The Press. Saturday, May 29, 1920. The Public Finances.

Press, Volume LVI, Issue 16847, 29 May 1920, Page 8

The Press. Saturday, May 29, 1920. The Public Finances.

Tho lateness of the hour at which, we received the summary of the public accounts for tho final quarter of the fiscal year 1919-20, which we printed yesterday, and the rather laborious calculations necessary to present a view of the accounts for the whole year, constrained us to defer -until to-day a general consideration of the position. The revenue—£26,o3l,336 —was easily a record, and 32 millions moro than the revenue in 1918-19. To this increase all the sources of revenue made a contribution; Customs accounted for a million of it, and railways for about ££00,000. But the increase in the yield of the land and income taxes was comparatively small, although tho yield is very large. In 1918-19 tho receipts from these taxes amounted to £7,730,000; in 1919-20 they amounted to £7,920,000. This is a sensible increase, but it is so much less than the increases in previous years that it would appear that the taxable margin available to the Government has about reached its limit, a circumstance which emphasises the necessity for a thoroughgoing investigation of the whole matter of taxation. It has been generally understood that some amendments will be undertaken, but we are without anything in the nature of a definite statement. There are four reforms which should be made. The income tax should be made moro general, there should be a more substantial differentiation between taxpayers having regard to their dependants, the taxation of company dividends should be placed on a sounder and more equitable basis, and some sound principles should be hammered out to improve the present anomalous state of the land tax.

When we turn to the expenditure we are struck by the large increase in the cost of the administration of the country's affairs. The heavy increase in the permanent appropriations cannot be helped; the interest on the debt must be paid, and the pensions also. But it is difficult to believe that the coest of the Departments could not have been "prevented from rising so sharply. We know, of course, that the bulk of the increase is due to the higher salaries and bonuses paid to the enormous army of public servants, and for Chese higher salaries and bonuses all the politicians are equally responsible. But when it was perceived, early in the war, that the cost of the Departments should be checked, somebody should have made it his business to consider how the growth could be kept within reasonable bounds. Unfortunately, Sir Joseph Ward's inclination has never been in the direction of sparing the general taxpayer, and under his management of the Treasury the expenditure got out of hand. ' The pace for the past financial year had already been set when he left office; the main Estimates were those he left as a legacy to Sir James Allen. We by no means wish that Mr Massey and his colleagues should be absolved from blame, because it was their duty—or' at least it was Mr Massey's duty—to remind the Minister of Finance that as head of the Treasury it was his duty to_ keep a tight hold on the spending departments. It would be surprising if any record could be found of Sir Joseph's attention to this duty.

Of course there is a surplus, and unless there is a serious financial or economic the present bases of incomings and outgoings will probably produce another surplus for the" current year. But we all know that on all hands the public servants axe demanding increased pay, and the granting of oven part of these demands may easily increase the expenditure to such a figure that a deficit may be recor3ed. Nor is there any certainty that the present basis of the country's capacity to fill the Treasury will remain unshaken. What faces the Government, therefore, is the necessity for a determined effort to repair the omissions of tho past five years. The whole, burden, however, does not fall upon the Government. Tho people must do their part by thrift and still more by a serious application to the work of production. The country has come through a very difficult period in far better shape than anyone expected, but a more difficult time is ahead.