FINANCIAL STATEMENT.

Kaikoura Star, Volume LX, Issue 53, 1 July 1940, Page 4

FINANCIAL STATEMENT.

SUMMARY OF POINTS IN BUDGET WELLINGTON, .Tune 27. Heavy increases in direct taxation arc provided for in the Government’s first War Budget. These increases will affect all sections of the community. The great changes in the financial situation brought about by the war were emphasised by the Minister for Finance (the Hon. W. Nash) in his Financial Statement in the House of Representatives this evening. “The costs of war, apart from borrowing overseas, must must come from current production for the material and services that are required now,” said the Minister. “Everyone is vitally concerned in the outcome of this war, and, therefore, should make some appreciable contribution towards its cost.” War expenditure for the current year is expected to reach £.37,500,000. The

Minister intends to do everything possible to moot war c<>.-! ■ as the\ accrue. He proposed in his i • i lget increases m income and company taxation. <l< .u duties, sales lax, :m<l :i now Nati'. i ;;:l Security Tax of 1/ in the £ on all id come. A.s part of a sustained economy campaign, nf’tional savings loans a. ill be availahi- A r the rank ami file investor. Taxation for war ex penses is expected to raise £11,120.001). ami it will be necOFsarv to borrow £3,630,009 in New Zealand for war costs here, and £19,70,000 for expenditure overseas, to be borrowed in Great Britain. War needs dominate the Budget, ami drastic reductions will be made in allocations for highways, public buildings, and public works generally. Features of the Budget are as folNew National Security Tax of 1/ in the £ on alt income. Sales tax to be doubled, making it 10 per cent. Increased income tax, starting at 2/6 in the £ on lhe first £lOO of tax able balance to a maximum of 12/

in the £. Increased company taxation, rising from 2/6 in the £ to a maximum of 8/9. Increased tax on debenture interest. A flat increase of 15 per cent, on both company and individual taxation, to be credited to the War Expenses Account. Taxation of State trailing concerns. A new scale of death and gift duties, with a big reduction in exemptions. and increased maximum Provision for a National Savings Scheme in con junction with the Post Office Savings Bank. provision for compulsory loans from all who have the means. The volume of national works will be reduced, highways expenditure re-1 duced by more than £4,090,009, and loan requirements for public works s u 1 >st an t i ally red need. Provision at a later stage for the transfer to the State of the whole of any excess profits made during the war. OFFER TO UNITED KINGDOM GOVERNMENT. On the outbreak of war the New

Zealand Government., on behalf of the people, immediately offered full and unqualified support to the United Kingdom and her Ally, France, and every effort has been made to make that support as effective as possible. Apart from the all important assistance in the actual theatre of war, since the outbreak of hostilities the whole of New Zealand’s exports have been made available to the United Kingdom Government, while at the same time, under our import selection policy, purchases of goods have been diverted to the United Kingdom wherever supplies have been available from that source. In present circumstances, when all attention is focussed on the war situation, J do not propose to review the governmental activities of the past year to the same extent as is customary (said the Minister), but will refer to them in relation to our war effort or for purposes of comparison. Otherwise I propose to deal as concisely as possible with, proposals for the current, year.

1 I.:l-i year’s public accounts have al- | ready been published, disclosing a Budget surplus of £319,000. Honourable members will obtain full details from the usual departmental reports, although those will be reduced in size to conserve the paper supplies. UTILISATION OF RESERVE BANK CREDIT. As the war progresses and its costs continue to mount we may be forced to utilise Reserve Bank credit to some exlent, stated the Minister for Finance.’ Bank credit is a normal and sound method of financing additional production, but to issue additional money to purchase for war purposes a portion,, of an existing volume of production must mean leaving civilian consumers with the present volume of purchasing power to buy the much smaller volume of goods that remain available for them. That involves progressive inflation, and experience in other countries lias shown that the disastrous effects which follow fall most severely upon the rank and file of the ' people. Except to the extent by which

production is expanded we,must inevitably consume or use less luxury products if we are to provide all that is required for a maximum war effort. Ji is infinitely better for everybody that the measure of the sacrifice required from each and every one to carry on the war should be made out of our current income either by way of taxation FINANCE EMERGENCY REGULATIONS. The spirit of work on the farms, in the factories, on the waterfront, and in public and other services is developing, as understanding of this issue grows, continued the Hoh. Mr Nash. We are creating more goods ami providing more efficient services than at any period in our history. There is still much to do. We must keep our people- employed on productive work and organise and utilise all possible resources of lhe Dominion; utilise them to help the Motherland by sending her every ounce of products she requires. Maximum exports and minimum imports are the best contributions we can make during the war years to assist the United Kingdom and carry qu<- share of the • Ammon load.

Every policy must be subordinated to the war requirements, but peace will come—our soldiers will return —-and we must prepare for them. In the meantime work and service are the test, and till the present struggle ends will remain the test. We must give all.

Saint Ignatius Loyola, who lived more than four centuries ago, sums up the spirit that should—nay must —animate all our men and women to-day if we are to come through this conflict victorious. The spirit is: “To give and not to count the cost, To light and not to heed the wounds, To toil and not to seek for rest, To labour and not ask for any reward. ’ ’ Aly statement ends on that note, concluded the Hon. Mr Nash. If we and our people can catch the spirit of Loyola, our actions will not only help us to save ourselves, but enable us to contribute our share to the saving of the British Commonwealth, the other Eng-lish-speaking countries, and the great democracies of Europe which are now crushed under the heel of the invading

oppressor.

NO INCREASE IN DIRECT TAXATION THROUGH CUSTOMS. LUXURY AND OTHER LINES. One of tin' surprises in the Budget introduced by the Minister for Finance is that there is no increase in the direct taxation through Customs or Excise on luxury and other lines that many taxpayers expected would have been more highly taxed. No fresh imposts were indicated in the Statement on beer, tobacco, petrol, spirits, or othqr goods in the luxury class. As the Minister himself said, the Statement dealt almost exclusively with war finance and its effects on our economy. However, the doubling of the sales tax will no doubt increase the price of luxury lines, along with all other commodities. PUBLIC DEBT. INCREASE OF £18,037,264 FOR YEAR Further increase in the National Debt over lhe Inst financial year was recorded in the Financial Statement of Hie Minister for Finance. The Minister said: “The total borrowings amounted Io £21,615,965, while redemptions and debt repayments nut <>f revenue totalled £2,678,965, resulting in a net increase in the nominal amount of the Public Debt of £18,937,264. “Of this increase £1,090,000 represents a short-dated sterling loan by the New Zealand trading banks, while Treasury notes amounting to £1,080,000 were issued to the United Kingdom Government representing advances under the exports credits scheme. The balance of the net increase—namely, £16.957,264 —was raised in New Zealand. ’ ’

WATERFRONT COMMISSIONERS. SALARY’ OF £1250. The salaries paid to the three waterfront Commissioners recent tv appointed by the Government is £1250 a year each. This is disclosed in the estimates of the Labour Department, presented to the House of Representatives on Thursday night. Two of the waterfront controllers receive £B5O each, two £750, and the fifth £650. The six wharf superintendents receive salaries of £6OO. STATE FUNERAL. The cost of the State funeral of Mr Savage was £3150, and an additional item in the estimates is for £59, the cost due to the Air Department for the hire of aircraft to convey Mr and Mrs French, with whom Mr Savage lived, from Wellington to Auckland after his death.