"FANTASTIC"

Evening Post, Volume CXVII, Issue 145, 21 June 1934, Page 12

"FANTASTIC"

MR. COATES'S COMMENT

Commenting on the statement of the Importers' Federation, - the Minister of Finance (the Et. Hon. J. G. Coates) said the statement contained fantastic miscalculations as to the allegedly enormous financial cost of the exchange rate adjustment. Eegarded as a whole, the calculations were in fact so fantastic that they carried their own condemnation, and it was needless to comment generally.

"Some points of comparative detail may, however, be mentioned," said Mr. Coates. "First, the sales tax is brought into account as an 'indirect cot-.t' of the exchange adjustment. -It is no such thing, and -repeated false assertions to the contrary have never been substantiated. If the federation, or 4ny other persistent critic, would take the trouble to ascertain the facts they would sco that the former Minister of Finance (the Hon. W. Downie Stewart), while not in favour of the exchange rate adjustment,, stated explicitly that the sales tax did not result from the variation in the exchange rate. To quote his words from 'Hansard,' Mr. Stewart said:.'lt would be unfair of me not to say that, apart from the raising of the exchange, so far as I had an opportunity of looking at the position, either a sales tax or some heavy alternative taxation would have had to bo imposed to cope with the deficit that was in prospect.'

"The federation has also made an obvious blunder in simple arithmetic. The direct cost of the transaction they

allege (quite inaccurately) to be £7,000,000 odd. To this they proceed to add .£1,800,000, being the proceeds of taxation which they argue- to have been made nccessaiy by the transaction. For what reason these figures have been added together it, is impossible to conceive. Their own argument is that, the direct cost has been £7,000,000, of which £1,800,000 has been met by new taxation; and these two sums are solemnly added together to show an inflated total described as 'direct and indirect costs.' It is simply nonsense. It is on a par with arguing that the year's public expenditure is £20,000,000, the taxation is

£20,000,000, and that the cost of gov eminent, is therefore £40,000,000.

"The federation expresses fear that inflation will result from the transaction to which, with such inaccurate arithmetic, they take exception," said Hi. Coates, in conclusion. "When this word is used it would at least bo interesting if the federation would say precisely what it rnpa.ns hv inflation,"