THE BUDGET

Wanganui Chronicle, Volume 79, Issue 185, 6 August 1936, Page 7

THE BUDGET

LONDON OPINION SUCCESS OF PROGRAMME REVENUE THE KEY PRICES AND MARKETS [By Telegraph —Press Association —Copyright] Received Aug. 5, 10.20 p.m. LONDON, Aug. 4. The City Editor of the Times says that New Zealand’s first Labour Cabinet had the good fortune to introduce its first Budget at a time of buoyant revenue and expanding trade. If the revenue continues to expand the ambitious programme of the Government should present no great difficulty. The policy of reducing overseas debt would, however, be checked if the attempt to guarantee dairy produce prices was carried too far. These products must compete in the world markets, and if their prices are fixed too high the difference will fall on the taxpayer in one form or another. The Financial Times expresses the opinion that the New Zealand increase in income and land taxes will necessarily affect British companies with investments in the Dominions. Those engaged in the wool-growing industry are as particularly concerned as the land-owners. It is clear the new Government has no fear that world prices and its own policy will operate otherwise than favourably on the capacity of the agricultural and pastoral industry to bear the new duties. It may be presumed, as no mention was made by the Minister of any immediate operation, that no more will be heard of conversion proposals except in accordance with orthodox practice. Meantime, in view of the decision to finance from revenue half the Public Works and development programme, it may be taken that the Government adheres to the intention of avoiding inflationary measures in pursuit of its policies. The Financial News describes the New Zealand Budget as apparently the first step from the well-worn track of Conservative Into the comparatively unexplored field of the Socialist finance. The step is a bold one, though there is nothing in it to disturb the British holder of New Zealand stocks. The Budget contains nothing unorthodox. The wealthy will contribute more to the revenue, which was only to be expected from a Labour Government. It was fortunate that Mr Savage assumed power at a time of rising prosperity.” NEW ZEALAND PRESS EDITORIAL OPINIONS THE BURDEN OF TAXATION CAN THE COUNTRY BEAR IT? AUCKLAND, Aug. 5. In the course of a column euitorial on the Budget, the New Zealand Herald says that financially orthodox methods have been used by Mr. Nash in solving the problems of his first Budget. The general result is that Mr. Nash is able to present a balanced Budget, balanced by the normal method of taxation to meet current expenditure, with normal borrowing for capital works. Like Mr. Philip Snowden's first Budget, Mr. Nash's is a triumph for orthodoxy. Its soundness cannot, however, obscure the fact that heavy burdens arc laid on the people. The total expenditure rises by £5,000,000 to the ominous total of £35,000,000, including unemployment, or about two-thirds of the receipts from the exports last season. Of the total, over £30,000,000, or about £4,700,000 more than last year, is to be taken out of the people’s pockets by taxation. The question is whether the national economy can bear these burdens and whether they do not represent a crushing over-load, especially as the hours devoted to productive work are being reduced. If the State takes a larger share of the smaller national output very many people, chiefly of the producing class, must go short. Lasting prosperity will not be realised in that way. While, therefore, Mr. Nash’s Budget appears to be financially sound, the Government’s policy appears to be economically unsound. The simplification of the income tax system is welcome, but the added weight may prove crushing to some and crippling to others, and in general that must be the big question-mark written on Mr. Nash’s Budget: \vhether the productive resources of the country can meet the drafts being made on them. The end of Labour’s policy is generally unexceptionable; the doubt is concerning ways and means. A DEFICIT POSSIBLE CHRISTCHURCH, Aug. 5. In its editorial comment on the Budget, the Press says: “Mr. Nash’s first Budget will have a cold reception. It will disappoint the many hundreds of electors who voted Labour because they were dissatisfied with the existing monetary system and because they were foolish enough to believe that Mr. Savages promise of an ‘intelligent use of the public credit’ really meant something. Mr. Nash is nothing if not orthodox. He uses the public credit as cautiously as his predecessors used it, and it might not be a rash prophecy to say that he is destined to be the Snowden of the New Zealand Labour Party. Criticism of the Budget will be directed mainly against the increases in taxation and against the Government’s failure to carry out its promise to reduce indirect taxation, particularly sales taxation. Mr. Nash will probably plead that the Labour Government cannot honour all its pledges in one year, but the answer is that the opportunity to reduce indirect taxation which presented itself this year is not likely to be repeated in subsequent years of Labour rule. It is perhaps' significant that Mr. Nash did not even mention the subject of tax reduction. “A second point on which Mr. Nash is open to criticism, having regard to

his pronouncement in favour of balanced Budgets, is the smallness of his estimated surplus, £13,000. His estimates of increased tax yields are more than generous and it will not be surprising if the present financial year ends with a substantial deficit. Finally, Mr. Nash's homily on the purpose of the graduated land tax shows a lamentable lack of financial realism. The history of this tax in New Zealand shows clearly that as an instrument of social policy it is quite ineffective. The reason for its reimposition is, it may be suspected, a sentimental one. It is merely an addition of one more complication to a taxation system that is already in-