The Otago Daily Times FRIDAY, February 5, 1937. PUBLIC FINANCE

Otago Daily Times, Issue 23107, 5 February 1937, Page 8

The Otago Daily Times FRIDAY, February 5, 1937. PUBLIC FINANCE

The Prime Minister, who is also Acting Minister of Finance, has expressed the belief that the position of the public finance at the end of the fiscal year will be satisfactory. There can be nothing to disturb this belief that lies outside the Government’s control. The Government came into office on a rising tide and nothing has occurred since its advent to power that has not been advantageous to it. It would be only by expenditure on a thoroughly extravagant scale that it could be deprived of the pleasure of a substantial surplus upon the twelve months’ operations. It has been lavish in all its expenditure but a great deal of the money that has been spent by it is not charged against the revenue account and consequently does not affect the figures for nine months of the financial year which have, in a provisional form, been made available by the Treasury. The most striking feature of the revenue account is the very heavy increase in the receipts from taxation. There is no source with the exception of income taxation, the great bulk of which is collected in the final quarter of the year, that has not yielded revenues largely in excess of thqse secured in the corresponding period of the preceding year. For some reason or other the Minister has not exhibited the income tax returns as a separate item. He has included them among “ other taxation,” which is shown as having produced £1,147,000 in the nine months of 1935-36. as against £933,000 this year. To this total of £1,147,000, however, income tax contributed as much as £998,300, and it may be assumed that it represents a very considerable proportion of the sum of £933,000 derived from “ other taxation ” this year. The Budget anticipation of the revenue from income tax for the whole year was £ 6,000,000, or a million and a-half in excess of the yield in 1935-36, and if the tax is relatively as productive as the other sources of taxation have been this year there can be no doubt about the Minister’s forecast being realised.

The estimate ' of the Customs revenue for the year was £9,100,000. Already in nine months the collections from this source have been £7,126,000, or 78 per cent, of the amount of the estimate. The value of the imports in 1936 reached a total of £44,134.000. which is nearly £13,000.000 more than the value of the imports two years previously and nearly £20,000,000 in excess of the imports in 1932. This expansion is the direct consequence of the increase in the value of the country’s exports, which, at £56,752,000 last year, was the highest that has been recorded in any year since 1928, and a necessary reflection of the growth of the trade of the country is the increase in the receipts from Customs duties. The Budget estimate of the year’s revenue from the sales tax. which the Government undertook to abolish, was £ 2,900,000 In nine months this tax produced £ 2,262,000, or 78 per cent, of the amount of the estimate of Hie whole year’s yield. As may have been observed, the collections in the month of January from both Customs duties and sales tax were so extraordinarily high that it is certain that the Ministerial estimate of the receipts from these two imposts will prove to be materially exceeded when the accounts are made up for the complete year The revenue that is not the outcome of taxation has not been equal in the nine months of this year to that of the corresponding period of last

year and one of the results of this is that the contribution from State departments to the payment of capital expenditure has been reduced. This may be regarded as directly attributable both to the increased scale of payments to Government servants and to the introduction of the 40-hour week in these departments.

The statement which the Prime Minister has issued does not make any comparison between the expenditure for the nine-monthly period and that for the corresponding term of 1935-36. This comparison may be shown as follows: — 1935-36. 1936-37. £ £ Permanent appropriations 10,397,168 10,670,000 Annual appropriations .. 8,081,402 10,412,000 £18,478,570 £21,082,000 The increase in the annual appropriations is largely due to the expansion in the expenditure in respect of social services, which absorbed £6,545,000 in the nine months of the current year, in comparison with £ 5,389,680 in the corresponding period of the past year. Another omission from, the Ministerial statement was that of any comparison between the total figures for the two periods. The returns for the present year show that the expenditure for the nine-monthly period exceeded the revenue by £2,495,000 in round figures. The excess of expenditure at December 31, 1935. was £2,399,405, The difference was, therefore, inconsiderable. Th 6 existence of a debit balance possesses no significance. The final quarter of the year is always one in which the revenue, swelled by the proceeds of the income tax, heavily exceeds the expenditure, and, as the public finance is demonstrably buoyant, the Minister may confidently rely on the realisation of a surplus, even if a generous scale of expenditure for the balance of the financial year is maintained.