The Dominion. WEDNESDAY, AUGUST 2, 1939. SOARING SPENDING AND TAXATION

Dominion, Volume 32, Issue 261, 2 August 1939, Page 8

The Dominion. WEDNESDAY, AUGUST 2, 1939. SOARING SPENDING AND TAXATION

Prefaced by platitudinous professions of good intentions, the first Budget handled by the Prime Minister in person commits the country to a further orgy of spending, and proposes to add a further staggering load of taxation which will fall on the shoulders of a 1 classes. There is not a single evidence of any serious recognition of the need for slowing down in the costs o£ Government,, but on the contrary it is made plain that the rate of spending is to be further accelerated. . _ T , tare Speaking in the Town Hall, Wellington, m November, 1/ob, just prior to the success of his party at the polls, Mr. Savage professed concern at the cost of Government. “The of Government,” he assured the electors, “will not be increased. that was the pledge he gave in 1935 when the Budget proposals of his predecessors in office involved an expenditure of some *31,000,000. Last evening he brought down a Budget providing for an expenditure of over *62,000,000, exceeding by *6,000,000 the record burst of extravagance established by his party’s election Budget of last year. A comparison with the figures of recent years will perhaps enlighten the reader more than many words could do. Here are the totals for the past seven years:

These figures speak for themselves and they convey a message which must occasion the gravest concern. The position is even worse than here disclosed, for to the total of this year has to be added the costs of the Social Security scheme, the charges on which no longer appear under the Consolidated Fund. To some extent this is offset by a charge of *2,500,000 for unemployment relief, which now has to be met out of ordinary taxation. What the exact cost of the Social Security services will prove to be this year, however, has yet to be disclosed, but whatever it is it has to be added to the record sum of *62,000;000 to be spent out of the Consolidated, and the Public Works Funds. It will be noted that of the huge sum amounting to nearly *24,000,000 which it is proposed to spend this year on public works, it is intended to provide nearly *20,000,000 out of borrowed money. What amount of fresh borrowing this actually will involve is not< clear, but it may be recalled that Mr. Savage in 1935 in placing his party's policy and platform before the country affirmed that “Borrowing means debt in perpetuity which has already reached unmanageable proportions” Yet in 1936 his Government took authority to borrow *13,000,000; in 1937 another *8,000,000; in 1938 another *14,000,000; and this year a further unspecified amount of additional millions. These borrowed millions unfortunately are being expended largely on unproductive public works and State buildings, and not only add to what Mr. Savage himself described as a debt of unmanageable proportions, but become a permanent taxation burden. Overshadowing the whole Budget is this burden of taxation. Everyone directly or indirectly is to be made to suffer one or more further turns of the screw which already pinches so severely. Income taxation is to be increased to the tune of another million a year. Even the lower-paid wage-earners are to suffer, while companies and individuals with larger incomes are to be taxed up to nearly one-half of their profits or their income as the case may be. The income tax limit on private incomes, it is true, is fixed at 8/2 in the £ and that of companies at 8/7, but in neither case is the tax of 1/- in the * for the Social Security Fund taken into account. Indeed, it is no exaggeration to say that in many cases of large institutions the Government, in one way and another, will be taking more than 10/- in the * of their profits. s This drain on the resources of public companies and individuals has already been carried to an excess which must handicap and in some cases entirely cripple the development and expansion of business enterprises which it.is in the interests of the community to encourage. The Government does not appear to realize that it is also exhausting the sources from which its revenues spring. There would seem to be no end to its folly in this respect, for it even proposes to aggravate the injustice of the double taxation of the farming community by repeating the exemption from income tax of small farmers. Most people had expected that some relief would be given the farming community in view of the general state of the industry today, but the contrary is the case. Increased death duties are another imposition to be enforced, and widows and children are to come under the lash of Socialistic resentment of individual thrift and saving.

No doubt the tax of 4d. a gallon on petrol seemed to someone an easy way of securing an additional million of revenue. It may not prove either so easy or so profitable as imagined. Fourpence a gallon on to the already high-priced petrol is likely to play havoc with road transport costs as well as seriously interfering with private motor-car users. Indeed, there may be quite marked reactions in a variety of directions affecting even the motor industry itself. , The proposed increase certainly appears to be excessive, and like the increased tax on beer suggests that the Government is hard pressed to secure the revenue it requires. , The Budget is a depressing one. It holds out no hope of a return to sound management of the country’s affairs. The one idea throughout appears to be to win as much favour as possible by continuing to spend as much as the Government can lay hands on by borrowing and by taxation. Private enterprise is discouraged at every turn and handicapped by fresh impositions. There is no practical encouragement held out for the farming industry which badly needs it. The secondary industries still have hanging over them the uncertainties arising out of the undertakings entered into by the Minister of Finance in London. Mr. Savage has produced a Budget which creates many new burdens to be borne and which intensifies the fears already felt for the future.

Permanent appropriations. £ Annual appropriations. £ Public Works expenditure. £ Total. £ .1933-34 .. 13,750,000 •10,452,000 ‘ 3,500,000 27,702,000 1934-35 .. 13,442,000 11,058,000 3,560,000 28,060,000 1935-36 .. 13,748,000 12,142,000 5,630,000 31,520,000 1936-37 .. 14,088,000 16,587,000 10,450,000 41,125,000 1937-38 .. 15,620,000 19,628,000 17,367,000 49,615,000 1938-39 .. 14,332,573 21,440,105 20,719,000 56,491,000 1939-40 .. 15,131,000 23,112,000 23,917,000 62,160,000