Finance and Economics

Hokitika Guardian, 7 May 1921, Page 4

Finance and Economics

(Exchange)

A contributor to tho Auckland “Star,” who writes under the noin-de-plumo of “Economist,” brings under review the financial legislation of tho Massey Government and finds it almost uniformly bacT We have made our own comments on most of this legislation, and we have indicated our reasons why we do not approve of it, but “Economist’s” brief and caustic comments should prove interesting to our readers because they take what may be termed a bird’s-eye-view of the whole situation. The first count upon which “Econoinist” frames his indictment is high taxation. While the rate of tax on company incomes is over 8s 9d in the £ in New Zealand it is only 2s 6d in ! Australia and only 6s in the United Kingdom. Yet,' unlike the Motherland and Australia, New Zealand came to 1 the end of the war with a handsome surplus of over £15,000,000. “Economist” points out that this heavy taxu- ' tion has to be levied from the general community, and is a direct cause of ex--1 cessively high cost of living. But the Government which came to

j,j vo New Zealand the messing* 01 “sound, economical and business-like administration” lias not rested content with imposing a burden of taxation which the Prime Minister himself in a lucid moment, characterised as “staggering.” During the war, and after the war was over the New Zealand Government went back to the days of the Tudors and Stuarts and levied forced loans, a step which even the Labour Governments of Australia refrained from taking. As “Econmist” points out, the Massey Administration added to the “staggering” "burden of the tax-

payer in one of the most difficult cears in the financial history of the Dominion by compelling him to pay £IOO for Go\ ernipent stock which was worth only from £B7 to £9O on the Stock Exchange. Hero again the loss had to be borne bv the general community from whom the traders and trading companies. who pay about 75 per cent, of the income tax draw their revenues. A further impost was placed upon the community by the extension of the moratorium on mortgages, which should have been lifted when money was plentiful and before land values had commenced to decline, and by the discriminative application of a further moratorium debarring persons who had deposited money at call with municipalities of commercial firms from the right of recovering their deposits. “Economist,” in comment upon this, which he terms “the final act of folly,” says: “Tn common justice, if the financial condition of the country demanded a cancellation of commercial agreements the law should have, been made operative all round. There is no essential difference between advances at call by banks and advances at call by private persons, and no reason wbv a tiadei who sellii goods on credit should icceiie payment at the date when his bill is duo when a person who lias given credit for monetary advances is being deprived of his legal rights of recovery. ADD FINANCE AND ECONOMICS. “Economist” adds that this rough interference with commercial agreements has absolutely cut off the supply of temporary loans, with the result that when finally these claims have to be settled the firms holding the deposits will find themselves without means for repayment save by the issue of preferential

shares are debentures at high rates ol interest, which will bo again represented in a further increase in prices and the cost of living. Finally “Economist condemns the system of food subsidieswhich, he says, merely means that the gas companies aiul others have to raise the price of their products in order to pay the high taxation necessary to conceal the real price of bread and butter. We commend this criticism, which we

have very briefly summarised, to the attention of business men and others who are more interested in the results of political policy than in the principles, or lack of principles which went to frame that policy. For our own part we may he suspected of politic:, bias. It has been said that in polities the parties may be divided into two sections, those who “point with pride” and those who “view with alarm.” In New Zealand just at present all parties seem to fall into the latter category. It may ob that the sequence of events out-lined by “Economist” has something to do

with that tendency 7 . For once in a way we will abstain from the temptation of pointing a political moral.