REVENUE AND TAXATION.

Otago Daily Times, Issue 20709, 6 May 1929, Page 6

REVENUE AND TAXATION.

The amount of the deficit upon the revenue account of the Dominion'-for the past financial year was said by the Prime Minister on Saturday to be £579,000. It is regrettable that there should be a deficit at all to mar the exceptional record which this country has enjoyed for a great many years, but the explanation of the major part of it is simple. The restraint that was exercised in respect of importation, contributing to tho establishment last year of a remarkably favourable trade balance, was not anticipated by the late Minister of Finance to be nearly as effective as it actually was, and the outcome of it was shown in receipts from Customs revenue that were substantially lower than Mr Downie Stewart had counted upon obtaining. The Customs revenue, Sir Joseph Ward says, was £300,000 to £400,000 short during the past year. Added to this shortage was one of £60,000 to £70,000 in the yield from income tax. The failure of this source of revenue to meet the anticipations of the late Minister of Finance must

be attributed to the fact that the profits of many of the larger payers of taxation had shrunk during the period of economic adversity which the Dominion recently experienced. Sir Joseph Ward states, also, that the losses on the smaller lines of railway—losses which constitute a direct charge on the proceeds of taxation — amounted last year to £770,000, or more than sufficient in themselves to account for the Budget deficit. The Government will introduce legislation this year to abolish the system under which these losses have to be recouped to the Railways Department out of the Consolidated Fund. The system was inaugurated when the decision that the railway undertakings of the State should be conducted as a business concern, the argument being, in effect, that the railways management should not be required to sustain the losses incurred in the operation of unproductive lines about the construction of which' it was not consulted. In reality, the matter resolves itself into one of bookkeeping only, since the taxpayers must in some form or other shoulder such losses as are made on the lines of railway that are not capable of earning interest on their capital cost. The point of real importance to the public in Sir Joseph Ward’s reference to the financial position consists in his statement that there must be an adjustment of taxation under which revenues will be secured that will safeguard the country against the possibility of a recurrence of a deficit. The Prime Minister did not afford any indication as to the manner in which tl\e adjustment may be made, nor would it be reasonable to expect that he would do so at this stage. It may be suggested to him, however, that the economic causes of the shortages of revenue to which he specifically referred may have ceased to exist by the time he prepares his Budget for the current year. His Ministerial colleagues have been repeatedly telling the country that “the corner has been turned ” since they came into office. >