The Auckland Star WITH WHICH AND INCORPORATED The Evening News, Morning News and The Echo and The Sun. FRIDAY, MAY 3, 1930. LEGISLATION AND TAXES.

Auckland Star, Volume LXVII, Issue 102, 1 May 1936, Page 6

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

FRIDAY, MAY 3, 1930. LEGISLATION AND TAXES.

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

The general public, and particularly the taxpayers, should not be left in complete ignorance of the Government's finance proposals until July or August, before which time, it seems, the first Labour Budget will not be presented. In ordinary circumstances there is no excuse for the habit that has grown up over the years of delaying the Budget until August, but on this occasion the circumstances are far from ordinary, and there is pressing need for an immediate announcement. The Government, intent upon giving legislative effect to its policy, is steadily passing Bills which, though various in character, have this in common —they nearly all involve substantial increases in State expenditure. Opjiortunity is being given for the discussion of these Bills in Parliament, but neither the Ministerial explanations nor the subsequent debates are furnishing the country with precise information, or, except in one or two instances, even with rough estimates of the cos«t. Yet it is obviously certain that the aggregate of increased expenditure will be very large and that (irrespective of any financial novelties the Government may have in mind) a considerable proportion of that cost will fall upon the taxpayer. The taxes Avhich he will be required to pay next March must for the greater part be earned this year, which means that he must budget for them now.

Already uncertain factors have been introduced by the Government's labour legislation which -will raise costs, but to the problem thus created is added the prevailing uncertainty caused by lack of knowledge as to probable taxation levels. The root of the trouble is lack of information concerning the use 'which the Government proposes to make of the Reserve Bank. All that is known is that the Reserve Bank may grant accommodation to the Treasury up to the full amount of the year's estimated revenue, and that it may underwrite Government loans. But these powers reveal nothing of the intentions of the Government. The Government goes on to the London money market immediately for conversion of loans totalling nearly six millions. It is surely the right of the investors in those loans to have at least an outline of the Government's method of finance, and of how the interest bill is to be met, especially as there are local conversions totalling thirteen millions to be arranged during the present Parliament.

PUBLIC EMPLOYMENT. First, though perhaps not greatest, among tho items of increased expenditure is unemployment. According to the Minister there were 52,657 registered unemployed at the last return; the expenditure when the Government took office was about £100,000 a week and the revenue about £67,000; thci'e was a small cash balance in the fund at March 31. It is not proposed to increase the tax, but the anticipated revenue this year, £3,900,000, will fall a long way short of requirements. It is obvious that this will be so, for the fund has to meet the cost, estimated at £150,000, of giving country relief workers the same rates as city men, and the much greater expenditure (£BOO,OOO to £900,000) arising from the general increases in relief and

sustenance rates, which come into force on June 1. These estimates, of course, presume the continuance of unemployment at the existing level, but the Government's greatest immediate ambition is to reduce the level, and undoubtedly some thousands of relief workers will be transferred to public works. The fund will be to that extent relieved, and the men so transferred may be expected to contribute more to it from their earnings in their new employment. But Mr. Armstrong must have had this in mind when he stated that the expected revenue this year would fall far short of requirements. The deficit, it can be assumed, will fall upon the Budget. The full extent of the Public Works programme is not known to the public, although the Minister, Mr. Semple, has mentioned his expectation that the total of Public Works employees will reach 30,000. These are to be paid at increased rates, based on a minimum which is expected to be £4 a week. The employment of 30,000 men at this rate would cost £0,000,000 a year in wages alone. Mr. Forbes said in a recent debate that even when rates were much lower the cost to the country of a man on public works was £6 a week. However, Mr. Semple's expectation of a pay-roll of 30,000 is unlikely to be fully realised, if only because of the extreme difficulty of finding and organising work for such a number. Even the East Coastrailway, estimated to cost £1,500,000 to complete, is unlikely to absorb many more than 1000 men. But it is certain that the Public Works expenditure this year will jreatly exceed the gross amount of £5,630,000 expended last year.

THE NATIONAL INCOME. There are other considerable items. The complete restoration of Civil Service salaries is likely to cost £360,000, apart from the effect of the 40-hour week, concerning which the Minister was not informative, though one ex-Minister estimated the increased cost at £300,000. Pensions legislation, also expected, will substantially increase the social service budget; the Defence estimates ntay include provision for much higher expenditure upon the Air Force, and also a higher Naval vote, on account of the greater cost of maintaining two larger cruisers. Of the Education estimates nothing has been heard, but the projected complete reorganisation of the system is likely to be costlv.

Although expenditure will be higher, there will be increases on the other side of the Budget. The estimated yield of income tax for the year 1935-36 was 4j millions, which was half a million greater than the actual yield in the previous year. The improvement

in the national incomo is continuing. Customs revenue (provided there is no undue disturbance of revenue) may be expected to continue expanding at its present rate, and to yield £500,000 more than in 1935-3(5. Sales tax, death duties, highways revenue, etc., may together increase by £500,000. A saving o£ nearly £200,000 in interest should be effected if the forthcoming loan conversion is successful. But only a blind optimist will expect that the increases on the revenue side can come near to offsetting - the higher expenditure. Xew Governmental Departments already announced and staff increases by reason of extensions in other Departments Avi 11 further add to the cost.

These are estimates, necessarily rough and incomplete, of State expenditure and revenue. But the taxpayer —and particularly the commercial community—has other figures to consider. The effects of the 40-hour week cannot vet be exactly gauged, but, despite the vague hopes of Ministers, it will be reflected iu higher costs in most businesses. Compulsory restoration of wages ''cuts" will impose another burden upon many businesses, including those least able to bear it. But such costs as these can be roughly estimated—and passed on. The greatest problem, because of the uncertainty surrounding' it, is the prospective rate of income and other taxes. It is due to the taxpayer, whose co-operation above all others the Government needs and seeks, that he should bo informed, at an early date, in general terms of the financial proposals that will affect him. Whatever its rate, no tax can be collected unless it has been earned, and the Government should do all in its power to facilitate the work of those who arc obliged to do the earning. If the Government cannot prepare its Budget in April, as in Britain, but must wait for four months after the financial year has opened, and one-third of the expenditure incurred, some indication could be given by a Finance Bill of the method by which this expenditure is to be met.