ANALYSIS OF THE BUDGET

Taranaki Daily News, 8 September 1934, Page 9

ANALYSIS OF THE BUDGET

MR. W. D. STEWART IN HOUSE NEW TAXATION SAVES POSITION. MAIN REVENUE SOURCES FAIL. OVERHAUL NECESSARY SHORTLY. By Telegraph—Press Association. Wellington, Sept. 7. A critical analysis of the Budget was made during the continuation of the financial debate in the House of Representatives by Mr. W. Downie Stewart, Coalition member for Dunedin West. Mr. Stewart pointed out that apart from new taxation all the main sources of revenue fell away, and expressed the opinion that before long a complete review of direct taxation would be necessary. The Budget indicated for the current year a substantial improvement in publie finances, Mr. Stewart said. In some respects it would appear as if prosperity had come back to the Budget before it had come back to the people, because there was still widespread unemployment and many people were still suffering hardship. However, the public finances showed a substantial improvement during the last year. Exports rose, railway revenue improved, and the. prices of wool and meat rose substantially. At first glance it would appear as if that improvement was reflected in the public accounts, as the Budget stated that the revenue for the year was greater by £1,455,000 than for the preceding year; but if the 7 figures were examined in detail it was clear that apart from the new taxation imposed all the mam sources of revenue fell away. Customs revenue yielded £353,000 in excess of the previous year, but early last year new duties were imposed on motor spirits, tobacco and sugar, and on the export of gold. These increases were calculated to yield about £1,000,000, so that had it not been for'the new taxation the Customs revenue would have shown a heavy, drop. YEAR’S PROSPECTS. The prospects for the current year seemed much more reassuring, because without any new taxation having been imposed an estimate of the revenue showed substantial prospective increases in practically all items. He supposed the estimated increase in Customs revenue of £1,114,000 was a conservative estimate. He thought the Minister was justified in making, some concessions and the psychological effect should encourage further confidence and expansion. It seemed abundantly clear, however, that had it not been for the high exchange last year the Budget would not only have been balanced, but would have shown a substantial reduction in taxation this year. After reviewing the events of recent years, Mr. Stewart said he was forced to come to the conclusion that before long a complete overhaul of direct taxation would be necessary in order to determine whether the burden was being justly distributed, whether it was. arbitrary and capricious, and whether it was not in danger of discouraging the expansion of enterprise and thereby defeating itself. If so it would dry up the sources of wealth and hinder a return to prosperity.

Referring to the proposed mortgage corporation, Mr. Stewart said it would be interesting to know to what extent the Government would be called on directly or indirectly to guarantee bonds issued by the corporation. Mr. Stewart added that already demands had been made that the corporation should be an entirely Government concern; in other words, that the Government must directly or indirectly guarantee bonds. That was ominous, because if the operation of the corporation spread far and wide and the Government had to stand behind the scheme it merely meant another huge addition to the public debt either directly or indirectly. He hoped the Government would be cautious about allpwing itself to be drawn into guaranteeing bonds.

Dealing with the Reserve Bank and Labour criticism of it, Mr. Stewart said he thought the small amount the country had to pay to the Reserve Bank to have an independent board to act as a buffer between political demands and the taxpayer was worth while.