THE OTAGO DAILY TIMES Saturday, September 27, 1941. A COURAGEOUS BUDGET

Otago Daily Times, Issue 24723, 27 September 1941, Page 8

THE OTAGO DAILY TIMES Saturday, September 27, 1941. A COURAGEOUS BUDGET

The Budget which Mr Fadden has brought down in the Australian House of Representatives calls for heavily increased contributions from the people of the Commonwealth to the sexwice of the State. This was, of course, to * be expected. There is no form of expenditure that makes greater' demands on the purse of a nation than war expenditure does, and there is none that is less immediately and directly remunerative. But there is none for which provision is more readily made by a people that is convinced of the justice of the cause that has involved its country in war. For that reason the colossal figure to which the expenditure of the Commonwealth is being increased this year will excite no public opposition. Of a total of £322,000,000, which is the estimated expenditure, as much as £217,000,000 will be devoted to purposes connected with the prosecution of the war. The details that have been supplied to us do not make clear the proportions to which Mr Fadden proposes to rely on taxation and on borrowed funds to meet the unprecedented expenditure that is to be incurred during the year. They show, however, 'that it is intended to devise a new and ingenious method by which a compulsory loan will be combined with taxation to provide what is designated as a wartime contribution. They show also that a post-war credit plan, another novelty in Australia, is to be introduced. This plan will apparently be an adaptation of one which the Chancellor of the Exchequer, acting upon a suggestion made by Mr J. M. Keynes, has decided to employ in the United Kingdom. Under it a portion of the proceeds of a tax is treated as an interest-bearing loan, and a refund of it will be made to the taxpayer at the conclusion of the war. The proposal in the Australian Budget is that the minimum income on which taxation’ will be levied under the post-war credit plan will be £IOO in the case of single men, and that on the higher incomes the taxes will amount to as much as 18s in the £. The compulsion to lend to the Government in this way will be not less, certain than it will be in the case of the loans, to yield £25,000,000, that are openly described as compulsory. Nor does compulsion to lend stop there, for holders of existing tax-free loans are to be taxed on their interest receipts, of which they are to be required to pay 20 per cent, into the post-war credit pool. The loans that are to be thus raised are far from exhausting the Government’s borrowing programme, for it is hoped by it that it will be able to realise £54,000,000 by public loans and another large amount by the disposal of war savings certificates and by loans from the banking corporations. So far as it is possible to form a conclusion on the basis of the cabled reports, the Government is directing its financial plan to the avoidance of inflationary measures which would in the long run be inimical to the intex’ests of the public. There ax'e, in addition, to be smart increases in taxes—in the imposition of a hew company tax, and in a revision of the gi-aduations of income tax—and increases, also, in the cost of cexiain public services. The need that is being forced on the Federal Treasurer of raising funds of exceptional magnitude is plainly driving him to recoui'se to methods of which the people of Austx'alia have had no previous experience. He has, h'owever, addressed himself to a perplexing task with a courage that should command respect thx'oughout the Commonwealth.