Is Taxation High?

Sun (Auckland), Volume I, Issue 292, 1 March 1928, Page 11

Is Taxation High?

Minister Defends Government’s Revision Of Tariff Schedule Fluctuating Customs Yield (Special to THE SUN) DUNEDIN, To-day. TO say that taxation in New Zealand is £.12 5s 7d a head is no indication of whether taxation is high in New Zealand or not. . . . The real fact is that an examination of the rates of taxation, as apart from the yield of the tax, whether it be customs, land tax or income tax, will show that taxation in New Zealand is low as compared with other countries.”

iJiHIS is the assertion of the Minister

t of Finance, the Hon. W. Downie Stewart, who, in a speech delivered here last evening, defended the Government’s administration in taxation, and claimed that the remission of the income tax schedule last year effected an adjustment of basis of taxation only, and, when offset by customs taxation reductions, did not mean increased revenue. The real burden of taxation, the Minister said, could he measured only by the actual rates of taxation and not by the aggregate yield of taxation divided hy the population. “In the last ten years the Customs revenue rose from £3,500,000 to over £9,000,000,” he said. “Butin the same period the value of imports rose from about £25,000,000 to £49,000,000, which is in a far greater ratio than the population. This does not mean, however, that Customs duties have been trebled. We know, as a matter of fact, that the actual rates of taxation have been reduced. SOUND COMPARISONS “If we wish to see whether (he people of New Zealand are highly taxed through the Customs the only sound way is to compare the actual rates of duty imposed on articles imported into New Zealand with the actual rates of duty charged on articles imported into, say, Australia. “But there are other items that are incorporated in order to arrive at the taxation per head in New Zealand, such as Land Tax, Income Tax, Decith Duties, Totalisator Taxes and other taxes. Taking each of these in turn, how can it be argued that the land tax in New Zealand is high, when out of about 80,000 farmers over 55,000 pay no land tax at all, nor do they pay income tax?” The Minister turned to income tax and showed by figures that the incometax payer on a wage of £6OO 9 year in any Australian State paid from twice

to three times as much as the New Zealander, while in Britain he would pay three times as much. There were two exceptions in New Zealand’s favourable comparison with other countries —death duties, which formed less than 10 per cent, of the total revenue, and local rates. HEAVY LOCAL RATES So onerous had the local, special and general rates become in some districts that farmers were in danger of being called upon to pay by way of rates more than the full economic rent of the land. One of the most serious problems the Government had to face was how to help the farmers where the special rates were so burdensome that it was Impossible for them to carry on. In defending the revision of the schedule, Mr. Stewart declared that our income tax scale had been so ragged and the various exemptions so far reaching, that the whole burden of income tax was gradually concentrating itself on a few classes of taxpayers. The Tax Department estimated that the extra revenue might amount to £150,000, but in the revision of Customs tariff the Treasury had estimated for reductions which involved an immediate loss of revenue of more than the State would gain by the income tax revision, and which may result in a loss of revenue of more than twice as much when the full effect of the tariff revision made itself felt. In reply to the statement that there had been no reduction in taxation since the war, Mr. Stewart said that between 1922 and 1926 the Government had made reductions in taxation which amounted to over £4,000,000 annually. This included reductions in Land and Income Tax, Amusement Tax, Customs duties and postal reductions. At the same time between 1922 and 1927 the war debt was reduced by £8,280,000.