N.Z.’S WAR BUDGET

Pahiatua Herald, Volume XLIX, Issue 14473, 28 June 1940, Page 5

N.Z.’S WAR BUDGET

SEVERE INCREASES IN TAXATION SCALE EXTRA SHILLING IN THE £ FOR SOCIAL SECURITY HIGHER LEVY ON INCOMES: SALES TAX DOUBLED COMPULSORY SUBSCRIPTION To INTEREST FREE LOANS. Electric Telegraph—Press Association ,In delivering the Financial Statement in the House last night, Hon. Walter Nash, Minister of Finance, said:— A s honourable members will recall the last Budget was presented by my late colleague, ine right Hon. M,. J. Savage, whose recent death has removed one of. the most outstanding personalities in the Dominion’s history. Hi s works will be his greatest monument to future generations Since the presentation of the last Budget the British Empre has taken up arms to resist the oppression of a powerful and ruthless nation whose ooyjctive is the subjection of the democracies and. in particular the destruction of the British Commonwealth of Nations: the Commonwealth of which we are proud and privileged to be a member. The menace from our enemies will bring out all that is great in our people—initiative, fortitude, willingness to sacrifice, and suffer hardships as required—so that the menace may be removed from the world, and our enemy may not prevail.

CHARGE ON INCOME TAX. An upward revision in income tax rate®, which will now range from 2s 6d to 12s in the jiound. and a national security tax of Is in the pound on all income in addition to the existing social security tax at the same rate, are two of several proposals for obtaining extra revenue contained in the Budget presented in the House of Representatives by the Minister of Finance, Mr Nash. The sales tax is to be increased from 5 per cent, to 10 per cent., companies are to pay taxation at a higher rate, there is to be a tax on debenture interest, the scale of death and gift duties is to be increased. and all state trading activities are in future to be liable for taxation. The Minister also said that proposals would be submitted to the House for the establishment of a procedure necessary to transfer to the State the whole of any excess profit made during the war period. DOMINION’S WAR EXPENDITURE. This year’s Financial Statement, which is much shorter than usual, deals almost exclusively with, war finance and its effects on the Dominion’s economy. Mr Nash said the magnitude of the financial programme with which the Dominion was now faced must necessarily involve the co-ordination of the various national activities and generally the mobilisation of all the country’s resources. The estimated war expenditure for the current financial vear totals £37,500.000. of which £19,750,000 represents expenditure overseas and the balance of £17,750.000 expenditure in New Zealand. The Government’s policy for financing a national effort is to tax to the economic limit for war purjxj.ses, and borrow for essential public works and the balance ■of war requirements. The United Kingdom Government lias agreed to finance the cost of New Zealand forces overseas on a loan basis, but every effort will be made to meet from the Dominion’s own resuices as much overseas expenditure as pos- , si hie. thereby relieving the United Kingdom. FOR. CONSOLIDATED FUND. The ordinarv Budget estimates involve a slight reduction in revenue, but this is partly offset by a decrease in expenditure. After eliminating war expenditure, now included in a separate War Expenses Account, there is a net shortage of £l,150.(XX) required to balance the Budget. Tt lias therefore been necessary to provide additional taxation revenue for tlu*s amount for the Consolidated Fund and as much as possible of the £17,750,000 of war expenditure in New Zealand. COMPULSORY WAR LOANS. The total revenue of the War Expenses Account is £14,120,000. having a balance of £3,630,000 to be borrowed tor expenditure in New Zealand. For these New Zealand requirements, and to provide as much as possible toward overseas costs, a national savings scheme is to be introduced to cater for small investors while loans with a currency of 10 years or more will be available for largei investments. The latter loans for War purposes are to be free-of-interest for three years or the duration of the war, whichever is the longer, mid not exceeding 2f per cent, for balance of frm. Many have already subscribed on interest-free basis, and the Government proposes to introduce a procedure whereby those with means will if necessary be required to subscribe appropriate sums to war loans, credit being given for amounts already received. Tlie public - works programme involves the borrowing of £15.000,000 internally as compared with £19,I+MQ'UMH) borrowed last year. The net increase in the public debt last vea r was £18,937.204 of which £16.857.264 was raised in New Zealand. SALES TAX RISE. A detailed explanation of the doubling of tlie sales tax to produce an additional £2,000,000 during the

rest of this financial year for the War Expenses Account was given by the Minister of Finance, Mr Nash, when the resolution necessary to effect this change was before the House of Representatives.. The Minister stated that foodstuffs produced in New Zealand w r ere not subject to the tax. DEVELOPMENT OF SMALL FARMS. A net total of £370,000 is provided for small farms development. •This item was shown in previous years as settlement for unemployed workers. SOCIAL SECURITY FUND. The Social Security Fund vote this year includes hospital benefits, £1,237.000, aij increase of £462,800 on last year, and maternity benefits £430,000, an increase of £167,000 on the previous year's expenditure. Provision is also made for £IO,OOO each for medical benefits and pharmaceutical benefits. The Social Security vote shows that the transfer from the Consolidated Fund to the Social Security Fund has been increased from £1.000,000 last year to £3,200,000 this year. The National Provident Fund and the Friendly Societies’ Department vote of £109.000 this year is a decrease of £IO,OOO on last year’s expenditure. REDUCED PUBLIC WORKS. A substantial beginning has been made in reducing the expenditure on the whole public works programme, and the amount of borrowed capital required this year is approximately £15,000,000, compared with £19,000.000 for last financial year, said the Minister of Finance. As men are required for more urgent purposes associated with the war the volume of national works will be progressively reduced. In addition to meeting all war requirements, some provision has to be made for carrying on national works such as development of more hydro-electric power required for our industries both, primary and secondary, and land-development and irrigation works which have a direct bearing on increasing production, while the curtailment of road transport to conserve petrol makes it all the more important that sufficient rolling-stock is provided for the railways to handle the traffic. In fact, useful development work is a necessary preparation for rehabilitation which must start before hostilities cease. 17s 6d IN THE £ LIMIT. The maximum tax that may be levied upon any income this year is J7s 6d in tin* £; this covering income and all other directly charged taxes. Few there are who will be liable to such a levy, though quite a number will pay the 12s in the £ maximum for individual’s income tax incurred at £3BOI. NO GREAT INCREASE ON SPIRITS AND TOBACCO. Amongst many Budgetary rumour*, were suggestions covering a 6d gallon rise in petrol tax, heavy imposts On tobacco and liquors, increased amusement taxes and so forth. A possible reason for the non-imposi-tion of such measures is that there is “a law of diminishing returns.” Over-severe taxation on unessentials defeats itself, as consumption rapidly falls. The income tax levies on typ. cal tax-paying incomes will be regarded as not so severe as expected in many quarters. FUNERAL OF LATE PRIME MINISTER. A vote? of £3150, the cost of tie State funeral of the late Prime Minister. Mr Savage, appears in the estimates of the Internal Affairs I'opartmeiit. There is also a sum of £59 voted for conveying Mr and Mrs A. J. French, of the late Prime Minister’s household, by air from Wellington to Auckland subsequent to ti e ! death of Mr Savage.