The Press FRIDAY, JULY 22, 1960. The Budget

Press, Volume XCIX, Issue 29263, 22 July 1960, Page 12

The Press FRIDAY, JULY 22, 1960. The Budget

Labour supporters may find Mr Nordmeyer’s Budget unexciting—no new extravagances and no election bribes. The community generally, finding that Mr Nordmeyer has shown a sense of realism, should have a feeling of relief, tempered by three reservations. The first is that so many of Mr Nordmeyer’s otherwise admirable encouragements to thrift are designed to increase Government control of savings. The second is that this is not necessarily his last word, and the Government’s touchiness over the mild criticism of the Auditor-General could be taken as a hint of other tax changes or benefits after Parliament has been dissolved. The third is that after two years of great prosperity the Government still finds it necessary to collect much of the taxation imposed in 1958 specifically, so it claimed, to meet an economic emergency. The emergency has passed, but we are still saddled with the costs of Labour administration. In 1958 estate duty was heavily increased, the sales tax on cars was doubled, the duty on beer and spirits was doubled, the tax on tobacco was doubled, an additional Is a gallon was levied on petrol, and income tax was raised sharply. Income tax has now been reduced to approximately National Party Budget levels, and the additional petrol tax is now only 2d a gallon. Otherwise most of the emergency taxes are still to be collected. A penny off cigarettes, twopence off petrol, and £5O off a new car are not very significant changes this year.

Probably the most interesting features of Mr Nordmeyer’s Budget is the way, in the light of experience, he has amended Labour doctrine on saving. Twenty-five years ago the people were advised, in effect, not to save but to lean on the State. Now they are to be encouraged to save so that the State may lean on them. Tax concessions are to be given those who lend to the State, the possession of capital is no longer to be a disqualification for social security benefits, and the income tax exemption for

small interest-earnings is to be raised to £3o—provided the money is lent to the State. Insofar as these changes encourage thrift we applaud them, though we do find it alarming that the general design is to draw money away from not only business but also local government investment. A man with a few pounds to spare will make a sacrifice if he wishes to put his money into local endeavour. The Government’s appetite for capital is shown by its unprincipled approach to estate duties, which are to remain at their present crippling level. Instead of reducing them, the Government will provide that any money paid in advance on account of duty will bfe deducted from the value of the estate. By this heavy discounting of duties the Government will encourage a farmer or businessman to divert his death duty provision from some other investment to the State. Two of Mr Nordmeyer’s inducements to saving can, however, be unreservedly endorsed. One is the increased exemption allowed for life insurance premiums. The other is the modification of the provision for aggregating the incomes of husband and wife for tax calculation. If this encourages wives to remain at work as, say, schoolteachers, it will not only add usefully to the labour force but also increase the real savings of married couples. All in all, this is probably the best Budget that could have been expected from Mr Nordmeyer in the position in which his party places him—always subject to the condition that it has not been framed with the intention of springing some campaign surprise. We do not believe that is Mr Nordmeyer’s intention. We accept the good faith of his statement that “ to “reduce them [taxation rates] “further at the present time “ would be to endanger the “ stability which has now been “ reached We are the readier to do so because anything else would be bad politics as well as bad government. After 1957 the electorate would be justifiably suspicious of anything with the appearance of election bait.