DOMINION FINANCES.

New Zealand Herald, Volume LXVI, Issue 20392, 22 October 1929, Page 13

DOMINION FINANCES.

BALANCING THE BUDGET.

REASONS FOR NEW TAXATION DEFENCE OF THE PROPOSALS* PRIME MINISTER'S STATEMENT- ; [by telegraph.—press association.] WELLINGTON, Monday. The Prime Minister, Sir Joseph Ward, stated to : day that, in view of the fact, that there still appears to be misapprehension, and also some misrepresentation, as to the Budget balance foe, the current financial year, he proposed to outline tho position. It had been stated that the additional taxation was being imposed merely for, the purpose of producing a huge surplus, amounting to £1,000,000 some had alleged. "All will recognise that imposing taxation is not a popular thing to do," sai'4 Sir Joseph. "No Government would take such action unless it was necessary, to secure the balancing of tho national accounts. If New Zealand is to maintain its good repute this is essential, and if additional revenue is necessary—and that is undoubtedly our position at pres« ent—l have no option but to do my duty*: "As I stated in the Budget, the esti« mates of expenditure for the current' year were most carefully overhauled, before considering the question of taxation, with a view to reducing them to the minimum consistent with the maintenance of present services. As a matter of fact new; services contemplated by this Government when they took office were held back on account of the financial position, and the Budget Estimates were based almost wholly on services supplied by the State.' .Revenue and Expenditure. "It was quite apparent that having once received these services people generally did not want to lose them. Thus, allowing for normal and inevitable increases in expenditure, the programme was practically fixed by our predecessors in office. "The net expenditure last financial year was £24,177,000, and to the Estimates for this year there had to be added £702,000 to meet increased charges for interest and debt-repayment, together with automatic increases for various charges, and subsidies fixed by permanent appropriations, none of which is capable of administrative reduction. The increase in the annual votes on the main Estimates was "kept down to the modesty figure of £31,000. These amounts, together with the usual allowances for Supplementary Estimates and contingencies, set down at £262,000, made up the Budget expenditure total of £25,172,000,_ an increase of £995,000 over last year's expenditure. Under these circumstances £25,172,000 of revenue is required to balance the Budget.' "Last financial year the revenue amounted to £23,600,000, so it will be seen that £1,572,000 of additional revenue has to be obtained this year, although, the comparative increase in expenditure is only £995,000. The difference lof £577,000 is due to the fact that last year, there was a deficiency of this amount. Reasons for New Taxes. "A careful review of revenue prospects showed clearly that I could not rely on the normal expansion of existing taxa-"* tion to produce £1,572,000 of additional revenue. The items of. revenue, apart from taxation, were, overhauled with a view to seeing that all legitimate recov-j eries were brought to account. Even so, the estimated revenue was found to be' short by about £700,000, and the Gov-! ernment had perforce to bring down posals for additional taxation, and, fori the reasons given in the Budget, it ;was decided to obtain this from land tax and primage duty. , ? "Since I delivered my Budget some modifications have been made in the lancfri tax proposals, and some of the sa.vinga l counted upon will not operate at present.:j Very little in the way of a surplus was anticipated from the original proposals, which' were designed to do no more than ,; make sure that there was no repetition of last year's results. Any margin has been' absorbed in the concessions since granted and finances will now have to be tightly' held to make ends meet. "Needless to say, "the statement- mad#V from time to time that I am budgeting! for a £1,000,000 surplus is nothing mora! than political propaganda, designed to. mislead the people, and the figures I hav® given should satisfy all reasonable people of the fallacious character of these extraordinary statements. . Revenue from Customs. "The accounts for the half-year ar® not yet ready for publication, but indications are that the Budget Estimates will be sustained. As our largest and most uncertain item of revenue, I have been carefully watching the position of" the customs. I have recently had the Budget Estimates reviewed by the de- ! partnients concerned, and the report is V to the effect that while the probable volume of imports for the remainder of the year is still somewhat uncertain, it appears likely that with the additional primage duty the Budget estimate of £8,400,000 will be reached, and may bs' exceeded by about £50,000. "It appears that the composition ofc our imports is changing, and there is a'"" distinct tendency for the decline in tha imports of some of tho largest revenues producers, notably spirits and tobacco..! In the former case decreased consumption* is the cause, while the decreased import;* of tobacco is the result of local industry.*) On the other hand the importation of other classes of goods, mostly duty-freefc items, such as manures and raw mater-1 ials, appears to be increasing, but thesej will not help revenue. Importations off motor vehicles have been heavy during tha past few months, but experience shows there is a considerable seasonal element' in this trade, the imports being high ia, the first six months to meet the coming summer sales. "Altogether the position is very complex, but I am satisfied, after a most careful review of all factors, that thera is no justification for the statements frequently made that customs will pro-! duce considerably more revenue than was allowed for in the Budget. . "The yield from land tax and inconwj , tax can be estimated with more certainty. All subsequent investigations affirm the position outlined in 'the Budget, that the additional revenue to be obtained from tho land tax and primage proposals is absolutely necessary to enable the ac-. counts for the year to be balanced:"- 1