GALL FOR ECONOMY.

New Zealand Herald, Volume LII, Issue 16007, 27 August 1915, Page 4

GALL FOR ECONOMY.

£2,000,000 TO BE FOUND.

BEER AND SPIRIT DUTIES. NEW TOTALISATOR CHARGE. BANK NOTES AND CHEQUES.

/ j In the introductory paragraphs to the Statement, Sir Joseph Ward said: — "The: increased taxation is proposed chiefly on I account of the war, and partly owing to the genera] expenditure increasing out of proportion to the increase of revenue. The v-! '-• ■■? '..•• f. •<:; proposals and in- »-!• ■■- ■■': <'■■■■ nt. • i ■'. ihe various public ! Bi'i'Vi'.-' v.-.'.' be !.•-.:-■<! with a view to' re;n ; :'s'i/ii-.;- :■. nd relictions when these arc • made posdh'e l. v improved condition?. In ad jr. tin:: the tax ,th and the rates for Various public srrv'«ces my object has b-cii t'' A'> ;'» with ■/it*, imposing additional ! ciiar.-e.-- on the cost of living. I ha.\e refrained from reducing the exemption for ' ineorr.c-tax, which still remains at £500.! :.;. i no tax is payable urvon earnings of the people below that amciut per ann'in: < >:• ' the. other hand, 1 propose to tutor ti.e income-'.ax a. -i other taxes so tliat those who ii;ivf> h«en making larje profits ri-io chiefly to 'ho conditions produced by the war shall p.iy a considerable portion oi their earnings to the country, and this they should not grudge, as the heavyborrowings incurred for war uh.irges have, secured them in their possession, and in tho inestimable blessings tiny enjoy as nii-nibers oi the British race. '■ The financial position created by the war is one caning fur prudent and vigorous treatment, and must bo faced by the Government and the people with inflexible courage. I cannot too strongly impress upon every section of the community the necessity for care and economy, especially in " the matter of luxuries, until the great war now raging is over. I do not .vi.--h to suggest that there should be a diminution in employment. On the contrary, both Government and private individuals can materially help the country in coming successfully through the present crisis by maintaining employment at its norma] maximum and at. the. same time doing everything possible to prevent waste and extravagance As a producing country we possess enormous advantages in comparison with most 5 other countries, but wo must not rely upon the present high Prices for our 1 lK!f P roducts Wng maintained after the- war * over. The huge and un m I

equalled war expenditure of the older countries must enormously limit the pur-chasing-power of their peoples until sufficient time has elapsed to enable the nation to take stock of the altered con-' ditions and to adjust their taxation and finance to meet the requirements of the new order of things. We shall require to do likewise, and it is our duty to take all reasonable precautions now to prepare for the exacting task that lies before us. If we are to recover quickly the losses ! we are suffering in the struggle in which we are engaged, there must be cordial cooperation and ready self-sacrifice from every one. " The future call? for self-sacrifice from : every one in the Dominion, and I confidently appeal to those affected by the proposals I am now submitting to face the position with broad-minded and undaunted determination. In all probability on the conclusion of the war it will be practicable to make very considerable reductions I in taxation, and it is merely necessary j to say that the Government will have > very great pleasure in doing so."' '■ Estimated Revenue and Expenditure. j In statin',' tin* rase for an increase in i taxation, !>ir Joseph Ward quotes the fol- ! lowing estimates of revenue and expend'- , turn for 1915-16 " j The revenue for the year 1915-16. esti- ! mated on the. basis of the existing 'statu-i tory limitations, is as i"iiov,-.-.-. — c Custom* ... ... ... "PooefO l!a:hv:w3 ... 4>n(,(H'i Martin nrd dontv, duties 1 n '(' •■><'o JVist.il n „d teieyriip'a ... l.?.4:;.C(lf) J 'and ,a TOn.noo Income tax =, 7, I];, !/'•'•'" '••■:■>■ ... j.'.tVn Ite't juration and other lc°. ItHuyii) ! Marine ... ■■■ ... r,o..j(H) ; M'-i-pibnoous ... 41:i.i)(,n li-rn-oT-.Hi revenue ... n)c, cci; i 1.-.ndcwmeci revenue O'J.t'M I Total ... ... £11,i;:h.U->1 J 11, fallowing figures show the w.avsand , infant of the l V, u bdatod iMnid for the I year inio-16, e.-timatttiL' the revenue on the foregoing basis:— ' J ' I i _ , c , lalsnrc orwarrl from 101 15 ... 1 to 047 j ,:.*>, mated p- emie. 1310-10 ... H.eTG^SI I Intimated expenditure, 1315-16 ... iy,6S.r-24-j ! Deficiency 'without . provision for '~ ! war . r*Ds:..n*. interest, and "mxing fund on war loans. 1 acid «i< to superannuation I inna.-i. and supplementary esti- ! :!11,1(, *J ... ... £827,911 I 'I ho following table explains the difference 1 between the estimated revenue for ,'l,„ a " d the aftua * revenue received lor 1914- :— E'.r! imateil. Actual, r . 191516 10111.=, Customs ... . , 2.800.0(10 3,167 fiM^n 78 «v-l - A Vi. 1.000.U00 4.106.675 Stamp and death '.iu<..o<o n duties 1220.200 1417 007 Jo.-t and telegraph ... 1.315.000 l'.r, -ir baud lax ... .„ 730.000 ' 739*641 fe? 1 ™ la * MS.OOO r.^'alH Beer duty UI.WO I>7fifio Registration and other *-<.6bo • M arir« "" Z ™ 10000 ° *» ¥i^ Ua * a 1° U * 41 »-"W 4(1498 Territorial revenue ... 210.0.,,) SM Endowment revenue 92.65-1 78770 Totals ... „ £ U ,676.251 12,443.525

"It is necessary," snya Sir Joseph j Ward, " when estimating the amount ' whi'ii will have to ho obtained by fresh] taxation, to consider, as well ad we are , able, the ultimate annual amount to which | the country will be committed in connee tion with war expenditure and other i spot demands in order that suitable. I provision may he made to meet the bur- j don. It is impossible for any one to say ! with any degree of certainty what amount. ■ (he Dominion will have to find to cover ; war pensions, hut tlio best estimate's | which have been provided place th<- j amount at approximately £1,000.000 per j annum, ou the assumption that the war | will last another year. The annual in terest and sinking fund )>avable on war I ■ loans of. say. £12.000.000." will amount '; to, roughly, £700,000. 'Hie whole of these amounts will lea fall to this year's i finance, but in addition to the deficiency shown for the. current year <>!" £827.941. ' wo must, provide for, say, £150.000 for I supplementary estimates, £34.000 additional for Superannuation bund, and a! considerable proportion of the pension and interest 1 have referred to. It would not. in my opinion, bo prudent at present to base the extra amount required at a lower sum than £2.000,000 km- annum, and it will depend entirely upon the duration of the war whether even this large sum will not in the future require to lv-> increased. 1 am hopeful that it will not, but this cannot he definitely determined at present. We may hope that in a year from now the war will be over, and that the circumstances then will enable us to make a considerable reduction in taxation."

Meeting the Deficiency. Ihe following .ire the increases proposed by the Statement: — e Land find income tax ... 61it.600 IVat and telegraph 380,000 Railways ••• • 360.000 Customs 285,000 Totalisntor dividends ... ' 7.1,000 Beer duty 55.000 Hank cheques ... ... 50,000 Land mortgages 48.000 Receipts ... .10.000 Conveyances. transfers, etc. 40.000 Succession duties ... ,'IO,OOO Non-ilk oholic beverages •■■ '20.000 Bank notes . ... ... 20.001) Sub-salts of land ... ... 10,000 Teal £2.032,000 New Proposals Explained.

Explaining the taxation proposals outlined above Sir Joseph Ward says — The land and income" tax receipts for 1915-16 are estimated as follows:—Land tax. £886,000; income tax, £1,090.000. Tii view of the fact that many business people whose incomes are taxed are also paving land tax. and in many cases graduated land tax, this is considered to bo d. high enough rate to impose, as in many instances the combined taxes will he equivalent to a tax of over 5s in the £1 of income. It is not considered advisable to attempt to obtain any increased revenue by lowering the exemption, a.s in addition to the fact that the additional expenditure that would be incurred would not be warranted by the result, the class that would he aff'-ctcd by such a change is already paying its taxation through the Custom*, and is sufficiently burdened by that and by the increased cost of living." It is not proposed to increase the tax on mortgages The comparison between the estimated tax for the current year and the tax for last year is as follo'ws:— Estimated Present Tax. Tax. Ordinary tax 307.000 307,000 Mortgage tax 240,000 '246,300 Graduated tax 839,340 265,100 , 866,340 818.400 Income tax ... 1.090,660 639.000 Totals ... £"1,977,000 £1,357,400

It is generally recognised that those who have been making large profits due, to the war should give an additional amount towards the financial requirements of the countiy. I shall not be contradicted when I.say that large profits have been derived from the sale of wool, meat, and dai-y produce. To provide for a reasonable contribution to defray a portion of the cost of the war I propose that the income tax shall apply to income derived from land. Five per cent, of the capital value of the land will be deducted from the assessment of the income, and the exemption of £300 will also be allowed. I estimate that £250,000 will be obtained by this alteration, and considering _ the high prices that have been realised for sheep, wool, meat, and dairy produce, it is not a large contribution from those affected. The total increase of income tax proposed will amount to £551.660. and will reach those whose additional profits have been due largely to the war.

Petrol and Kerosene. I do not think any exception can tie taken to the proposal for increasing the duty on petrol, etc., for motor-cars. Kerosene, which formerly had a duty of od a gallon, is also included. Petrol cannot be taxed to produce the revenue necessary unless this is done. Tyres are to reman, free from British and* neutral countiies, with a 50 per cent, ad valorem tax on tyres from enemy countries. I propose thai an excise duty of Id j per gallon be put on all non-alcoholic beverages to be defined. It is difficult to estimate what the revenue from this will be, but 1 put it down, in round dgures, at £20.000. The full benefit to the revenue of the increased duties on spirits will not accrue for many months, as merchants, anticipating changes in the tariff, have cleared from bond all available stocks of these articles. The amount of inflation of revenue during the last two months due to this -auce has been about £130,000. It should also be remembered that the new duties will be in force for seven months of the year only, that there are large stocks of motor spirits and kerosene at present stored in the Dominion, and that „ the consumption of most articles will be reduced on account of war conditions, the absence of many of our men on active service, and other causes. Taking all these facts into consideration I do not think the increases for the present financial year due to the new duties can be safe'.v estimated at more than £120,000. In these proposals I Lave elected to touch a few special articles, and not to increase the duties on the necessaries of life The increased beer revenue is estimated at £55,000.

Stamp Department Increases. It is proposed 11 ine-e.-tse the duties re, <•' nvevnnee.s. transfer,,, lenses. settle mpnts. common deed;», and other assess able instruments mention, d in the peeimd schedule of the Stamp Duties Act. 190H, by ?.'■> i ■:■ i ■•!.',. The amount of dntv realised from tin-- source during the l a .«t year was 11175.000. After making allowance for a shrinkage in bind transactions, it is estimated that the increased tax will yield C 40.000 per annum. The bank i ,te duty at present is J ."is pet cent, and realises £60.000 annually. It is proposed to increase ibis tax ti •'-! per cent. It is estimate,) that this inciease will produce £20.000 per annum. The bank cheques duty is at present Id. It is propped to increase the dutv to 2d. This increase is 'estimated to produce £50.000 annually There are lar-e „,„„. be is of blank --heoues stamped with Id in circulation, rind these may be used with an additional adhesive stamp for a period of one year. All unused cheques stamped with Id will be called in and an allowance made for '.hem. The duty on receipts at present is Id on every receipt for £2 and upwards It is proposed to increase this dutv to 2dThe amount that will be realised from tins source is put down at £40,000. Death Duties. ! Regarding death duties, there is not much room for increase in these duties, i nor is it desirable to increase the d,,ty lon small estates, although they receive ' liberal treatment under the present law There is one class of beneficiaries how- ; ever, which escapes very lightly in the I matter ot succession duties. i' refer to the children of wealthy persons. At present such children do not pav succession duty on a less sum than £20.000 each [ which for all practical purposes exempts ! them from duty. It is proposed to reduce : this exemption to £5000 for each child and to impose a duty of 2 per cent, on suc- , cessions over this amount. I estimate I that this duty will realise £50,000 per annum.

Regarding mortgages of land or any interest therein, it is proposed to impose a stamp duty of 5s per cent, on mortgages. This tax is estimated to produce £40,000. On release, reconveyance. or discharge of mortgage a fixed duty of 10s. This tax is estimated to produce £8000. In the United Kingdom an ad valorem duty has been imposed on mortgages for many years. This duty is not a recurring one, and should not cause any hardship in its incidence. A r.i'iv stamp duty is to he imposed on all sales of property at the same rate as if the purchaser took a transfer or conveyance of the property. This duty ; is estimated to produce ' £10.000 peri annum. It, is calculated to fall almost ! entirely on the land speculator. j It is proposed to make some small addit'ons to the charges leviable for postages and telegrams ; and, although it is anticipated that, the amount realisable will ho £380,000, yet. owing to the vast | number of pieces of mail-matter and telegrams handled, it is estimated a very I small increase in tho minimum charges I to which they are subject will yield the j sum indicated. It is proposed "that the j initial rate on telegrams be increased by j 2d, that 2d he added to the inland j charge for cablegrams, that tho initial charge for bureau communications within j a radius of 25 miles be 6d lor both ! subscribers and non-subscribers, instead j of as at present 3d for subscribers and i 6d for non-subscribers, and that a special I war-tax of id be levied on all articles j posted except newspapers. The amount ! realisable under each heading is estimated as follows :—Telegram and cable messaces: Increase of itial rate of 2d, £50.000. Bureau messages: Initial rate made 6d to all, £20,0C0. Postage wartax of J,d on all articles posted except newspapers, £310,000. Total of £380,000.

Increased Railway Charges. The railway passenger and goods rates will be increased "to the extent of £360,000 per annum. This becomes a necessity from causes clue chiefly to the war, and it is impossible for the Railway Department to provide sufficient ways and means under conditions now existing. Prices of materials required for the maintenance and extension of the services have risen enormously. I may give a few instances; The cost of canvas has increased 100 pelcent. ; rails, 12 per cent.; fastenings, 9 per cent. ; steamer freights on rails, 102 per cent. Girders, ironwork, and general materials have also increased greatly in price. In the locomotive branch an average increase of 40 per cent, has taken place in respect to materials used in build r.ng and repairing engines, cars, and waggons. In view of the foregoing and the fact that indications point to still further advances, it is evident that the Depart ment cannot satisfactorily carry on its operations and provide 3J per cent, on the capital invested unless the rates are raised (■■■ in- i the eniei- -■> '••'•ditions arising out of he war, aid a ter are . fully looking into the wis . ,<■ ~.tion it is proposed that passenger rates be raised by 8 13 per cent., and goods, excepting timber, by 10 per cent. Assuming that effect is given to this proposal, the rates operating fur conveyance of dairy and other farm produce and live stock will be less than those ruling in 1894, when the industries were either languishing or in ' then- infancy, while the proposed advance is so infinitesimal as to be negligible as tar as the increase of prices over the ! counter are concerned. Effect of New Rates. The effect of the proposed increase in rates would be as follows:—Butter, B£d per £100 of value: cheese. Is per £LOO of value; wool. Is 8d per £100 of value; frozen meat, 2s 8d per £100 of value; 6heep, 4s 8d per £100 of value; cattle, 3s 9d per £100 of value. I omit timber for the reason that the increase would be on white-pine £1 14s 5d per £100 of value, and on red pine- £1 5s 5d per £100 of value. Timber is used more or less by all classes of the community, and the general increase proposed to be put on other goods if applied to timber would injure thfe industry, which is at the moment prejudicially affected by the war. Discrimination in this article is consequently a necessity. In regard to passenger fares, the 8 1-3 per cent, proposed works out at a penny in the shilling, and this would be applied in all cases excepting workers' tickets. An adjustment of excursion rates also will be submitted. I estimate these changes will produce £350,000 per annum. The alternative to the increase of rates would be a drastic curtailment of the train-miieage run. Necessarily this would involve greatly diminished train services and the dismissal of a very large number of employees. Such an undesirable course can be avoided by the adjustment I have suggested.

The Customs Tariff. While I realise that a necessity exists for revising the Customs tariff generally in regard to certain matters, the subject is one of such importance and difficulty that it cannot be dealt with at present. No doubt the question of encouraging new industries may become more pressing when the war is over. We must take steps to prevent New Zealand being made the dumping-ground of foreign countries' goods to the serious injury of our industries, manufacturers, producers, and workmen. There is no doubt that the facilities offered to the German manufacturer and merchant in gaining access to British and colonial markets have helped our enemy to bund up her large commercial and industrial establishments and to increase their export manufactures, thereby amassing great wealth from British countries, which has helped to supply her with the sinews of war. One way of preventing Germany again becoming a great commercial and industrial nation with the assistance of British countries is to prohibit Germanmade goods being imported into New Zealand and other British countries. One ot our supreme duties for the future will bo to make our people, as far as practicable, a self-reliant and self-contained nation. The House will be asked to place a duty of 50 per cent.' on all importations from countries that are now, or may be, enemies of the British Empire, excepting such goods as may bo exempted from time to time by Order-in-Council. Basis of £2,000,000. A revival of inward trade, which there is" good reason to hope will be the case, would be favourably reflected upon the principal Departments now adversely affected, and an early termination of tho war would materially reduce tho prospective liabilities. We are reasonably entitled to take both these as probabilities, and are justified in basing our responsibilities on tho basis of £2.000.000. It must, not be forgotten that the full amount or' taxation and other increases of revenue will not come into the Treasury during this year. I estimate that we will reerive !, v Man h 31 i,. vt not more than £1.009.000 from the increases now proI"7*"'; i: '■' impossible to give a fairly reliable approximate estimate of the finanrial p.-5M:,,,, of the Consolidated Fund at March ,;1 next. It may ho that there will be. * d.-heit as the whole operation of the imrccd rates, and taxes cannot operate fully until the following year I feel it to 1,,, my duty to point "this out now. [hero need be no misgiving on tins account, as what 1 am now proposing should, when the changes are in full sway, more lllanha,an, ' ~,1,C revenue and expenditure.

COOK ISLANDS' SCHOOLS. KNTHISIASM OF THE NATIVES [tIY TKUI.IUIII Sl-KIIU, r-ORMFSrONDENT.] Wki.tjncton, Thursday. The primipal work of development at, tho i.'otiU Islands during the year was the establishment of a system of education similar to that of the native schools in New Zealand, says tho Financial Statement. Two schools have been opened at Harotonga and one at the Island of Aitutaki. Buildings suitable for present requirements have been sa cured in which to conduct the schools, and houses have been provided for teachersA most satisfactory feature in connection with the introduction of the system is the enthusiasm with which it has" been leceived by the natives, who are fully alive to its benefits. A large number of children have been enrolled, and the attendance is being well maintained.