THE FEDERAL BUDGET

Taranaki Daily News, 14 November 1930, Page 2

THE FEDERAL BUDGET

LARGE DEFICIT EXPECTED SMALL AMOUNT OF ECONOMIES. EXTRA CHARGES TO JBE MET. A curious feature of the financial (statement, made by the acting-Treasure! of the Commonwealth, Mr. J. A. Lyons, last week is the absence of any estimate of the final results for the year. “It is not possible to estimate with reliability what the deficit on the basis of the July Budget would be if no alteration were made.” Mr. Lyons said in one passage of his speech. “In the light of the results to date, a deficit of between £12.000,000 and £15,000,000 might be possible if the position continued to drift and trade and unemployment became worse. On the other hand, with the restoration of confidence and the revival of trade and employment, a reasonable estimate of the deficit would be between £8,00,000 and £10,000,000. It is on this basis that the Government has approached the task of adjusting the Budget.” .. . , The proposals outlined provided lor savings and economies amounting. io £1.230,000 and reduction of 4he sinking fund appropriations by £1,050,000, together with new taxation estimated to yield this year £3,700,000, making a “total benefit to the Budget” of £6,880,000. Against that were estimated increases in expenditure t>H pensions and cost of exchange on remittances to London, amounting to £BOO,OOO, so that the net benefit is £6,080,000. BALANCING NOW IMPOSSIBLE. Setting tlmt amount against the alternative speculations regarding the deficit on the July Budget—£l2,oo,ooo to £15,000,000, or £8,000,000 to £lO,000,000— apparently gives the nearest approach to a forecast of the year s results. “It would be quite impossible m a period of eight months so to reconstruct the Budget that a balanced ledger could be secured for the present financial year,” said Mr. Lyons. The most that can be achieved, without undue sacrifice, is to plan the Budget on such a basis that when it operates for a full year the Commonwealth will have redeemed its undertakings to secure a ‘balanced Budget.’ ” . Referring to the question of admimstrative economies, Mr. Lyons claimed that savings of £1.000,000 were made before the Estimates were presented in July and he produced further list estimated at £1,230,000 for the remainder of this year. The Sydney Morning Herald observes that the original £l,000,000 was promptly dissipated by the granting of that sum to The States for unemployment relief, the ■ money having been subsequently diverted by the Melbourne Conference into a special grant of almost the whole amount to South Australia. And as against the savings now announced, Mr. Lyons requires £BOO,OOO extra expenditure. Hence the net reduction of expenditure by two Budget efforts is £430,000-— apart from the sinking fund reductionout of a total of £65,585,770. SHRINKAGE OF REVENUE. The net revenue was estimated in the July Budget at £65,622,000, this being exclusive of the extra revenue from increased postal charges which is deducted from the expenditure charged against the total. revenue. 'Mr. Lyons gave only general estimates of the deficiency in actual receipts below the original expectations. “The actual receipts from customs and excise for the first four months totalled £10,230,000—a shortage of £3,003,000, compared with the pro rata Budget estimate for that period. If the customs and excise revenue does not improve in later months, a shortage of £0,000,000 may be expected under this heading—the original estimate having been £27,900,000. The sales tax was to produce £5,000;000, but “the indications are that there will be a shortage of at least £1,000,000 unless there is a revival of trade.”. There was a shortage in Post Office revenue for the four months of £540,000, but while the decline may not persist for the full year, it is reasonably certain that the estimated revenue will not be fully realised. The balance of the revenue under other headings is' expected to conform closely to the Budget estimates. SINKING FUND ADJUSTMENT. Explaining the proposed reduction in sinking fund payments, Mr. Lyons said the fund, which was established in 1923, was designed to pay off the Post Office debt in 30 years and war and other debt in 50 years. To that end, provision was made for the necessary contributions from revenue. By law, sundry other payments have been made to the sinking fund. The most important of these excess contributions are reparation moneys and half the profits of the 'Commonwealth Bank. The payment of these moneys to the sinking ’fund in times of abundant revenue was desirable, but their continuance in present circumstances would place an undue and unnecessary burden on the taxpayers of Australia. The total amount provided by the Commonwealth for debt redemption in 1928-29 was £6,230,000. In 1929-30, £6,422,000 was so provided. For the present year the provision under the law as it now stands is estimated at £6,849,000. In the seven years since the establiahedment of tho sinking fund, a total of £43,727,921 has been provided for the redemption of debt. This sum is £14,000.000 in excess of the amount required under the 1923 scheme. The Government considers there is ample justification fol" reverting to the original basis, and “the contributions from revenue will be reduced by an amount equal to the reparation ’ moneys, the bank profits ancj other excess contributions.” The reduction this year will be £1,950,000, leaving £4,900,000 available for debt redemption. HEAVY TAX ON PROPERTY INCOME The principal features of the new taxation proposals were outlined in the telegraphed report published last Thursday. New customs and excise duties are estimated to produce £2,000,000 this year, and additional income tax on property £1,500,000. The latter comprises a super-tax of 7i per cent, on all income from interest, dividends and rents. “Taxation of interest by itself is impracticable,” said Mr. Lyons, “and would only defeat the restoration of national credit, as it might be regarded as a breach of the loan contract.” The super-tax is to be based upon a radical alteration in the basis of assessment. The present exemption for property income is the same as for personal exertion income, namely, £3OO, and it vanishes at £l2OO. The Government proposes to reduce the exemption in respect of property income to £lOO, and to make it vanish at £2OO. Previously, incomes from property alone were liable to taxes ranging from £2 4s 8d on £4OO to £986 2s 7d on £5OOO. Under the new shale, an income of £2OO will be charged £lB 13s lid; the tax on £4OO will be £4O 6s 3d; and the scale will rise to £1509 Is, or so per cent. t on £5OOO. ,

A very large number of bargains in Men’s and Boys’ Clothing is to. be found at Broome’s Winter Sale. . There are boys’ fleecy-lined singlets, all sizes, at 1/6, boys’ coloured handkerchiefs, four for Is, boys’ sports suits,, all wool, at 20s 9d, boys blazers, with white, red or gold piping, at 7s lid for -11 sizes, men’s wool socks, three pairs for 2s 6d, men’s all-wool saddle tweed trousers at 16s 9d, men’s oily canvas coats, at 29s 3d, men’s felt hate, at 7s lid, men’s cleared at bus dd. All these Bargains are worsted suits,-..worth £5 10s, all to be to be had at Broome’s Corner. Davon and Liardet StreeL