THE BUDGET SURPLUS

Manawatu Standard, Volume LVII, Issue 110, 10 April 1937, Page 10

THE BUDGET SURPLUS

DUE TO SALES TAX REVENUE. The parting announcement by the Prime Minister that a surplus of £IOO,OOO in the national accounts appeared to be assured for the financial year just ended has been received by the country with gratification (says a statement by the Associated Cnambers of Commerce of New Zealand), particularly in view of the fact that a surplus of only £13,000 was anticipated by the Minister of Finance when the Budget was brought down- last year. The detailed figures showing how this was accomplished will be of considerable interest when they are made available to the public in due course. The chief means by which this surplus' was achieved was, of course, high taxation, which in turn was aided very materially indeed by the favourable prices that have been received by the primary producers, the value of merchandise exports in the calendar year 1930 at least (in terms of New Zealand currency) having been the highest yet recorded, while remarkably lngli values have ruled during the wool-selling season. These factors have enabled a hightaxation programme to be carried out for the year. ESTIMATE EXCEEDED.

Collected returns from the various ports of entry for Customs purposes show that the sales tax is the key to the Budget surplus. The Minister of Finance estimated last year that, for the financial year ended last month, the sales tax would produce £2,900,000. Actually, the vield from the tax was £3,040,986, whicli is £140.985 in excess of the estimate, hence the Budget surplus of £IOO,OOO. It is a somewhat ironic situation that the sales tax, which the Government is under pledge to abolish, should be the one which has made a national surplus possible. In the passage of time since its introduction the sales tax has grown to be a most prolific source of revenue. It has produced the following revenues:— SALES TAX COLLECTIONS. £ 1932- (less than 2 months) 38,253 1933- 1,847,333 1934- 2,170,503 1935- 2,462,602 1936- ... 3,040,985 The sales tax was introduced (in February 1933) at a time “when additional revenue was needed to meet national commitments.” As compared with that year (1032-33) Consolidated Fund not revenues (exclusive of sales tax and unemployment taxes) increased by £1,179,498 in 1935-36, while the official estimate of similar revenues for the year 1936-37 just concluded was foi £5,636,000 more than in 1932-33. Yet the sales tax still remains. SALES TAX PER FAMILY. The average family of four persons paid £7 14s 3d in sales tax in 1936-37. That is on the sum collected by the Customs; actually, the people paid more than the yield to the Government, because the increase in the cost of goods subject to the tax was greater than the 5 per cent. tax. As payment of tlie tax by the wholesaler or manufacturer is, in the main, met some time before it is reimbursed by collection from the customer, financing costs are involved, and these, together with the extra labour involved in the compilation of the necessary analyses and returns by business concerns, are in large measure passed on to the consumer.

There seems to be no move to remove the sales tax. On present revenues, to reduce it by one per cent, would mean the sacrifice by the Government of £600,000. The trouble is that Government expenditure is increased just as fast ns old and new taxes bring in fresh revenues—faster, in fact, because greatly increased spending was provided for in last year’s Budget in anticipation of the increased revenues to come, creating new national commitments. Total Government expenditure in 193233 was £28,594,255 (from revenue and loan moneys) while for the year ended last month it was brought up (on estimate) to £41,610,711— an increase of 45 per cent. The fate, of the taxpayer, and of trade, industry and commerce, seems to be an endless dipping deeper into their pockets for intcrmably multiplying national commitments which have to-day reached most disturbing proportions.