SOBER BUDGET

Hawke's Bay Tribune, Volume XXV, Issue 232, 17 September 1935, Page 7

SOBER BUDGET

COMES UP TO-NIGHT

CUTS PARTLY RESTORED Lower Unemployment Tax NO SALES-TAX REDUCTION Concessions to Pensioners (By Telegraph-Special to “Tribune.”) WELLINGTON, Sept. 17. To-night’s Budget is not to be as spectacular as the public might have expected in view of the early speculations, mainly based on the large surplus recently disclosed. On the contrary, the Finance Minister 's statement will prove to be a more sober document than many Government members would like, in view of the approaching general election.

The Budget makes it clear that last year’s profits on the sale of gold, £1,360,000, and the big excess of stamp and death duties cannot be expected to recur. Another factor making for caution is that, while business conditions have undoubtedly improved and the eales-tax clearly reflects this, it is the only item in the State revenue which at once benefits the Consolidated Fund when it increases. In other items of taxation there is a lag, as in the case of income-tax, when a full year has to expire before the benefit is felt in the growing total of assessable income.

While the Government may be justified up to a point in anticipating increased revenue, it appears that Cabinet has resisted the temptation to stage a flambuoyant pre-election appeal.

There will be no announcement of fresh loans. The Government has indicated that it will pursue a vigorous public works policy and has sufficient funds in hand to enable this to be done.

Members of the Government have frankly admitted that under the afreet of circumstances they have had to impose extremely heavy burdens on the taxpayer and that the time has arrived for some relief.

In his Budget of last year Mr Coates said that if the steady improvement in conditions continued he should be able to make further reductions in taxation this year, and it is anticipated that this undertaking will be carried out, but in a more modest form than was generally expected. Direct taxation is more objectionable than indirect taxation, and if reductions are coming they may be expected in this direction. This assumption excludes the sales tax, an indirect impost producing so large a return that the Government could not face the loss of over £2,000.009 involved in its abolition, a bile the list of exemptions is already so lengthy, filling seven pages of the statute, that it is hardly likely the Government wfll ex-

tend it. , However, the buoyant condition of the finances of some of the State trading departments has given, the Government an opportunity of giving a measure of relief to the whole community without handicapping the Consolidated Fund, and as a result the Budget may be expected to disclose some further attractive postal end telegraphic concessions. There has been a very vigorous agitation for the full reeloration of the Public Service cuts, but Public Servants, like the taxpayer, are not likely to get all they expect. It seems certain that the service will have to rest content with another 5 per cent, increase, which, operating over a full year commencing on April 1, would involve the public revenue to the extent of approximately £500,000. Variations in unemployment tax, now lOd in the £, are made by Order-ln-Council and the fund is not regarded as a budgetary matter. However, it is expected that the Minister will again review the position of the unemploj ■ ment fund and indicate the important bearing of the proposed extension of public works upon an immediate and ultimately permanent solution of the problem. Last year, when a reduction of 2d in the £ was announced, Mr. Coates held out some hope of a further reduction this year. Irobby anticipations are that there will be a further reduction of 2d in the £, but Mr. Coates has maintained very strict reticence as to the Government's plans.

It is expected that reference will be made in the Budget to the position of pensioners. Already an indication ha* been given that the Government intends to make provision for those returned soldiers who were discharged apparently fit but who have since developed disabilities. This is to be done at a cost of approximately £lOO,OOO. The possibility <'f an invalid pensions scheme being introduced cannot be overlooked, and although there may not be time to formulate a complete scheme on which Parliament can legislate this year, it can he regarded definitely as an important item of Government policy.