GOOD PROGRESS MADE

Press, Volume LXXII, Issue 21903, 2 October 1936, Page 11

GOOD PROGRESS MADE

EMPIRE TASMAN SERVICE AUSTRALIAN DELEGATION -T® LEAVE TO-DAY [From Our Parliamentary Reporter] WELLINGTON, October 1. Substantial progress has been made dining the last few days in the discussions, between the New Zealand, Australian, and British representatives over Empire air mails, and the proposed operation at an early date of an air service across the Tasman- The discussions have been proceeding in camera, but it ia expected that finality on a number of important matters will be reached to-morrow morning before the Australian delegation, headed by the Commonwealth Minister for Defence (Sir Archdale ParkhiU) leaves by the Awatea in the afternoon. It is suggested that plans have been completed at the conference for the establishment of a flyingboat service across the Tasman, and that the difficulties with the Empire Sir-mail service have to a large-ex-tent been removed. However, finality has not been reached, and even if the conference reaches agreements on important matters the decisions will have to be considered in detail and ratified by the Governments concerned. The end of the conference tomorrow will bring to a close only one part ,of the aviation discussions as they affect New Zealand.* Mr F. G. L. Bertram, DeputyDirector of Civil Aviation in the British Ministry, who has been representing the British Government at the discussions, will remain in

New Zealand to make investigations and advise the Government on various aspects of commercial air services within the Dominion. It is understood that Mr Bertram _ will travel extensively in the Dominion to obtain first-hand knowledge of < local conditions, THE BUDGET FOR 1936 NEW HIGH TAXATION . RECORDS CHAMBER OP COMMERCE SURVEY The budget results for 1935-36 show a surplus for the second year in succession, states the latest economic bulletin of the Canterbury Chamber of Commerce. Coming after four successive years of heavy deficits, this is welcome evidence of improvement in the Dominion’s affairs. Over the last two years, without increases in tax rates, the yield of . taxation; has increased by 26 per cent.. Which. indicates the measure of expansion in die sources from which taxation is drawn. The improvement in the budget; is due, not to reduction in expenditure, which has increased by £N.Z.I.7m. sines 1929, nor to other government revenue, which has fallen, but solely to increased taxation. Since the depression began, the new taxes, imposed'include the unemployment tax, the.sales tax, the gold export duty, and the film hire tax. Heavy additions in. rates have also been imposed in the case of. customs, income tax, and stamp duties, etc., A.fiat tax was substituted for the graduated land tax. It is by means of this increased burden on taxpayers that the budget had been balanced, for the country’s income in 1935-36 was substantially less than in 1928-29. Bright Prospects The budget prospects for 1936-37 s were brighter thah at any time since the onset of depression, tor export receipts had risen appreciably, and the increase in income was stimulating recovery in business and employment In these conditions, some relief from' the heavy emergency taxation Imposed dpring the depression might have been expected. But the Government’s proposals for expenditure not only absorbed the increased yield expected from existing taxes, but required additional taxation as well Restored salaries and shorter hours in the public service, increased departmental expenditure, and increased - pensions raise total expenditure by £N.Z.4.dlm.This allows only for a period of nine months or less. In a full year, the new commitments may raise budget, expenditure to £N.Z.32m., or one-third more than in 1928-29. The chief increase is in social services, which are now to cost £N.Z.10.3m., or £N.Z.4m. more than before the depression. To meet the increased expenditure, £N.Z.4.9m. more revenue is required. Other revenue is to provide less than £N.Z.&m of this, and nearly £N.Z.4im is to come from taxation. It is anticipated that existing taxes will yield XN.Z.3.76m. more than last year, and a further £N.Z.I.Bm. is to be raised by increasing the income tax.and reimposing the graduated land tax. The income tax is to be raised to a maximum of 7s 6d in the £1 on earned incomes, and 10s oh unearned incomes. These rates must seriously restrict company enterprises, which must now earn 8 per cent, in order to pay 5, where the full tax of three-eighths has to be paid on net profits. The graduated land tax, too, discriminates heavily against large enterprises, whether farming or business, and must retard or prevent the large scale use of the country’s resources. Public Works Public works expenditure is also to be restored to pre-depression levels, and -the budget proposals total £N.Z,10.45m., of which £N.Z.4SIm. is to be found from sources such as the highways and unemployment funds, and £N.Z.5.94m. borrowed, but without the issue of a public loan. i While the budget relieved fears that unsound financial methods might be adopted, it created new high for both expenditure and taxation in the Dominion. State taxation, including unemployment tax, is now nearly 70 per cent, higher than in 1928-29, and equals £N.Z.I9 a head of population and 25 per cent of the total value of production. Under the. present policy- of increasing expenditure - on social services and public works, it appears, more likely to increase than diminish. Since there Is no large wealthy class 'from which to exact a large yield of direct tax, mdstofthe taxation is indirect and is passed en in higher costs and prices. : 3This increases costs of production and of living, restricts enterprise, and, promotes unemployment and hence tends to in- ’ crease the difficulties whic& public pqlky is required to renadf• -