BUDGET TO-NIGHT

Dominion, Volume 31, Issue 2, 28 September 1937, Page 10

BUDGET TO-NIGHT

Some Expectations As To Contents

NO RADICAL CHANGES IN TAXATION

Public Works Expansion Programme

Legislators do not appear to anticipate any radical changes in taxation as a result of the Budget to be introduced in the House of Representatives to-night by the Minister °f Finance, Hon. W. Nash. The general feeling in Parliamentary circles is that a reduction in national expenditure is unlikely, and that tlie Government .will, therefore, require the same amount of revenue from taxation as it obtained last year.

After last year’s Budget was presented, a committee of Government members was set up to examine the whole incidence of taxation in New Zealand, in the light of Labour’s avowed policy that direct and not indirect taxation should be the principal source of revenue. It is gathered that this committee has made considerable progress in its deliberations, and has made at least one comprehensive report to the Government. However, the suggestion in well-informed circles is that the time is not opportune at present for any widespread change in the taxing system, and that Mr. Nash s latest proposals are likely to be only variations of those put into operation a year ago.

From statements which have been made recently by members of the Cabinet, it appears that there will be no alteration in the rate of either the unemployment wages tax or the petrol tax. The unemployment tax, which was wholly an emergency measure imposed during the depression, yielded approximately £4,225,000 last year, exceeding the Budget estimate of £4,210,000, and with a full 12 months of increased wages and salaries the revenue from this source during the current financial year is expected to be appreciably higher. . Petrol taxation is included in highways taxation for the purpose of the summarised accounts, and from this source last year the revenue was £9OOO below the estimate. Mr. Nash himself has stated very definitely that no reduction in this form of taxation can be expected this year. There is nothing to indicate that the sales tax will be removed this year. Government members in Parliament have remained steadfastly silent when Opposition speakers have recalled the promise by the Prime Minister, lit. Hon. M. J. Savage, that this tax was to disappear, but the general view is that Mr. Nash cannot afford to remit the growing yield which comes from it. Revenue from sales tax last year was £3,045,000, an excess of £145,000 over the estimate. Land and Income Taxation. The proposals regarding income tax will probably be the subject of chief interest when the Budget makes its appearance. The new system of income tax introduced last year yielded £6,619,000, exceeding the estimate by £619,000, and it is safe to assume that a tax based on the same rates would give an even higher return this year, when the income of a record export season will be partly available for taxation purposes. There is a suggestion that the Budget may reveal plans for altering in certain directions the incidence of land and income taxation. It is not known whether alterations in respect of income tax will benefit taxpayers on the lower and middle incomes or whether they will increase the amount to be taken from the higher incomes. One thing seems fairly certain and that is that Mr. Nash will continue ou the reasonably orthodox lines which he laid down last year. On that occasion the Minister budgeted for a small surplus of £13,000 which, with the buoyant state of trade during the year, was converted into an actual surplus of £472,000. Mr. Nash has already given an indication that he will probably budget again for a small surplus this year.

Some mention of interest rates is bound to be made in the Financial Statement. This matter was the subject of some comment by Hr. Nash on his return from England. Low interest, rates form a cardinal point in the Government’s policy and the Minister may be expected to give some indication of steps to be taken in the future. Housing is also likely to bulk largely in the Budget, and there is a fairly general belief in Government circles that provision will be made for increased activity in this department. Public Works Programme. The same remark is likely to apply to public works, for which a substantial programme of expansion has been prepared. It is known that plans are being advanced for an extended reading programme in country districts and this may be the subject of reference in the Budget. Other points which are expected to receive attention are the guaranteed price policy, a forecast of legislation for trade agreements with overseas countries, and the national health and superannuation schemes. It is quite possible that Mr. Nash will quote detailed figures showing the' factors taken into consideration by the Government in fixing the prices for the current export season, and it is only natural that he should give a review of the first year’s operations of the Marketing Department. On the question of trade agreements, Mr. Nash may be in a position to state more definitely the results of his mission overseas, and in this case reference will probably be made to the anticipated completion of an agreement with Germany. With regard to national health and superannuation proposals, details have still to be completed by the Government committees concerned and, as it is hardly likely that financial provision will have been made for either scheme before March 31 next year, no detailed statement of policy is expected to be included in the Budget.