OUT OF ONE POCKET

Rotorua Morning Post, Volume 3, Issue 648, 28 September 1933, Page 4

OUT OF ONE POCKET

Mr. W. A. Veitcli's bi-11 to repeal the Banks Indemnity (Exchange) Act has disclosed a very powerful argument in favour of the movement to restore the exchange to its normal level. It is evident that the whole of the money which goes to assist the primary producers through the increa,sed rata is collected inside the country. If it,came from outside sources, the position would be improved, but as it is it is simply depriving Peter of something in order to pay Paul. Actually not a shilling is contributed towafd the exchange fund from outside sources. The position, briefly, is that any increase in prices that may be brought about as a result of depreciating the currency, is provided entirely by the levy of 25 per cent. made on all imports. This levy is paid entirely by the New Zealand importers who in tuni ,are forced to pass it on to the consumer. So that once again the vicious circle resolves itself and the consumer pays. It is, of course, a disguised method of imposing taxation upon one section of the community in order to benefit another. But this particular method has made New Zealand's position overseas very difficult and there are a number of unpleasant reactions which must be taken into account. It is doubtful whether the country will ever be told exactly [ what the Government will be required to find in increased interest as a result of the increased exchange rate, but an indication may be taken from the experience of one very much discussed body — the Southland Power Board. After first deciding to meet its committments in sterling, this board has rescinded its original motion and has decided to pay in New Zealand currency. The difference amounts to £20,000, and in the case of the board, it would be paid chiefly by its rural consumers throughout the Southland province. This is a typical example of the manner in which the raised exchange puts something into the farmer's pocket that it has already taken out of the other. As the exchange proposals were originally advanced, it appeared that the additional millions paid on London prices would be derived outside the country. But this is not the case. Actually the raised rate imposes an additional tax of 5 s in the £ on imported articles and this additional tax is paid by the New Zealand consumer — in which class the farmer is ineluded •along with everybody else. In the light of these circumstances, the wisdom of the Government's action appears to be distinctly doubtful.