Trade and Taxes

Press, Volume LXXI, Issue 21417, 8 March 1935, Page 10

Trade and Taxes

The latest economic bulletin issued by the Canterbury Chamber of Commerce presents and reviews a very interesting and encouraging collection of trade statistics, but contains, towards the end, a sentence which weights it against too easy optimism. "The disparity between " internal prices and export prices, " which has been an important fac- " tor in curtailing business," it says, ■' is less than it was in 1932, but it "is still serious." What is worse, the effort to lessen the disparity appears largely to have spent itself. It is a long time since any Minister, in a public utterance, applied himself seriously to the question of public economy and looked forward with the avowed purpose of pursuing it instead of back, with complacency, over the Government's record of savings and cuts. Yet, as we have shown many times, this record is illusory in an important respect. It is simple to add up the sum of reductions in public expenditure and produce a handsome total of millions. It is much harder t derive a similar satisfaction from a study of the revenue and expenditure figures, through the same period of years; for the fact is that the budget is not smaller, but bigger, than it was before the axe was put to its work. The Government has inclined always to think of its problem as fhat of " balancing " the budget," or as nearly doing so as possible; the real problem is that of balancing expenditure and means, and it has not been solved at all, while its obstinacy has almost ceased to be recognised. It is not, of course, wholly the Government's affair; it is the affair of producers, distributors, and consumers of every kind, organised or unorganised. But it i& largely the Government's affair, because the effect of excessive taxation on the movement of trade and the movement of prices is'not slight and superficial but profound and cumulative. The present financial year is approaching its close. The financial proposals for the next must already be under consideration. The most encouraging announcement that the Government could make would be to the effect that it had some immediate relief to offer taxpayers generally—which means, in the last resort, industry—but that its intention was to seek further relief in a fresh study of the problem of national expenditure. And, to avoid possible misunderstanding, we do not mean by that a fresh study of the scope for mere lopping and pruning in the thicket.