WELLINGTON NEWS

Hokitika Guardian, 1 August 1928, Page 3

WELLINGTON NEWS

TAXATION. ’ (Special to “ Guardian.”) WELLINGTON, July 30. Mr B. E. Murphy, Professor of Economies at Victoria College, Wellington, recently delivered a lecture on ’Taxation in New Zealand and stated empaticallv that “ with our present commitments there is no prospect of taxation being appreciably reduced in the Dominion for many years, if at all.” This is not very pleasant to contemplate, but it is open to doubt whether the position is quite so hopeless. The Professor says that “ the bane of New Zealand administration for the past thirty odd years has been expenditure by the State to an extent, and in directions which appear to me to ho extravagant. It seems to me that an even more urgent task at tho present time is to curb and curtail pub. lie expenditure than to reduce taxation.” This is very true, hut the difficulty is to impose a check. The commitments in respect to public works are much in advance of requirements, for we have engaged in works to cover the needs of double our present population, and it will he many years before that is accomplished. The Minister for Finance has stated repeatedly that when some of the works in hand, notably hydro-electric installations, borrowing would be reduced, hut those who believe that this course will he adopted will believe anything. The Consolidated Fund is drawn upon for all sorts of things, and though some of the items may ho small the aggregate is large. Even at present there is scope for reducing taxation. It has hetfonie the practice in connection with the budget to underestimate tho revenue and over state the expenditure, and the result at the end of the year is to how a surplus anil this surplus can he just as large as the 'Treasury officials desire.

The surplus comes in handy for rll sorts of extravagances, for unlike borrowed money no interest has to he paid on it. An effort must he made to put a stop to surpluses, and this could he clone so effectively that the surplus lor the year should pass automatically to the extinction of debt. U rev Mite from taxation is required tor capital expenditure then the details should appear in llte estimates so that the taxpayers may know wltal is being clone. If the Government has no power I > manipulate the surplus the I reasury would make a hotter ollorl at ha lancing the budget. The present method of dealing with the surplus is wrong in principle and merely leads to extravagances on the part ol the Government.

According to Mr Murphy, all taxation, whatever the basis on which it, was levied, was ultimately paid by persons out of accruing income. It was commonly thought that some taxes, such as land tax in certain instances, and death duties were objectionable on that ground, hut this was a fallacy. The only classification of great importance was that with direct and indirect taxes. Income, land and inheritance taxes or death duties were direct taxes; Customs duties, the amusement tax, mid some minor imposts were indirect taxes. Since tho workers paid heavily in indirect taxation through the Customs tariff without being conscious of being taxpayers, hut paid very little in direct taxes, they felt that they did not hear the cost of public burdens, and were consequently indisposed to make their political influence felt on the side of public economy. The Customs revenue received for the year ended March 31, 1923, "as "C 6,644.420, while for the past year the amount was £8,872,212. an increase of over £2,000,090 in five years. The total amount raised in taxation in 1922-23 was £15,59-1,288, and for the previous year it amounted to £17,115,115. The tax revenue for the past year shows an increase of 190 per cent on the pre-war year 1913-1911, and allowing for the war and post-war increases in prices of goods and services the expansion in the tax revenue clearly indicates extravagance. Dealing with the land tax. the Prolessor declared that the general effects of a tax must he distinguished from the incidence, and constituted a wider and loss determinable problem. I'roin the economic point of view the land tax was highly objectionable on several grounds. It offended against the principle of ability to pay. A farmer in a good season might make a huge income and .yet under the existing law he paid no income tax as such, and lus land tax might he a very poor equivalent to what his income tax would have been. This was unjust to other taxpayers. On the other hand in a hail year a farmer might make no income or even suffer a loss, and yet he was called upon to pay land tax when lie had no ability to meet taxation measured in the only possible manner bv his earnings.