PROPOSALS IN THE BUDGET.

Auckland Star, Volume LXVII, Issue 183, 4 August 1936, Page 8

PROPOSALS IN THE BUDGET.

LAND AND INCOMES, £2,000,000. LARGER PENSION ALLOWANCES. (By Telegraph.—Parliamentary Reporter.) WELLINGTON, this day. To-night's Budget will mark a notable departure from the Budgets of recent years because of the great changes in the taxation policy which it foreshadows and actually commences to carry out. Having been only eight months in office, the Government is unable completely to change the financial policy of the country in its first Budget, but the document to be presented by the Minister of Finance, the Hon. AValter Nash, will make it clear that the ultimate objective is the levying of taxation as much as possible by the direct method, rather than the indirect method. The only question as the Prime Minister, Mr. M. J. Savage, has stated in recent interviews is "when and how" this is to be achieved. The most notable examples of indirect taxation are the Customs and sales taxes, which were responsible last year for almost half the total taxation yield. These will not be interfered with in the present financial statement, though the Government will ultimately abolish the sales taxi There are, however, most important changes likely in taxation. The income tax scales are to be changed with the object of securing approximately an additional £1,000,000 from this source. At present the maximum taxation .paid by the highest incomes, including those of large companies; reaches 6/8 in the £, but it is highly likely that this will be extended, and that gradations further down the scale will also be increased, the effect being felt practically throughout the class of assessable income already outside the scope of the exemptions. Land Tax Graduated. It is in the land tax that the Budget makes its most notable departure from former Budgets, because the Government is carrying out its declared policy of reviving the graduated scale of taxation in this sphere. The present tax is a flat rate of one penny in the £1, with no exemption. When the value of £2500 is reached, it is understood, the new tax will be at the old rate up to £.5000 unimproved value, and that the graduation scale will then commence to operate on every additional £1 of value, so that at £13,000 the tax will be 2d in the £, and at £21,000 it will be 3d, rising steadily to a maximum of 6d, which will be reached when the unimproved value exceeds £45,000.

The statement is expected to make it quite clear that the object of the taxation is to secure the fullest profitable use of land and make it difficult to hold land for purely speculative purposes. When the graduated land' tax was in full force, six years ago, the yield was- about £1,500,000 annually, but it dropped last year under the flat rate tax to £458,000. The reimposition of the graduated tax therefore is likely to provide an-additional £1,000,000 of revenue.

Though there appears to be no prospect of immediate reduction in taxation, but on the contrary the two important extensions on incomes and land are likely to yield close on £2,000,000 more revenue, the reason for this will be found in the Budget disclosure that the Government will immediately improve the financial standard of pensioners, definitely allocating this additional revenue to that purpose. . ' Pensions to be Increased. A new pension scale is to be immediately instituted, providing payments at the same rate as old age pensions for persons permanently incapacitated. This invalidity pension will be £ 1 a week for a man, 10/ weekly for his wife, and 10/ in respect of each child under the age of 16 years. The income qualifications will be the same as for the old age pension. Old age pensions will be brought up to £l a week by an increase of 2/6 a week, dating retrospectively from July 1. Miners* pensions, widows' pensions, war pensions are all to participate in the improvements, and a number of existing anomalies in the system are:to be cleared up by legislation. Further Increases? Contemplated. To-night's announcements wall not constitute the final word of the Government's pensions policy, for it is working towards an even higher standard, possibly as much as 30/ weekly, with much wider scope. It is proposed immediately to set up an important committee, including members of Parliament, Departmental officers'and actuaries, to. t report upon a practical system of national Superannuation, as distinct from the existing old age pensions. „ While the Government's extensive public works policy, will be dealt with more fully in the Public Works Statement, the Budget naturally will make reference to the financial resources to be provided. As an indication of the activity on railway construction for the remaining half of the financial year, approximately £600,000 is needed for this alone, while ample provision is also to be made for an extensive housing programme, the only limit in this respect being the number of tradesmen and materials available.

To finance all these activities the resources of the Dominion will be utilised. 1 here will be no recourse to overseas borrowing. The Budget is likely to repeat recent Ministerial assurances that there is no immediate prospect of variation in the rate of exchange, nor is there likely to be any reference to variations in the unemployment tax, despite the important expansion of the pension system and the increased liberality in respect to social services, including a milk supply for school children. Ihe Minister of Finance anticipates confidently that the buoyant condition of the Dominion's economic resources warrants an anticipation that the Budget will show a surplus at the end of the year. Last Year's Taxation. years revenue from income tax amounted to £4,581,328, the highest yield for a number of years. The revenue from land tax was £458,873, this being the lowest recorded for a very long period. The actual receipts from income tax exceded the Budget estimate by £331,328. Land tax fell short of the estimate by £1 1,127. j total collected in taxes from all sources for the year en e arc ia st was £25,476,441. On a per capita basis this amounted to £16 5/9, which was an increase of about 7/3 on the previous year.