PRESENTATION OF BUDGET

Press, Volume LXXXVI, Issue 26196, 21 August 1950, Page 6

PRESENTATION OF BUDGET

Major Reductions In Taxes Unlikely HIGHER DEFENCE COMMITMENTS

(From Our Parliamentary Reporter.) WELLINGTON, August 20.

No major tax reductions are expected in the National Government’s first Budget, which the Prime Minister (Mr Holland) will present as Minister of Finance in the House of Representatives on Thursday evening. Taxpayers cannot look forward to very much more than the tax adjustments already promised by Mr Holland —the abolition of the 33 1-3 per cent, penal tax on unearned income and a change in the basis of assessment of land tax.

Any hopes that Mr Holland might have been able to increase, even slightly, the £lO rebate on income tax demands given by his predecessor, Mr Nash, two years ago. or alternatively to increase the present personal income tax exemption of £2OO have been destroyed by the change in the international situation. New Zealand’s defence commitments here and overseas now call for heavy expenditure, which is likely to cancel any savings the - Government has been able to make since it assumed office. Therefore the basic income tax rate is not likely to be changed, and the 15 per cent, war surcharge seems certain to remain. f increases in Revenue There should be increases on the revenue side in Mr Holland’s Budget. The abolition of certain subsidies and the reduction of others have effected a saving oi £7,000,000 in this financial year. Wages are still high and the return from income tax and the social security charge therefore is expected to be more than it was last year. Also there should be increased customs revenue as imports were higher in the last financial year. Most of the total increase, however, is likely to be absorbed in meeting additional expenditure on defence, housing and education. The cost of the compulsory military training scheme will come to charge this year, and added to this will be a substantial amount needed to equip, maintain and reinforce the special combat unit for Korea and to keep two frigates in Korean waters. Part of the amount allotted for defence also might be needed for the new aircraft ordered for the Royal New Zealand Air Force, as the sum of £1.611,713 in the Air Defence Fund established in 1948 may not be enough to pay for them all. The Government intends to spend more money on housing, and the expenditure on education is expected to be increased. Also, in spite of effortsto reduce Government expenditure, departmental estimates, it is understood, will be higher than ever before. . Social Security Charges Social security services, however, are likely to make the biggest call on ■the national revenue. Provision will have to be made not only for existing services but also for tne increasing cost of the scheme. An increase in S r^ e nnnL the , benefits totalling about ±.1,500,000 will also have to be included on the expenditure side. Other higher costs for which Mr Holland must provide are the recent increases in salaries of senior administrative and professional officers ln J* 1 e P u hlic Service and increases made by the interim wage order issued by the Court of Arbitration. Although the appearance of the Government’s first Budget is awaited with interest in Parliasnentary circles, there is not as much speculation about its contents as in former years because Mr puand has already announced some of the tax adjustments he proposes to make. As his concern is to continue his policy of sound finance, the national accounts should be presented on orthodox lines. Mr Holland may not have much left over for any betters this year but he should have no difficulty m balancing his Budget