NATIONAL ECONOMY.

New Zealand Herald, Volume LXVIII, Issue 21049, 7 December 1931, Page 8

NATIONAL ECONOMY.

The campaign for greater national economy that is being organised by the Associated Chambers of Commerce should be welcomed by the Government as a demonstration of intelligent co-operation in a formidable task in the achievement of which it will need steadfast support. There should by now be a general appreciation of the fact that expenditure by the Government is possible only to the extent of the levies it makes upon the taxpayers ; it is not yet fully realised that the former scale of expenditure cannot be maintained except by the surrender to the Government of a much larger proportion of the national income. That this is actually being done may be simply illustrated. Expenditure in 1030-31 rose to the record total of £2-1,708,000; in spite of all tho economies, the final estimate for this year shows a reduction of only £BI,OOO. On the other hand, revenue last year, when taxation was heavily increased, was £23,600,000; according to the Treasury estimates, the receipts at 1030 rates of taxation would this year have been only £10,776,000, a decline of £3,824,000. So severe is the shrinkage in the national income that had the Government been restricted to the same ratio as it had last year even with some taxes operating for the whole instead of only part of the period the receipts into the Treasury would have been 16 per cent. less. To make up the deficiency, it proposes to diaw £1,490,000 from reserves and £3,400,000 from additional taxation, including that imposed in the form of extra post and telegraph charges. It is true that the estimate of expenditure includes £1,100,000 for subsidies to the unemployment fund, but if any reservations are made on that point, mention must also be made of the unemployment relief taxation outside the Budget. This is estimated by the Minister of finance at £770,000, so that the new taxation imposed this year * amounts to £3,oßo,ooo—because revenue at the former rates has declined anti expenditure has increased by £689,000. Although some economies have already been effected, it is manifest that further steps must bo taken to curtail expenditure that is still out of proportion to the country's capacity to pay. The Minister of Finance will not be able to draw £1,500,000 from reserves next year; he will certainly not be able to impose any more taxation. There is

therefore only one alternative—rapid and large economies. Whether or not the Associated Chambers decide to press the proposal of a commission, which past experience suggests would not secure results promptly and decisively, they should seek from the Government a positive assurance that it will rely entirely upon economy for the adjustment of the Budget and undertake not to alter the rates or the incidence of taxation until it can propose a reduction of the present burden.