Wairarapa Times-Age THURSDAY SEPTEMBER 28, 1939. FOOTING THE WAR BILL.

Wairarapa Times-Age, 28 September 1939, Page 6

Wairarapa Times-Age THURSDAY SEPTEMBER 28, 1939. FOOTING THE WAR BILL.

TTXCEPT where immediate increases in taxation are concerned, the Minister of Finance (Mr Nash) gave, as might have been expected, only a rather sketchy outline of the ground to be covered by the war finance legislation submitted to the House of Representatives on Tuesday evening. Muth the P’ohable duration of the war and other vital 1 actors still a matter o rather va<>ue speculation, there can be no question meantime of shaping, rounded and complete in every detail, the financial policy the occasion demands. The Government s current pi posals must be regarded as a preliminary approach to problems the magnitude of which is by no means yet determined.

Mr Nash’s estimate of the cost of war activities witjiin the Dominion for the current year (i.e., to March 31, LI4U) is £9 750 000. This takes no account of the cost of sending men overseas/ The cost of the war next year, the Minister thinks, may be £20,000,000 or £30,000,000. Accurate details obviously, and no doubt inevitably, are for a later time, but it is clear that the Dominion is called upon to provide for a huge additional expenditure while the war continues. The only ultimate governing consideration is that of the maximum war effort of. which the country is capable.

That being so, the additional taxes now being levied cannot be called in any deiail excessive, though it happens unfortunately that they are superimposed on taxation that was aireaxlj at an extraordinarily high level by any standards applicable to this country. Of the estimated expenditure, within the Dominion of £9,750,000 for the current year, the sum of. £3,200,000 has already been voted for defence. New taxation (estimated to yield £3,726,000 in a full year) is expected to produce for the remainder of the current year. In all, £5,608,000 will be provided from taxation towards the £9,750,000 required for the current year, leaving a balance of £4,142,000 which is to be obtained by borrowing.

Partly on account of the scope that undoubtedly should exist for savings in other branches of public expenditure, and the transfers that should thus be possible to the War Expenses Account, there has been some criticism of the fact that the Government is taking authority to borrow, not £4,142,000—the amount of the immediate revenue deficiency for the current year—but £10,000,000. Since a. heavy continuing war expenditure is in prospect for some time to come, however, the grant of loan authorities in advance of immediately apparent requirements does not seem lo.be open to serious objection.

Tt is of more obvious importance that of the known and definitely anticipated expenditure for the remainder of the current year—£9)7so,ooo—approximately 57 per cent is to be met out of revenue. This is a very substantial percentage and if it could be maintained it would place New Zealand high on the scale of countries adopting a pay as you go policy in conducting the war. Obviously, however, heavy further increases in taxation would be needed to maintain the existing ratio of payment from revenue as war expenditure attains its full dimensions. On the most moderate estimate yet offered by the Minister, the Dominion’s war expenditure next year is expected to double that of the present year, and it is not unlikely to increase to a much greater extept.

With so many details awaiting definition, it can only be said meantime that the right policy for the Dominion undoubtedly is to meet from revenue as large a proportion as'is reasonably possible of its war expenditure. That the revenue contribution should continue to be as large relatively as it is to be in the current year no doubt is impossible, but the Government will consult the ultimate interests of the Dominion if it confines war borrowing within the narrowest limits that are practicable.