ECONOMY OR MORE TAXES.

New Zealand Herald, Volume LXVII, Issue 20601, 27 June 1930, Page 12

ECONOMY OR MORE TAXES.

The anxiety of the Government, since the reconstruction of the Ministry, to create an impression of prudence and moderation is reflected in the form of the Speech from the Throne delivered« at the opening of Parliament yesterday. Its proposals are outlined with so much caution that their character and scope have been completely concealed. Only on one subject is there any precise definition of its intentions. After a year and a-half of the United Party's administration, the national finances are in a situation which, as the Prime Minister naively admitted at Cheviot, is without precedent. A great commotion was made a year ago over the task of closing a gap of half a million in the Budget, and more taxation was instantly prescribed as the only remedy. Now Mr. Forbes has discovered a prospective deficiency of three millions; the loss on the railways, which eclipsed all records last year, will be worse this year and must be borne by the Budget; there are predictions of a substantial decline in customs revenue and a falling-off in land and income taxes; in addition, it was stated that expenditure would normally increase by half a million. To meet this position, the Government proposes "a drastic curtailment of expenditure," accompanied by "some increases in taxation." Much has been made of the difficulty of effecting economies without ' upsetting basic organisations and established institutions. This contention ignores the fact that there has been an enormous inflation of the Budget in a very short period, so that if the expenditure added in the last two years were discontinued, the anticipated declifte in revenue could be borne without inconvenience. Last year's receipts from customs, land and income taxation were £13,938,000, which is over £1,500,000 more than in either of the preceding years; expenditure, excluding railways subsidy, Post Office expenses (which no longer appear in the Budget) and transfers of main highways taxation, has increased in two years by £1,826,000. These extraordinary movements are shown in the following summary:— Land and ExpendiCustoms. Income. ture. 1927-28 . . £7,942,589 £4,428,208 £21,805,414 1928-29 . . 7.954,252 4.451,201 22.445,334 1929-30 . . 8,897,046 (i,010,675 23,631,615 Even if customs revenue declined £1,000,000, the Government would still have as much from that source as in either of the. two years before last: moreover, it is continuing the extra primage duty, which will be in force four months longer than last year. The real fault of the Budget is the increase in expenditure: £640,000 was added in 1928-29 and £1,200,000 in 1929-30, the latter a remarkable multiplication of what Mr. Forbes has called "normal expansion." For this position, the extravagance of the United Party's policy and administration is chiefly responsible During the 15 months from January 1, 1929, to March 31, 1930, the expenditure, excluding the same items as before, was almost £30,000,000; during the comparable period from January, 1927, to March, 1928, it was £27,000,000. Special circumstances, such as the renewal at higher rates of maturing debt, have contributed to this extraordinary increase, but their imminence was known, and the Government cannot escape the responsibility for its reckless disregard of them. Nor will temporary retrenchment be sufficient. Debt charges last year were £940,000 more than in 1927-28 ; borrowing must also be severely curtailed unless the situation now confronting the Government is to be periodically recurrent.