“Temptations Resisted In Election Year”

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

“Temptations Resisted In Election Year”

“Mr Nordmeyer deserves credit for having resisted the temptations of election year,” said Professor A. J. Danks, associate professor of economics at Canterbury University, last evening, commenting on the Budget.

“He has brought down a Budget which effects no very important changes, and this is something to be grateful for at this time, when our general economic circumstances would certainly not sustain any considerable tax reductions/’ Professor Danks said.

“Such small changes as Mr Nordmeyer has made deserve a mixed reception,” Professor Danks said. “He is right to regard savings as important, and the Budget provides some useful incentives to increase these. “He is right again to direct attention to the development needs of industry, and make some minor fiscal concessions to these needs—and the dismantling of much of capital issues control will be welcomed. “But the small reductions in petrol and tobacco duties are almost derisory, while lowering sales tax on new cars is an empty gesture as long as import licensing retrictions apply at present level,” said Professor Danks. "One has a feeling that the Budget has tinkered with small adjustments while bigger matters cry out to be dealt with. Our unnecessary and expensive food subsidies stay on, while company tax remains too high, as do death duties. - “In the monetary field, the declarations of fixed or lower interest rates for local bodies, deposits lodged with companies, and approved new capital flotations scarcely seem compatible with the extra demands on savings a freer capital market will exercise. "Extra savings may be created by Mr Nordmeyer’s encouragements, but demand is likely to gobble these up in both the public and private sectors, and then look for more. “All this «makes the promised announcement about firmer control of bank credit by Government a matter of great interest, if not of hopeful expectation,” Professor Danks said. Capital Issues The easing of restrictions on new capital issues, was welcomed by the chairman of the Christchurch Stock Exchange (Mr Somers W. Cox). “Stock Exchanges have advocated repeatedly in recent years that capital issues control should be relaxed, if not removed,” Mr Cox said. “This is a step in the right direction. "Relaxation of the excess profits retention tax will also be welcomed by investors, and should encourage businesses to provide for expansion,” he said. This move would also help to ensure full employment. The reduction of Interest rates payable on local body loans would make this form of investment less attractive compared with Government loans. “The steering of loanable funds into the Government coffers is an obvious motive for several of the changes in this year’s Budget.” Mr Cox said. Local Body Loans “It would appear that the Government has made certain impediments to local body borrowing although I hope this is not the case,” said Cr. H. P. Smith, chairman of the City Council's finance committee. “There are problems enough with raising loans now. I have been discussing with the City Treasurer whether he might be bold enough to go for loans without underwriting; but the demand is so substantial from other local bodies who are willing to pay commission that we hesitate lest we find a loan half-subscribed and --ork held up.” Manufacturers Mr J. K. Dobson, president of the Canterbury Manufacturers’ Association said submissions had been made by the Manufacturers’ Federation to keep the country in step with the promised development of New Zealand and the Minister had gone some way in meeting four of the six'submissions, said Mr Dobson. The submissions accepted were tfiat excess profits retention tax provisions be provided, the writing off of depreciation be accelerated, provision be made for companies to set aside funds through excess retention tax provision, and the setting up of taxation appeal authority. “Some of the Minister’s proposals will make it easier for industry to finance its expansion and obtain equipment.” he said. Motoring “While we receive the Minister’s pronouncement of a reduction of 2d a gallon on petrol and 6 2-3 per cent, in sales tax on motor-vehicles with some satisfaction, we" still bear in mind that there remains the extra 2d a gallon petrol and the extra 13 1-3 per cent on motor-vehicles that the Government still levies, said Mr E. R. Casbolt, president of the Automobile Association (Canterbury). “It is often said that the public have a very short memory; but I feel that motorists as a class will remember very vividly Mr Nordmeyer’s 1958 Budget in which

he stated that these extra taxes were of an emergency nature only. It would appear that, as with other emergency taxes, once levied the Government is loath to abolish them. I feel sure that the Automobile Associations throughout New Zealand will continue to press for the abolition of both these extra taxes.” Resellers’ Margin “For at least 12 months we have been pressing for an increase of at least Id a gallon in our margin; but this id goes some of the way,” said Mr H. D. Baylis, of Leeston, chairman of the petrol re-sellers’ section of the Retail Motor Trade Association in Canterbury. “Over, the last 12 months things have been pretty strained with extended hours and increased costs. This has hit those operating service stations only (as distinct from garages) very hard. The stability of our businesses should be somewhat improved, especially if the decrease in the price of petrol stimulates trade.” Vehicle Tax “The reduction in sales tax on motor-vehicles will be a welcome One for franchise-holders, and the public too,” said Mr C. E. H. Cornish, president of the Canterbury branch of the New Zealand Retail Motor Trade Association. “The sales tax used to be 20 per cent., then it went to 40 per cent., and now it is back to 33 1-3 per cent., which means we can hand a new vehicle on to the public at a slightly lower price.” For cars priced about £l2OO, representing three of the most popular makes of cars today, the sales tax reduction would mean a reduction in the retail price of about £5O, said another spokesman for the motor trade. Tobacco “Had the amount of reduction in duty and excise duty on cigarettes and tobacco been handed on to manufacturers, merchants, and retailers pro rata, as to petrol re-sellers, then profits to the industry would have been somewhere near what they should have been,” said Mr C. A. Lang, president of the Canterbury and Westland Hairdressers’ and Tobacconists' Association. “These new reductions, of course, can only apply to stock bought at the new prices, and -it will therefore be some weeks before a new list can be secured.” Labour View “Mr\ Nordmeyer’s third survey and Budget reflects the wisdom of the financial policy he has followed as Minister,” said Mr T. M. McGuigan, chairman of the Christchurch Labour Representation Committee. "The country’s monetary stability, threatened by the previous Administration, has recovered and has never been sounder. All in all, a sound Budget designed to stimulate savings, to provide incentive, and to assist those most in need.”