CONSOLIDATED FUND

Manawatu Standard, Volume LXI, Issue 193, 17 July 1941, Page 4

CONSOLIDATED FUND

LITTLE CHANGE IN FIGURES. NO TAX ALTERATIONS. The Minister said that in order to appreciate the position of the public accounts fully three separate budgets must be examined, namely, the Consolidated Fund, wherein are'' recorded tlio main taxation receipts and out of which the administration expenses of tho Government are met, the Social Security Fund, and tho War Expenses Account. 'These three budgets, while separated for clarity of accounting, are all interdependent. The War Expenses Account is now the most important of these budgets not only on account of the fact that in this account is reflected our financial contribution to the war, but because the total amounts involved eclipse the other two accounts put together. In logical sequence, however, it is necessary to consider tho Consolidated Fund first. It is not proposed to make any alteration in the rates of taxation for this year, and the following estimates have been compiled on this basis CONSOLIDATED FUND ESTIMATES. REVENUE. Taxation— £

EXPENDITURE.

Ul JLO‘I,UUU As compared with last financial year's actual receipts totalling £40,438,000, tho estimated revenue lor the current year shows a reduction ol £1,142,000. A reduction of over £1,000,000 has been allowed for in respect of Customs revenue, in anticipation of reduced imports, and a reduction of £222,000 in highways revenue to allow for reduced petrol consumption, hut a reduction in estimated income tax revenue will, it is anticipated, be more than offset by revenue from the excess profits tax, which will be payable this year, for the first time. Apart from the transfer of £l,500,000 to the War Expenses Account, the estimated expenditure is £37,712,000. This total is approximately £1.000,000 less than last year’s actual expenditure.

Debt charge and exchange show a comparative decrease of approximately £1,800.000 due to the repayment last year of Treasury notes in London. Oil the other hind, the votes grouped under the heading of “Social Services” are in the aggregate greater by approximately £1,000,000. This includes £246,(XX) for the Health Department, mainly on account of increased subsidies to hospital boards, £166,000 to provide for the normal increase in the costs of education, and the transfer of an additional £400,000 to the Social Security Fund. The other departmental votes in total show a comparative decrease oi £260,000. This, however, is after providing for £365 000 by way of additional subsidies for fertilisers, butter boxes, sugar, wheat, and coal, increases which for tlio most part arise out of the war. INCOME TAX ANOMALIES.

The opportunity is being taken this session to introduce amending legislation to correct certain anomalies that exist in regard to income taxation, the principal ol' which relates to tlie basis of assessment of trading banks. Since 18‘J4 banks have been assumed lor taxing purposes to earn prolits in proportion to their total assets and liabilities, the rate varying from 7s Gd per cent, when tho system was originally introduced, to GOs per cent, since lUlo. It is obvious that the assessed, income computed in this way bears no relationship to tho true profits of a hank; in fact, during recent years some banks have paid more in income taxation than they have actually earned in profits. The difficulty in the past, and, in fact, the justification for imposing tho existing system, has l>een tho problem, owing to tho bunks trailing in more than one country, of assessing accurately the profit earned in each, but by collaboration with the Governments concerned that difficultv has been overcome, and accordingly there is no longer any justification for continuing the existing obviously unfair system. The proposed legislation will therefore authorise) the taxing of banks on the basis of actual income earned in New Zealand, and make' them also liable for full national and

social security taxes. At the conclusion of liis review of the country’s finances tho Minister said that the three principal State budgets—the Consolidated Fund, the War Expenses Account, and the Social Security Fund —having been adequately provided tor, no increases in taxation | will be necessary this financial year, but it is confidently hoped that citizens will contribute to the maximum extent to the War Loan and the National Savings Bonds and Accounts. j Other Budget extracts appear on page S. j

Customs ... 7,700,000 Beer duty ... 1,000.000 Sales tax ... 0,300,000 Highways ... 2,172.000 Stamp duties ... 1,700,000 Land tax ... 950,000 income tax ('including excess profits tax) ... .. .10,100,0(K> Miscellaneous ... 215,000 £33,737,000 ltd crest ... 3,140,000 Other receipts ... 2,413,000 £5,559,000 £39,290,000

Permanent- Appropiations— £ Debt services .-10,955,000 Exchange 1,600,000 Transfer of highways revenue ... * 2,172,000 Transfer to War Expenses Account ... 1,500,000 Other permanent appropriations 395,000 £10,622,000 Annual votes— Social services 12,705,000 Other 9,425,000 £22,190,000 Supplementary estimates and contingencies 400.000 £39,212.000 Leaving an estimated surplus of £84.000