BUDGET BALANCE

Evening Star, Issue 20311, 21 October 1929, Page 8

BUDGET BALANCE

PREMIER JUSTIFIES TAX PROPOSALS H 0 CHANCE Of BIG SURPLUS All FACTORS REVIEWED £Pob Uwrrsn Prxss Association.) WELLINGTON, October 21. Sir Joseph Ward, the Prime Minister, stated to-day that, in view of the fact that there still appears to be misapprehension and also some misrepresentation as to the Budget balance for the current financial yean, ho proposed to outline the position". “ It has been stated,’] he said, “that the additional taxation is being imposed merely for the purpose of producing a huge surplus, amounting to a million some have alleged; but all will recognise that to impose taxation is not a popular thing to do, and no Government would take such action unless it was necessary to ensure the balancing of the national accounts. If New Zealand is to maintain its good repute this is essential, and if additional revenue is necessary (and that is undoubtedly our position at present) I have no option but to do my duty. As I stated in the Budget, the estimates of expenditure for the current year were most carefully overhauled before considering the question of taxation, with a view to reducing them to the minimum consistent with the maintenance of present services. As a matter of fact, new services contemplated by this Government when it took office were held back on account of the financial position, and the Budget estimates were based almost wholly on services already supplied by the State. Further, it was quite apparent that, having once received these services, people generally did not want to lose them. Thus, allowing for normal and inevitable increases, the expenditure programme was practically fixed by our predecessors in office, i

“ The net expenditure last financial year was £24,177,000, and to the estimates for this year there had to be added £702,000 to meet increased charges for interest and debt repayment, together with automatic increases for various charges and subsidies fixed by the permanent appropriations, none of which was capable of administrative reduction. The increase in the annual vote on the main estimates was kept down to the modest figure of £31,000, These amounts, together with the usual allowances for the supplementary estimates and contingencies (set down at £262,000), made up the Budget expenditure total of £25,172,000, an increase of £995,000 over last year’s expenditure. “ Under these circumstances, £25,172,000 of revenue is required to balance the Budget. Last financial year the revenue amounted to £23,600,000, so that it will be seen that £1,572,000 of additional revenue has to be obtained this year, although the comparative increase in expenditure is only £995,000. The difference of £577,000 is due to the fact that, last year, there was a deficiency ol this amount. A careful review of the revenue prospects showed clearly that I could not rely on the normal expansion of existing taxation to produce £1,572,000 additional revenue. Items of revenue, apart from taxation, were overhauled with a view to seeing that all legitimate recoveries were brought to account, and even so, the estimated revenue was found to be short by about £700,000, and the Government had perforce to bring down (roposals for additional taxation; and, for the reasons given in the Budget, it was decided to obtain this from land tax and primage duty to meet the position. “ Since I delivered the Budget, some modifications have been made in the land tax proposals, and some of the savings counted upon will not operate at present. Very little in the way of surplus was anticipated from the original proposals, which were designed to do no more than makp sure that there was no repetition of last year’s results. Any margin has been absorbed in concessions since granted, and the finances will how have to be tightly held to make ends meet. “Needless to say, the statement made from time to time that I am budgeting for a £1,000,000 surplus, is nothing more than political propaganda, designed to mislead people; and the. figures I have given should satisfy al! reasonable people .of the fallacious character of these extraordinary statements. The accounts for the half-year are not yet ready for publication, but the indications are that the Budget estimates will be sustained. As our largest and most uncertain item of revenue, I have been carefully watching the position of the Customs. I have recently,” said Sir Joseph, “ had the Budget Estimates reviewed by the departments concerned, and the report is to the effect, that while the probable ‘volume of imports for the remainder of the vear is still somewhat uncertain, it appears likely that, with the additional primage duty, the Budget estimate of £8,400.000 will be reached, and may be exceeded by about £50,000.’ It appears that the composition of our imports is changing, and there is a distinct tendency for a decline in the imports o c some of the largest revenue producers—notablv spirits and tobacco. In the former «ase decreased consumption is the cause, while the decreased import of tobacco is the result of local industry. On the other hand, the importation of other classes of goods, mostly duty free items, such as manures and raw materials, appears to be increasing, but these will not help revenue.. Importations of motor vehicles had been heavy during the past few months, but experience shows there is a considerable seasonal element in this trade, the imports being high in the first sis

nonths to meet th© coming summesales. “ It is fairly certain that the state of international finance and the increased bank rate in England will react on imports, and altogether the posilon is very complex, but I am satisfied after a most careful review of al! the factors, that there is no justification for the statements frequently made that the Customs will produce considerably more revenue than was allowed for in the Budget, “The yield from land tax and income tax can be estimated with more certainty, and all subsequent investigations affirm the position outlined in the Budget—that the additional revenue in be obtained from the land tax and primage proposals is, absolutely necessary to enable the accounts for tho year to be balanced.”