SPENDING TOO MUC

Wanganui Chronicle, Volume 74, Issue 114, 16 May 1931, Page 11

SPENDING TOO MUC

THE NATIONAL FINANCES I DECLINING YIELD OF TAXES. ONE WAY TO BALANCE BUDGET. I "The very strength of the objection to reductions in Government expenditure suggests that there is already too much dependence on the bounty of the public purse, mu' imined by tho taxpayers,” says a bulletin prepared by the economics department of Canter-

bury College and published by the Canterbury Chamber of Commerce. "A candid examination of the present situation and of the prospects for 1931-32 suggests, too, that the public finances can no longer be made to carry their burden of recent, years, and that there are no sound methods by which the Government can get the money to maintain its present scale of expenditure. "In the past wo have relied much too greatly on borrowing from abroad for public works which, too often, prove unproductive. The appalling losses on tho railways alone aro sufficient to show how such borrowing and expenditure have increased tho load on the taxpayer. There aro lew avenues open at present where borrowed money might be publicly expended in the secure knowledge that it would earn its own interest. Moreover, it would be unwise in present circumstances to attempt to borrow heavily in our usual market, London. Draining Private R-esouroes. "Internal borrowing is subject to the same objection, that it creates a certain liability without creating an asset certain of meeting its own cost. Moreover, internal borrowing will not remedy any reduction in the national income. Jt will transfer money from the community to the Government, but will decrease further the limited amount available to finance production by private enterprise. "Increases in taxation have the same effect. They increase the Government’s power to spend, but decrease that of the taxpayers. In addition it is doubtful whether the Government can by any reasonable means increase its revenue for .1931,-32, as the increases in rates, of taxation might be more than compensated by contraction at the source, and it is practically certain that any increases imposed are likely to do more harm than good to tho national income as a whole. Increases in customs duties must increase either costs of production or costs of living, and reduce purchaing power. In addition, without borrowing abroad to pay for additional imports, the total of imports is likely to be substantially reduced for .1931 32, and importations of dutiable articles may suffer tho heaviest reductions. Less Income to Tax. "Taxable incomes have suffered so severely in 1930-31 that the yield of income taxes for 1931-32 is difficult to estimate. but must be greatly reduced. Land taxes will be hard to collect and in any case stand in urgent need of revision, while totalisator and amusement taxes, stamp and death duties are showing substantial declines. Motor taxation is already excessively high, and as 1 transport is perhaps the key industry of tho Dominion and much motor transport outers into costs of production, these taxes should be reduced rather ‘ than increased. Heavier taxation, too, means further reduction in the com munity’s spending powe r at a time when severe depression ami unemploy- ' ment are directly due. to the cont rar- j tions of spending power alrendv suf- ' feted. "The alternative is reduction of ex i penditure to an extent not yet. seriously considered by the public or Parliament of New Zealand,”, says the. bulletin. ' It may yet; have to be considered, ami considered very seriously, whether we arc not spending public money, which j the taxpayers must find, on a scale and on services which we simply cannot afford, and collecting money from the coniunity to spend on their behalf when the community would be far better off if it had that money t > spend for itself.” '