BUDGET “PLUMS”

Greymouth Evening Star, 7 August 1946, Page 6

BUDGET “PLUMS”

MAY NOT PROVE AS SWEET AS EXPECTED POSSIBLE CONCESSIONS [SPECIAL TO STAR.] WELLINGTON, August 6. The secrets. of this year’s Budget are being guarded even more closely than in pievious years. There has been much talk of an “election-win-ning Budget,” but indications are that the hopes of large reductions in Taxation cherished by some optimists may be dashed, or at least dampened. Observers at Parliament feel that too much has been made of Budget “plums” and that many people may be inclined to view its contents as disappointing. The opinion is held that, rather than wait for the presentation of the Budget, the Government should have prepared the way by giving more prominence to the heavy post-war defence burden, costly social security and other benefits, and other matters which must keep expenditure at. a high level. Incidence of Taxation

A reduction of sales tax or possibly its elimination from some articles such as building materials and adults’ and children’s clothing is an obvious choice for inclusion in the Budget. There has been talk of a reduction in duties on cigarettes, tobacco and beer, with the provision of sixpenny “handles,” for the election. Although these suggestions have a great number of supporters, it is difficult to find confirmation. If any reductions in sales tax or duties were included in the Budget, it would be unsatisfactory to wait until legislation was passed through the House, and it is more likely that it will be done by customs resolutions, to be put immediately after the presentation of the Budget and passed before the House adjourns.

Suggestions that a further 6d in the pound might be removed from the present total of 2/- wages tax were current earlier this year, but as the Budget draws nearer supporters of this theory are becoming noticeably fewer. War Loading on Income

A great deal of interest centres on the present 33 1-3 per cent, war loading on income tax rates. There are some who foresee its elimination, but others who are close to the Minister suggest that a reduction to 10 per cent, may be all that can be expected. There is a possibility that the present personal exemption of £2OO may be raised as one way of reducing taxation on those in the lower income group. It may be significant that trade unions have been pressing for this, arguing that increased costs of living justify some increase in the exemption. Recent references by both the Prime Minister, Mr Fraser, and Mr Nash to the need for New Zealand to shoulder a greater share of Empire defence have not passed unnoticed in Parliamentary circles. It can be taken that defence expenditure will be higher than might have been thought necessary almost 12 months after the end of the war. This factor, together with the greatly-increased pensions and benefits, should temper the opinions of those who aver that, now the war is over, expenditure will automatically revert to 1939 levels. On the other hand, it must be remembered that Mr Nash has a tidy sum in hand from the last financial year, and, more important than all, perhaps, that this is election year.