WELLINGTON NEWS

Hokitika Guardian, 30 July 1930, Page 2

WELLINGTON NEWS

>V- if ■' ' TRADE AND TAXATION,

. (Special Correspondent.)

WELLINGTON, July 28

Tlie * Witer' ! lias had a quiet talk ■with a sound business, man on economic conditions, and ? particularly ■ oil the new increases Jn taxation. He pointed out that' the; "dedii ne •; in itfle values of r; our. ; primary products v in world markets lrajS reduced the ‘ national income, for • our-iiicome is derived from what* w0,,,' sell overseas, less wlia't ; :''ive' buy,'pips'- pur'- other commitments, such as interest' - oh public and. private indebtedness. Tlie balance remaining, if any, is our revenue. Some people think that when the exports exceed our imports that all is well, quite overlooking the fact that these other payments have to be met. M"'" :

To meet ,allv oußkoiitside f engagements the excess of exports over iinp’orts should. "'’a/pproximate -Ho £lO, 000,000. 1 ; • This excess, lias'not been obtained in recent, years and we have made good the deficiency by borrowing overseas. We have in fact been over spending and living on capital. Now with the drop in produce prices and the reduction in the national income, ; we have not the funds to employ of ! ; labour ■ and that is why there is.so much unemployment. If the'Hall in commodity values is only temporary, then unemployment will disappear as*-soon as prices recover and the national income increases. There- lsj,,J]Oweverj, .no. im-j mediate. ..-prospect ofany recovery, consequently^doles for unemployment are palliatives., arid! not purgatives. ' At la ytime' when |tne' national in--come qs,ffeul|Eatitialiy reduced, and with lis»e,pctoance of the position improving, - .tlie' Government of the day lias found’lit necessary to .sburden the community^.,jyvitli additional taxation. This of ■course, is sound according to the theories!; of public finance, still the increased taxes will lmve,. a- detrimental eJfqOtj Lbn. trade and- industry, and >; }lhieoeffert ! ;of, further ,reduc-‘ ing the. ;4pfepd][jiS, of the'people. Wheri t^e '4kre'qsed|;G U£to ' nis diities were Announced yj)ieilington member of. Association made 'tiiat. the “taxes would llarih.” t H-i$ taxation, was .to tli.e'j of indostryj. |{' Evervbody. -linew,. or ought ijo'kn,ow,' tlifit-’inie Pf...the'" greatest essentiais ,;,tp|. prosperityin.. busi-: ness,:"'t|h|i'tqver 'business it’’might 1 be, wats-; Hhe ,'.!cr'oat|6n : •of • reserves, and it is obvious that when ■ a large percentage qf‘the/profits earned , a busilifoss, 'wbitfer HmCj#' a pany or/iiuTividuaßy owned liad to be paid in taxation as a first' charge there ' was. little opportunity left to,build up reserves, ■ r every business to meet contingencies, to keep the business up to date, and to provide the power to ..expand. It was the putting back into a business of a large proportion of the profits as possible, that, ensured success; it was the^’paying but of fob large a proportion of the profits that weakened it. Reserves were infinitely preferable to borrowed capital.

This business man further emphasised this view quoted from the report of a sub-committee of the General Federation of Trade Unions (Britain)., It said:,“That excessive taxation- has'ipsycologieal consequences and weakens /the ..will; to save seems to be demonstrated by the growth of spendthrift hints amongst the richer membersJbf the community.” ' It is to 'be hoped that Parliament has now' realised .i that the people of New Zealand., arte as heavily taxed as the peoples of most other countries, -and this business man' was of the opinion that it will he a long time before the taxation now imposed, is remitted, and he is of that op in-, ion because the basis of our public finance is wrong, and there is a misconception too on the part of .;': typ: public as%q..t^er : functions of tbebGpyeminent.,. A'b' 'jt AVith respect;to the public accounts, he expressed "the. conviction that ;the surplus ’df'^a,'-year should. l>e placed beyond • %,' c 0 ritv : ol of the, Sinister of Finance, but should pass automatically ..to the Debt Commissioners for the reduction of debt;}; When there is u deficit or an expected revenue shortage as just now, the deficiency is made" up by . increased taxation but when there is a surplus the taxpayers should get the direct benefit through the reduction of the national debt. In the, past surpluses have been used by successive governments for buying- votes, and the Treasury has made a‘. practice of over estimating expenditure". and under estimating revenue 'ib'Aproduce a surplus. Another matter that this business man referred tp .'waa the absence of any proposalr-’to TeduCe costs of adminisHe thought ' salaries and wages be lowered provided the cut commenced with ministers and members of Parliament.