PAYING THE WAS EXPENSES

Otago Witness, Issue 3353, 19 June 1918, Page 7

PAYING THE WAS EXPENSES

MINISTER EXPLAINS THE GOVERN MENT'S POLICY.

The question whether tho Government is adopting a sound policy in paying the expenses of the war entirc'y out of borrowed capital was discussed by tho Acting Minister of Finance (the Hon. A. M. Myers) on Wednesday. Mr Myers said that he wished to quote the policy of the Imperial Government, which continues to pay only a certain portion of the war expenses out of taxation, about 27 per cent. It should be remembered that tho war expenditure being incurred by this country is partly incurred in England. The Imperial Government is advancing the cost of maintenance of troops, which amounts to between £6.000.000 and £7,000,000 per annum. The dominion, of course, gives the Imperial Government adecjuate security for these advances.

Tho Minister pointed out that the dominion has imposed very considerable extra taxation for the purposes of meeting the expenditure in connection with the war, and this extra taxation has enablerl the Government to create considerable reserves in London, which can, if considered advisable, bo utilised in the repayment of the obligations incurred to the Imperial Go"vernment. From a business point of view, it. is an advantage to the country to invest these reserves in Imperial Government securities rather than utilise them for tho purpose of paying the war expenses, as they now produce higher interest than that which tho Government is paying- for its war money in Now Zealand. The total amount of the increased taxation derived from tho people of New Zealand and invested in this way amounts to between £8,000.000 and £9.000,0C0.

Mr Myers said that it, was apparently assumed that the extra taxation which is being obtained from the taxpayers of the country for the purposes of the war is being utilised for other than war purposes. This was not correct. The balance, after payment of interest on war loans, is being invested as stated, and it will bo a matter for future determination as to whether or not it should be used for the redemption of a portion of our war loan.