The Daily News. WEDNESDAY, MARCH 23, 1921, REDUCING TAXATION.

Taranaki Daily News, 23 March 1921, Page 4

The Daily News. WEDNESDAY, MARCH 23, 1921, REDUCING TAXATION.

“The country is staggering under the present load of taxation.” These are not the words of an alarmist, but a confession made by Mr. Massey in the House on Friday evening when the Finance Bill was under discussion. It is satisfactory to learn that the Prime Minister has awakened to the fact, and is about to give the sorely tried taxpayers some relief. It, certainly is not much; only ten per cent, and this is made possible only by the reduction in the wheat subsidy, and the contemplated abolition of the butter subsidy. Still it is a start, and we should be thankful for small mercies. Mr. Massey quoted figures that have during the past year been often presented in proof of the heaviness of the taxes jp respect of companies. They are striking. A company earning £20,000 is paying nearly £9,000 in income tax; really it comes to more than that, for a good many items of expenditure that every prudent business must provide for are disallowed by the commissioner, so it is safe to say that, all the big companies earning profits over £6400 a year are paying in taxation more than 10s in the £, a rate which is higher than obtains in England or in any other part of the British Empire. This heavy taxation was borne in silence during the war, for money had to be found, and found quickly, and the war had to be. won. but it’is a different matter to-day, when the taxpayers have a right to ask that the anomalies and injustices should be remedied or ij-iohted. Heavy, taxation affects

everybody- Take Taranaki, where there are several large companies operating. In order to pay 6 per cent, on their capital—a very moderate net return considering the risks they incur—they must make a gross 13 or 14 per cent, on their services or.merchandise. Big taxes, therefore, mean big prices; small taxes, lower prices. In his statement on Saturday regarding the finances of the Dominion, Mr. Massey stated that heads of departments had been instructed to exercise economy, and large savings had already been made and further economies were expected. This is gratifying news, but to be at all effective, to give any sensible relief to taxpayers’ burdens, the pruning knife must be applied in no timorous way. It is not a matter of thousands, or hundreds of thousands. It is a matter of millions, for after this month the revenue will fall by several millions, and if the public are to weather the storm, there must be a greater reduction in income-tax than the ten per cent, promised. As, the Mercantile Gazette stated in a recent issue: “The greatest problem the Government now has is to find some way of restoring the financial balance. Involution must equal evolution in finance, and the problem the Government has to face is how to provide the means for paying the present cost of administration if they will not retrench, and. at the- same time lighten the already too heavy burden of taxation which is nowhelping to bring the country to financial disaster.” This is perhaps an extreme view, but the figures quoted by Mr. Massey on Saturday show that the departmental expenditure is growing apace, almost equally with the revenue, which as the result of the phenominal imports and the heavy taxes is unprecedently high. This expenditure, it . cannot be too strongly emphasised, must not only be arrested, but, reduced by millions- Any measures taken by the Finance Minister to achieve this desirable end will meet with the approval of the-public, who a,re expecting a strong lead from the Government, and are in no mood to tolerate half-measures in a matter of such vital importance. On Monday evening Mr. Massey referred more fully to the finances, of the Dominion, which he regarded as perfectly sound and buoyant. So they are—at present. All with the interests of the country at heart desire them to remain so, and will help the Finance Minister to that end. It is the future which gives most concern, not the present. Mr. Massey stated the departmental economies would amount to £600,000 per an'nura, and with the savings in subsidies ■would total a million and a half. But more than this, as we have said above, must be saved if we are to give any effective relief to taxpayers. We should cut our coat /according to our cloth. The Prime Minister referred with satisfaction to the amount that would be available at the end of the present financial year—the huge sum of nine millions. Public Works are being financed out of revenue, and unless a loan can be floated to repay the amount thus advanced the surplus will be to that extent- Whilst at Home Mr. Massey will endeavor to float a loan for this purpose, ’but in the present state of the financial market. we cannot depend upon the money being raised at an acceptable rate. The money in sight may be sufficient to tide over the difficult times we have entered, but we will be well advised to carefully overhaul all our spending departments, and, if necessary, ration them. Mr. Massey concluded his statement by stating that he had every confidence in the industry and business ability of the people to overcome any difficulties with which they may be faced. So they will, providing the Government sets the example in economy and takes every means to reduce its own expenditure and to make a substantial reduction in taxation.