ABILITY TO PAY

Timaru Herald, Volume CXLIII, Issue 20732, 20 May 1937, Page 9

ABILITY TO PAY

SHOULD BE BASIS OF TAXATION “JUSTICE TO ALL” The basis of taxation should be ability to pay, said Mr J. M. Jenkins, retiring president, when addressing the South Canterbury Chamber of Commerce last night. He suggested the Government might take as its guide the maxim “justice to all, preference to none.” Ability to pay should be the governing feature not only as between the individual members of the community, but also as between taxpayers as a whole and the Consolidated Fund. Referring to the national accounts, Mr Jenkins said an individual could spend only what he earned, and the same simple rule applied to a company, a local body, or a government. If an individual continued to spend more than he earned, he soon reached the point when he commenced to spend his capital and then it was only a matter of time until he reached the stage where his capital was gone and he faced the Inevitable position of bankruptcy. It was the same with a country. A country secured its revenue from taxation, either direct or indirect, and should only tax consistent with the ability to pay. It followed that a country could only spend up to the amount it received in taxation and when that point was reached it must then draw on its reserves or national wealth. It must be remembered that even a country’s resources were not unlimited, and that being so, a state of bankruptcy was one which must be watched very closely in order to preserve stability and ensure progress.

During the year it was admitted that very considerable increases had occurred on the expenditure side of the national accounts, and it remained to be seen whether the revenue balanced this expenditure, said Mr Jenkins. Expenditure was on the upward trend and must be watched very closely. In 1913-14 social services cost the country £2/2/1 per head, whilst to-day the approximate cost was over £6. Population had increased in the same period about 40 per cent. These facts indicated that taxation had increased beyond all proportion to the Increased number of taxpayers.