The Timaru Herald TUESDAY, JULY 8, 1930. AUSTRALIAN DEFICITS.

Timaru Herald, Volume CXXV, Issue 18613, 8 July 1930, Page 8

The Timaru Herald TUESDAY, JULY 8, 1930. AUSTRALIAN DEFICITS.

Facing a deficit of twelve millions the Federal Cabinet is finding itself confronted with immense difficulties in its efforts, not only to meet tiic current deficit, but to balance the budget in the coming year. “Immense difficulties faced us when we came into office,” declared the Federal Treasurer in answer to his ci'itics. “There was practi•ally no cash, and very little credit. That can be admitted without blaming any individual or administration.” Not only is the Commonwealth Government confronted with a most difficult financial outlook, but nearly every State in the Australian Federation finds itself in a similar plight. The deficits already announced are:

Commonwealth .. .. 12,000,000 New South Wales .. .. 4,394,000 Victoria 750,000 Queensland 722,485 Already the Federal Government’s new taxation proposals have been mentioned. These include an increase of 10 per cent, in the tax on all incomes, with a 5 per cent, super tax on taxable incomes over £330 a year. An additional tak is to be imposed on the profits from foreign films in Australia. There will also be taxation on all income derived by Australians from sources outside Australia. Tourists leaving Australia will bo required to contribute substantially' to the revenue of the Commonwealth. Amendments will be made to prevent the avoidance of taxation by the distribution of profits among members of families. Death duties are to be increased. Telegraph and telephone charges, and the poundage rates on postal and money orders are to be raised. The Government will also impose taxation on insurance companies with head offices outsjde Australia. It will also tax absentee property owners. The State Treasurer of New South Wales, however, does not propose to increase the taxation on incomes, but the financial position is to be adjusted by various economies. As far as the. Federal Government’s proposals are concerned it will be noted that already some comment has been voiced in London. The possibility of taxation being imposed upon incomes derived from sources outside Australia, has been frequently discussed in recent years. It was mentioned by Dr. Earle Page in his Budget of August 1,928, but only to object to it. ‘.‘The Government,” he said, speaking as Federal Treasurer, “ is not prepared at present to ask Parliament to legislate on the subject in the light only of the information it now possesses, because it is certain that such legislation would raise many important international and interdominion problems. It is communicating with the Governments of other parts of the Empire and of countries outside the Empire from which residents of Australia are deriving income, for the purpose of examining all the facts connected with the taxation of that income in those countries.” A further statement on the subject was made by Dr. Page in his Budget speech last year, in which he said the question had not been finally settled. He had learned that the major portion of such income is derived from the United Kingdom, where it is subject to taxation. Referring to the arrangements for avoiding double taxation he stated that it is not desired to prejudice the continuance of this arrangement unless it is reasonably certain that the adoption of a new system would not result in diminishing Federal revenue and inflicting undue hardship upon Australian citizens. It is obvious that the safest course for the Federal Cabinet of Australia to take, in view of the vital importance of preserving good relations with London, is to follow the example of the State Treasurer of New South Wales and embark upon a campaign of economy. AVhile the Federal Budget may represent first cut at the revenue cake of Australia, some of the State Governments have been going on with their special taxation proposals for unemployment relief, and in Sydney they are still talking of relief work as being a depression-windfall in that Sydney will get public works that would have been deferred for years. But they are talking of relief works financed out of special taxes or salaries and wages of the employed, not financed out of loan! “It may be,” remarks a Sydney writer, “that the prevailing depression will bring many benefits to city and country. Works that would not otherwise be undertaken will be carried out in order to provide work for unemployed. The £3,000,000 to be raised by the tax of 3d in the £1 on all wages and incomes will be used for the purpose.” New South Wales has a Nationalist Government. Victoria has a Labour Government. But Mr Hogan, Victoria’s Labour Premier, will not be stampeded. On 25th June he said that it was the intention of the Ministry to do whatever it could to provide work rather than to hand over the relief money to anybody who came along and applied for it. He saw no solution of the difficulty by employing men in making

roads, because when the roads were finished, the men would still be unemployed. Men must be persuaded to return to the land. In South Australia, where a Labour Government holds office, the action of the Premier in appointing all expert committee to advise the Ministry concerning the administration of public finance has been widely applauded. Unquestionably the financial situation throughout Australia is difficult, but if the Governments, both Federal and State, will face the position with resolution and courage, the immense recuperative capacity of that wonderful country should furnish a sure, foundation upon which to restore Australia’s shattered fortunes, and to rebuild the country’s progress and prosperity.