BLOW TO FARMERS

Gisborne Herald, Volume LXVI, Issue 20006, 3 August 1939, Page 10

BLOW TO FARMERS

TAXATION IN BUDGET KEEN DISAPPOINTMENT PRICE RISES LIKELY MR. MULHOLLAND’S VIEWS (Per Press Association.) WELLINGTON, this day. The Budget was an intense disappointment to tile farmers, wlio. had .been encouraged to look for a lightening of the burden of Government expenditure, said the Dominion president of the New Zealand Farmers Union, Mr. W. W. Mulholland, in an interview yesterday. In view of the recent suggestion by the Minister of Finance, the Hon. W. Nash, to farmers that they should be content to forgo increases in prices as part of the policy to stop rising costs, it was natural for them to assume that the Government would take its own medicine, he said. “The huge increase in petrol tax, for instance, means a considerable addition to farmers’ costs. It means an increase of about 24 per cent on the cost of petrol for farm power purposes. As farmers are also large users of transport, both on and off the farm, they will be substantially affected, in this manner also. “They do not suffer alone in this, however, as all people living outside i the main centre whose cost of living and of carrying on their business is also considerably influenced by transport costs, are similarly affected. This tax, as a means of raising the general revenue, is particularly unsatisfactory in that, while being a direct addition to the costs of production and the cost of living, its incidence is much more severe on people living in the country and in provincial towns, than on those living in the cities. “Injustice” Extended “Mr. Savage justified the proposal to abolish the exemption of farmers with £3OOO or less unimproved value of land from income tax, by saying the effect will be to place farmers upon the same basis as other sections of the community. “Actually, it extends still farther the very grave injustice from which the farming industries have suffered for some time in that, unlike other sections of the community, they are required to pay tax on their land at the highest rates ever imposed in addition to income tax, and are not even allowed to deduct the amount of land tax from the income bn which they ’ will now have to pay income tax. To : free them from this injustice, it will j be necessary to abolish the special taxes on their land, which are taxes on the means of producing their mar-, ketable products.

“The enormous expenditure of practically £24,000,000 on public works is dismaying. Apparently it is to equal last year’s expenditure with the defence expenditure of £2,000,000 added. It would appear that the Public Works Department is going to bemade to take over the expenditure previously made from the employment fund and, apart from defence, it is apparent that a great deal of expenditure on public works is going to be | used for the relief of unemployment. A Sinister Aspect “The most sinister aspect of this is that £.19,000,000 is to be financed from loan moneys. The effect of the Government’s taking this huge sum from the resources of the Dominion, and, consequently, from private expench- | lure, to be expended on works which are largely unproductive and frequently valueless, must be to perpetuate unemployment. “Money expended by the Government in this way does not reproduce itself, while, if it is left in the hands of private individuals to use in productive enterprise, produces more and more employment as the resulting goods move in the channels of commerce and production and generate the production of other goods and services. “The terms of the £17,000,000 loan transaction appear to require that of our exports in the next five years, £16,000,000 will not be available to the public of New Zealand as consumable goods. j “The £5,000,000 to be spent on the Oneßaka project and the expenditure of o‘her millions on plant will also be a direct reduction of the consumable goods available in New Zealand, so that the public must expect a severe shortage of goods and this, added to the huge inflation of lccal money, partly due to pay out of New Zealand money in New Zealand for exports which do not bring in consumable goods, must result i ! -n enormously rising prices. The difficulties of the export industries are not lightened by this Budget.”