FINANCIAL STATEMENT.

Otago Witness, Issue 3249, 21 June 1916, Page 50

FINANCIAL STATEMENT.

In introducing the Financial Statement in the House of Representatives on the 16th inst., the Minister of Finance (Sir J. Cl. Ward) said:— It is my pleasing duty to lay before honourable members a favourable statement Concerning the finances of the dominion for the year just concluded, and to be able to assure the House that, notwithstanding the disturbing influences of the war upon trade and commerce generally, the country’s finances arc in a very sound condition. It was stated in last year’s Budget that, in view of the anticipated fall in revenue and the increased burdens which would be cast on the Consoldiatcd Fund by the' necessity of providing for war pensions, interest and sinking fund on war loans, and other similar charges, a very considerable increase in taxation would bo necessary, and, subsequently, legislation was introduced and passed by the House to enable the additional revenue to be raised. Owing to the freedom of the seas having been maintained between New Zealand and the Motherland, and other causes, there has been a very considerable revival of trade. The export from this country of meat and other farming produce “has been continued at remunerative prices, and the producers of the dominion have experienced a very favourable year. These circumstances have made it possible for the community to meet the extra taxation of last year without inconvenience, and I have been able not only to provide for the additional charges on the Consolidated Fund, but to show, in addition, a good surplus for the year, amounting to £2,166,077. Deducting from this surplus the sum of £149,047 carried forward from the previous year, there is left a net surplus of revenue actually received during the year of £2,017,030. I wish to remind the House and the country that the longer the war continues, the greater will become our annual burdens, and that the expenditure of the year just concluded must not be taken as the maximum of the expenditure of the current and succeeding years. The payment for interest and sinking fund in respect of v7ar loans will show a very considerable increase for this and succeeding years _ over the amount paid for last year. Two items alone will entail an additional expenditure this year of over £1,000,000. REVENUE AND EXPENDITURE. The following figures show the revenue and expenditure for the year 1915-16 as compared with the figures for the previous

BBG WAR ASKED FOR A SPECIAL INCOME TAX HEAVY LEVY ON WAE PEOFITS

The increase in revenue for 1915-16 was partly clue, of coui'se, to the increased taxation and revenue charges imposed by last year’s legislation, and partly to increased activities in the trade and commerce of the dominion. Expenditure.

Grand totals £12,40:1,107 £12,079,803 £113,304 * Doorcase, I desire especially to call attention to the reduction of £74,674 in the expenditure under the annual appropriations for the year 1915-16, when compared with that of the previous year. This economy is largely, in my opinion, duo to the care with which the administrative heads of departments controlled their expenditure. On two occasions during the year I mot the permanent heads of departments in my office and emphasised the necessity for the exercise of economy in public expenditure, especially at the present time, and I wish publicly to express my appreciation of the zealous manner in which these officers carried out the wishes expressed by mo by carefully supervising the expenditure in their respective departments. ESTIMATES OF REVENUE AND EXPENDITURE. The revenue for the year 1916-17, on the basis of the existing statutory limitations, is estimated as follows: easterns ' £5,300,000 Railways 4,450,000 Stamp and death duties 1,470,000 Postal and telegraph 1,750,000 Land and income tax 2,540.475 Beer duty 185,000 Registration and other fees ... 104,605 Marine 45,850 Miscsdlanous 425,500 Territorial revenue 211,000 Endowment revenue 90,971 Other receipts 10,000 Total £14,591,401 The following figures will show the ways and means of the Consolidated Fund for the year 1916-17, estimating the revenue on the foregoing basis: — Balance forward from 1915-16, less investment (£2,000,000) ... £ 166,077 Estimated revenue, 1916-17 ... 14,591,401 £14,757,478 Estimated expenditure 14.390,626 Balance ... £566,852 RESERVE. Since the war began the deposits at cal] with the Post Office Savings Bank have increased very rapidly, and a considerable portion of these moneys has been invested in war debentures and other Government securities. In view of the possibility of heavy claims being made by depositors when matters assume a more normal aspect in Europe, I established a reserve in London by investing, in Imperial Treasury bills, funds which are not wanted for immediate requirements. New Zealand has by this means assisted the Imperial Government, and has at the same time established a strong liquid reserve against possible sudden claims in the future. WAR LOANS. During the session of 1914 authority was granted by this House to enable £2,000,000 to be raised for war purposes, and during last session additional authority was granted for raising a sum not exceeding £10,000,000 for the same purposes, making a total of £12,000,000 in all. Of this total wo had borrowed, up to the beginning of May, 1916, £9,850,000, leaving an unexhausted authority of £2,150,000. Honourable members will recognise that our war expenditure must expand in proportion to the increased number of men we put into the field. The Imperial Government has advanced £8,500,000 of the £9,850,000 raised, and the balance, £1,350,000, has been found in New Zealand from Post Office investments Additional authority to borrow will have to be granted to enable the war expenditure of the future to be met, and I propose to ask the House for authority to borrow further amounts for war purposes to the extent of £12.000,000 for this year. With the unexhausted authority of £2,150,000, this will provide a total of £14,150,C00. This is a large sum, but, as it is expected that the war costs will shortly run into over £1,000,000 per month, the amount I have mentioned should not be considered excessive.

PUBLIC WORKS LOAN. During last session of Parliament authority was granted to the Government to raise a loan of £2,000,000 for public works, and this amount was raised without having recourse to the London market. Although the purpose of this loan did not appeal to the patriotic feelings of New Zealanclers in the same degree that it would have done

had the money been required for the expenses of the war, the loan, nevertheless, met with great success, and was considerably over-subscribed. I would especially call attention to tho very small cost entailed in raising this loan. The work was performed by the Treasury and Post Office officials, and the total expenses amounted to £5035, or £ per cent. only. These expenses consisted solely of brokerage, advertising, and printing. When it is remembered that the cost of raising a loan at par in I.ondon amounts to, roughly, 2g per cent., the saving which has be-on effected will be fully recognised. As regards tho future, our chief efforts must be exerted in tho direction of render* ing as much financial aid as it is possible to the prosecution of the war, and until the termination of tho Avar, therefore tha utmost economy will be exercised in tho prosecution of public works, and only those works which are essential will be continued. I need honourable members that it would be impossible to approach tha London market, under existing conditions, for a_ public works loan, and I do not think that it would bo prudent to float a loan in New Zealand for public works purposes. I estimate that thero is sufficient money now available for public works to enable! us to carry on at a reduced rate of expendi» ture for some time, but to guard against unforeseen contingencies the House will bo asked to grant authority for raising during; tho year half a million from the Post Office funds. It must bo understood, however, that this authority will be merely a precautionary measure. REDEMPTION AND RENEWALS. In last year's Budget it was shown that loans amounting to £6.274.953 would require to bo met in London before March 31. 1916, and I am glad to say that this has been. successfully and satisfactorily completed, as follows:-"Redeemed by creation of 4 pep cent, inscribed stock, £190.499 ; redeemed by investments from the Post Office. £655.801; investments renewed to the Imperial Treasury, £5.421.053; converted under Finance Act, 1915, £2600: converted into 4 per cent, inscribed stock (1943-53), £SOOO. The loans failing due during the past year in Australia and New Zealand amounted to a total of £3,631.521. and of this sum £410.056 has been redeemed with monev provided by tho Treasury, £2,806.015 ha"s been renewed for a further term of five years, and £i6o,lGo has been converted into new debentures under "Tho Finance Act, 1915." i Tho balance of £47,550 has not yet been dealt with, as the Treasury has not received advice from the present holders whether they wish to renew or not. CONVERSIONS. Under the authority of tho Finance Act of last session all holders of debentures maturing on or before December 1, 1916, were offered the option of converting into debentures of similar terms and currency to tin: £2,000,000 loan raised in the dominion for public work-?, and a sum of £208,900 was thus converted. I subsequently made a proposal to holders of debentures" maturing on or before March 31, 1924, to convert into debentures with a currency of 25 years and bearing interest at 4|- per cent, free of, income tax The result was most gratifying. Up to tho end of April debentures to the amount of £1,891,000 had been thua lodged for conversion. It will be seen that the total amount provjded for undc-r these three headings for a considerable period amounts to approximately £12,000,000, and this, vhen considered in conjunction with tho net surplus of £2,017,030, may be looked upon as an extraordinarily strong position with which to face the developments of the future, which are rendered uncertain by tho :n possibility of forecasting the termination of the war. 'Treasury bills, which at one period of the war reached the record ajnount of £1.950,000, were all paid off before March 31. CUSTOMS. The new duties for the seven months during which they were in operation, amounted to £K9,OUO, and of this amount primage duty of 1 per cent, on all imports was responsible for £98.000. Comparative figures showing the value of exports for 1914 and 1915 are as follow: 1914, £26.261.447; 1915, £31,748,912. The value of the exports for 1915 is the highest ever recorded, the increase being, of course, greatly due to tho high prices of our staple, products. LAND TAX AND INCOME TAX.

The effect on the revenue of the increased taxation upon land and income is very marked. The net receipts in this depart* ment for the past year amounted to £2 440 475 (made up of land tax £1,048.356, income tax £1.392.119). and, compared with the collection'for the previous year, show an increase of £1.100,516. , „ The land tax receipts for the financial year 1915-16 considerably exceeded the estimate, and, comnared with those of 1914-15, are as follow :-Receipts. 1915,-16. £1.048.356; receipts, 1914-15, £799,641.;—an increase of £?4B 715' The income tax receipts for the financial year 1915-16 also considerably exceeded the estimate, and, compared with those of 191415 are as follow: —Receipts. 1915-16, £1392 119; receipts, 1914-15, £540,318;—an increase of £851.801. The excess of receipts under this heading over the estimate is duo partly to the fact that the dislocation of shipping at the outbreak of the war did not cause the shrinkage in trade that was anticipated, and partly to the fact that high profits were realised by taxpayers dealing with the primary products of the dominion. Honourable members will be interested to know that the income taxi chargeable for the past year to farmers in respect of the profits derived from land amounted to £269.000. of which sum £240,000 had been paid by the 31st March last. STATE ADVANCES OFFICE.

There has been no change in the policy of this office during the year. The limit of advances to local authorities remains at £SOOO, while advances not exceeding £IOOO (including loans for the repayment of mortgages and the erection of homes in urban districts up to £450) continue to be mad© to settlers. . In the workers' branch the full amount allowed by the law is being advanced. Thei amounts of advances paid over during year ended March 31 were:—To settlers, £314 555; to workers. £275.680; to local authorities, £235,410;—t0ta1, £1,375,645. The Joans authorised, but not paid over, as at March 31 were: —Advances to settlers, £147 279; advances to workers, £85,185; adx vanc-es to local authorities. £3oo,49o;—total* £502.954. There has been no increase in the ratea of interest chargeable to settlers, worker* and local bodies during the year. ThJ rates to settlers and workers remain at 5 pej cent., reducible to per cent, for prompt payment. The rate chargeable to local authorities remains at 4j per cent.

SUPPLIES FOR EXPEDITIONARY FORCES. In view of the heavy commitment to the Army Council in connection with equipping', training, and despatching, say, _ thirty thousand men during 1916, it is estimated that £1,548,000 will be required for the calendar year 1916. The sum is made up as follows: -Stores. £1,100,000; smpphes, £424.500; drugs, £23.500-total, £1,548,000. It has been found advisable, in order to create reserves in certain lines of equipment, to place orders for heavy deliveries during tho first six months of 1916. These goods will be held in store under proper custody. and as a result, the orders for goods will not' be so extensive towards tho close of the year as for tho first six months. As far as can be ascertained, the sum of £248 000 has been paid for 1916 supplies, which leaves a balance of £1,300,000 to be provided for the remainder of the calendar year.

IMPERIAL GOVERNMENT SUPPLIES. Tho arrangement entered into with tho Imperial Government by which all beef, mutton, and lamb availablo for export should be purchased on account of tho Imperial Government, and which became operative on March 3, 1915, has been continued throughout the year. Tho total shipments up to May 9, 1916, have been: 719,089 quarters beef, 3,045,732 carcases mutto freezing companies and producers have amounted to £9,143,794. A _ clearance of tho freezing stores was practically effected when the new season commenced. At the beginning of May there remained in store approximately two million 601 b carcases at the freezing works, but the outlook for the balance of the season is favourable. It is satisfactory to note that many of the freezing companies have taken in hand the matter of increasing the storage accommodalii November last a requisition for 15,000 tons first-grade cheese was made by the Imperial Government, the price fixed being 7id per lb f.o.b. In order to comply with this requisition, all factories wero notified that approximately one-third of their output for tho season would be required for Imperial Army purposes. Up to May 9, 12,725 tons had been shipped, and the payments to dairy factories and producers totalled £845,474. , . A notification was received m September last to secure for Imperial Government purposes tho whole of the output of schcelite ores from the dominion to December 31 next, the price being fixed at £2 15s per unit of tungstic acid per ton of ore. Arrangements were made with tho mining companies, and a working scheme prepared and put into operation. Up to-date 151 tons have been shipped, tho payments to mining companies and producers totalling £28.683. Considerable congestion is being experienced in the export of general cargo, owing to the shrinkage in tho world's tonnage. This condition is due, firstly, to tho heavy and ever-increasing demands of our own and allied Governments for tonnage for war purposes; secondly, to the sinking of a number of cargo steamers by the enemy, and the loss of two largo carriers, and also to the fact that the output of general cargo is above the normal. There are indications that tho tonnage available in the months of Juno and July will clear tho accumulation. and the situation should wholly right itself by the end of August. Tho congestion may reasonably be said to have reached its worst in March and April, and, given tho safe arrival of steamers now on tho way to load, it should decline by August and become normal by September.

ESTIMATED LOAN EXPENDITURE FOR 1916-17. I estimate that it will be necessary to provide from sources within the dominion a sum not excoeding £2.500,000 during the current year to provide for the carrying on of works and other services which are deemed to be necessary. This amount has been cut down to the lowest figure possible, and care will have to be exercised in the expenditure, as difficulties are likely to occur if further sums are required. Of the above-mentioned sum, £500,000 represents money for the purchase of land for soldiers, and as this may bo paid for by means of debentures, I estimate that the net amount which it will be necessary to obtain for works will amount to, approximately, £2,000,000. How far this will be given effect to must necessarily depend upon the sums which are from time to time available for investment on account of various departments.

TAXATION PROPOSALS. I propose to effect some important changes in taxation. The ordinary land-tax on mortgages will bo repealed, and an incometax substituted on tho income derived from tho 'mortgages. This change, while giving relief to the owners of small sums invested on mortgage will imposo a heavier tax on incomo of tlioso having large investments. I will ask the House to make provision for exempting from assessment of incomo tax in New Zealand any incomo earned elsewhere and which has already been taxed in the United Kingdom or any British dominion, with tho view of avoiding as far as wo oan the duplicate taxation of incomo within the Empire. There is no room to doubt that the present system is unjust, and acts as a constant barrier to the full and free develop.rncnt of commerce within tho Britisn Empire.

MONEY. During the year the financial condition of the country has been a singularly peculiar one. Money has boon plentiful, but the uncertainty of the future haw made those who were tho fortunate owners of sums in excess of their requirements exceedingly cautious; the result has been a marked indisposition to invest in existing industries or in new undertakings. Tho fact that no one can. with any degree of accuracy, gauge what conditions will prevail after the war makes the position anything but easy to forecast. It, however, appears certain that after the war tho whole world will find a new and, indeed, an unprecedented situation, and that the change in the economic, industrial, social, and financial condition must necessarily bring about changed methods of finance. All industries, whether trado or primary, to a large extent aro dependent on the stability of the country's finance. I am convinced that it is a wise oourso to keep the year's surplus in a liquid form, and I decided some months ago not to use tho surplus for ordinary governmental requirements, but to invest it in liquid securities, and part of this £2,000,000 has since th s >i the financial Jrear boon invested in Imp-ci il Treasury bills, and tho remain will I • similarly Invested at an early ! .::> ! i from tho

first recognised that it is our duty to aid the Motherland during this great war to our utmost capacity. I had previously invested a sum of £1,325,000 in imperial Treasury bills, and with this further £2.000,000 a total of £3.325,000 will bo provided as a reserve. I think this investment in Imperial Treasury bills may be regarded as a partial set-off by New Zealand against liie war funds .so generously advanced by tho Motherland. I hone during tho current year to further increase this reserve.

WAR PROFITS. Money for the conduct of tho war must bo had, and thoro is no valid reason why those who have surplus moneys, largely duo to war conditions, should not be called upon to provide a portion of the capital required. Those who have made extra profits during the war, either from business or directly from primary products, cannot object to provide out of such profits a share of tho finance necessary. I will aek the House to give authority to take by way ol taxation 45 per cent, of the excess profits earned during last year. Theso will be ascertained by taking tho average rrofits realised for each of the throe years previous to the war and comparing this average with the returns made since the war commenced. I estimate to receive £2,000,000 from this source. The date of payment will probably bo about the end of the current, financial year. SPECIAL INCOME TAX.

Those taxpayers who derive their incomes from other sources than war profits should likewise at this juncture be required to contribute something further than they are at present called upon to pay, and 1 propose to ask for authority to levy a special tax of 5 per cent, upon incomes earned last year from all sources, exclusive of. war profits which have already been dealt with. This tax will be collected in March next, T calculate that £750,000 will be realised under this heading. INCOME TAX MINIMUM.

I 'direct attention to the minimum upon which income tax is charged in this dominion. So far as I can ascertain, the amount at which we start to levy income tax is the highest in the world—by that I mean we exclude from the payment of any tax a]] those who receive wages or salaries not exceeding £3OO rcr annum. Nothing is proposed in the direction of increasing the income tax revenue by reducing the minimum upon which income tax is leviable, but it will become a question for serious consideration if the war continues beyond the end of next year whether this should not be done. It is only right that, thoso who are well-to-do or possessors of wealth should contribute the greater proportion of the cost of this war, the successful winning of which means such enormous advantages to them as well as to every other section of the community. Even the humblest in the land -would probably take exception to being altogether excluded under the law from making some slight contribution towards helping to win the war and towards assisting to maintain a pensions scheme for the benefit of the widows and dependants of thoso who are, on behalf of every class, great or small, throughout the dominion, fighting for the freedom of this country.

WAR BONDS. I will also ask the House to provide for a system of war bonds to bo issued in New Zealand, with a currency of 25 years, bearing interest at per cent, free of incornotax. This will enable those desirous of helping war finance to do so The financial requirements during the year will be obtained partly from the Old Country and partly from New Zealand, and will, of course, be limited to the dominion's needs. - • Tho course I am suggesting will givfl those desirous of helping the Motherland the opportunity of doing so. Our war expenditure is now reaching very large figures, but tho proposals I am submitting will, in my opinion, supply the means for providing everything that is necessary for the pensions, equipment, transport, and pay of our soldiers, and this must be the first duty of the country during the crisis through which tho Empire is now passing. I hope not only to supply the necessary means for current requirements, but eventually to provide for the full repayment of tho loans received from the Imperial Government for war purposes. It would, of course, be impossible at present to continue the war expenditure without assistance from the Homeland. For the months of May and .June it has been found possible to reduce the usual Imperial contribution by more than half, owing to the assistance derived from local investments, and it will bo nry endeavour in the future to continue to relieve tho Imperial Government to the fullest extent possible. How far this can be accomplished will largely depend upon the total amount we obtain from tax on war profits and from the special income-tax, but. I feel justified in saying that the amount will be considerable.

I wish to point out that no additional taxation is being suggested, except to provide for war expenditure, and though the extra tax may be severely felt by some of those who will be called upon to respond to tho needs of the country during the war. they will cheerfully accept any additional burdens which are essential to achieve tho final victory in this great conflict. Tt may be necessary, as soon as I know definitely what amount is required for authorisation on the Supplementary Estimates, to ask tho House to provide for nn increase in taxation to further strengthen tho consolidated revenue. I will inform the House when I am in a position to do so. MONEY IN DOMINION. It is, in my opinion, tho duty of those who own or control monov made in this country to utilise it in the dominion as much as possible during tho currency of the war, in order to help to maintain the stability of the trade and commerce of the country. I propose to ask the House for authority to ensure that this will he done until 12 months after peace has been declared. This will also apply to deposits in banking or other institutions in so far as they represent money in New Zealand, but will not affect remittances for legitimate trade or other purposes. Authority will he asked to have suitable provision made by regulations to enable this proposal to be carried out. RATES OF INTEREST. Last year the House gave authority to control tho raising of public loans by local bodies, and this provision has worked well. I have not given authority for any local public body throughout the country to raise loan money at a higher rate than per cent. In a number of instances I was asked to do so, but refused, and tho fact that tinmoney has been obtained within the maximum rate fixed shows that had this provision not made tho rate of interest throughout the dominion would in all pro-

bability have boon materially increased. As already mentioned, the Government rate for the State Advances Local Bodies Branch has been kept at per cent. Under the abnormal conditions at present ruling an inflated interest rate would be highly undesirable. I propose, in order to prevent the possibility of a general increase in the rates of inaerest, to apply a similar restriction to the rates to be allowed in respect of deposits, and to fix a rate applicable to all financial institutions, whether banking, companies, or private firms, so that no institution can take advantage of another of tho 6amo class by ofFering higher rates for deposits.

GOLD EXPORT. The exigencies of the war have caused the Imperial Government to stop tho exportation of gold from the British Isles, and this course has been followed by Australia. The stoppage of gold export from these countries necessarily interferes with trade finance, and the banks find it somewhat difficult to provide a sufficiency of gold within the dominion for trading purposes, while at the same time' they must of necessity maintain their requisite proportion of gold reserve. I propose to submit legislation to meet this difficulty, which I will explain fully when bringing down the necessary measure. I may add that there is not the slightest cause for any uneasiness; on the contrary, the trade and commerce of tho country have been carried on throughout the war uncommonly well in tho face of many unprecedented difficulties. YE A R'S OPERATIONS.

For the convenience of honourable members I now summarise the most important items relating to the financial operations of the past year : A loan for £2,000,000 for public works successfully floated within tho dominion. Tho establishment of a reserve of £3,325,000 in London. Redemption and renewals of loans falling due in London up to March 31, 1916, amounting to £6,274,953. Conversion of loans falling due in New Zealand maturing up to December 1, 1916, to the amount of £208,900. Conversion of loans falling duo in NewZealand maturing up to March '3l, 1924, amounting to £1,891,100, into a new currency of 25 years. . Treasury bills in dominion paid off, £1.950,000. None have since been issued. Net surplus of tho year's revenue, £2,017,030. . . War loans received up to the beginning of May from Imperial Government, £8,500,000. PROPOSALS.

I also place m concise form the new proposals submitted to honourable members: — Reduce public works expenditure. Repeal mortgage tax, and substitute an income tux on sums invested on mortgage by owners. . , Abolish duplication of income tax oy exempting in New Zealand income earned elsewhere within the British Empire, and which has already been taxed there. Provide for annual bonus out of proms of Public Trust Office to beneficiaries ol estates. Provide for war bonus during war to employees of all branches of the Public Service whose pay does not exceed ±,olo per annum. , ~ Provide £2,.0C0.0C0 for internal expendi"providc £SCT,OCO for purchase of land for soldiers. , , Miur-t conditions by legislation to meet the changes war has brought about m regard to banking. , Provide for acquirement of 45 per ecu,. 01 profits realised by war conditions. _ ' Provide a proportion of moneys required in aid of war finance by issuing war bonds in New Zealand. .. . Provide, a tax of 5 per cent .on all incomes, exclusive of those" obtained from war profits. , To regulate the transfer of moneys from the dominion except for legitimate trade purposes. . . To regulate the rate of interest chargeable on deposits. . Provide for financial assistance to friendly societies. . ... , Provide for borrowing an additional £12,000,000 for war purposes. CONCLUSION.

It now only remains for mc to say that I fully realise the tremendous growth of the Public Debt, duo chiefly to the great war, but although our responsibilities are increasing enormously, there is no need ior misgivings as to the future. New Zealand has wonderful natural advantages, and owing to this fact, and the patriotism of the people, wo are in the fortunate position of being able to meet all demands upon our finances. Individual sacrifice?, no doubt have to bo mad" This is inseparable from the conditions that now exist, but the resources of tho country as a whole are more than sufficient to bear the increased strain. _ I remind the country that there is a sinking fund for the repayment of all loans, including those raised and to be raised for war purposes. The renewal and conversion of loans completed during the year for some years to come will greatly help in providing further financial requirements. Trie future financial outlook may be viewed with confidence. It is not at any time a pleasant task to submit to the country proposals for increased taxation, but in view of the justice of the cause for which the Motherland, with her Allies, is now fighting, I do so in full confidence that the people of this dominion will be in the future as they have over been in tho past, ready and willing to shoulder the additional burdens with unflinching courage. I feel sure that they will shrink from no sacrifice which will help in the overthrow of an unscrupulous enemy who has forced, an unjust war upon the British Empire and those great countries associated with her. I thank honourable members for the courtesy and patience they havo been good enough to extend to mo.

(Fitou Our Own Correspondent.) WELLINGTON, Juno 16. The Minister of Finance was listened to with an interest which became most marked as the taxation proposals wcro enunciated. The two features —taxation of war profits nnd the imposition of a special income tax — were greeted with "Hears, hear," from several quarters. The proposals contained in the Budget are so far reaching tinifc members on the whole when seen afterwards were reluctant to express views, but pleaded for time to digest the political faro placed before thorn. Tho 45 per cent, imposition on war profits met with approval from the Labour and Radical section, but they expressed a desire to bo assured' that this .year's and subsc-

quent war profits would como within tho tax. The Budget will meet with both approval and criticism, and tho men immediately behind the Government benches will not remain silent. One who was prepared togive a few views at short notice was Mr Nosworthy. As a few blots on the Budget, ho mentioned that tho income minimum should have been lowered from £3OO to £l5O. It was the nation's war, he said, and all classes should pay, and would bo found witling to pay. The huge increase of £400,000 promised to the civil servants was not in accordance with Britain's idea of how to do things and economise in time of war. He did not know how tho general taxpayer would view this increase, which would only have been justified if the income tax minimum had been lowered to £l5O. Britain was aimin" at economy, and we should do the same from the national point of view. For this reason he was sorry to see that no tax was imposed on amusements, picture shows, horse racing, etc., that more money was not sought from beer, and that nothing was proposed to be done to check the extravagance in motor cars. The Budget, in a word, imposed class taxation, and should have been broadened considerably in its scope. The Moderate members generally approve of the Budget proposals. They hold that 45 per cent. taxation on war profits is about right, and the creation of the liquid reserve at Homo gives great satisfaction. They accept as justifiable as a war expedient the prohibition or restriction of the investment of Now Zealand private capital abroad. The abolition of the mortgage tax is approved, and it is also largely held that the income tax minimum should bo. reduced, and that attention should be given to profits on liquor and restrictions on amusements, horse racing, etc.. while something should have done to limit motor ear importations. The war bonus of £400.000 to civil servants wi!l_ come in for considerable criticism as being a heavy burden on the general taxpayer, whoso lot might preferably have been lightened. The extreme Radicals cannot, of course be satisfied, and urge that o« much as 75 per cent, of war profits should be taken.

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Permanent appropriations— Civil list £ 20,280 £ 21,954 *£ 1,674 Interest and sinking fund 3,190,798 3,071,448 119,350 Under special Acts 574,000 545,341 28,659 Subsidies paid to local authorities 133,072 124,821 8,251 Territorial revenue 52,184 51,685 499 Endowments 178.692 173,916 *254 Old-age pensions 450,842 436,765 14,077 Widows’ pensions 36,265 31,610 4,656 Military pensions 48,278 47,607 671 War Pensions Act 13,744 — 13,744 Totals i £4,693,155 .£4,505,177 £189,906 Annual Appropriations— Legislative Dopartments 34,480 37,552 *£ 3,072 Department of Finance 90,004 1*0,134 * 80,130 Post and Telegraph .Department 1,294,712 1,244,569 50,143 Working Railways Department 2,954,006 2,881,087 72,919 Public Buildings, Domains, and Maintenance of Hoads 100,780 117,676 * 10,896 Native Department 24,877 24,005 872 Justice Department 452,227 442,478 9,749 Mines Department 28,562 29,170 * 618 Department of Internal Affairs 408,053 489,207 * 81,149

T3 O -V s ** rC £-s. 8 g 5 te\ H a Defepoe Departmerit 432,227 499.137 * 66,910 Customs, Marine, anti Inspection of Machinery Departments 161,225 149,200 12,025 Department oi Labour 31,670 28,142 3,534 Department of Lands and Survey 235,322 239,043 * 3,721 Department of Agriculture, Industries, and Commerce 191,774 206,731 * 14,957 Education Department 1,329.166 1,207,983 121,183 Services not provided lor 30,866 108,512 * 77,646 Totals £7,799,952 £7,874,026 £270,425