The Auckland Star: WITH WHICH ARE INCORPORATED The Evening News, Morning News and The Echo. FRIDAY, JULY 25, 1930. A BUDGET FOR ALL.

Auckland Star, Volume LXI, Issue 174, 25 July 1930, Page 6

The Auckland Star: WITH WHICH ARE INCORPORATED The Evening News, Morning News and The Echo.

FRIDAY, JULY 25, 1930. A BUDGET FOR ALL.

For the cause that lacks assistance, For the wrong that needs resistance, For the future in the distance, And the good that we can do.

The first thing that should be noticed about the Budget is its courage. It may go too far in calling up reserves of taxation to fill the gap in depleted ranks; it may have several faults in detail; but it is at least the work of men who see danger plainly and are not afraid! of incurring unpopularity in meeting it.! Increase in taxation is always unpopular, and a Government "whose own party does not provide it "with a majority might be expected to be particularly chary of incurring such unpopularity. In this position, however, the United Government has this week brought forward taxation proposals that hit every class and every individual in the country, from the humble smoker and frequenter of the cinema to the man who drives a big car and the company with a large turnover. On top of increased Customs duties come higher taxes in every direction—land and income tax (though, the special tax on large holdings levied last year is repealed), totalisator tax, stamp duties, death duties and amusement tax. There has been nothing like this since the days of the war. It is impossible to believe that the Government would make such proposals if they were not convinced, of their necessity. When he took office Mr. Forbes issued a review of the country's finances that was notable for its clarity and honesty. He then warned the country that a black cloud of deficit was looming up. He has had some weeks to study the outlook, and he has not changed his opinion. These taxation proposals are a sequel to his warning.

It is called a profligate Budget by the "Xew Zealand Herald," but the profligacy is in the events leading up to the Budget, and not in • the document itself. The country has for years been living somewhat beyond its means, and basking in a prosperity that was not "wholly real. The Budget is like an addres3 from a father to a family that has gone the pace j sacrifice is expected from everybody. But the situation is really much more favourable to the Government than such a comparison suggests. Reform "was in office for sixteen years, and the United Party has been there for eighteen months. To charges of profligacy Mr. Forbes may with some justification retort: "You call us profligates because we are raising money to pay debts that you incurred!" -With its usual desire to score off the Government, the "New Zealand Herald," in its comment this morning, makes the briefest possible mention of the special conditions that have helped to make the financial outlook dark, and it contrasts savings effected by Mr. Downie Stewart in the country's interest bill with the increase in that bill since he left office. It does not mention that he also left an empty Treasury and heavy commitments to his successor.

It is too much to expect that in its attacks on the Budget Reform -will be shamed by its own past or forbear to turn the situation to party advantage, but it may be askechnow -what it would do to restore the balance in national finance. Would it borrow the money? That is really the only immediate alternative. It would be preposterous to suggest that if Reform were in office to-day it could avoid either increasing taxation or borrowing to cover the deficit. Much is being made of the possibility of departmental economies, and we axe far from believing that the limit has been reached in this direction. Wβ would not be in the least surprised if : it were proved that large additional savings could be made in the State services, and we urge Mr. Forbes and his colleagues to apply themselves with renewed zeal to this task. But as Mr. Forbes points out, the field of economy is limited, and the Government has. already saved a good deal. The Defence vote has been cut down drastically (which the "Herald," by the way, objected to), and £360,000 has been saved on the railways. For the most part, however, Departmental economy is in the nature of things a remedy with slow results, and the country's need is urgent. The Government is faced with a prospective deficit of three millions, and it is determined to balance its accounts.

We are inclined to think that Mr. Forbes is asking for more than he really needs, but this is a question that must remain open for some time. Certainly some of the fresh taxation will cause hardship. The 10 per cent increase in income tax will hit some businesses hard, and here it may be remarked again that review of the incidence of income tax is long overdue. Small shareholders in companies suffer by the present method of taxation, and the levy on companies takes no heed of the relation bet.veen capital and profits. That farmers with holdings above a certain value should pay both land and income tax is fair, and probably—especially as the special land tax is repealed—this will arouse less opposition than before. If the income is not made, there ■vrill be no income tax. ' The proposed tax on films is particularly interesting in that it is an attempt to tax the profits of the producer, which, if report is correct, are large and have hitherto slipped through the Government's net. There is, we are glad to see, a substantial preference for British films. The amusement tax, on the other hand, will probably be one of the most unpopular of all the levies; it will be considered vexatious in method and a real hardship on the poorer classes. However, the national deficit must be made good, and Mr. Forbes should at least be given credit for distributing the extra burden over the whole of the community. As we have said, we hope that he will not think all his duty has been done when this Budget is accepted; the obligation to economise with energy and courage will remain. The country may well hope and pray that better times come soon, but it must also realise that for the present thev are worse than thev were.