WELLINGTON TOPICS.

Taranaki Daily News, 20 June 1922, Page 7

WELLINGTON TOPICS.

TAXATION. A PREDICTION. (Special Correspondent.) Wellington, June 12. An article, which may or may not have been inspired by some one with knowledge and authority, appears in the Dominion this morning foreshadowing the Government’s taxation proposals in much the same terms as they already have been foreshadowed in these columns. “The Prime Minister,” the writer says, “had declared that the incidence of taxation requires to be reviewed. The defects of the present system of company taxation have been pressed upon him strongly by the business community. The Prime Minister has not made any promise, but it may be assumed that the policy measure he has mentioned, will deal with some of the hardships and anomalies that have been mentioned of late. The Taxation Committee which is now sitting will have a mass of information on these points to place before the Government and its report may help to provide the basis of the promised policy measure.” A sub-committee of the Taxation Committee is now drafting its report and it is expected the document will be in the hands of the Government before the end of the current week. THE GOVERNMENT’S ACTION. What the Government will do with the report depends, of course, very largely upon its character and upon its own ability to grant concessions. Mr. Massey made it quite clear before the committee commenced its sittings that as Minister of Finance he could not afford to forgo any of the revenue he at present is receiving. He was so definite on this point -that the members of the committtee must have realised it would be quite futile tp suggest reduction that were not counterbalanced by increases. This limited their field of exporation to the means of removing the hardships and anoinalies admitted by the Prime Minister. The business community as the, writer in the Dominion says, has been very busy in laying the defects of the system of company taxation before the committee and to all appearance it has made out a very strong case for a thorough over-haul of the whole system. It, at any rate, has on its side of the argument that all the Australian states are following in this respect an almost opposite policy to the one followed by New Zealand. STATE AND MUNICIPAL ENTERPRISES. The committee has been within its order of reference in inquiring into new i systems of taxation and it has given some attention to the Canadian Sales Tax and to the proposal for the taxation of State and municipal enterprises. Probably the sales tax has not been sufficiently commended to make any very strong appeal to the members. As it has been present to the committee, it looks very much like a supplementary customs duty and in that guise it is attractive to neither the seller nor the. buyer. But the taxation of State and municipal enterprises bears quite a different appearance. At present State coal mines, and municipal gas works for instance, escape all State taxation, and consequently compete on very unfair terms with privately owned concerns of the same character, •which pay all forms of State taxation in addition to local rates and charges. It is estimated, roughly, that about half a million a year is lost to the Treasury by this discrimination, and it will not be at all surprising if this anomaly is marked down by the Taxation Committee for extinction. THE LICENSING POLL. The Prime Minister’s definite statement that there will be no amendment to the liquor law during the approaching session of Parliament leaves the parties to the licensing contest to fight out their differences on fhe same ground as they did three years ago. There can be no doubt that the inclusion of “State Control” on the ballot paper in 1919 materially helped the Moderates towards their success, but it is doubtful if it will serve them as well next December. The parties will’ understand that the real struggle lies between “Continuance” and “Prohibition,” and only a fraction of those who would prefer the middle course to either of the other issues will throw away their votes merely to assuage their conscience. Both sides are organising on a big scale, but on this occasion the Moderates are better provided than are their opponents with the sinews of war and the popular opinion here, influenced no doubt by local feeling, is that they again will prevail. THE GO /ERNMENT’S STRONG CARD. It is fairly obvious that the Government’s strong card at the approaching general election will be “safety”; safety, that is, from the threatening ascendancy of extreme Labor. Mr. Massey has been proclaiming from various platforms during the last few weeks that out and out Socialism, represented' by the Alliance of Labor, is the only, alternative to Reform,. and his col-' leagues have been reiterating their chief’s assertion whenever an opportun-i ity has offered. The latest echo comes from Mr. Downie Stewart in Dunedin. The conditions, it must be admitted, are particularly favorable for the propagation of this idea. The Progressive Liberal and Moderate Labor Party, heedless of the scriptural injunction to the contrary, is persistently hiding its light under a bushel, while the Social Democrats, to give Mr. Holland’s followers their official designation, are denouncing the two older parties with unabated vehemence and with delightful impartiality. Faced by an Opposition composed of these conflicting ele-i •nents, and helped rather than hindered by a large body of “Independents, Massey and his colleagues, one would think, ought to be able to contemplate the situation with equanimity; but they are leaving nothing to chance in the preparations they are making for the next trial of strength in the constituencies. SWING OF THE PENDULUM. There are people, too, even among I Mr. Massey’s political supporters, who * expect the parties in the new House of Representatives to be much more closely balanced than they are in the expiring one. In the first place there is, out, the popular disposition towards change—“ The swing of the pendulum”—which Mr. Seddon arrested for so long, and which Mr. Massey now lias held up over two elections. They do not think that this disposition has

I been extinguished, but that it has been | merely lying dormant under exceptional circumstances. Then there are the accumulated grievances of a large number of people who blame the Government for largely increased taxation, for declining revenue, for unsatisfactoryrailway services, for the hard lot of anany of the soldiers on the land, and for everything else that has gone wrong in the public affairs of the country. These accumulated grievances, the gloomy prophets of Reform predict, will cause a substantial turn over of votes from the Government to the Opposition, chiefly to Labor. The opponents of the Government, of course, are making much more out of these factors. STATE AND MUNICIPAL TRADING. Though the members of the Taxation Advisory Committee have given no indication of their attitude towards the proposal for the taxation of State and municipal trading concerns, there is a pretty general feeling in political and business circles here that the committee’s report will recommend a radical change in the existing law on the subject. Private enterprise presented its case very strongly and ably to the committee, showing not only that State and municipal concerns were given unfair advantages over their rivals, but also that the country was losing a large amount of revenue, estimated, as already stated, at half a million, through these concerns being exempt from the attention of the tax-gatherer. The bodies responsible for the conduct of municipal trading concerns, on the other hand, make a somewhat feeble retort, arguing that as these concerns were run purely in the interests of the citizens it would be inadvisable to burden them with taxes. One of the obvious arguments of the private enterprise people, however, is that the exemption of certain sections of the community from taxation, places additional burdens upon every other section. THE LOCAL APPLICATION. The Dominion, which in these days is aspiring to the broader application of the first principles of economics makes this point rather neatly. “For instance.” it says, “if Wellington City does not pay taxation on its electric lighting profits, the amount'thus saved by Wellington City has to be made up from somewhere. Who then pays? Clearly it is the people generally—that is to say, the people resident in Upper Hutt, Featherston, Greytown, Waikanae, and so on throughout the whole country are taxed more than they should be, Wellington or Auckland or any place where there are municipal trading concerns, therefore secure a benefit at the expense of those who live in localities where there are no municipal trading concerns. It may be a small thing financially, but the principle at stake is not a small matter; it is bad, and should not be permitted to continue in force.” The discussion of the subject has elicited a great deal of information in regard to the respective results obtained by municipal and private enterprise, and, to put it mildly, this has not reflected always to the advantages of the former.