The Auckland Star WITH WHICH ARE INCORPORATED The Evening News, Morning News, The Echo and The Sun. FRIDAY, DECEMBER 22, 1933. BUDGET AND EXCHANGE.

Auckland Star, Volume LXIV, Issue 302, 22 December 1933, Page 6

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

FRIDAY, DECEMBER 22, 1933. BUDGET AND EXCHANGE.

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

If Mr. Coates' estimate of brighter Budget prospects were based upon a complete picture of the facts it would be more cheering to the country. As it is, his expectation of comparatively small increases in revenue here and there must be Set against the probability of a substantial and unavoidable increase in the amount which the Government will have to pay for surplus sterling credits in London. For reasons of its own the Government has created a special account to deal with the high exchange, and the Budget is relieved of a heavy weight; but for the country as a whole the effect is exactly the same whether the extra cost of London funds is shown in the Budget or outside it. The method of accounting in the long run nukes not one iota of difference to the taxpayer. And in the present circumstances it would be surprising if the people did not discount Budget forecasts in the light of this knowledge. In the first half of the financial year the Government was required to take over £4,545,000 for which it had no use, and this after having satisfied, its requirements for overseas payments for the whole year. As the second half of the year includes the months of heaviest exjJorting, this figure is liable to be exceeded, and the rise in wool prices adds to the probability that it will be exceeded. Any increase in export revenue, over and above the amount which the country is spending on imports, increases the bill which must be met sooner or later in the final reckoning of the cost of high exchange to the Dominion. The Treasury bills that are being to the banks meanwhile represent so much increase in the country's floating debt. Even if the exchange situation is left out of the picture, as by Mr. Coates in his closing statement to the House yesterday, a survey of the taxation field fails to show that the Government will receive immediate and general benefit from an increase in export i-evenue during the coming months. The yield from land tax is known, and that from income iax can be fairly closely estimated. It is not n direct taxation, but in indirect, that ncreases must be sought, and certainly the mprovement in imports already occurring, and ;he revival of business activity, will produce idditional Customs and sales tax revenue. But it may take a year or two for the rise in ncomes to filter through to the Treasury in ;he form of rising revenue. On the other side of the Budget, although Vlr. Coates is able to claim that a tight hand s being kept on spending, the general tenor of lis remarks is to confirm the impression that Departmental costs are stubborn, and that urther savings cannot be made without onsiderably greater effort. In three years, vhile prices fell to half their 1929 level, the Jovernment was able to lop 20 per cent off State expenditure. At this level, however, he programme of economy was slowed down, nd early this year, therefore, some increases a taxation had to be made. The heavier acrifices involved have been borne by the ountry in a commendable spirit, but there an be iio doubt that the effort has been a evere strain on the finances of the people, low, with the depression lifting, progress will e helped if the Government, like private itizens, makes every possible effort to live dthin its means.