THE BURDEN OF DOMINION TAXATION

Timaru Herald, Volume CXLIII, Issue 20894, 25 November 1937, Page 6

THE BURDEN OF DOMINION TAXATION

It is pertinent perhaps to point out that while the House of Representatives is discussing finance and taxation from all angles, without of course, giving much thought to the struggle many taxpayers are having to meet the demands of the taxgatherers, very definite warnings are being addressed to the Government from authoritative circles in support of the contention that the time is come to soften the thrust of the taxgathering machine. The National Bank of Australasia in its monthly review of economic conditions says:

“The weak point in economic recovery in New Zealand is the relative failure of Investment to respond to improved conditions. During the financial debate in the House of Representatives members of the Government were much incensed by statements by members of the Opposition that there was a ‘flight of capital’ abroad, and to Australia in particular.

“Statements of this sort are difficult to prove or disprove. But the continued high level of fixed deposits with the trading banks, the firmness of all Government securities, and the sluggishness of most New Zealand share issues are an adequate indication that capital is not moving as freely as could be desired Into New Zealand enterprises.”

And what is the explanation? The bankers’ review suggests that the situation in New Zealand has been created by higher taxation and high costs. This phase of the Dominion’s economic situation was raised by the chairman of the Stock Exchange Association of New Zealand, in his address at the annual meeting of members yesterday:

“The cost of State and local government in the Dominion to-day,” said the chairman, “is comparable with the employment of a traction engine to drive a sewing machine.” “This country, in spite of record prosperity, has not reduced either debt or taxes after four years of recovery. Can it continue to hold Its own In the world’s markets with its primary products? Are not taxation costs preventing the primary producer from Improving his products sufficiently to maintain their place against competition from nations geographically better situated?” It cannot be said that the case for reduced taxation has not been presented from time to time for the consideration of the Government. Almost every company balance sheet that is published discloses the bigger and bigger inroads the taxgatherer is making into the fruits of private enterprise. In some cases as much as 10/in the £ of profits is being drawn into the national coffers. Moreover, the chairman of the Stock Exchange of New Zealand showed at the annual meeting of his association yesterday, that State and local taxation is taking 27.6 per cent, or 5/6 in the £ of the total value of production.