FIXED INCOME

Waikato Times, Volume 122, Issue 20500, 17 May 1938, Page 4

FIXED INCOME

AND COST OP LIVING HIGHER TAXES AND PRICES The Prime Minister, In his recent review of economic conditions in New Zealand, defended the existing high level of taxation, and said that more than half the amount which is obtained from taxation is handed straight back to the people in social services (says a statement by the Associated Chambers of Commerce of New Zealand). The matter is not altogether one of simple and satisfactory transfer such as that. The availability to the people of the social services which the State provides does not give them the extra means with which to purchase food and clothing and other living necessities—things now costing more than previously, owing in part to high taxation falling on the consumer in increased living costs. Workers have been given higher wages in an attempt to increase their purchasing power, but we have already shown that these wage increases, when related to the more rapidly growing cost of living, have given the great majority of industrial workers an “ effective ” margin of only approximately .6 per cent, (less when direct taxation increases on the individual are deducted, and 'less still to those workers working short time). Then there are those in the community who are entirely dependent on fixed incomes, whether from personal effort, or from investments, mortgages, rents, annuities, superannuation or any other source. These persons receive no benefit, from the increased wages shorter working hours, while their incomes, not having increased in size, have consequently received the full impact of the increased cost of living. Owing to the shrinkage in their purchasing power, they are able to buy less. The actual increases in the cost of living which they have had to face, without any increase in their incomes, are as follow:

OOST OP LIVING INCREASE PER CENT. OVER 1935

These percentages are compiled from the Government’s own published statistics. There are those people, therefore, whose purchasing power is considerably reduced as compared with 1935, owing in part to the effect of high taxation on the cost of living. They may pay no income tax, but they cannot escape the high prices which taxation brings.

Nov. Feb. May Aug. Nov. Feb. 1936 1937 1937 1937 1937 1938 Food: 7.9 9.7 13.9 14.4 20.0 17.9 Rent: 5.4 5.9 6.5 7.2 8.0 8.7 Fuel and light: 4.3 4.7 6.2 7.4 8.6 8.7 Clothing. Drapery, Footwear: 3.1 6.7 10.0 12.2 13.2 13.6 Miscellaneous: 2.5 6.2 7.4 8.2 8.7 8.3 All groups combined: 5.4 7.2 9.8 10.7 1 3.1 12.6