POST-WAR FINANCE

New Zealand Herald, Volume 81, Issue 25085, 26 December 1944, Page 6

POST-WAR FINANCE

TAXATION PROSPECTS

PROBLEM OF INFLATION

Taxation prospects after the war and national problems associated with public finance are discussed in the December bulletin issued by the Canterbury Chamber of Commerce and the department of economics of Canterbury University College. Among the problems examined are inflation and the division of income between the Government and the people. Although £45,000,000 of last year's taxation was for war purposes, states the bulletin, and most of these expenses should cease when the war was over, it would appear optimistic to anticipate a reduction in taxation of this magnitude. The War Expenses Account was now meeting some expenditure, which would be continued and probably increased after the war, pensions and rehabilitation costs being instances. In addition, if stabilisation was to continue, subsidies might be met from taxation. Additional Requirements

To such increases must be added higher interest payments on war and other unproductive debt. Add some allowance for the growth of social security expenditure, expanding State activities and for higher prices and costs, and it would be realised that taxation showed no early prospect of returning to pre-war levels. Present indications were that the tax revenue required would be at least £50,000,000 and possibly £60.000,000 a year, continued the bulletin. Nor would tax revenue alone satisfy the Government's probable demand for money. Housing, at 10/100 homes a year would require about £15.000.000. There wore hydro-electric developments, railway and road works, and requirements for education arid public buildings, all of which would call for loan money. There would undoubtedly he strong support for heavy public expenditure after the war. The Abundance of Money It must not be forgotten that wartime borrowing had been financed in New Zealand largely by inflation, and that local monev had increased from about £80,000,000 in 10:18 to £160,000,000 in 1944 largely, although not wholly, as the result of credit creation on Government account. The resultant abundance of money and the increase in incomes had greatly assisted taxation and borrowing from the public, but it had also increased greatly the need for and scope of rationing and price fixing, and it had been directly responsible for the imposition of exchange and import control. Earnest efforts had been made to check inflation, and it was certain that many present controls could not be removed until inflation had been dealt with. Inflation was likely to prove the most difficult of all post-war problems, and it had destroyed the former balance between buying power and things bought. This was the ba.sic cause of much trade regulation which threatened to prevent essential adjustments to post-war changes. Must Live Within Income

At present, partly owing to the war, the Government was collecting in taxation and loans, and was spending probably well over half the total income of the country. If production and trade were to increase, as they must if men were to be rehabilitated and standards of living improved, they must have the money to finance their own reconstruction, a.s well as increase operations and development. In order to discharge their functions after the war, industry and trade must be relieved of much present taxation. This means that the Dominion as a whole, both Government and the people, must live within its income. Ileal income of goods and services must be increased and redistributed. The Government must be content with a much smaller share than at present, and industry and trade must receive a larger share for the large part they had to play in reconstruction and the future. These were the real limits, con-cluded-the bulletin, within which postwar finance must operate. KNEE GUMBOOTS CONTROL OF DISTRIBUTION (P.A.) WELLINGTON, Saturday The acting-Minister of Supply, Mr Nash, stated today that it had been decided to modify the present form of control over the distribution of knee gumboots. In future retailers will obtftin bulk supplies and hold these pending reeeip't of permits from authorising officers, when applicants will be able to obtain immediate fitting.

In the case of applications from farmers, releases will in future be approved by the secretaries of primary production councils, dairy factory managers, or secretaries and local officers of the Agriculture Department. Local officers of the Department of Industries and Commerce may now authorise releases for secondary industries. Thigh gumboots are still in short supply, and the former restrictions will continue on these.

ITALIAN MOTHER

NEW ZEALANDERS' HELP

(N.Z.E.F. Official War Correspondent) FAENZA, Dec. 22

Two young Italians now almost three days old have had to thank a group of New Zcalanders, members of the 25th Battalion, for being born in a comfortably furnished house instead of a dugout.

The night before the latest big attack north-west of Faenza men of a battalion mortar platoon in position in a forward area found a woman sheltering in a dugout from intermittent German shelling. How long she had been there they did not know, but the place was filthy. It was obvious the blessed event might be expected any time, and they decided it should at least take place in more favourable circumstances.

The woman was helped into a truck and driven to battalion headquarters situated in a substantial country house some distance away. Here she was installed in a comfortable room, and the battalion medical officer stood by for developments. His services were not required, however, as an Italian doctor hastily called arrived in time to greet not one but two babies when they made their appearance about two hours after the mother reached the house. Both w ere boys.