The Tax Burden

Hawke's Bay Herald-Tribune, Volume 81, Issue 23, 20 October 1937, Page 9

The Tax Burden

RATES CGMPARED How Far Do Minister's Figures Apply? d0mini0n & britain When speaking in defenc© of tlie present weight of taxation in New Zealand, the Minister of Finance made a number of statements in the House on October 13 which call for comment (says a statement by the Associated (Jhambers of Commerce of New Zealand). ' The Minister made comparisons in the matter of tbo income-tax paid on certain incomes in England and New Zealand, and said that in certain grades the British rate was ^lightly more than in New Zealand. ihat is so but the Minister did not mention that British revenue from income taxation represents 34.7 per cent. of the total taxation revenue foa: the current yaar, while in New Zealand such collections represent 24.7 per cent. of total taxation revenue. The Minister cannot establish that Engjish taxation is greater than Nkw Zealand merely by quoting comparative rates of incometax where such English taxation is heavier. It is also the case that tax rates on certain other grades of income are considerably beavier in New Zealand than in the United Eangdom, but the fact that New Zealand rates of income-tax so closely approximate those in the United Bongdom, at the same time as New Zealand collects 75 per cent. of its taxation revenue by other means, as compared with 65 per cent. in the [Jnited Kingdom, only serves to emphasise how heavy New Zealand income-tax is in proportion. indirect Taxes. . Th©n . the Minister said that in New Zealand income-tax on £500 (man, wite and two children) was £12 9/8, and that ih South '■ Australia it was £22 0/8; but- he did not explain that, in South Australia, funds for unemployment refief are secured by iucreased income-tax rates. To mako a true com • parison-v- in- • this case, tho Minister .should have.adfied £17 13/4 unemplpyment taxes to the income-tax payablo in New Zealand on £500. This. inakes a- v^ry big ditt'erence, tlie two taxes on the £500. man then being actually £30 3/- in New Zealand and £22 0/8 in Soxith Australia. (In the United Kingdom, income-tax on £500 is £8 6/8, as compared with £12 9/8 in New Zealand). Again, the Minister omitted to state that taxation from all sources in riduth Australia was equivalent to £6 0/6 a hj*-d in 1936-37, plus £9 4/9 *a bead Commonwea.th taxaiibn— >a Total *#f £15 5/3, as compared with £19 14/10 a head New -Zealand taxation for the same year (including unemployment taxation ih. each case). The "person, .jvho . pays np income-tax cainnot escape" paying irfdireotly his share of ctlifer taxes, which are equivalent this year to £57 10/8 an average "family of four in New Zealand, as compared with £46 5/- in the United Kingdom. Some families will -pay less, others more, than this, in each case These taxes are reflected in higher prices for goods, commodities and services. This bill for indirect taxation has grown on an average family basis, as foilows: — Year 1929, £39 ft/3; 193536, £48 8/3; 1936-37, £51 9/9; 1937-33, £57 10/8. Unemployment Taxation. Anothei point made by tbe Minister, in support of his statement that United Kingdom taxation was heavier than New Zealand, was that if the wages tax were to be taken into consideration in New ^ea jand thiere ?would have to be an addition made for unemployment insurance payments }it England; also that taxation was levied in New Zealand to cover all services, whereas in England the local aathorities had to tax to pay for services which in New Zealand were the responsibility of the central Covernment. However, one can leave Out of consideration both the £5,180,000 to be raised in New Zealand this year for unemployment purposes, and the unemployment insurance ' payments in England, and the position still is that the remaining taxation is equivalent to £19 2/2 a head of the population of the Dominion, as compared with £17 14/5 a head in the United Kingdom, for the current ' financial year. There is small point to be made in the taxes raised by local bodies in Kngland, because while the amount so collected in England and Wales in 193536 was equal to £4 0/10 a head, local bodies in New Zeaiand collected the . equivalent of £3 18/9 a head in the same year — the latest year for which figures are available in either case. The position, tliareforc, is as foilows ; —

O&fence Experuliture. The figure of £17 14/5 for the United Kingdom is an official Government return for 1937-38. Figures of taxes collected by Scottish, lccal bodies — wliicb would be an addition to the £4 0/1C given above — are not available for years past. ' In this comparison, an importanl point not to be forgotten is that, oi the total United Kingdom expenditur this year, £198,268,000 is for defenco services. This is equivalent to 23 pei cent. of the total British Budget expen diture, whereas only 4 0 per cent. o the Budget expenditure of the Nev Zealaud Government fcr Ihe curren year is for defence purposes, Finaliy, the Minister named certaii

Stato organisations which pay taxation, but omitted mention of those which do not — to which latter class are to be adderl loeal-body trading concerns, lt is highly disturbing to not.e that the Minister generallj confined himself to defending the preseht oppressive weight of taxation on industry, commerce and the individual, and did not mention whon taxation is to be reduced, if at all. ■

United New Kingdom. Zealand. £ s d £ s d State .... 17 14 5 19 2 2 - Local body 4 0 10 3 18 9 Totals ... £21 15 3 £23 0 11

TAXES A HEAD. (Excluding Unemployment.)