The Dominion FRIDAY, AUGUST 2, 1929. A BUDGET OF NEW BURDENS

Dominion, Volume 22, Issue 263, 2 August 1929, Page 10

The Dominion FRIDAY, AUGUST 2, 1929. A BUDGET OF NEW BURDENS

It can be said for the Budget which the Finance Minister presented to Parliament last evening that it gives a very full survey of the country’s financial position and in most respects a clear idea of the Government’s intentions. Sir Joseph Ward has shown his hand quite frankly in regard to his taxation proposals; he has reached out in a variety of directions for increased revenue; and the general burden of taxation will be materially added to. There are features of the policy proposals which will command general approval, but there is no evidence of the needed economy and caution in expenditure beyond amiable professions of good intentions.

Land is to bear the burden of the increased direct taxation. The big landholder is hardest hit, but the farmer of moderate means is also to carry a share.- The penal super-tax which starts on properties of an unimproved value of £12,500 means a heavy impost _ A table presented by way of illustration shows that the existing high scale of graduated taxation will actually double in the transition from a £12,500 holding to one valued at £30,000. And to aggravate this heavy imposition it is provided that if the income tax on the profit from the land should return the State a larger amount than, the land tax, then the larger sum . shall be paid in taxation. Furthermore, the exemption which the city landholder secures in his income tax (5 per cent, of the capital value of his land) is not allowed the country landholder.

But the land tax proposals are still more drastic even than this. Under the existing law a mortgage exemption of £lO,OOO is allowed in assessing land tax, this disappearing gradually by £2 for every £1 of value over £lO,OOO. It is now to be provided that the mortgage exemption shall be reduced to £5OOO, which will disappear £1 foi every £1 of unimproved value in excess of £5OOO. Thus at £lO,OOO the mortgage exemption totally disappears. When account is taken o f .bX tat w(S> .he high values of much of our lands comparatively modest holdings in area reach a value of from £5OOO to £15,000, and that the great majority carry substantia mortgages, it can be seen that it is not only what is known as the Ng landholder that is going to be hit. The reduction of the mortgage exemption will mean that many landholders are going to be taxed on their debts. * • *

Another tax to be imposed is the increase in the primage duty from 1 per cent, to 2 per cent. This duty is claimed on all goods imported into the country, irrespective of where they come from or whether they pay duty under the Customs tariff. Taking last year s import figuresfnameljG £45,000,000. .his means tat Sir oseph Ward is adding new taxation through the Customs on all classes of t e community to the extent of at least £450,000. It is claimed tha this is so widely spread that it will not be felt. There is some truth in the contention, but it is an added burden of nearly six shillings per head of the population and includes every-day necessaries in the way of food and clothing. Coming from a Government which at the hustings a few months ago professed its ability to provide such an array of benefits for the people without one penny of additional taxation, this proposal may be expected to provoke caustic comment.

While on the subject of extra taxation it may be mentioned that in his search for added revenue Sir Joseph Ward has dragged in the State-trading departments. Some of these already pay land or income taxation, but in future they are to pay both. This is right and proper. They compete with private business undertakings and it is only just that they should compete on a fair basis. The Finance Minister is to be commended for this step. A share of the profits of the Pu.dtfc Trust Office also are to be raked in to swell the Consolidated Fund on the ground that the State guarantee originally carried with it the right to the net profits. Sir Joseph Ward, however, proposes to take only half of these profits, which, as they last year amounted to less than £30,000, will not at present bring very much to the Treasury.

The references to Railways policy are decidedly interesting. The annual loss of a million a year is candidly admitted. Indeed Sir Joseph Ward states that if the present drift is allowed to go on it will, in a few years, be necessary for the taxpayers to find £2,000,000 a year to meet the loss. Yet there is no sign of wavering in the intention to sink further millions in railway construction. In accordance with the mandate received from the people at the elections, to quote the words used in the Budget, the Government is determined to accelerate the construction work and complete the Trunk lines as quickly as possible. How a minority party can claim a mandate from the people may possibly be capable of explanati i. but no attempt is made to show how the proposed railways are likely to do anything more than swell the existing annual loss. As in his previous utterances on the subject, the Finance Minister confines himself' to generalisations and pious expressions of confidence that some day —a very remote day, it seems—the. railways will pay. 11l light of the known facts assertions of this class are decidedly unconvincing. * *

One wav of making the railways present a better appearance of being interest-earning is put forward, and it certainly has the merit of boldness. Seeing that certain lines cannot be made to pay, it is proposed that they should be closed down and the capital, cost of the lines written off. If this is done the interest bill, it is assumed, will be correspondingly less. In ordinary circumstances, this would not be the case. But it so happens that of the total cost of railways construction some £8,100,000 came out of surpluses transferred from the Consolidated Fund. It is not borrowed money, and as the railways cannot earn enough to pay interest on it why not write it off and make a virtue of necessity and incidentally make the railways look a better proposition than they really are? The idea is not without its merits. It is indeed a sound business proposition if the railways were treated as a self-contained business. But it will lose any claim to merit if it is to be used merely to cover up the losses in operating the railways and to justify further expenditure on railway development in the future. The writing-off of the capital cost of the lines in question means the loss of the capital, whether it was borrowed in London or came out of the pockets of the people herein taxes.

Space will not permit of a fuller survey of the Budget on the present occasion but there are a number of subjects dealt with in it such as land settlement, highways policy, State advances, public works, borrowing, etc, which deserve attention. Speaking broadly, it can be said that Sir Joseph Ward has brought down a Budget which shows a good deal of courage and some resource. It can also be said, to use a phrase in common use, that he has “come down to earth.’’ Faced with realities the glowing promises of election time show distinct signs of fading. The keynote of the Budget is bigger burdens for the present and hopes deferred.