BUDGET PROPOSALS.

Otago Daily Times, Issue 20786, 3 August 1929, Page 16

BUDGET PROPOSALS.

NEWSPAPER COMMENT. LANDHOLDER HARDEST HIT. GLOWING ELECTION PROMISES. t “ DISTINCT SIGNS OF FADING.” , (Special to Daily Times.) WELLINGTON, August 2. Commenting editorially on the Budget the Dominion says: Land is to hear the burden of the increased direct taxation. The big landholder is the hardest hit, hut the farmer of moderate means is also to carry a share. The penal supertax, which starts on properties of an unimproved value of £12,500, means a heavy impost. Furthermore, the exemption which the city landholder secures in his income tax (5 per cent, of the capital value of his land) is not allowed the country landholder. But the land tax proposals are still more drastic even than this. The reduction of the mortgage exemption will mean that many landholders are going to be taxed on their debts. Another tax to be imposed is the increase in the primage duty from 1 per cent, to 2 per cent. It is claimed that, this is so widely spread that it will not be felt. There is some truth in the contention, but it is an added burden of nearly 6s per head of the population and includes everyday necessaries in the way of food and clothing. Coming from a Government which, at the hustings a few months ago, professed its ability to provide such an array of benefits for the people without one pgnny of additional taxation, ’ this proposal may be expected to provoke caustic comment. While on the subject of extra taxation it may be mentioned that in his search for added revenue Sir Joseph Ward has dragged in the State trading departments. Some of these already pay land or income taxation, but in the future they are to pay both. ' This is right and proper. They compete with private business undertakings, and it is only just that they should compete on a fair basis. The Finance Minister is to be commended for this step.

The reefrences • to the railways policy are decidedly interesting. The annual loss of a million a year is candidly admitted ; yet there is no sign of waver in the intention to sink further millions in railway construction. One way of making the railways present a better appearance of being interest earning is put forward, and it.certainly has the merit of boldness. Seeing that certain lines cannot be made to pay, it is proposed that they should be closed down and the capital cost of the lines written off. If this is done the interest bill, it is assumed, will be correspondingly less. Xu ordinary circumstances this would not be the case, but it so happens that of the total cost or railways construction some £8,100,000 came out of surpluses transferred from the Consolidated Fund. It is not borrowed money, and as the railways cannot earn enough to pay interest on it why not write it off and make a virtue of necessity and incidentally make the railways look a better proposition than they really are? The idea is not without its merits. It is indeed a sound business proposition if the railways were treated as a selfcontained business, but it will lose any claim to merit if it is to he used merely to cover up the losses in operating the railways and to justify further expenditure - on railway development in the future. The writing off of the capital cost of the lines in question means the loss of the capital, whether it was borrowed in London or came oat of the pockets of the people here in taxes. Speaking broadly, it can be said that, Sir Joseph Ward has brought down a Budget which shows a good deal of courage and some resource. It can also be said, to use a phrase in common use, that he has “ conic down to earth.” Faced with realities, the glowing promises of election time show distinct signs of fading: The keynote of the Budget is bigger, burdens for the present and hopes deferred. The Evening Post says, editorially: It would be expecting far too much of human nature to anticipate a favourable reception in the country of Sir Joseph Ward’s Budget, A Finance Minister who comes before the public with nothing in his pocket bht a hole and a request for a patch for the pockets is not likely to be greeted with cheers, but we hope reasonable people will view the Budget proposals as a whole and with full consideration of the circumstances which have made them necessary. The Budget has undeniable merit. It presents a thorough review of the financial and economic position, and having ascertained the facts it courageously prescribes the remedies. Sir Joseph Ward’s opponents must at least acknowledge his courage. ‘ It is not the type of Budget that he wished to present, •and it must be a disapointment to many of his supporters who hoped for magical relief in spite of the deficit. By taking chances the Government might have lightened the blow, but Sir Joseph has refused to gamble and has made his first aim a balanced Budget. In doing so he has taken possibly an unpopular course, 'but it is the right course. A great part of last year’s and this year’s added burden is interest. There is only one way to stop interest from mounting, and that is to examine more closely still the possibility of a return from * projected loan works. To avoid budgeting for a deficit he has been Compelled to increase taxation. We do not welcome the increase, and wc realise that it will not hasten the recovery from trade depression, but we believe that it was unavoidable. Admitting this, we admit, too, that the increase has been distributed in such a way that its effect? will be least felt by the community. The justice of an increase in land taxation is proved by the returns for the past decade. In 1919 land tax yielded £1,512,693, equal to 10.96 of taxation receipts. In |928 the yield was £1,154,479, equal to 6.73. For 1029 the yield was even less, £1,140,324. The increase now proposed will fall chiefly upon the large landowner. The small farmer will he affected more by the reduction of the mortgage exemption, but as this exemption is still to be £SOOO, he will not be heavily hit. Approxiatoly 46 per cent, of the land tax is paid by manufacturers, traders, and other owners, who are not farmers. Labour’s principal objection to the Budget as it appeared last night centres on the added primage duty. We can understand the reason for opposition. Customs and excise; duties have almost doubled (in amount) in the last ten years, and. though a considerable part of the icvenuc comes from luxuries, the family man has had to pay his share on many necessaries. Nor can wc agree with Sir Joseph Ward that the increase is so small that it will, not be passed on. The importer will not pay all from his own pocket. Ho will reimburse himself where he can, and the reimbursement may be more than 1 per cent, on some lines, but we do not think the increase should he considered only from this viewi point. The Finance Minister has stated that the duty is regarded as temporary. With temporary additions to taxation a most important consideration is the ease with which they can be collected and removed when the necessity no longer exist*. Prlinag,,. duty of 2 . per cent, will cost no more to collect than the old dutr. and it is removable, figuratively, by

a stroke of the pen. It will yield a substantial sum with little trouble or disturbance to trade, and as it will be widely distributed It can scarcely be opposed on the ground of actual hardship. If it fs in some part a tax on necessaries, it is also a tax dictated by necessity. Parliament will be wise to accept It in this way, and not to make a mountain of a molehill of hardship. The Budget, moreover, should be regarded as, a whole, and this is but one item in tbio balance. BUSINESS MEN’S VIEWS. PRIMAGE DUTY CRITICISED. (Peb United Press Association.) WELLINGTON, August 2. When asked for his opinion of the Budget the president of the Wellington Chamber of Commerce (Mr E. Salmond) stated to-day that he would not care to express a personal opinion until the Government’s proposals had been reviewed by the council of the chamber. “ This much, however, you can say,” declared Mr Salmond. “ There will be a strong protest forthcoming from the * combined Chambers of Commerce concerning the doubling of the primage duty on imports. When the last Government imposed a tax of 1 per cent, on imports jt was stated that this could not be handed on, but now that the \tax has been doubled there will be a great temptation to add 2 per cent; As to the other items, such as a super tax on land, they were just what was expected.” “ The wiping out of a deficit of £577,252 and the providing for increases in expenditure in almost every department is a problem that demands very careful consideration,” said Mr F. Campbell, of the New Zealand Manufacturers’ Association, when asked for his views of the Budget. “ Prom a brief and somewhat hurried consideration the proposals are no more than the Government of the day could expect to collect, and no less than it could safely ask for to carry on the business of the country. The proposals -to place Government trading concerns somewhat nearer as far as taxation goes to private concerns will be universally endorsed. I think the manufacturers of New Zealand will agree that the proposals are responsible, and should not interfere with the prosperity of New Zealand.” Mr Campbell concluded by saying that the exemption of land and income tax up to £12,500 was, perhaps, on the low side, and he thought this might have been raised by another £SOOO. It did not take much land at from £7O to £BO an acre to total £12,500. OPINIONS IN CHRISTCHURCH. PROPOSALS VIEWED WITH DISFAVOUR. (Special to Daily Times.) CHRISTCHURCH, August 2. It is evident from the opinions and comments gleaned from business men in the city that the Budget is not regarded with approval by the business community, and men with farming interests look upon the Government’s proposals with extreme disfavour. Mr H. S. E. Turner, vice-president of the Chamber of Commerce, said that the business men had hoped that the Prime Minister would tackle the problem of Government expenditure. A large section of the business community probably disagreed fundamentally wß'.i his stated policy of road and rail transport. It looked, without having examined it carefully, as if he was suggesting handicapping the modern development of transport in order to assist the railways. “ A considerable section of the business communitysaid Mr Turner, “feels that this is illogical, uneconomic, and reactionary—illogical on account of the suggestion that because the people own .the railways it is-necessary to handicap road transport; uneconomic because they are proposing to- force the use of a transport that is more expensive.”, “Our public expenditure has. almost got out of control,” said Mr A- F. Wright, another member of the Chamber of Commerce. “It is all very well for taxation to follow so as to provide the revenue, but the general community would like to see a reduction in expenditure, however unpopular such a move might be. It looks as if we are now paying for the incursion of the State into private enterprise in many directions,- and -if the activities of the State are not reduced and curtailed we must be met with ever increasing taxation to balance the national account. If there was one thing that the last election showed more than another it was the anxiety on the part of the people that the departmental powers, with their resulting heavy costs, should, be. lessened, but it would appear from .the inability or disinclination to effect sweeping reductions so urgently required in the public expenditure that the Government departments are proving too strong for the Government, as they proved too strong for the preceding Government.” Mr W. Machine, manager of the New Zealand Farmers’ Co-operative Association, said that to confess' helplessness in the curtailment of public expenditure and to dig deeper.into the pockets of the taxpayers for the required revenue was a bad lead to everybody in the Dominion who was trying to make ends meet, and it was to be hoped that the collective wisdom of Parliament would realise the cold facts of the present position that our Government expenditure had got too highland must be cut down. The proposal to make a large farmer pay either income tax or land tax, whichever was the larger, was not equitable. British people had accepted the doctrine that it was fair to tax incomes and profits, but it would never be just to tax losses, and this was what would happen in the case of many people were farming large amounts of land which they could subdivide and which they could not sell at the present time, farmers who were struggling to pay mortgage interest and had been borrowing for years to pay land tax, sometimes high graduated land tax which had increased their annual losses. “It seems to me,” said Mr Machine, “that the time has arrived for the whole question of land tax to be reconsidered, and as a trader I shall be interested to see whether the farming community generally in this matter decides to stand by that proportion of its number which will suffer intense hardship under these proposals. If they do take concerted action I think that the fair-minded business man must support them.” “ It is an iniquitous proposal,” said a gentleman who represents the farming interests. "It is iniquitous in that it will catch the farmer both ways—on his land tax or on his income. ’ It is the type of legislation which will tend to make the Government very unpopular so far as the farming community is concerned.”

The head of a big stock and station firm was ndt of the . same opinion, however. “If the Government needs the money, as of course it does,” he said, “ it is justified in getting it in this way. The proposal is a fair one in that it will affect a farmer only one way. If his land tax is greater than his income tax, then he will have to pay the former, and vice versa,”