THE PUTARURU PRESS. Office Main Street. ’Phone 28 – P.O. Box 44 (Lewis, Portas and Dallimore’s Buildings.) THURSDAY, OCTOBER 2, 1924. TAXATION.

Putaruru Press, Volume II, Issue 50, 2 October 1924, Page 2

THE PUTARURU PRESS. Office Main Street. ’Phone 28 - P.O. Box 44 (Lewis, Portas and Dallimore’s Buildings.) THURSDAY, OCTOBER 2, 1924. TAXATION.

FROM any point of view taxation is an intricate subject, but perhaps its most puzzling feature has to do with the extent to which and the way in which taxes are passed on and diffused among the population at large. 111-advised or hasty changes only make the problem still more disturbing, and this may be a reason >vhy there is cause to wish that Parliarre&a would exercise more dispassionate and judicial conside*wfcie» than it usually upon the subject, Gaßy perith a curiously limited, distort- *&* or<<4 widish knowledge of econo- j that the burden is carby any small or limEven the wisest scholars, most astute lawyers and clearest thinking business men are unaware of the exact force and incidence in taxation. They merely know that taxes are an added complicating factor in the cost of doing business, necessary perhaps, but amounting to a large fraction of income. Also they know that to a very considerable extent these costs are spread out among the whele mass of Consumers, entering into the cost of living. Many taxes are not only passed on to the consumer but are intended to be. A good example is the amusement tax. This is actually paid by the concerns directly interested, but both by intention and in fact the sellers of the entertainment collect the amount of the tax from their patrons. It is likewise a matter of common knowledge that taxation on urban property is shifted to a large extent upon the renters of houses or apartments. If there is an over-supply of houses competition forces a reduction in rents, and the owner must swallow a loss and that loss may include his taxes. But in the long run the owners of capital will not build houses if the return

on the investment after paying taxes is unsatisfactory. But because in the long run taxes on this class of property are shifted to a large extent, . it does not follow that the amount of taxes is a matter of indifference to the owner. It is sometimes said tiffat if taxes are passed on there is no reason why the owner of property should complain of high rates. But the owner does not find it any easier to pay taxes in a very bad year, when profits are non existent, just because of the sound theory that in the long run he will shift them. In the application of the income tax commercially the shifting process is less clear. If prices are fixed by competition they may be set by smaller concerns -whose earnings are not large enough to pay taxes, or at least only negligible sums. If the richer concern increases prices to a point that includes its own _ heavy taxes it may lose business. On the other hand the small concern that increases its business through low prices speedily finds that its taxation increases and there must be a corresponding advance in prices. Every business concern seeks to be on the safe side. It may not be able to forecast the taxation for the current year but it can add the taxation of the past year with a little margin of safety, if conditions permit. Business is not philanthropy, and it would be strange if an individual or company in business that makes a profit fails to get back its costs, of which taxes are to be reckoned a portion. For the salaried individuals to pass on his personal income tax is not a simple undertaking. The professional man may be able in certain cases to increase his fees, but it is probably less actuated by the amount of income tax that he is paying as by the demand for his services. , But the average individual cannot pass on the indirect charge of taxation to any one. The only resort that remains for him is to put a higher price on the selling power of his labour, in other words to seek increased wages. The investor can only pass on the high income tax by increasing the rates of interest, and high taxation is synonomous vith high interest. The farmer is the class that has the greatest task fci transferring his share of the burden. EqualV/ affected with *>ther classes by the la«7 S of supply and de'mand, he is further handicapped by competition in the world’s market. He does not dictate the prices of his commodities, he has to accept the ruling degree of his profits or spending power affects the other sections of the community and adds to the complications that arises through passing on the burden of taxation. No taxation conjures revenue out of rate of the Home markets. But-the the void. Most forms of taxation have their merits, and because of this are apt to be overworked. But taxation is the form that authorities have of raising revenue. The more perfect or more smoothly running any system might be the easier the method would Government to increase its colwith the corresponding en-

hancement of revenue. Which might a very bad thing for the taxpayers of the country.