BUDGETING FOR DEFICIT

Evening Post, Volume CXIV, Issue 1, 1 July 1932, Page 6

BUDGETING FOR DEFICIT

If there is any consolation in the reflection that a deficit is not as great as the Government at one time thought it might be, New Zealand is entitled to that consolation. The deficit was estimated at about 2-1 mil-

lions; it now figures at £2,140,000. Still two millions is two millions, and is a sufficiently heavy deficit to impress electors who have been asked by farmers on the platform and in the Pressto approve a policy of high exchange that would load the oversea interest bill still more heavily against the Treasury. Of the deficit of £2,140,000, nearly one and a half million is caused by two items: Subsidy to the Unemployment' Fund; £1,120,000; extraordinary (and im> anticipated) expenditure, on change, £374,000, total £1,4.945000.; It may bring home to people the times in which they live if they note that the £1,120,000 subsidy to die Unemployment Fund is nearly equal to the total motor vehicle taxation revenue (£1,184,186)" for the year (1931-32); is very much greater than the total of interest paid in by the railways (£841,720); is more than twice the land tax revenue (£542,128); is over one quarter of the whole yield of income' tax (£4,447,814); and is not much less than one-fifth of the whole yield of lhat one-time backbone of the revenue—the Customs (£5,904,348). Customs in 1930-31 yielded £7,605,976, so the 1931-32 figure is well below that, also below the Finance Minister's ■ estimate, £6,750,000.

The behaviour of Customs and income tax is always interesting, but it cannot be said that there is anything surprising in the failure of these two big items to reach the Finance Minister's estimate. If a country is too poor (in exports) to import, it cannot have big Customs revenue; and if it is not carrying income it cannot make good in income tax by double-taxing income not earned. The tax increase did give a net result in 1931-32, because the published,! figures indicate that income taxi yielded £4;447,814, or about i £440,000 more than the 1930-31 receipts, but the Finance Minister's October- estimate of income tax yield was £4,935,000; and ihe writing is clearly on the wall in the matter of continued over-taxation of income. In comparing the estimates and the results for 1931-32, the Prime Mim ister points out that the expenditure would not have' shown an excess (£233,000) over the estimate if the Budget had not been loaded with extraordinary exchange (£374,000) not allowed for. The part of the expenditure controlled by vote was actually £300,000 less than the appropriation, and the economies generally exceeded the estimated saving. Alterations in unemployment taxation have created a new basis of revenue for the current year, but there will be new expenditure, too. The three-cornered problem of tax, axe, t and unemployment remains with us."