THE TAX BURDEN

Timaru Herald, Volume CXLIII, Issue 20862, 19 October 1937, Page 6

THE TAX BURDEN

RATES COMPARED POSITION OF DOMINION Special to “ The Timaru Herald." WELLINGTON, October 18. When speaking to defence of the present weight of taxation in New Zealand, the Minister of Finance made a number of statements in the House on October 13 which call for comment (says a statement by the Associated Chambers of Commerce of New Zealand). The Minister made comparisons In the matter of the income tax paid on certain incomes in England and New Zealand, and said that to certain grades the British rate was slightly more than in New Zealand. That Is so,, but the Minister did not mention that British revenue from income taxation represents 34.7 per cent of the total taxation revenue for the current year, while in New Zealand such collections represent 24.7 per cent of total taxation revenue. The Minister cannot establish that English taxation is greater than New Zealand merely by quoting comparative rates of income tax where such English taxation is heavier. It is also the case that tax rates on certain other grades of income are considerably heavier in New Zealand than In the United Kingdom, but the fact that New Zealand rates of income tax so closely approximate those in the United Kingdom, at the same time as New Zealand collects 75 per cent of its taxation revenue by other means, as compared with 65 per cent in the United Kingdom, only serves to emphasise how heavy New Zealand income tax is in proportion. Indirect Taxes Then, tire Minister said that in New Zealand, income tax on £5OO (man, wife and two children) was £l2/9/8, and that to South Australia it was £22/0/8, but he did not explain that, in South Australia, funds for unemployment relief are secured by Increased income tax rates. To make a true comparison in this case, the Minister should have added £l7/13/4 unemployment taxes to the income tax payable to New Zealand on £5OO. This makes a very big difference, the two taxes on the £5OO man then being actually £3O/3/- in New Zealand and £22/0/8 in South Australia. (In the United Kingdom, income tax on £5OO is £B/6/8, as compared with £l2/9/8 to New Zealand). Again, the Minister omitted to state that taxation from all sources to South Australia was equivalent to £6/0/6 a head to 1936-37, plus £9/4/9 a head Commonwealth taxation—a total of £l5/5/3, as compared with £l9/14/10 a head New Zealand taxation for the same year (including unemployment taxation hi each case). The person who pays no income tax cannot escape paying indirectly his share of other taxes, which are equivalent this year to £57/10/8 an average family of four to New Zealand, as compared with £46/5/- in the United Kingdom. Some families will pay less, others more, than this, in each case. These taxes are reflected in higher prices for goods, commodities and services. This bill for indirect taxation has grown on an average family basis, as follows:—Year 1929, £39/6/3; 1935-36, £4B/8/3; 1936-37, £5l/9/9; 1937-38, £57 10/8. Another point made by the Minister, in support of his statement that United Kingdom taxation was heavier than New Zealand, was that if the wages tax was to be taken Into consideration in New Zealand, there would have to be an addition made for unemployment insurance payments in England; also, that taxation was levied in New Zealand to cover all services whereas in England the local authorities had to tax to pay for services which in New Zealand were the responsibility of the central Government. However, one can leave out of consideration both the £5,180,000 to be raised to New Zealand this year for unemployment purposes, and the unemployment insurance payments in England, and the position still is that the remaining taxation is equivalent to £l9/2/2 a head of the population of the Dominion, as compared with £l7/14/5 a head in the United Kingdom, for the current financial year. There Is small point to be made in the taxes raised by local bodies r.i England, because while the amount so collected in England and Wales In 1935-38 was equal to £4/8/10 a head, local bodies in New Zealand collected the equivalent of £3/18/9 a head to the same year—the latest year for which figures are available in either case. The position, therefore, is t. 3 follows: Taxes a Head (Excluding Unemployment) United Kingdom. New Zealand. State .... £l7 14 5 £l9 22 Local body 4 0 10 3 18 9 Totals .. £2l 15 3 £23 011 The figure of £l7/14/5 for the United Kingdom is an official Government return for 1937-38. Figures of taxes collected by Scottish local bodies—which would be an addition to the £4/0/10 given above—are not available for years past. In this comparison, an important point not to be forgotten is that, of the total United Kingdom expenditure this year, £198,268,000 is for defence services. This is equivalent to 23 per cent, of the total British Budget expenditure, whereas only 4.6 per cent of the Budget expenditure of the New Zealand Government for the current year is for defence purposes. Finally, the Minister nanrnd certain State organisations which pay taxation, but omitted mention of those which flo not—to which latter class are to be added local body training concerns, It is highly disturbing to note that the Minister generally confined himself to defending the present oppressive weight of taxation on industry, commerce and the individual, and did not mention when taxation is to be reduced, if at all.