The Dominion. SATURDAY, JUNE 17, 1916. A SENSATIONAL BUDGET

Dominion, Volume 9, Issue 2799, 17 June 1916, Page 8

The Dominion. SATURDAY, JUNE 17, 1916. A SENSATIONAL BUDGET

The War Budget of 1916 presented, to the House of Representatives % the Finance Minister last evening contains .' some sensational feaThe financial results of the year s operations indicate how little the war has affected the prosperity of the country, or rather they go to show how.prosperous the countryis under the conditions created- by the war. The. revenue for the year increased by £2,058,192, whereas the expenditure (excluding the expenditure out of loan for war purposes) increased by only £113,304.. The net' Surplus of revenue over expenditure was £2,017,030. This surplus was due to the. increased taxation -imposed last year.-' A two million is a staggering margin—it means that practically one-seventh more" taxation was collected last year than was. required to meet the year's expenditure. /At ordinary i times this could only be regarded as wildly., extravagant finance, but under the conditions which exist the Government acted wisely in allowing a wide.margin for contingencies, more especially as the . country could well afforcl, to .carry this extra hurden t At. the same-time it is well "to note that the-revenue .far. cxceedmost sanguine forecasts of the Finance Minister, and this ,is par-' ticularly noticeable in connection with the amounts yielded by the new taxes/ It is apparent that Sik Joseph Ward took a very conservative view of the revenue prospects when he framed his. estimates in 1915.. < This point;should ] JC borne in mind when-/considering the estimated revenue foreshadowed in the Budget; placed before Parliament last evening. ;It is obvious.that the ■Minister.^has., again preferred'to err on, the side, .of ■■■■understating tho prospcots ahead, for in spite of the fact that the' taxes imposed last year, were only in operation "for a portion of the financial year he csti-. mates the total revenue for the current financial-year ."on the basis of existing statutory limitations" at only some £81,000 greater than last yoar. Tho words _in quotation ma rks; —"on _ the basis of existing statutory limitations"—should be carefully noted. They mean that Che existing taxation is estimated to produce over £14,000,000.' But the Government does not consider this sufficient. New proposals are outlined in the Budget, and the. mated £14,000,000 of. revenue will in-all probability be -increased 'by , another two and a half to three millions if Parliament approves these additional taxes. •

•• .Probably ...these . .proposed new taxes will be' tho most discussed feature of the Budget to-day. The tax on. war profits has ■ cmne and the' Government has 1 not minced matters in'- dealing with; it... . It; .is proposed that the' State shall confiscate, 45 percent., or nearly one-half; of the war _pr.ofi.ts. earned either from business or directly from primary products; The method of determining what are war profits -is to take the average of the' profits realised for the three years previous to the war and treat anything ..in ..excess of that amount as_ war profits.' This method is cefr tain to lead to injustice, and it will also allow many people to escape this particular form of taxation. Probably, : this in ' the main is. unavoidable, but _ the Government might well consider the cases of those who ha.ve already given voluntarily a large proportion of' their war,profits to patriotic funds. It should _ notr be difficult to • supply proof in ' such cases, and those in this position should certainly not bo taxed on what they have already donated to public purposes connected with the war. But this is' not the - only increase-in taxation proposed. The ordinary . income tax on incomes' other ■ than, those derived ffoni. .war", profits 'is 1 'also . 'to. be'' increased by a charge, .of .5 per cent, additional-on.-ail incomes over £300. The Finance^'..Minister estimates a rovenue o'f'£2,ooo,ooo from the'new tax'on war'profits'and an additional. £750,000.fr0m, the.iiew tax 011 'ordinary incomes.. .It may be'safely as-su-med_ that, the .revenue of the country will be - .swelled ; from , these sources by nearly . three millions. That the tax on war profits will be popular goes without saying; whether it-.will work out equitably in all. cases is quite another matter. On the present occasion we have not the time or the. space to examine the position in respect of the Government's : war taxation in detail, but it will be observed that Ministers still shirk the unpopular step of spreading any share of the taxation -to-those, with incomes *of less than '£*300 a year, a condition of things which the Minister himself admits nowhere else in the world. ' It "will also be noted that the new form of beer duty imposed last.'year,_ instead of making'a,handsome addition to the., revenue, yielded only-some £33,000, which gives ground for "the suspicion expressed at the time of its imposition that the brewing interest, which could well afford to pay a substantial tax, was escaping very lightly.' On the other '.hand,-the. new taxes on the farming community yielded > over half a. million—£24B,7ls by : way of land tax, and £269,000 under tho new incomc tax.

It is quite impossible to traverso the whole of the Budget proposals in one articlc, and we must reserve our comment on certain matters. There are one or two admirable features, however, which may be briefly mentioned. The first of these is the establishment of a reserve of £3,325,000 in London. The investment of these spare funds in Imperial Treasury bills should prove a profitable as well as a wise step, and the Minister of Finance is >to bo complimented on. the course h'o has adopted. The abolition of the mortgage tax will also meet with general approval in financial circles, and the removal of the injustice which arose out of the double charges of income tax on income earned in other parts of the Empire is also to be commended. On the whole, ihe Budget is likely to prove popular with the bulk of the people. The taxation proposals will produce a great deal, more revenue than is actually, required to meet current needs, but if the money is carefully put away , for the possiulo rainy oay ahead,little fault ,can bo found with the Government for taking the piecaution of accumulating funds while the opportunity offers. '