The Waikato Times SATURDAY, FEBRUARY 18, 1933.. THE SALES TAX DEBATE.

Waikato Times, Volume 113, Issue 18874, 18 February 1933, Page 4

The Waikato Times SATURDAY, FEBRUARY 18, 1933.. THE SALES TAX DEBATE.

The debate on the Sales Tax Bill is proceeding and naturally offers a wide pcope for attacks on the Governmen . nothing attractive in the tax; there seldom is in any a , the Labour Party has a kindly feeling for an income tax wh •will be paid by other people.

The trouble with those who criticise the tax is that they ha no alternative to offer. Mr Downie Stewart admits that the condition of the Budget makes the tax necessary, as there is no ot e from which the required sum can be obtained. He is s l PP to the higher exchange and estimates that it will cost e J? an amount of £4,000,000 next year. This is based on an estimated loss of Customs revenue £1,400,000, and an amount payable to the banks for exchange losses £1,000,000.

The experience in Australia has been that impor s ave increased,, and Australia supplies her own manufacture re^ mr ® ments to a much greater extent than we do. It is reasona e o suppose that our imports also will increase, and if so the estimates based on their shrinkage, and those based on the compensation to be paid to the Banks will both prove incorrect.

The amount payable to the Banks will we presume, take the form of buying from the banks the surplus funds, after the country s bill for interest, and the importers’ requirements have been met. These funds will be available for future payments and will hasten the date when exchange returns to normal. Such speculations, howevei, mean little for they depend entirely on the course of prices, whic lately have been falling and have led to talk of restrictions of dairy imports similar to those on meat. This does not augur well for t e mood in which the World Economic Conference is met.

Mr Downie Stewart is still obsessed by considerations of the Budget. It is a matter of great importance that it should be balanced, but it is not the one and only consideration. It is necessary to save the agricultural interest in all its different forms, for on it depends the prosperity of trade and industry, and the continued existence of people on whom future taxes may be levied. iu his anxiety over the Budget Mr Downie Stewart is apt to oveilook this consideration.

The Labour Party is still harping on its plan for the Government to issue notes to the amount of £10,000,000 or £12,000,000. The first effect of this would be that the notes would be returned to the banks who would pass them on to the Treasury for immediate payment. If they were made inconvertible they would displace bank notes, and as these are taxed the Government would lose its revenue and the banks would lose their profit. There is no evidence to show that credit would be more easy in any way. Wherever the banks are restricting credit it will be because they fear the stability of would-be borrowers in these troublous times. It is not because they are short of funds which can be lent, and banks are the same as other businesses in that they desire to do business where it can be done with safety.

If the big issue of notes that Labour desires caused inflation it might help a small number, but would raise costs against the exporter, and thereby do much more harm than good. It is strange that Labour is so sensitive about the effect of higher exchange in raising prices, and yet favours protection which would have the same effect as raising prices. »

The recent policy of the Government is not popular with those who have to make sacrifices nevertheless it is a policy which reflects credit on its authors. They were elected to take drastic steps. A year ago when a policy of inaction prevailed, there was reason to feel disappointment. This has been replaced by a policy of decision. There is no need to subscribe to all or anything they may do, but they have shown that they know their own minds, and are standing by their opinions.

A charge has been brought against the Prime Minister by Mr Stallworthy that he said exchange was a matter for the banks and now deals with it himself. It is not likely to disturb the Prime Minister; as a criticism it is worthless, though perhaps as good as many of the other criticisms of high exchange. That a man should change his opinion in times like the present, is anything but wonderful; in fact it may be said that, most people capable of having an opinion have changed it many times.