TAXATION SPIRAL

Manawatu Standard, Volume LVII, Issue 214, 10 August 1937, Page 3

TAXATION SPIRAL

\ COSTS OF GOVERNMENT. OUTLOOK FOR TAXPAYER. The gilt on the review by the act-ing-Minister of Finance of the substantial increase in State revenue for the first quarter of the current financial year is taken off by the concurrent and substantial expenditure increases shown in the annual votes, particularly under the heading of social service (says a statement by the Associated Chambers of Commerce of New Zealand). There is little satisfaction to the taxpayer in swelling State revenues with gruelling taxation, in the knowledge that he lias small prospect of taxation relief, but is only preparing further rods for his own back.

The Minister could have dealt much more fully than lie did with the further expenditure necessary to meet a full year’s charge for increased pensions, which, together with- a full year’s charge for the restoration of Public Service salaries and wages, and reduced working hours in various State services, will necessitate additional expenditure this year of something in excess of three-quarters of a million pounds. The Minister could also have mentioned the taxation which will be necessary to float the pending national health insurance and national superannuation schemes. However, these things are not all. It is now reported to be the intention of the Public Service Association to seek increased salaries in the Government service as soon as the present investigations into general regrading are completed. The official organ of the association says “it lias to be borne in mind that the existing salary scales are below- the scale levels which existed in 1920, and that in view of the mounting living costs the restoration of 1920 salary scales would be fully justified as a bare minimum.” Here is emerging another consequence of recent legislation. Without entering into the merits of the Puhlie Service claim, the position of the taxpayer is that lie has had to pay an extra £5,687,000 in taxation in 1936-37 over the previous year to provide lor expanded Government services. Part of this money was needed to pay not only restored salary and wages cuts, but also salaries and wages to a considerable number oi the 3700 additional employees who were added to the State pay-roll. Jhe Public Service Association, basing its case on mounting living costs, is now preparing to secure improved salary scales, which will mean another bill for the taxpayer. In 1935-36 the total salary and wages bill of Government employees, in round figures, was £11,000,000. In 1936-37 it went up to approximately £13,000,000. The figure includes salaries and wages in respect of employees of a number of Government departments which are no charge on taxation, such -aS the Post Office, Public Trust Office, Government Insurance Office, etc. Salaries and wages actually chargeable on taxation in 1936-3/ totalled approximately £5,710,000 net. An addition to this would be a sum in respect of the railways, which do not pay full interest on capital, the balance being a charge on taxation. (The amount paid by the railways toward interest on capital in 1936-37 was £147,000 less than in 1935-36.)

TAX BILL UP 40 PER CENT. All things combined, the-taxpayer is being forced up the taxation spiral, and his prospects of relief are negligible under the present rate of Government expenditure. As regards Public Service salary scales, the country must have a Public Service, ami the members of it should be paid as well as the country can afford in relation to the’ services rendered. The Public Service Association can be expected to put the case for the Public Service to the Government ably enough, but it should then be for the Government to consider very seriously a few facts, namely, that in 192021 (to which year the Public Service looks as regards salary scales) there was a considerably smaller Public Service; that the cost of government in that year was £28,000,000, as compared with £34,885,000 in 1936-37; that the population of New Zealand has increased by 25 per cent, over 1920-21, but the amount raised in taxes has increased by 40 per cent. There is a limit to taxation —the Government said it had been reached before even to-day’s level was arrived at —and the position then is that if expenditure is increased in one direction it must be made up for by a reduction in expenditure in some other direction. The Public Service makes the plea that laws are thrust on it by Government and Parliament to administer, and that this inevitably • leads to an expansion of Government departments. There is no question as to the validity of this argument, but the Public Service Commissioner, in Ins annual report to Parliament in 192 b, after saying that legislation and the work of post-war reconstruction had necessitated considerable expansion ol staff, went on to state: “In addition, there seems to be a tendency on the part of some departments to endeavour to expand their operations and staffs, the reasons for which are not so apparent.” . Can the present Publm Service Commissioner say if there is any similar tendency to-day? Has he any comxnent to make on tne wholesale additions that are being made to the ranks of the Public Service? Has he considered that the interests of the Public Service, which is rapidly expanding for whatever reason or reasons, may be prejudiced in the eyes of the taxpayer, who would prefer to see a service of moderate size, adequately remunerated? the Associated Chambers ask.