BUDGET TO-NIGHT

New Zealand Herald, Volume LXXIV, Issue 22845, 28 September 1937, Page 8

BUDGET TO-NIGHT

TAXATION POLICY REDUCTION UNLIKELY THE NEED FOR REVENUE DAIRY PRICE SCHEME fDV TELEGRAPH— SPECIAL REPORTER] WELLINGTON. Monday No reduction in the volume of taxation is expected as a result of the second Labour Budget, which will be presented in the House of Bepresentatives to-morrow evening bv the Minister of Finance, the Hon. W. Nash. Official indications of the financial policy to be announced by the Minister are naturally lacking at this stage, but the general feeling in Parliamentary circles is that national expenditure is not likely to be reduced, and that the Government in consequence will require at least as much revenue from taxation as it obtained last year. After the 1936 Budget was presented a committee of Government members was set up to examine the whole incidence of taxation in New Zealand, in the light of Labour's avowed policy that direct and not indirect taxation should be the principal source of revenue. It is gathered' that this committee has made considerable progress in its deliberations, and has made at least one comprehensive report to the Government.

Change in System Not Expected However, the suggestion in well-in-formed circles is that the time is not opportune at present for any widespread change in the taxing system, and that Mr. Nash's latest proposals are likely to be only variations of those put into operation a year ago. From statements which have been made recently by members of the Cabinet, it appears that there will be no alteration in the rate of either the unemployment wages tax or the petrol tax. The unemployment tax, which ■was wholly an emergency measure imposed during the depression, yielded approximately £4,22-5.000 last year, exceeding the Budget estimate of £4,210,000. and with a full 12 months of increased wages and salaries, the revenue from this source during the current financial year is expected to be appreciably higher. Petrol taxation is included in highways taxation for the purpose of the summarised accounts, and from this source last year the revenue was £9OOO below the estimate. Mr. Nash himself has stated very definitely that no reduction in this form of taxation can be expected at present.

The Sales Tax Yield There is nothing to indicate that the sales tax will be romoved. Government members in Parliament have remained steadfastly silent when Opposition speakers have recalled the promise by the Prime Minister, Mr. Savage, that the tax was to disappear, but the general view is that Mr. Nash cannot afford to remit the growing yield which comes from it. Revenue from sales tax last year was £3,045,000, an excess of £145,000 over the estimate. The proposals regarding income tax will probably be the subject of chief interest when the Budget makes its appearance. The new system of income tax introduced last year yielded £6,619,000, exceeding the estimate by £619,000, and it is safe to assume that a tax based on the same rates would give an even higher return this year, when the income of a record export season will be partly available for taxation purposes. Possible Change in Incidence

There is a suggestion that the Budget may reveal plans for altering in certain directions the incidence of land and income tax, but even if this is so it is not known whether alterations in respect of income tax will benefit taxpayers on the lower and middle incomes, or whether they will increase the amount to be taken from the higher incomes. It has also to be" remembered that the yield from land tax last year was below the estimate. One thing seems fairly certain,- and that is that Mr. Nash will continue on the reasonably orthodox lines which he laid down last year. On that occasion the Minister budgeted for a small surplus of £13,000, which, with the buoyant state of trade during the year, was converted into an actual surplus of £472,000. Mr. Nash has already given an indication that he will probably budget again for a small surplus this year. Apart from questions of taxation some mention of interest rates is bound to be made in the Financial Statement. There is a world wide tendency at present for interest rates to rise and this matter was the subject of some comment by Mr. Nash on his return from England. Low. interest rates form a cardinal point in the Government's policy and the Minister may be expected to give some indication of steps to be taken in the future. Housing is also likely to bulk largely in the contents of tho Budget and there is a fairly general belief in Government circles that provision will be made for increase.*} activity in this department.

Public Works Expansion The same argument is likely to apply to public works, for which a programme of substantial expansion has been prepared. It is known that plans are being advanced for an extended roading programme in country districts and this may be the subject of reference in tho Budget. Other points which are expected to receive attention are the guaranteed price policy, plans for trade agreements with overseas countries and the national health and superannuation schemes. It is quite possible that Mr, Nash will quote detailed figures showing tho factors taken into consideration by tho Government in fixing the prices for tho current export season and it is only natural that he should give a review of the first year's operations of tho Marketing Department. On the question of trade agreements Mr. Nash may bo in a position to state more definitely the results of his mission overseas and in this case reference will probably be made to the anticipated completion of an agreement with Germany. With regard to national health and superannuation proposals, details have still to be finalised by the Government committees concerned and as it is hardly likely that financial provision will have to bo made for either scheme before March 31 next year no detailed statement of policy is expected to be included in the Budgets