Bay of Plenty Beacon Published Mondays, Wednesdays and Fridays. MONDAY, SEPT. 15, 1947 WITHDRAWAL OF SUBSIDIES

Bay of Plenty Beacon, Volume 11, Issue 80, 15 September 1947, Page 4

Bay of Plenty Beacon Published Mondays, Wednesdays and Fridays. MONDAY, SEPT. 15, 1947 WITHDRAWAL OF SUBSIDIES

jI'HE decision of the Government to withdraw or reduced subsidies on certain comodities has not come altogether as a surprise. Mr Nash had some time ago following his return from overseas declared that the Government realised that it could not possibly maintain the position from a taxation point of view and at the same time maintain subsidies. The advantage in dropping certain subsidies will be all to the benefit of the State finances. The majority of the people do not stand, to reap any actual benefit. The withdrawal of subsidies means that the commodities and services affected—fresh fruits, meat and bacon, tea and sugar, imported raw leaf tobaccos, sea and rail fares and freights—will have to stand on their own merits. Those who buy the commodities and those who use the services will have to pay any increase in costs, and those who refrain will get the benefit. Instead of the community as a whole paying only the users will be called upon to do so. That is as it should be. The changes in costs are likely to be taken into consideration by the pending pronouncement of the Arbitration Court in regard to wages. Obviously the cycle of events seems to be shaping this way: There will be an increase in wages authorised by the court; there will possibly be an increase in the price of the goods and services affected by the withdrawal or reduction of the subsidies; the wage earners will receive more money to spend at dearer prices and this is where the State comes in: It will receive a double benefit: The amount that it saves in subsidy and the additional sum that it will collect in income tax from the increase in the national wage bill (unless the incidence of taxation is substantially altered, which is unlikely at this juncture). It is also the intention to cancel farm subsidies and to make compensatory adjustments in the price paid for the products concerned. It will not lighten the load of the people but it 'may bring them to a better realisation of what it is actually costing them to live. Governments cannot go on indefinitely giving largesse to the community without eventually having to call a halt. The policy of subsidisation is one form of largesse which has produced difficulties for the Government. It was faced with the prospect of having to increase taxes if it desired to maintain the subsidies, and as there exists a vigorous demand for tax reduction any increase to maintain subsidies would have provoked a storm of dissent. The move is merely one to shift the burden from the Treasury to the people, who have always done the paying. With subsidies reduced or removed the people will then be paying directly, instead of indirectly, and will thus , have a better indication that subsidisation is often only one form of political expediency that acts in the nature of a screen—to obscure the actual act of paying individually.