Budget Proposals Speculation

Manawatu Times, Volume 63, Issue 154, 2 July 1938, Page 5

Budget Proposals Speculation

Variations on Income And Land Are Unlikely STATE’S COMMITMENTS Per Press Association. WELLINGTON, July 1. Speculation concerning the nature of the Budget proposals this year centres on the subject of taxation relief. Actually, the people will be required to meet additional axation, by way of an increase of .’ourpence in the £ in the tax on vagea and other personal income, vilich is provided for under the Government’s superannuation and health insurance proposals. These same proposals eliminate any possibility of a reduction in the present 8d in the £ wages tax, the revenue from which, together with that from the propose ’ fourpence increase in the rate of this tax, is to be diverted into the social security fund. Although the suggestion has been made that the Government may abolish the present annual registration levy of £l, the fact is that the social security proposals of the Government specifically provide for the continuance of this levy, which produced £448,000 in 1937-38. On the other hand, this year’s finanjial document being what may be termed an election Budget, the Government is expected to give whatever taxation reductions it can. As regards the ex.ent of any taxation l * + ions, a re;tricting factor is the greatly extended commitments the Government has entered into on A he expenditure side, and which narrow the scope the Government has for reducing taxes. Any reductions that are open to the Government to make have to be balanced with the determined policy of the Government to redistribute the existing income of the country by means of taxatio devices and the spending of the proceeds on social and other services. In the matter of general taxation reision, a departmental committee has, ;ince the beginning of 1937, been reviewing the incidence, principles and administration of land and income taxation, but no legislation will be introduced this session for a general revision of the existing law, despite the fact that the Government has admitted that the legislation on the Statute Book contains anomalies. Income and Land Tax. Business opinion is that it is unlikely that any variation will be made in the existing income and land taxes on companies, as such taxation has afforded the Government an excellent yield, with a minimum of difficulty or odium in the collection, although the general public has largely paid these business taxes through higher prices. Graduated land tax, on rural, as well as on urban, lands, which was imposed in 1936, seems unlikely to be disturbed; the Minister of Finance holds fast to the policy that values that accrue to land through public ctivities and increased population should go to the State. Last year the Government eased the incidence of land tax to the extent of extending the power of the Comm’ssioner of Taxes to grant relief in ca*»es of proved hardship, and it would be a retraction of policy for the Government to go further in the matter.

Income taxation on the individual, the rates for which were increased in 1936, is not expected to be revised. The rates imposed two years igo were designed to fall on those grades of income which constituted in the aggregate the only substantial reservoir that existed to be tapped in this direction, and any material changes now could only be made at a sacrifice which the Government would not contemplate with any equanimity at all. Revenue From Customs. Customs taxation provides the Government with its largest single source of revenue—the amount realised from his source for the financial year which ended thre* months ago being £10,758,000. Gicat as the total Customs revenue is, it is also a fact that in the earlier ears of New Zealand’s history, the revenue derived from Customs and excise duties produced a greater proportion of *he total revenue than it does to-day. There is, never theless, an opinion held that the Governmen' may reduce the duty on te? and sugar, as a countei to the greatei cost of living, which has been causing the Government concern for some time. The present duties on tea and sugai date back some years, when increases were made for the purpose of securing much-needed additional revenue during the depression period. A duty oi 3d per lb. on British tea in i.ulk (formerly on tt e free list) was imposed in 1931, together with an increase ol 3d to 5d per lb. on foreign. As regards sugar, the duty on the refined article was increased to jfd per lb. in 1931, and raw sugar (which is imported for refinement at Auckland) was ir'-.d lutiable ai £d per lb., or, alternatively id per lb. excise duty on manufacture An additional id jer lb. on both refined and raw sugar va imposed as from February, 1933. Reduced duties on these two commodities may be a surprise of th. Budget—surprise because public attention has centred more on the sales tax. So far as the tax on sales is concerned, any anticipation that this will be abolished this year may be regarded as extravagant; the tax is to-day the Government’s third largest revenue-pro-ducer (£3,500,000 came from it in 193738) and it is not practicable for the Government to sacrifice that amt it of income without seriou.Vy affecting its spending programme. The most that seems probable is a reduction in the rate of the sales tax, and/or a series of additions to the list of articles which are exempted from the tax.

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