PAYING THE WAR EXPENSES

Dominion, Volume 11, Issue 227, 13 June 1918, Page 4

PAYING THE WAR EXPENSES

MINISTER EXPLAINS THE GOVERNMENT'S POLICY. The question as to whether the Government is adopting a sound policy in paying the expenses of the war entirely out oi' borrowed capital was discussed 'by the Acting-Minister of Finance (the Hon. A. M. llyers) yesterday. Mr. Myers said that he wished to quote the policy of the Imperial Government, which contiimes to pay only a certain portion of the war expenses out of taxation, about -7 per cent. It should be remembered that tho war.expenditure being incurred by this country is partly incurred in England. The Imperial Government is' advancing the cost of maintenance of troops, which amounts to between .88,000,000 and .07,000,000 per annum. The Nonunion, of course, gives the Imperial Government adequate security for these advances.

The Minister pointed out that the Dominion has imposed very ' considerablo extra taxation for the purposes of meeting (ho expenditure ill connection with the war, and this extra taxation has enabled the Government to create considerable reserves in London, which can, if considered advisable, be utilised in tho repayment of the obligations incurred to tho Imperial Government. From a business point of view, it is an advantage to the country to invest these reserves in Imperial Government securities rather than utilise them' for the purpose of paying the war expenses, as they now produce higher interest than that which the Government is paying for its war money in New Zealand. Tho total amount of the increased taxation derived from the. people of Nc.v Zealand and invested in this way amounts to between JCS,OOO,OOO and .£9,000,000. Mr. Mvers said that it was apparently assumed that tlie extra taxation which is toeing obtained i'rom the taxpayers of tho country for the purposes of the war is being utilised for other than war purposes. This was not correct. Tho balance, after payment of interest oil war loans, is being invested as stated, and it will bo a matter for future determination as lo whether or not -it should be used for the redemption of a portion of our war loan.