EFFECT OF THE BUDGET.

New Zealand Herald, Volume LXVII, Issue 20626, 26 July 1930, Page 15

EFFECT OF THE BUDGET.

CONCERN IN THE CITY.

BUSINESS MEN DEPRESSED.

A CHECK ON TRADE

INDUSTRY BUKDENED

CLOUD OVER ENTERPRISE.

N7> Budget is universally popular. Even if it does not increase taxation it displeases the considerable section of the people who believe that there are wrongs (o be rectified and economies to be practised. Obviously no Budget, increasing taxation or changing its incidence arouses applause, but the reception can be in several keys. The average key is indicated by a shrug of the shoulders and some degree of philosophic fortitude. Then again, the note may deepen and folk will say "This is becoming serious." But never before in New Zealand has a Budget produced the common note of yesterday. Every section of tho community was depressed, because every section knew at once that such taxation cannot be imposed without deepening the trade depression, without further destroying tho confidence of capital, without throttling what initiative has been active in industry and without causing more unemployment and more misery.

"A Panic Budget."

From the man in the lift to the chief executive the Budget spread a sense of Rloom. A dark cloud descended upon the city. The streets were full of visitors who had come to see to-day's Rugby test match, hut there was no escaping the genoral sense of depression. Opinions varied, hut some of the highest authorities believed that it was a panic Budget, that the concern of the Government over the estimated shortage had carried it too far. "Departmental economy seems to be tho last factor in this Budget ," said one prominent business man. "The Government has simply gone out for more revenue without attempting to find means of spreading a reduced revenue over its departmental activities. And this means that the Government has simply passed on to the business men of this country the unpleasant task of making economies and carrying out retrenchment. The ultimate result will, of course, be that these least able to bear the burden will have to carry it."

Bad for Tiade and Industry

Mr. M. Stewart, president of the Auckland Chamber of Commerce, said the chamber would discuss the Budget next week, so all he could now do was to indicate his own impressions. The effect of the new tariff and the Budget proposals would be bad for trade and industry, he said. Everyone knew that the Minister of Finance was faced with a difficult task, but the responsibility of securing economy had been passed on to the business interests of the country. Economy, like charity, should start at home, but the Budget was not signally successful in reducing departmental expenditure. A reduction in taxation would stimulate business more than anything, but higher rates were to be paid, and in addition the 5 per cent, allowance on land tax was now to be cut off, which was a serious matter for many city firms. The head of one large firm, whose attitude may be regarded as fairly representative, said that for two years business conditions had been very difficult. His firm had had to effect some reductions in staffing, although not to the extent it might have done, because it did not wish to add to unemployment and make business still more difficult. Effect of Exchange.

"But we have already received a pretty severe bump in connection with exchange arrangements," he continued. "Notwithstanding the fact that in tjie early stages of the exchange increase wo were able to make some financial arrangements to cover ourselves, we are to-day faced with an additional charge of some thousands of pounds against our profits over stock purchases. This is the cost of exchange alterations alone. Tliero will bo some easement, seeing that primage is removed, but this will not anything like meet the additional exchange costs. "Now, in addition to being faced with a higher rate of income tax, we lose the 5 per cent, easemont on land tax. The nature of this business requires extensive premises and it is not likely we will secure much by way of depreciation. The extra charge involved by this alone will approximate about five average salaries. There is the further point that competitors renting premises, particularly whore long leases have been arranged, will secure a distinct advantage over us. "Under the present conditions it will be impossible to get higher prices for our commodities and the only means by which we will be able to effect, any sort of a balance as between expenditure and revenue will be by staff adjustments. There is, of course, the point that the earnings of a depressed year will have to bear the charge of the past year's income tax, but normally some provision is made to meet, such a contingency. However, my summing up is that the ultimate effect of this Budget will be a heavier burden upon those least able to bear it."