The Auckland Star: WITH WHICH ARE INCORPORATED The Evening News, Morning News, The Echo and The Sun. WEDNESDAY, APRIL 26, 1933. A CAUTIOUS BUDGET.

Auckland Star, Volume LXIV, Issue 96, 26 April 1933, Page 6

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

WEDNESDAY, APRIL 26, 1933. A CAUTIOUS BUDGET.

for the cause that lacks assistance, For the wrong that needs retistarwt, For the future in the distance, A.tnl the good that vte can da.

In. budgeting for the year ahead, the , British Chancellor of the Exchequer has deemed it wise to pursue a policy of "safety , first," making only a very small concession to those who have been urging the Government to ease the burden on the taxpayer at all costs. Mr. Chamberlain has completed a difficult year with a deficit of £32,000,000, which he considers is as satisfying as a surplus would be in more prosperous times, and he shows that this is due entirely to the effect of the debt payments to America. But for the war debt liability there would have been a favourable balance of over £11,000,000, and th© benefit of the savings which the Government has been able to make on the expenditure side would be apparent to everyone. As it is, that benefit is swallowed up by the American payments, for which no provision was made in framing the estimates last year. Again to-day Mr. Chamberlain is leaving the war debts out of account, and he is setting aside also the possibility of receiving payment from Britain's European debtors. When the Chancellor surveys the financial situation at home, the most encouraging feature is the saving expected to result this year from recent conversion loans. He is able to tell the nation that the relief under this head for the past year was £22,000,000, and that, with other savings added, total expenditure was less by £113,000,000 than two years ago. Yet it appears that this reduction has not been in line with the fall in national income and the yield from taxation. Undoubtedly the budget difficulties of the day are due to the fact that the nation as a whole has less means of paying taxes, and if the State takes a larger share than before of the total earnings of the people it is cutting down spending in other directions and sowing for itself the seeds of future trouble. In 1931 income tax and surtax payers in Britain proved a remarkably fruitful source of revenue, but last year there was a fall of £11,000,000 in surtax yield, and of £8,000,000 in revenue from income tax. Thus the law of diminishing returns in direct taxation has begun to operate sharply over the whole field, and it is inevitable that there should be a further fall this year. The Chancellor has weighed the advantages of lower taxation, which has been pressed upon him by businessmen and economists, against the dangers of an unbalanced budget, and is not prepared to reduce income tax. The only concession ho makes is by restoring half-yearly payments, thus returning to the method which prevailed before Mr. Snowden speeded up the rate of payment two years ago. It is not clear whether there is to be a general suspension of sinking fund charges, but if they are suspended this can be justified only by the present unprecedented strain on the nation. Such action would serve as a precedent to others, and might be used by local authorities in this Dominion, or even by the Government, as an argument for similar relief until they emerge from the depression. Any saving in sinking fund payments has not enabled Mr. Chamberlain to avoid the necessity for some increase in taxation, for he has decided to make a heavier levy on goods transport vehicles using the roads. This impost, to take effect at the beginning of January next, may be intended partially to help the railways, and is the one important increase—perhaps the one increase —proposed in the budget.