8.—6.

The other departmental votes in total show a comparative decrease of £260,000. This, however, is after providing for £365,000 by way of additional subsidies for fertilizers, butter-boxes, sugar, wheat, and coal, increases which for the most part arise out of the war. The opportunity is being taken this session to introduce amending legislation to correct certain anomalies that exist in regard to income taxation, the principal of which relates to the basis of assessment of trading banks. Since 1894 banks have been assumed for taxing purposes to earn profits in proportion to their total assets and liabilities, the rate varying from 7s. 6d. per cent, when the system was originally introduced, to 30s. per cent, since 1915. It is obvious that the assessed income computed in this way bears no relationship to the true profits of a bank; in fact, during recent years some banks have paid more in income-taxation than they have actually earned in profits. The difficulty in the past, and, in fact, the justification for imposing the existing system, has been the problem, owing to the banks trading in more than one country, of assessing accurately the profit earned in each, but by collaboration with the Governments concerned that difficulty has been overcome, and accordingly there is no longer any justification for continuing the existing obviously unfair system. The proposed legislation will therefore authorize the taxing of banks on the basis of actual income earned in New Zealand, and make them also liable for full national and social security taxes. SOCIAL SECURITY FUND. As regards the Social Security Fund, allowance has been made in this year's estimates for an increase of £796,000 in monetary benefits and £1,223,000 in respect of medical and hospital benefits. These for the most part arise from normal increases. Thus the increase from £10 to £12 10s. per annum payable in respect of universal superannuation, together with new entrants and late applications, accounts for an additional £250,000 and the increase in the number of age beneficiaries for £300,000. Medical and pharmaceutical benefits account for the greater portion of the increase in the heading of hospital benefits, being reflected in the accounts for the first time this year. The out-patients' service and pharmaceutical benefits are now in full operation, while in anticipation of the general practitioner service being in full operation shortly the sum of £600,000 has been set aside for medical benefits. Total expenditure for the year is estimated as follows : — Monetary benefits— £ £ Age .. .. .. .. 7,410,000 Widows' .. .. .. 855,000 Orphans' .. .. .. 18,000 Family .. .. .. 604,000 Invalids' .. .. .. 1,014,000 Miners' .. .. .. 85,000 Maori War .. . . . . 500 Unemployment .. . . 300,000 Sickness .. . . . . 290,000 Universal superannuation .. 490,000 Emergency .. .. .. 135,000 J1,201,500 Hospital, &c., benefits— Medical .. .. .. 600,000 Pharmaceutical .. .. 350,000 Maternity . . .. .. 550,000 Hospital .. .. .. 1,435,000 Supplementary .. .. 65,000 3,000,000 Administration expenses .. .. • 471,500 £14,673,000

Income-tax amendments.

Social Security Fund Estimates 1941-42.

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