WAR EXPENDITURE AND FINANCE.

Poverty Bay Herald, Volume XLIV, Issue 14473, 7 December 1917, Page 6

WAR EXPENDITURE AND FINANCE.

— . 1 ■ SOME GIGANTIC FIGURES. 1 (Special to tb« Herald.) j ) WELLINGTON, this day. I ' Outlay m connection with the war : continues to mount up steadily. That or' 4 , the British alone, is now at the rate of . approximately £7,000,000 a day, remarked j ' Mr Harold Jie.auchamp/ chairman of 1 i the Bank of New Zealand, at the halt* yearly meeting to-day. I The total war' expenditure of the British Treasury from August 1, 1914, to ! September 22, 1917, amounted to £5,<- ' 534,527,000, of which £4,210,384,000 was " provided by loan and £1,324,143,000 by ' revenue. This expenditure includes loans . to the Allies and the Dominions amounting,, at July 21, 1917, to £1,171,000,000. Befoie* the entry of the United States ' of "America 'iiito the war, slie bad . raised loans for the 4 Allies aggregating over £470,000,000 (of which £226,300;000 was to Britaih), v and* shortly after her declafatibh of-war on April 6, 1917,- a War -Fmanfre Bill was passed authorising 1 the raising bf loans for £1^400,000,---000. Subsequently a further authorisation, for a, large amount was macie. Huge Votes for the bhilding of. aeroplanes and shijis of ytar aud.'&ekhantmen have been passed by. Congress, "arid, the programme of *^a,r expenditure so far outlined, ihcliidirig_ loans, 'to the Allies , provides for an .aggregate to close on £4,400,000, - --000.. .. ' :d'~: ' The first Liberty Loan of £400,000,000 a t,'3_ per' cent, was isued m June, and was largely oversubscribed. The second Liberty 'Loan, proposed originally for £6CO,000;000 at 4 per cent, was offered iii . October last. Limitation of the amounPwaJs then removed, the United Treasury expressing the hope that the. f £I,OOO,OOO,QOQ mark would be r^cb^d. N According to Tpress telegrams, this* h^ c been nearly achieved. A "Whatever iniaiy have been thought or said cbncernirtg America's * tardiness m taking up arms, there can be no question that, since her declaration of war. she, has, thrown .-herself into ; the struggle in;.such-a wlible-liearted, systematic .and wdl ; organised way that it augurs well for the future of the Allied .cause," mas.- -"? U( <h. a s i fc implies a grim: determination on part tb see the war, at all costs, to a 'victorious conclusion without unnecessary loss of time. In the early stages of the conflict the cost of it all amazed and bewildered us. Now we have grown accustomed to the outlay. We have learnt,, financially speaking, to think m millions, ahd we 'somehow view the hugely swelling figures of the. national debts with feelings akin to indifference. We, have to win the war whatever the cost. It is the price of freedom from German domination, and the worth of such freedom is incalculable. » In New Zealand we are pursuing a self-reliant financial policy. We have largely provided, for all ,our <var and other expenditure; girice hostilities commenced, out of locally raised loans or revenue. The total loan authorisations during the period have .amounted to •Qfi-** 44 . 185,000. These authorisations are estimated to provide for all requirements uv> to July, 1918. A total of over .000.000 m all- has been raised, of which about £24,000,000 has been provided by public subscription m the Dominion, and probably £10,000,000 by loans from the Post Office Savings Bank. So far, thanks to the high prices paid for oui' pi'oduce, we have been able to bear our financial burdens, "and will probably continue ..able to bear them, provided that reasonably good prices are maintained and that shipping facilities are afforded to exporters and to the Government, wliich has commandeered such a large proportion of our products. At present, owing ho the absence of shipping facilities, it is estimated that fully •■"> 000,000 worth of last season's" produce is still held up. Of this, frozen meat and avoo! comprise the major portion. THE MONEY MARKET. • Advances against unshipped produce \ are reflected m the bank returns for the .' "quarter ended September 30, 1917. The total advances, 4 ' as therein shown, were at that date, £28,415,450— at September 30, 1916, they were £24,677,964. The , 1917 figures constitute a record for the J Dominion. . In spito of the high rates ruling for money m other parts of the world, the banks m this country have not, since the i declaration of war, increased the i;atea > of interest charged for overdrafts or > discounting of bills. On the other hand, ' since the passing df tbe last Finance Act, which provides for such heavy additions to land and income tax, other lending institutions and private individuals , have been compelled to substantially m;- -; crease their rates for lending on , mortgage. r The heavy borrowings by the . Government within the Dominion have naturally absorbed a substantial proportion of the savings of the people. As a ; consequence, the reserves of floating capital are being depleted and a period of dearer money must be expected. , The Minister of Finance x is to be cordially eongratul&ted upon the success- of the last internal loan. It is a great financial feat for a small country such as. , this is, to have provided fron-j^ts own rer sources £34,000,000 for war purposes and public works during the currency of the war, and it speaks well fpr the financial stability of the Dominion and for the patriotism of its people. TAXATION. To meet the increased war expendi- ; ture and the heavy additional interest , payable m respect to loans raised for war purposes, it was /imperative to provide for extra revenue, and this was done by substantially increasing the land and income tax, ,by disallowing deductions for mortgages on land over a^id above the sum of £6000, and by slightly recasting the Customs tariff. Under the new scale, companies and individuals, with incomes of £6400 and upwards, will pay 7s 6d m the £, or 37£ per cent. As this rate will fall heavily upon joint stock companies, strong efforts Avere made to induce the Minister to alter the present method of collecting the. company tax and, m lieu of taxing the companies, make the tax payable by the individual shareholders, who would be subject to the graduated scale. The Minister could not see his way to accede to this request, biit he made provision for a refund to shareholders ■(whose dividend does, not exceed 6 per cent, upon the paid-up, amount of their shares) .of a relative proportion of the tax paid by a company, provided that the shareholder's income,' from all source*, does not exceed £400 per anI MII n * To give you an idea of what th.c iii- • crease m New Zealand income tax means, to. us, I may mention that, on its assessed income last year, this bank will contributed about £216,500' to the Exchequer, or an advance of £121,830 on the amount we paid last year. The former sum is equivalent to 12.37 per cent, of the total paid-up capital of the bank ; m other words', if the .present rate of taxation were to be continued, an amount equal to the whole of your -japital would, m eight -years' time, be paid to the Government m the shape of New Zealand income tax. Then, m addition, our land tax will amount to about £17,000, apd our '; contribution to tl*e revenue m the . shape of note tax wilb probably he considerably m excess £75,000 for the year.

We fully recognise the necessity for j all classes of the community to pay m. i proportion to their means. At the same j time, to use a platitude, there ought to be true "equality of sacrifice." At present this. does not obtain, as the banks i are taxed upon a higher' scale than any ! other trading corporation's or individual** .m the country, because they are taxed upon an income larger than that they ' actually earn. i It has been suggested that, if fur- ' tiler imports are placed . on land and income, the result may be disastrous to the trade and industry of this Dominion. * Judging by two of his late public utterances on the question Of taxation, our Minister of Finance is apparently fully alive to that possibility. I Below are particulars from a local trade and financial journal of the amount of taxation derived from the different

The percentage under each heading to tlie total amount collected for the last four yeai's compares as follows with five years and ten years previous: . ,

Tlie proportions for the latest year show considerable chahges. The share of Ohstoms diities (incliiding excise) con-, tihiies on a s't'eddy dowiigrade, and takes secjfihd placePfbr the fn^.t tifaie on record, although the 'actusjA*'total, shows ihcrease. , Incbme tax; ; now .take's first! place, 4 with 46 cetit;, _s' cohipaved with 6 per cent, m 1903-4;. this is partly dub to'the tax on mortgages .being changed'from the heading of land tax to inColiie tax, and 'consequently land tax shovvs a heavy .decline. • Tbe, total shows an increase of £3,---282,688, or 45 per ,cent., and t,he,average per head is £9 lis lld^, as compared with £6 12s Id m the previous year, and , £4 5s 6d m 1909-10, which was - the ■ lightest average, m the last ten years. . These figures are fpr taxation by, the, General Government oply> and do ,i 4tot_inQhide taxation by various: local bodies,' which amounted to £2,542,220, or -48s; per head, m 1915-16 (1916-17 figures are: not available at present). | I think the figures given indicate that! when further revenue.is. wanted,, we can reasonably look to the Customs to find a large share, seeing, the lieiivy 4 drop, on apercentage basis, that has occurred between the yettis 1903-4 and 1916-17. This fall, you will, note, amounts to ho less 4 tTian 35|- per cent. . , . V -^ Recognising its inequitableness, Parlia-! liament, on the reconunendation of the Minister ot Finanfce, promptly repealed last' session the tax on excess profits,' which had been m" existence for only 12 months. -...:..- „.' - -

sources.:- | 19-16-17 1915-14. | Customs ..., £4,037,628 £3,553,785 Lind Tax- ... 713,118 767,451, Income Tax ... 4.262,126 554,271 Death Duties 570,040 613,751, Other 966,742 428,776 ' ■ -I Total ... £10,549,654 £5,918,034

s • • o — ; £ (J *» s o 12 a* tn C r, cd .ffi ...... O nl. t-H R O 1916-17 ... 38i-6| 40* 5£ 9. 1915-1916 ... 48*. 14 19 8£ 94 1914-15 ... 56 13§ 9 13§ 7§ 1913-14 . ... 60 13 9£ 10£ 7£ 1908-9. ... o6§ 13| ?i ''6 '6i 1903-4 ... 74 9 6 4 7