FINANCING WAR EFFORT

Southland Times, Issue 23989, 2 December 1939, Page 5

FINANCING WAR EFFORT

MEASURES TAKEN IN AUSTRALIA BALANCED TAXATION PROGRAMME (United Press ''Association) WELLINGTON, December 1. The following information was received. by the Australian Trade Commissioner (Mr C. E. Critchley) today by cablegram from the Prime minister of Australia (Mr R. G. Menzies): — “Mr P. C. Spender, acting Treasurer for the Commonwealth, presented a financial statement in the House of Representatives yesterday. He stated that it is the policy of the Government to finance Australia’s war effort by a balanced programme of taxation, borrowing from the public and borrowing from the banking system. The balance between these three methods would change from time to time according to. economic circumstances. For the. time being the Government has denied that the balance will be weighted towards borrowing with the assistance of the banking system rather than towards

taxation so as to bring all available resources into full use. “In' view of the increases in taxation imposed in September last, the uncertainty resulting from the outbreak of war and the recent decline in employment, the Government is of the opinion that to increase taxation at present would merely delay the recovery of Australia’s economy and consequently interfere with the full prosecution of the war programme. TAX INCREASES “There would be no Increase in taxation for defence beyond the increase of £8,000,000 announced in September last and a further increase in Customs duties of £150,000, details of which would be announced later in the day. “Mr Spender declared that as the economic recovery which has already begun gets, under way the Government will transfer the emphasis of its financial policy from borrowing from the banking system, first to borrowing from the public and second to taxation. It is probable that the change in emphasis will come before the end of the financial year. Part of the borrowing plan is the issue of savings certificates. “The attitude towards plans for next year’s Budget is substantially different. The Government will bring down early in 1940 a comprehensive scheme of war taxation. If this is done and other controls of exchange prices and capital investments maintained, it is possible that Australia will avoid the evils of excessive credit expansion. The Government has looked ahead and formulated a financial policy which will fit into a co-ordinated plan capable of being adapted to changing circumstances. SACRIFICES NEEDED “The real burden of the war effort must be borne now. It cannot be shifted by ingenious devices to the future. It is foolish to believe the war will not entail substantial sacrifices all round. No one can predict the course of the war but Australia is determined to see it through to the finish, no matter what sacrifices are entailed. Sacrifices are insignificant compared, with the disaster of the loss of liberty if the victory is not ours. “Details of the revised estimates for' 1939-1940 are as follows, showing comparisons with the September Budget: EXPENDITURE “The outstanding feature in defence and war expenditure is the greatly increased estimate for defence and war services. Defence expenditure was estimated at £33,137,000 and the revised estimate for defence and war services is £62,014,000, of which £46,181,000 will be provided from the Loan Fund, and this includes capital war expenditure of £15,583,000 and pre-war capital defence worlds £20,383,000. “Reductions effected in expenditure other than for defence and war amount to £1,617,000. The total estimated expenditure from revenue is £101,452,000. REVENUE “Customs revenue is estimated to fall by £2,920,000 compared with the September Budget. Income tax is now estimated at £1,140,000 more than in z the Budget. Gold excise is expected to yield £900,000 in the current year. Other adjustments made provide for increased yields totalling £280,000.. The estimated total receipts for the’ year are £101,490,000. NEW TAXATION “Under the Budget and the supplementary measures £8,000,000 new taxation has already been levied for this year. The only further increase now proposed is Customs duties to yield £150,000, details of which will be given later. For the reasons already given no further taxation will be brought down this financial year but comprehensive and balanced taxation 1 plans are now being prepared for next financial year. LOAN EXPENDITURE “The September estimate of £23,072,000 is now increased to £48,931,000, including £46,181,000 for defence and war services, £2,000,000 for the PostmasterGeneral’s Department and £750,000 for farmers debt adjustment.”