THE YEAR'S SURPLUS.

New Zealand Herald, Volume LXI, Issue 18710, 16 May 1924, Page 8

THE YEAR'S SURPLUS.

The chief features, of the national accounts for 1923-24 '.disclosed by the telegraphed summary are that, as a result of the increase in revenue and the reduction of expenditure, the surplus has been- increased by £496,000. to £1,812,366 that £1,000,000 of that surplus has been transferred to the Public Works Fund, while the balance and portion of previous surpluses to the amount of nearly £1,500,000 have been used for the redemption of debt or transferred to such other capital accounts as education buildings. These facts are a complete justification for the criticism of the Government's financial policy. The fundamental need of the country is lower taxation ; it cannot afford a surplus of nearly two millions it cannot afford! to finance public works from taxation to the extent of a million pounds. Mr. Massey has been ■ repeatedly urged to take the bold course of risking a deficit so [ that he might give substantial relief from the burden of taxation, but on the slenderest excuse for 'hesitation he budgetted ■ last, year for a surplus of £485,000 J and has obtained one of nearly fourfold that sum. Actually, the revenue fell short by nearly £9000 of the estimate, but the accuracy of the forecast is superficial. - • From the four main sources of taxation—customs and excise, stamps and death duties, land tax and income taxwas drawn £16,323,000, or £409,000 more than the ' estimate, while other sources yielded £11,637,000 or £418,000 less than the estimate. The excess of taxation receipts over the estimate is doubly',Significant since there was no indication in the Budget or in any. official utterance whether the forecast was based on the former scale of taxation or on the lower rates fixed by subsequent action. Early in February, Mr. Massey issued an ' estimate of the concessions as £1,583,590. This included £250,000 for a full year's loss on penny . postage ; actually the postal revenue has ideclmed by only £24,000.. Amusements tax reduction was estimated at £25,000; a departmental return indicates that this has been realised. Remission of tea duty was estimated at £112,590; no information is yet available in this regard. But the greater part of the estimate, £1,176,000, was in respect of land and income taxation. The position may be shown as follows — • Receipts. Estimate. Receipts. 1922-23 1923-24 1923-2-1 . , . • £ ~£... £ Income tax . . 3.831.932 3,500,000 3,782,531 Land tax . . 1,541,502 1,300,000 1,426,162

Totals . . 5.373.434 4.800.000 5,«08,993 According, to Mr. Massey, the reduction of land taxes was equivalent to £136,000 ; the receipts exceed the estimate by £126,000 and are £115,000 less than in the previous year. The exemption of income from land was represented as a concession of £200,000, the increase in the allowance for depreciation as £100,000 and the reduction of the scale by 20 per cent, as £740,000, a total of £1,040,000. How then is it that the actual result is £282,000 above the estimate and only £49,000 below the previous year's collections? It is of course possible that allowance was made in the Budget for the reductions in rates, though no hint was given of their extent, and the taxing bill did not appear until six weeks later. That would explain the unusual accuracy of the forecast. On the other hand, if the estimates did not allow for the subsequent legislation, there would be the remarkable result that a scale of income, tax designed to : produce £2,460,000 actually yielded £3,782,000. The point is of the first importance because huge surpluses are derived from excessive taxation and taxation is maintained on a high scale because the Minister for Finance still adheres to the convention that revenue should * be grossly underestimated in order to produce an impressive surplus. In spite of his excellent professions, Mr. Massey has always shrunk at the critical point from making a drastic reduction of taxation. How little justification there was for his reluctance last year is now manifest. His hesitation has cost the country £2,000,000 more in taxation than there was need to collect and more than it can bear without the burden "pressing on enterprise and retarding development."