EFFECT OF WITHDRAWAL OF SUBSIDIES

Chronicle (Levin), 9 January 1947, Page 6

EFFECT OF WITHDRAWAL OF SUBSIDIES

Eeceived Wednesday, 7 p.in.

SYDNEY, Jan. 8. Pollowing tlie recent aimouneemenfc of the increase in the price of to'bacco and cigarettes come antlioritative stateniients t'o the effect that this is only the first of a series of price. jolts to the public. Tlie increase was necessitated, according to the Government, by tlie withdrawal of tlie subsidy paid to manufacturers aud producers or importers to keep down retail pxices. The subsidy system caftmot be dcscribed as au eflicient system of price control as its benelits are largely illusory. Money paid to tlie manufacturer by the Government has to be obtained.by taxation from tlie pocket of the eonbumer. Thus the citizen should be pleased to see the subsidy go if it did not meaii au immediatc increase in indirect taxation. Anthoritative sources state that in the drustic amendnient of the system imported articles will be first alfected. Nearly £3,000,000 annually is being paid as a subsidy on imported goods, exclusive of a similar amount "whiefi helps to keep tea prices stable. The loss of the tea subsidy would mean a rise of more than ls a Ib-in the price oi tea. With this forecast and 'tlie knowledge gleaned from the Minister of Customs (8enator Courtice) that the Government wauts to see the end of the subsidy system, the taxpayer looks askauce at what is happening to tobacco. "Taxpayer Palls In" The common view is voiced by Mr. Menzies, the Leador of the Federal Oppositiou, who comments: "It, was hoped that a lower price for the subsi disod commodity would compensate the taxpayer for the liigher tax. Wlien the subsidy is withdravvn up goes the priee. The taxpayer expeets to liave taxation iowered by way of compeiisaLion, buti Lliat is where he falis iu. The tax eontinues at tlie same ievel and tlie citizen, as usual, gets it in the neck both vvays. " At the same time olficiai figures diselose thal the Government expeets to receivc from Customs and excise 011 tobacco and cigarettes £3,000,000 more than last year. The total gain to tlie Treasurv' is £23,750,000. The subsidy paid 011 Lobacco has reached only a few hundred Ihoudand pounds a year and this year would liave totalled £1,000,000 at t'he outside. The citizen has the ofliciai figures fco show that at December 31, with half the iinanciai year gone, tlie Customa and excise revenue was already £2,746, 526 above Ihe estimate for the entire year. Tlie Press and tlie publie, alike are at a loss to uuderstand what Mr. Menzies describes as "the thinible aud pea aspect of Government finance." The 8ydney Telegrapli says tliat tlie increase in the tobacco price ia illugieal because il does not follow Mr. Chifiey T staled policy of keeping down prices wliile relieving the taxpayer of burdens ' linmedi'at6i}MlfhiY" befeomes possib'le. The paper comm^ic|§Lthat.. subsidies should go, but not at'the price of lieavier taxation. VVifh reveuue pouring inlo tlie jTreasury iu uiipreCedeirLed . quan.ti.ties Mrij ChiflHy". cadLi cp^tai,filV . .alford- to give -a'.^axf b'tit" of r20 cent. Why he delays ; tluit db j'io usly ' possible afiil; popUiar iliove'-isl liard to underiltaull. Is he reluctaiit pArhap's Lo 'proye: tlrat Mr, Menzies , was . riglit- wllen 'lie' said that. the uut; 'was |)ossi,bie? "