The Dominion THURSDAY, AUGUST 2, 1917. A STAGGERING BUDGET

Dominion, Volume 10, Issue 3152, 2 August 1917, Page 6

The Dominion THURSDAY, AUGUST 2, 1917. A STAGGERING BUDGET

■ Those who anticipated sensational. features in this j'ear's Budget havo not been,disappointed. Sir Joseph Ward has sprung on Parliament and the country some staggering . figures and some striking proposals, and those who havo been urging tho National Government to bestir itself will at least havo to concodo that the tax-gatherer has not been practising "go-slow" methods. The figures showing the year's financial operations are on a scale never previously approached in this Dominion. Tho surplus of revenue over expenditure is colossal, measured by our standards. The'previous year's record surplus of £2,017,030 positively sinks into insignificance when compared with the £4,308,000 whioh tho Minister of Finance is able to announce on the present occasion. Tho rovenuo for the.year increased by nearly four million pounds, while the expenditure was a little over one and a half millions greater than during tho previous twelve months. It is significant that more than one-half of this increase in expenditure, viz., £823,994, is due to interest and sinking ,fund charges; whilo altogether over £1,400,000 appears under the heading "permanent appropriations." The- fact to he bomo | in. mind is that the country will | havo to carry this large addition to its annual expenditure as a , perj manont load, bo far as tho present generation at least is concerned. The increase, of course, was almost entirely due to tho war, and we must expect tho charges under this head to go on mounting up for some time to come. When wo turn to the expenditure out of loan money the figures are equally staggering. Since the commencement of hostilities the war expenditure of the Dominion out of borrowed money had at Juno 30 last reached the sum of over 28 millions, and tho current expenditure under this Head is estimated at approximately £1,901000 a month. This means another large loan, and it is proposed to tako authority to borrow 24 millions, of which amount 12 millions will be sought locally within tho next month or two. In connection with this loan it is proposed to introduce a penal measuro to enable the Government; if necessary, to compel the public to conic forward and subscribe tho money required. The method to bo adopted is to load nonsubscribers to the loan who aro in receipt of incomes of £YOO and upwards with additional heavy taxation. Sir Joseph Warp promises to explain this provision fully when dealing with the Bills relating to taxation. It will require a good deal of explaining and many safeguards. It should not bo overlooked in this respect that the Minister has fixed the rate of interest which he proposes to pay for his loan at 4i per cent, free of income tax. This rate is a low one as matters are today. Even in Great Britain Mil. Bonar Law, when he raised tho last great loan, deemed it advisable to fix the rate of interest at 5 per cent. To fix a lower rato here and at the same time to compel tho public to Invest their savings, for a lengthy period extending long after tho war, at what is not generally considered a fair rato of return, is likely to lead to difficulties and to occasion injustice. This is one of the Budget features that calls for close examination. It is liable to make the War Loan-unpopular. The taxation prooosals outlined in the Budget should go a long way towards pacifying those people who have been raising their voices in appeals for the conscription of wealth The revised income tax is of a most drastic nature in its bearing on persons fortunate enough to possess iaree incomes, and unless we arc Ki-eatly mistaken tho maximum rate of income tax, Vs. Gd. in the £ on .incomes of £6400 and upwards, is on ~ higher scale than is charged anywhere else in the British Dominions. Tho decision of tho Government to abandon the Excess Profits Tax has necessitated this readjustment of the land and income taxes and the addition of a special war tax In each caso tho taxes have been framed on the graduated principle, and

those with moderate incomes and small land holdings escape comparatively lightly. At the same time a minimum of Is. 3d. in the, £ in the ease of incomes and of lid. in the rC in the caso of land tax cannot bo regarded as an insignificant impost. These taxation proposals, more especially that relating to land tax, will warrant close analysis. It is worthy of note that last year land and income taxation produced revenue totalling £4,975,21-1. This year, in spite of the huge surplus on last year's revenue, the Finance Minister has framed his land and incomo taxes so as to produce in revenue £5,850,000, or practically another million of revenue. Judging by past experience, they are likely to return him a good deal more. In addition ho proposes increased Customs and Excise duties on tea, beer, spirits, champagne, cigars, cigarettes, silks, satins, velvets, plushes, and imitation silks—all of which items, with the exception of tea, may be classed as luxuries.. There is also to be an amusement tax, and it is made abundantly clear that Sir Joseph AVabd intends to take no risks of weakening the extremely strong financial position which has developed as the result of the heavy war taxation of the past two years. Taken as a whole the Budget is one on which tho Minister of Finance,' .the National Government and the country generally are to be heartily congratulated. The remarkable financial results disclosed afford an evidence of the goneral 'prosperity prevailing throughout_tho Dominion, and though exception might bo taken in ordinary times to the large reserves of surplus ' revenuo being extracted from the people by high rates of taxation, there is arriplo justification under existing conditions for the policy adopted in this respect by Sir Joseph Ward. So long as high prices continue to rule for our primary products _ and so long as shipping is available to transport our meat and wool ana dairy produce overseas New Zealand can' face the increasing financial burden entailed by the war with confidence. And while tho _ good times continue it is a wise policy on the part of tho Finance Minister to reap his harvest and accumulate financial reserves which may prove of immense benefit to the country later on when money is more difficult to obtain. The use to which "these reserves should be put is ono of the matters to which Parliament Should give its early attention.