TAX REDUCTIONS

New Zealand Herald, Volume LXXII, Issue 22209, 9 September 1935, Page 8

TAX REDUCTIONS

CONCESSIONS EXPECTED THE BUDGET NEXT WEEK CIVIL SERVICE SALARIES PART RESTORATION POSSIBLE [BY TELEGRAPH —SPECIAL REPORTER] WELLINGTON, Sunday

A. reduction of at least 2d in. the pound in the uriem pipy meat tax on wages, and a. 5 per centrestoration in the cut in civil servants' salaries are confidently expected to be among the major provisions in this year s Budget, which will probably be presented in the House of Representatives by the Minister of Finance, Mr. Coal.es, on Tuesday week, September 17. The Budget proposals are, of course, still a closely-gua :ded secret, but it is known that Mr. Coates has made good progress with his; financial statement and presumably some of the proposals have been discussed at the lengthy meetings of Cabinet on Friday night and again on Saturday. With the steady increase in the Dominion's wages bill during the la;st 12 months Mr. Coates may have grounds for thin'.iing that a scalingdown of the wagC3 tax is not likely to afiect very greatly the total revenue from that source. Unemployment Tax Receipts The point can be made that when the rate was reduced last year from Is to lOd in the poind receipts from unemployment taxation actually rose from £4,413,221 to £4,(104,719. Indeed, there has been a suggestion that the Government might consider a lowering of tbe rate to 6d in the pound, but in view of the fact that an extended public works programme and certain subsidy schemes are already foreshadowed, that additional relief does not seem likely. It is known th{>t requests have been made to Mr. Coates for taxation relief in other directions, chiefly for reductions in income tux and sales tax and the abolition of the export duty on g Something may be done to relieve the income-tax burden, but the reduction, if any, is not likely to be great. This year's tax will levied on income derived during the year ended March 31, 1935. Last year's returns were £835,233 higher than the yield of the previous year, but that included the delayed benefit from a season of high wool prices. During 1934-35 the value of wool exports declined by £7,000,000, a fact that cannot be overlooked when a tax is being levied one year on the results of the previous year. Grounds lor Optimism However, the fact remains that Mr. Coafres can look with confidence to the future. There ib reason to believe that he takes an optimistic view of the recent increases in butter and wool prices, and no one is entitled to view with greater satisfaction the position of meat exports. These factors may encourage him to make son;e concessions beyond a reduction in unemployment taxation in the almost certain hope that there will be a substantial increase in the amount on which taxes can be levied. The position with regard to the sales tax is somewhat uncertain. With improved conditions generally, the yield from this source can be expected to show a marked rise this year, but the incidence of ths tax is not noticeably heavy and opposition to it on the psirt of the commercial community appears to have become less. It is probable tba'fc a reduction in income tax would bo more than compensated for by an increased yield in sales tax at the current rate. . , Civil Servants' {Salaries

The Prime Minister, Mr. Forbes, has already made a. statement that the Government is considering at least a partial restoration of the original cut in civil servants' salaries,, The Budget last year provided for a 5 per cent restoration, which in the case of those receiving low sakries really amounted to a restoration of the second cut. The statutory reduction of 10 per cent made in 1931 still remains, and higher-paid officers were reduced more than 5 per cent when the sec and cut was enforced. A deputation from the public service recently asked tha Prime Minister for a full restoration, but at present that appears to be beyond the scope of practical politics. Tbe opinion is fairly generally held that there will be a restoration of 5 p2r cent, retrospective, as was the case last year, to April 1. This would involve an expenditure oE approximately £4^,000. Ex-Soldiers' Pensions An extension of pension benefits in certain directions is also expected, to appear in the Budget. A fairly broad hint was dropped last week by this Minister of Pensions, the Hon. J. G. Cobbe, that the Government was considering provisions for ex-servicemen who are only no'r beginning to show the physical and mental effects of theiir war experience. Increases :in other forms of pensions in addition are held to bo a possible feature of Mr. Coates' plans. In Parliamentary circles the Budge'; is being eagerly awaited. Government members rely on it to give an indication of the policy on which they will go to the electors in a few months' time. Possibly Mr. Coa:es may give a br:ie:f outline of his. proposals at a Government party caucus early next week.