parrot cries which bear no relation to facts.

Does the Legion expect that it should be allowed to bring forward inequitable and uneconomic plans and schemes without anyone criticising them? To classify adverse criticism as destructive is not to answer it. As far as the welfare of the community is concerned, the most constructive suggestion concerning the scrip scheme is that it should be dropped, because it proposes an inequitable form of taxation, which would fall most heavily upon the poor, both directly and indirectly. The taxation would fall upon those people who have to use money in their credit transactions, i.e., the poor and the retailers. In business, the tax would be in direct proportion to cash turnover, and not to profits which might be nil. A professional man whose profit is a relatively high proportion of his gross income, would pay relatively little tax, while a retail store whose profit is very small, in proportion to turnover, would pay much tax. Money is only used in a very small proportion of credit transactions, yet the scrip plan throws all the taxation on to the shoulders of the man, whose position in life or whose occupation compels him to use money. All the wealthier groups who use credits and cheques would escape. The poor man's income and expenditure takes the form of money, and the taxation would weigh heavily on him, but the wealthy man whose income may be in cheques and dividends, etc., and who pays for a £6OO car by cheque, is largely immune from Wie tax. On the other hand, the wealthy man, whose income comes from a retail shop, would be extremely heavily taxed. He would be taxed out of all reason. Profit margins will not permit a tax of 5d on 10/-, so up would go prices. The plan is inequitable. One of its objectionable features is that an additional £IBOO is to be raised for the profit of the administrator of the scheme, and the remark that it would be easy to dispose of this profit does not impress me with the profundity of its wisdom. Finally the writer completely misrepresents me in his statement that I said that the scrip would not circulate. I said no such thing. Of course it would circulate—at a discount. But, as I remarked before, Gresham's law would operate, and the total money circulating would be very little increased. My criticism of the scheme, however, is not on this score, but because it involves an Inequitable and heavy tax on the section of the com-

munity least able to bear It.—l am, etc. D. G. MCMILLAN. Kurow, October 16.