THE DOMINION’S FINANCES

Wanganui Chronicle, Volume 73, Issue 97, 26 April 1930, Page 7

THE DOMINION’S FINANCES

RECEIPTS SUPPLY £150,000

REVENUE £25.350,000 EXPENDITURE £25,200,000

SIR JOSEPH WARD REVIEWS PRESENT POSITION

[ Per Press Association. ] ROTORUA, April 22. The Prime Minister has released the following statement concerning the public finances, for publication: “I am now in a position to announce some preliminary figures of the results for last financial year. The returns are not yet absolutely complete and the accounts are all subject to audit, but the preliminary figures I have indicated, at the year ended on March 31 last, closed with a surplus of approximately £150,000. “Taking all the circumstances into account I think it will be agreed that the position disclosed is a satisfactory one. It will be remembered that on taking office the Government were unfortunate in falling heir to a deficit. The Government, however, did not hesitate to do their duty and, notwithstanding strenuous opposition in the House, prompt steps were taken to remedy matters. In this connection, when the Government taxation proposals were under discussion, it was maintained by the Opposition that they were entirely unnecessary, and a surplus of £1,000,000 or more, was freely predicted in and out of Parliament. Now that the year is over it will be seen that the additional taxation was in fact absolutely necessary. A State with its large resources can bolster up an unhealthy position for a much longer period than is possible in the case of a private business, but the ultimate result would be the same in either case. A Government’s term of office depends, in the long run, on its management of the public finances; and solid progress cannot be made unless the State pays its way. In any case, we, as a country, cannot afford to have a deficit very often while we are dependant upon overseas investors to provide a large part of the capital for development purposes. Putting on additional taxation is never a popular thing to do, but the facts have proved that the Government was acting in the true interests of the Dominion in puting forward proposals last year to ensure a balanced budget. Revenue.

The Revenue received during the year amounted to approximately £25,350,000, which is about £lBO,OOO in excess of the Budget estimate. The Customs revenue exceeded expectations, and was nearly £500,000 in excess of the estimate; a substantial falling off in the last few months of the financial year was anticipated but it did not eventuate. The Income Tax exceeded the estimate by £130,000 and land tax by about £lO,OOO. Against these in- 1 creases the estimates of stamp and death duties failed to materialise to the extent of approximately £210,000. Petrol tax and other revenue, earmarked for highways, showed an increase of nearly £70,000 over the estimate; but this item, of course, is offset by an equivalent additional amount transferred to the highways account or distributed to local authorities. Then -the writing off of £8,100,000 of railway capital, effected by legislation passed last session, resulted in the interest receipts from the railway being £310,000 below the amount allowed for in the estimates. Expenditure.

In round figures the expenditure amounted to £25,200,000, including £17,230,000 under permanent appropriation, and £7,970,000 under annual votes. Under permanent appropriation is included the expenditure on interest and debts repayment, pensions, subsidies to hospital boards and to local bodies and other permanent items payable under various acts of Parliament. Debt charges all told absorbed £10,695,000 and other payments under Acts amounts amounted to £6,535,000. Details of these payments are not available at present, but the expenditure will of course be fully analysed in the Budget. The position in regards to departmental expenditure, included in the annual vote, is very satisfac.ory. As stated in the Budget, the estimates for last year were most carefully overhauled before being finalised, even e • a rigorous control over expenditure during the year resulted in saving under most of the votes, and these savings in the aggregate amount to about £220,U00. Trade and Banking.

“Having such a relatively large external trade, this Dominion is very much concerned with the state of trade in other countries, and particularly in Great Britain, where the greater part of our exports are sold. Happenings in the realm of international finance and general economic conditions operating abroad, have in the last few months brought about a marked change in the economic position and outlook of the Doqiinion as a result of falling prices, and delay in realisation the value of our exports have declined consi ably, and during the last financial year were hardly sufficient to pay for the year’s imports. These showed an increase of about £4,-

000,000. During the two previous financial years, however, there was an excess of exports amounting to approximately £22,500,000; so that over the longer period the trade balance is satisfactory. The published banking figures for the March quarter 1930, show an excess of deposits of £355,000 as compared with £8,985,000 for the same quarter of the previous year. This decline in the relative position was brought about by a slight fall in the volume of deposits and a considerable increase in advances. The change in the banking figures, of course, is largely the effect of the change in the trading figures; the rise in imports and advances, however, indicates increased activity in business. The exceptional conditions ruling outside the Dominion have given rise to high rates of exchange, which rates are by no means a true indication of the present financial position of the Dominion. In fact, the position is quite a sound one and, but for outside influences, would have been regarded as quite normal. Special Land Tax

“As additional taxation was unavoidable last year the Government endeavoured to place the additional burden equitably and at the same time create as little disturbance as possible in business and trade in order that the economic progress of the Dominion should not be hindered. As it was considered that the large farming incomes had not borne their fair share of taxation in recent years a special land tax was imposed on large rural estates, with an unimproved value of over £14,000. Large farming incomes were also made assessable for income tax, but subject to a set off of the amount paid in land tax. In order to ensure that the special land tax should not impose undue hardship in particular cases provision was made in the legislation for a special hardship commission to which land owners were at liberty to state their case. This commission was given an entirely free hand by the Government, which has accepted their decisions in all cases; as a result the special land tax has been wholly, or partly, remitted in a number of cases. In matters of taxation, as in many other things governed by arbitrary rates, absolute justice can never be completely attained; but the provision for appeal in the case of special land tax at least prevented undue hardship being imposed on particlar individuals. After deducting remissions, amounting to nearly £lOO,000, the special land tax brought in about £250,000 additional revenue. The data obtained from the income tax returns of large farming incomes has not yet been fully analysed, but it is clear that the contention contained in last year’s Budget that large farming incomes have not in recent years carried their fair share of taxation, was in accordance with the facts. This is proved by the fact that a considerable amount, definite figures not being available yet, was derived from income tax on farming incomes after deducting land tax, both ordinary and special. This means that previously some farming incomes were contributing less, than half of their fair share of taxation. It will thus be seen that the Government was quite justified in placing part of the necessary additional taxation on this section of the community. Additional Primage Duty

To provide the balance of the additional revenue that was required to bridge the gap between the estimated revenue and the expenditure for last year, the primage duty on imports was increased from one to two per cent. Primage, of course, is purely a revenue duty imposed upon practically all imports, whether dutiable or not, so obtaining the additional revenue through this channel meant spreading the burden equally over the whole community. The additional impost on individual classes of goods from a retail point of view is practically negligible; but even so, the Government did not desire the tax to remain upon food any longer than was absolutely necessary. Accordingly it was provided in the empowering legislation that the additional primage duty on foodstuffs and also on manures, was to be lifted automatically on March 31> 1930. Accordingly all such goods are now subject to the normal one per cent primage duty only. In regard to the additional primage duty on other classes of goods it is prescribed in the Customs Amendment Act 1929 that this may be terminated at any time now by Order-in-Council.

“It is not usual, however, between Parliamentary sessions to make any forecast as to what will be done regarding Customs taxation, and I do not intend to make any pronouncement concerning it at this juncture. The matter will be dealt with when the whole of the financial proposals for the current year are finally under review.