CRUSHING TAXES

Wanganui Chronicle, Volume 74, Issue 121, 25 May 1931, Page 10

CRUSHING TAXES

EFFECT ON INDUSTRY NEW SOUTH WALES TO-DAY. LESSON FOR NEW ZEALAND. j Striking illustrations of how the 1 . rushing taxation of the wealthy in New South Wales is drying up the I sources of capital were given by a prominent Sydney business man in an interview at Auckland. ‘‘A man with a large income would find it much more convenient if the Government would take the whole of his income and allow | him to live on the amount that he j pays in taxation.” he remarked in all earnestness. I To illustrate his point, the visitor from i Sydney quoted the case of a certain ’ well-known business man with an in- I come of £65,000 per year. His total | taxation amounted to 17s 6d in the £, ; with the result that, despite his appar- | ent great wealth, he was left with an i income of approximately £Bobo. Under j normal circumstances that man lived in I a magnificent homo in Sydney, employ- j ing some 20 servants and 40 gardeners. • I The crushing taxation now demanded j meant that he could not live in Sydney i at the usual rate of expenditure, and he | had been obliged to dismiss the whole of his staff with the exception of two j servants to look after his house and two gardeners to care far the grounds, while he himself had gone into country residence some distance out of Sydney. “There arc very many professional men in Sydney—architects, doctors, lawyers —whose incomes this year will be only from one-quarter to one tenth what they wore a year or so ago.” he said. Professional men who previously had an income of £lOOO a year would not make sufficient money this year to pay their income tax of last year. “Take,” he said, “the case of an architect who until recently had an income of £2OOO a year. During the last eighteen months he has bad do income, for there is no building in New South Wales, and he probably possesses do assets, having previously lived up to his income. As a result he must buy a small farm or allotment for about £3OO, and grow vegetables and keep a cow in order to save his wife and chillran from starvation. Cases like this arc actually happening and they are not rare. 0 Numerous Tax Demands. Touching ou the channels through which money paid in taxation passes, the “Star’s” informant instanced the case of a man with an income of £5OOO. In income tax he paid 5s 2d to the State Government and 5s 2d to the Federal Government, a total of 10s 4d. Then there was Is jn the £ unemployment tux paid to the State Government, and 3d in the £ unemployment tax paid to the Federal Government. Next came a 15 per cent, super tax paid to the Federal Government, and a childhood endowment tax to the State. On top of all that expenditure he had to find money for his laud tax and ordinary ■ municipal rates. Companies were being affected in the j same way as private individuals. One company, which would be regarded by the public as being very financial, had made a profit of £32,000 for the past financial year. Their balance-sheet, however, showed the following items: I /Reserves for taxation, £21,000; reserves I I for depreciation on investments (in ’ eluding Government loans), £6OOO. I That meant that out of a profit of £32,hioo, as at first disclosed, there was left 'i lie "sum of £5OOO to be divided among I four partners. •‘The outcome of the whole thing moans the unemployment of a trenien lons number of individuals,” said the [Sydney man. “No firm bled white by 'taxation has much money to pay in wages, and the natural result is a reduction in staffs.” He here quoted the ’case of one large company in New South Wales. During the course of the past seven or eight years the average pay sheet of the company was between £5OOO and £6OOO per week, but today it was not £5O per week. That was only a typical case of a business con netted with one of the key industries. Until eighteen months ago conditions in New South Wales were comparatively normal, but to-day there were practically no companies making profits, or individuals with incomes which were sufficient to pay the taxes on their last prosperous years. A conservative estimate of the amount of unemployment in New South Wales was 33 per cent. It was reasonable to assess the number of Civil servants as somewhere in the region of one-third of the total employed, which meant that about two fifths of the whole of the population of the State was working to keep the ?ivil servants in employment and to pay the unemployment dole. “New Zealand Going Same Way.” “The dreadful thing is that New Zealand is going the same dangerous way as Australia was a year or so ago,” said the Sydney visitor. “But [ honestly think that you in New .Zealand will benefit from Australia’s experience and avoid the trouble that the Commonwealth has got herself into. Nevertheless it was interesting to note that the whole conditions in New Zealand to-day were exactly similar to those which prevailed in Australia about two year s ago, when the depression first appeared. The debt per head of population in New Zealand was actually more than in Australia. “I sincerely hope that New Zealand > will see the folly of her ways and r.d- , mit the correctness of Sir Otto NieI meyer’s advice. Sir Otto's advice was . not followed in Australia, but tin re is now a big feeling there that what ho said was right.” The thing to do was > to balance the country's Budgets. 11 would be necessary to decrease the costs of production in order that New . Zealand Primary products might be sold in competitive markets at such prices as would allow the farmer tu make a fair livelihood. The saving of New Zealand would probably be due to Hie fart that, unlike Australia, the country was not building up huge secondary in- , ■' 'i-i rii-s with terrific import duties, lhaxirig very wisely limited her tariffs Ito purely revenue producing /ones.

industries to subsidise with, heavy tariffs and wisely she had reduced the costs of production, until they were approximately equal to 1912, or pre-war figures. After paying a tribute to the Australian workman, the Sydney visitor said that Australia was bound to pull through eventually because of her enormous wealth. It would be necessary, however, for the cost of produciton 1o be decreased by about 25 per cent., and the country tu receive a normal return for her short wool and wheat.