THE WRONG MEDICINE

Wanganui Chronicle, Volume 73, Issue 371, 15 September 1930, Page 10

THE WRONG MEDICINE

NEED FOR CLEAR THINKING. There still seems to be much confusion of ideas in the minds of those who, professing to spea? for “Labour” prescribe the remedies for some of our national ailments. An instance of this is to be seen in a recent communication to the papers from the Canterbury Trades and Labour Council. The Council quotes figures to show that remissions of taxation since 1919 have amounted to nearly £7,000,00 and they argue that iT his amount had been taken as taxation instead of being remitted ?‘the amount would have kept New Zealanders employed at a higher wage than £5 a week for a considerable period.” We are not concerned with the figures which may or may not be correct, but with the fallacy that maintaining instead of remitting taxation would have been better for the wage earner.

►Supporters of this policy of high taxation seem to forget that, the more the ►State takes from production by way of taxation, the less there is to accumulate for future development; and if that taxation reaches a certain point (and it has done so in New Zealand) there is so much withdrawn from the process of production and used for consumption, that there is very little margin left to function for future production. From every year’s harvest a certain amount of seed has to bo kept for producing next year’s crop, and high taxation for immediate expenditure is equivalent to consuming our seed and jeopardising next year’s harvest. Thus excessive withdrawals of 'income by way of taxation result in limiting the growth of capital and it becomes stationery. Even Karl Marx foresaw his. A fact which his followers and the Socialists of to-day have apparently forgotten, for he said in 1847 at the Brussels Free Trade Congress: “If capital remains stationery industry will not merely remain stationery, but will decline and in this case the workers will be the first

victims. The most favourable condition for the workers is when capital is growing.” When taxes are too high the result is to paralyse, the process of capital ac cumulation, not only directly by diverting too much of the social product to consumption and too little to saving, but also indirectly because it weakens the desire to produce if the producer knows that the bulk of his results will be taken from him, and furthermore the money so taken is too frequently expended uneconomically. Social reform in many directions is urgently needed. Every thoughtful man admits this and desires to promote it on proper lines, but it defeats its own object if it is achieved at the cost of capital accumulation, which is what high taxation inevitably docs. This danger was clearly recognised by the “General Federation of Trade Unions in England, and shown in its recent report which said “However desirable it may be to secure fairer distribution of wealth, it is fatal to national prosperity to eat up by taxation that capital which is necessary to finance present and future production. When people advise the worker that his insurances, pensions, housing and expenditure can be extracted from capital without endangering his industrial existence, they are misleading him badly.” British organised Labour has at last realised the evil effect of high taxation and in the interests of the New Zealand wage earner we hope that their spokesmen here will do likewise. (Contributed by the N.Z. Welfare League.)