CRUSHING TAXES

Hokitika Guardian, 26 May 1931, Page 2

CRUSHING TAXES

EFFECT ON INDUSTRY

NEW SOUTH WALES TO-DAY

Striking illustrations of how the crushing taxation of the wealthy in New south Wales is drying up the sources of capital were given by a pr'ominient Sydney business man m an interview at Auckland. “A man with a large income would find it much nioie convenient if the Government would take the whole of his income and allow him to live on the amount that he pays in taxation,” he remarked in all earnestness. To illustrate his point, the visitor from Sydney quoteed the case of a certain well-known business man with an income of £65,000 per year. His total taxation amount to 17s 6d in the £, with the result that, despite his apparent great wealth, he was left with an income of approximately £BO>X). Under normal circumstances that man lived in a magnificent home in Sydney employing some 20 servants and 40 gardeners, The crushing taxation now demanded meant that he could not live iu Sydney iit the Usual I‘flte of expenditure, and he had been obliged to dismiss the ivhdie of iiis .staff with th@ cxceptioii of two servahts to iobk itftOi' iiis lloiise and two gardefcers to barb for his grounds, while he himself had gone into, country residence .some distance out of Sydney. “There aro very many professional men in Sydney-—architects, doctors, lawyers—whose incomes this year will he cnlv from one-quarter to one-thenth what they were a year or so ago,” he said. Professional men who perviously had an income of £IOOO a year would not make sufficient money this year to pay thei rincome . tax of last year. “Take,” he said, “the case of an architect who until recently had an income of £2OOO a year. During thelast eighteen months lie has had no income, there ,is no building in New South Wales ,and he probably possesses n« assests, having previously lived up to his income. As a result he must buy a small farm or allotment for about £3OO, and grow vegetables and keep a, cow in order to save his wife and children from starvation. Cases like this are actually happening and they are not rare.”

• NUMEROUS TAX DEMAND. i. on the channels through iv Inch money paid in taxation -passes , the visitor instanced the > case of a man with an income o* t ,wOOO. In income tax lie paid 5s 2d > to the State Government and os Xa ■ to the Federal Government, a total of 10s 4d. Then there was Is in the £ unemployment tax paid to the ktate ’ Government, and 3d in the £ unenw ployment tax p-vid to the Federal Govand a childhood endowment ’ tax to the State. On top of all that expenditure he had to find myney for i iiis land tax and ordinary municipal rates. Companies were being affected in the same way as private individuals . One company, which■ would be regarded by the public as being very financial, had made a profit of £32,000 for the past financial year. Their balance-sheet, however, showed the following items: Reserves for taxation, £21,000; reserves for depreciation on investments (including Government loans), £6OOO. That meant that out of a profit of £32,000, as at first' disclosed, there was left the sum of £sooo'to be divided among four partners. “The outcome of the whole thing means, the unemployment of a tremendous number of individuals,” said the jydney man. “No firm bled white by .taxation has much money to pay in I wages, and the natural iresult is a, (‘eduction in staffs.” He here quoted the case of one large company in New r south Wales. During the course of the past seven or eight years the average nay-sheet of the company was between'£sooo and £6OOO per week, but to-day it was not £SO per week. Tnat was only a typical case of a business connected with one of the key industries.

tries. Until eighteen months ago condition! ip Inbw South • Wales Were comparatively normal, but to-day there were practically no companies making profits, or individuals with incomes which were sufficient to pay the taxes on their last prosperous years. A conservative estimate of the amount of unemployment in New South Wales was 33 per cent. It was reasonable to assess the number of Civil servants as somewhere in the region of one-third of the total unemployed, which meant that about two-fifths of the whole of the population of the State was working to keep the Civil servants In employment and to pay the unemployment dole. “NEW ZEALAND GOING SAME WAY.; 1 “The dreadful thing is that New Zealand is going the same dangerous way as Australia was a year or so ago,” said the Sydney visitor. “But I honestly think that you in New Zealand will benefit from Australia’s experience and avoid" the trouble that the Ooniiiionwealth lias got herself info. Nevertheless it was interesting to note that the whole conditions in New Zealand today were exactly similar to those which prevailed in. Australia about two years ago, when the depression first appeared. The debt per head of population in New Zealand was actually niore than in Australia.

“I sincerely hope that New Zealand will see the folly of her ways and admit the correctness of Sir Otto Niemeyer’s advice. .Sir ; Ott’o’s advice was not followed in Australia, but there is now a big feeling there that what he saul was right.” . The thing to do was to balance the country’s Budgets. It would be necessary to decrease the cc-sts of production in order that New Zealand primary products might be sold in competitive markets at such prices as would allow the farmer to make a fair livelihood. The savings of New Zealand would prolutbiV be due to the fact that unlike Australia, the country was not building up huge secondary industries with terrific import duties, having very wisely limited her tariffs to purely revenue producing ones. QUEENSLAND’S POLICY The brightest spot in Australia at the present time was Queensland, where the unemployment figure was 8 per cent. Queensland’s better position was due to the far-seeing policy of the late Labour Premier, Mr Mac Cormack, who laid it down as his policy that there should he no external borrowing while he was in office. Exports exceeded imports by approximately £lO.000,000, although the State certainly benefited to the extent of £1,000,000 by sugar bounty. The great lesson to he learnt from Queensland was that, comparatively speaking, she had no secondary industries to subsidise with heavy tariffs, and wisely she had reduced the costs of production until they were approximately equal to 1912, or pre-war figures. After paying a tribute to the Australian workmen, the Sydney visitor said that Ausgtralia was bound to pull through eventually, because of her enormous wealth. It would be necessary however, for th eccst of production to be decreased by about 25 per cent, and the country to receive a normal return for her wool and wheat.