THE FEDERAL BUDGET

Wanganui Chronicle, Volume 73, Issue 425, 17 November 1930, Page 9

THE FEDERAL BUDGET

LARGE DEFICIT EXPECTED SMALL AMOUNT OF ECONOMIES EGTRA CHARGES TO BE MET ■ A curious feature of the financial statement made by the actiug-Trcasurer 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 £8,000,000 and £10,000,000. It is on this basis that, the Government has approached the task of adjusting the Budget.” The proposals outlined provided for savings and economies amounting to £1,230,000 and reduction of the sinking fund appropriations by £1.950,000, 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 on 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 that amount against the alternative speculations regarding the deficit. on the Julv Budget—£l2,ooo,ooo to £15,000,000, or £8,000,000 to £10,000,000 —apparently gives the nearest approach to a forecast of the year’s re-| suits. “It would be quite impossible in 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 sr. -rifice, 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 administrative economies, Mr Lyons claimed that savings of £1,000,000 were made before the Estimates wore presented in July and he produced a further list estimated at £1,230.000 for the romaii’-<r of this year- The Sydney Morning Herald observes that the original £1,060.000 was promptly dissipated by the granting of that, sum to the States for unemployment relief, the money having boon subsequently diverted by the Melbourne Conference into a special grant, of almost the whole amount to South Australia. An ’ r.s against the savings now announced, Mr Lyons requires £BOO.OOO extra expenditureHence the not reduction of expenditure by two Budget efforts is £430,000 — apart, from the sinking fund reduction —out 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 £1(1.230.000 — 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 £9.000.000 may be expected under this heading—the original estimate, having been £27.900.000. The

•L's tax was to produce £5.000.00(1. I . “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 £510.000. but while the decline may not persist for the full year, it is reasonably certain that, the estimated revenue will not b fully realised. The balance of the revenue undef other headings is expected to conform closely to the Budget estimates. Sinking Fund Adjustment Explaining the proposed reductions 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 nave been made to the sinking fund. The most important of these excess contributions arc 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 £6,230,00(1- 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 £6,849,000In the seven years since the establishment of the 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 for reverting to the original basis, and “the contributions from revenue will be reduced by an amount equal to the reparation moneys, the bank profits and other excess contributions.” The reduction tnls 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 week. Now 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 7$ 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 supertax 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 Sd on £4OO to £986 2s 7d on £5OOO. Under the new scale, 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 30 per cent., on £5OOO-