Evening Post. SATURDAY, JUNE 17, 1916. THE BUDGET

Evening Post, Volume XCI, Issue 143, 17 June 1916, Page 4

Evening Post. SATURDAY, JUNE 17, 1916. THE BUDGET

A note of cheerful confidence pervaded the most interesting Financial Statement ever submitted to the New Zealand House of Representatives. "Itis my pleasing duty to lay before honourable members a favourable statement concerning the finances of the Dominion for the year just concluded," sa-id Sir Joseph Ward, in his opening sentence. Other parts of his task were not so easy, for, as he said, it is never pleasant to have to submit proposals for increased taxation, and some of^ the proposals in that direction were of a drastic character. But the note of confidence was as well sustained through this part of the speech as through the rest of it. The Finance Minister expressed himself confident both in the material resources of the country and in the resources of its patriotism as adequate to meet the call, that is made upon them, and we are sure that his confidence is not misplaced. The country is assuredly ready and willing, as be says, to shoulder the. additional burdens with unflinching courage. It could have shouldered, not merely with courage but with cheerfulness, much heavier burdens than he is asking it to bear, and there ara ample reserves of both, these qualities left to meet the more exacting demands that must inevitably follow. The announcement of a net surplus of the revenue actually received during the year over the ordinary expenditure amounting to £2,017,030, certainly gave the Finance Minister a very pleasant start with his onerous task. This amount corresponded almost exactly with that which the extra taxation imposed last year was ex.pected ultimately to yield, but it is twice as much as what that taxation was estimated to produce during the year., The- general revival of trade, the immense- prices realised by our producers as a result of the war, and the British sovereignty of the seas, without which neither of these causes could have operated, are properly indicated by Sir Joseph Ward as the reasons for this happy result, In ordinary times, a surplus representing nearly 20 per cent, of the estimated revenuo would be bad fina-nce, but in the present case theFinance Minister justly regards it as a matter for congratulation rather than apology. Two points in connection with this surplus are particularly gratifying. In the first place, there has actually been a reduction, in the Departmental expenditure, not large, but still valuable owing to ths normal tendency to increase; and secondly, the surplus is to be invested in Imperial Treasury Bills, in addition to a sum of £1,325,000 previously so invested. Both as a reserve fund and "as a partial set-off by New Zealand against the war funds so generouslyi advanced by the Motherland" this arrangement is eminently satisfactory.

With regard to loans, we are; particularly pleased to see that Australia's lead is .to be followed, though the extent is not defined. In proposing to reduce the Public Works expenditure and to raise £2,500,000 locally for this and other domestic purposes, including £500,000 for the purchase of land for soldiers, the Government may be said to be making a virtue of necessity. The immenße amount of money lying idle, and the ease with which the two million loan was floated locally, show that this project will be easily realised. But the principle of financial self-reliance is to be given a wider application. The patriotism of our investors is to be asked to relieve the Imperial Government of thecoat of financing a part, at anyjrate, of the £12,000.000 that we shall need during the year for the expenses of the war. What proportion of the money, is to be so raised is not stated, "but tlie system of war bonds with a, currency of twentyfive years, and bearing interest at 4Jrper cent, free of income-tax, which the Government- proposes to' institute will produce a ready response. The. principles! enunciated by the Finance Minister o£? psm«ris£ Mis tiiipeHs,!: $tt*si«awnfc to

the heartiest support. To what extent this can be done will largely depend, as the Minister sa-ys. upon the amount realised by his taxation proposals. These proposals have the great merit of simplicity. A 45 per cent, tax on war profits is estimated to produce £2,000,----000, and a tax of 5 per cent, on all other incomes £750,000, The principle o! both these taxes will command general approval, and few will be disposed to regard either of them as excessive in amount. They are more open, to criticism from the opposite standpoint. The Finance Minister's estimate shows that the aggregate excess profits of our producers and merchants; from the war are assessed at about £5,000,000. Why should not the country intercept half that amount, or even more? In the United Kingdom the tax started at 50 per cent., and was increased in April to 60 per cent. For an all-round rate the additional tax of 5 per cent, on all other incomes- is less obviously inadequate. As the exemption of £300 is maintained—a limit at which the British taxpayer is already paying £20 5s on earned income and £27. on unearned income—our in-come-tax payers ought to regard the demand as a mild one.