The Evening Star FRIDAY, SEPTEMBER 16, 1927. A TAXATION REPORT.

Evening Star, Issue 19663, 16 September 1927, Page 6

The Evening Star FRIDAY, SEPTEMBER 16, 1927. A TAXATION REPORT.

Taxes and public finance have in the past been so much the shuttlecock of politicians that rarely has the still small voice of the practical expert or the economic thinker been heard, or, if heard, listened to. There are, however, possibilities of a new day dawning so far as Great Britain is concerned if the recently-published report of the Committee on National Debt and Taxation is going to win the attention it commands. Taxation Commissions do not function in a hurry. This ono was sot up early in 192-1. At that time, as at present in our own dominion, there were loud cries lor a induction of taxation and a feeling of pressure from the burden of the National Debt. On the other hand, a Labor Government had mooted costly changes and talked of a capital levy, so the Colwyn Commission was set up to inquire into tho National Debt and existing taxes, with special rcl'oroiico to their eflcct on trade, industry, employment, and national credit. The committee explains that with these directions it confined its extra researches to schemes like the .capital levy, limited its general study to existing taxes, and did not explore alternative services for fresh fields of revenue. It is to be regretted that similarly it omitted in its survey new taxes introduced while it was sitting, notably the MTvenna import duties, which were reimposed in 1925. The inquiry, however, has been a very exhaustive one. An elaborate questionnaire was drawn up and sent out to the leaders of trade and manufacturing and to those well versed in economic thought. Tho Commission itself held forty-eight sittings and called sixtytwo witnesses. On the Commission wero persons of such diversity of outlook as Sir Arthur Balfour; Mr Fred. Bramley, of the Labor movement; Mr W. L. Hichens, of Caramel!, Laird, and Co.; Professor Lees-Smith, of the London School of Economics; Sir Josiah Stamp, official economist; Mrs Barbara Wootton, ono of the brilliant younger economists; Sir Charles Addis, and Sir William M'Lintock, with officials of the Inland Revenue Department and of tho Treasury as secretaries. Valuable statistics were obtainable from tho Customs and Excise Department, the Board of Trade, the Ministry of Labor, and the Registrar-General. Both personal and corporate views were obtained from representatives of such bodies as tho Landowners’ Association, London Chamber of Commerce, Federation of British Industries, Institute of Chartered Accountants, National Union of Manufacturers, Trades Union Congress, Co-operative Congress, and Women’s Co-operativo Guild; also from tlio official heads of tho Treasury and tho Inland Revenue Department. The witnesses included Lord Bradbury, Sir A. Lowes Dickinson, Mr St. J. Loe Strachey. and a brilliant panel of the leading economists—Professors Caiman, Kirkaldy, Layton, M'Grcgor, Pigou, with Dr Dalton and Mr J. M. Keynes—who all went to great trouble to give their carefully-considered opinions to the Commission. And it is noteworthy that many of their views were vindicated and upheld by tho Commission, Tho published report, running to many hundreds of pages, might well bo taken for a study text book on public finance and taxation. It is in tho main a vindication of tho British system of taxation as it now is. In only two oases do tho Commissioners hesitate—tho sugar duties and tho stamp duties. They pick out tho former as tho first national tax that ought to go. Stamp duties, it is suggested, though the fact is not established, may interfere with the mobility of capital. Tho Commission finds no evidence of tho indirect harm often attributed to high income tax and death duties; and concludes that the people of Great Britain arc not yet beyond the limits of direct taxation as an efficient fiscal instrument. The unanimous opinion of the economists that income tax is not shifted and does not lead to higher prices to the consumer was endorsed, practically without reserve, notwithstanding the opinion of business men to tho contrary. The data at the disposal of tho Commission enabled this fact to be put to a statistical test, from which it emerged undamaged. Many statements put into circulation by those who feel themselves overtaxed arc classed as fallacies. No evidence, for instance, could ho found that post-war income taxes have driven individuals or businesses abroad on any scale worth troubling about, or that death duties break up businesses through the strain of finding ready cash to meet them, though the troubles of landed proprietors are frankly admitted. In short, the Commission considers that British taxation is not too high in the sense that it would not bo right to diminish admittedly useful expenditure on such things as education, social insurance, and health services, for instance, merely in order to reduce it. Tho committee’s final summing up is worth quoting: “ Tho burden of direct taxation, while wo do not wish to belittle it, is less crushing than is frequently represented. It docs not, with trivial exceptions, enter directly into prices, and its indirect effects are not such as substantially to affect the general price level. It has a materially adverse effect on savings, but this does not hold good so far as the receipts are applied to payments on account of the internal debt. Again, it has widely diffused psychological effects, and has been responsible for a good deal of discouragement, while trade has been suffering from long-drawn-out depression, due to wider causes; on the other hand,

somo of tho psychological effects have been actually beneficial. In our opinion tho present taxation—even in conjunction with tho loss of material wealth duo to war expenditure, which lies behind tho National Debt—is not one of tho main causes of industrial difficulty . . . So far as taxation is concerned, we think that, if general conditions improve and times become more prosperous, the burden will bo carried with comparative ease. Wo base our conclusions, not on preconceptions, but on tho long analysis contained in tho foregoing part of our report, in tho light of which they must stand examination. We may perhaps remark that the view we tako is more optimistic than the view which attributes to taxation a very large responsibility for the present industrial position; for, while there is little prospect of any great lightening of the tax burden hi the early future, there is legitimate hope that in many respects more general conditions botli at homo and abroad may improve.” Wo wonder what this Commission would have to say on our New Zealand public finance?