DECLINE IN INCOME

Rotorua Morning Post, Volume 3, Issue 688, 14 November 1933, Page 4

DECLINE IN INCOME

One of the most significant features of a budget which was not particularly notable for its •significance, is the continuing decline in income tax. Last year the amount of tax collected decreased by £891,000 and the Minister of Finance is making provision for a further decrease of £857,000 again this year. This represents a total of £1,748,000 in two years, while this year's estimated decrease is over onethird of the total estimated income tax revenue of £2,700,000. These figures not only represent a very serious charge upon taxable revenue, but they also clearly indicate the difficult plight of commerce and industry. Incomes derived from these sources have been increasingly affected by decreases in profits, the decline in or total extinction of dividends and the increase in ! taxing charges. Men on salaries have had their earnings decreased by enforced reductions, while the Government's forced reductions in interest on loan and local body investments have affected another very large class. It is plain from the Minister's estimate of the position that the Government is realising that there i are two sides to the lowering of ' interest rates. On the one hand, | relief is afforded the borrower j but 011 the other hand the tax- ' able income of the lender is re- 1 duced. It still remains to be j seen whether the amount of this j decrease may not largely offset ■ the relief that has been afforded j — so far as the Government's 1 purposes, at least, are concerned. This decline in income tax cannot be lightly disregarded for it indicates a steady falling away in the main sources from which the eountry derives its wealth j and prosperity. It indicates that j in very many cases, the limit of ] taxable capacity has been reach- | ed and that a stage of diminish- | ing returns has now set in. When matters reach this stage, it is time for the Government to in- | vestigate the position and ascertain whether it is not defeating i its own ends by maintaining the | present burden of taxation. It is true that Mr. Coates' budget does not propose any taxation increases, but it must be remebered also that the stamina of industry and commercial enterprise has been severely tried j during the past few years and | that it cannot be expected to gain strength until it is given a j rest to enable it to do so.