MEETING DEFICIT.

Auckland Star, Volume LXI, Issue 130, 4 June 1930, Page 7

MEETING DEFICIT.

GOVERNMENT'S PROBLEM

ECONOMY "DRIVE'.' STARTED.

DEPARTMENTAL ESTIMATES.

WILL TAXATION BE INCREASED?

(By Telegraph.—Special to "Star.")

WELLINGTON ,this dav

What is . probably tlie greatest economy drive ever launched in New Zealand is now in progress by, the Government.. .

The heads ',of various Government Departments, at the end of the last financial year, received circulars setting out the fact that in consequence of the world-wide depression in raw materials and the lower returns for the Dominion's exports, a considerable shrinkage of revenue is to be expected for 1930-31. They were requested to bear this fact in mind when framing estimates-for the current year, and informed that no unnecessary work was to be undertaken.

There is abundant evidence that the pruning-knife is being used to delete all items of expenditure which may be safely removed from the Departmental needs, and before the campaign _ has gone much further there may be jettisoned other items which will lead to concern the part, of the sections of the coi y interested. Following a prudent policy; the Treasury has called" at ntion to the situation at the earliest possible moment, and all arrangements are being mode against the position.

Onr fact which gains, attention is that in consequence of our decreased national income and higher exchange rate purchases abroad are falling off. Imports to the Dominion are expected to be markedly lower this year, and in con;sequence the Customs .Department, which last year provided £9,000,000 of the £19,000,000 taxation paid by New Zealanders, will, be unable to fulfil the demands made upon it at the .present rate of duty. In a period such as the one upon which the Dominion _is now entering, the volume- of some imports is also likely to be uncertain and their return from a higher Tate of' duty problematic. The experience the Hon. W. Downie Stewart had of the uncertainty of Customs revenue is likely to be repeated by the next Minister of Finance. With this knowledge and a realisation that reduction of State spending below a certain point —and that markedly higher than the total of a few years ago—is unlikely, financial critics are predicting an increase in other forms of taxation this, year,

notably income tax.