THE GREAT WAR BUDGET

Dominion, Volume 9, Issue 2800, 19 June 1916, Page 6

THE GREAT WAR BUDGET

PRESS AND PUBLIC OPINION

CIVIL SERVANTS' WAR BONUS THE £300 A YEAR MAN Interviewed on Saturday regarding the Budget, Mr. James Macintosh, President of tho Wellington Chamber of Commerce, said:

"In common, I think, with the very groat majority of business people, I view the Statement (taken as a whole) as an exceedingly satisfactory one. It not only discloses n very good position now, but it makes vary satisfactory provision for the' future. The proposal to borrow a further amount of ,£12,000,000 for war purposes may seem large in the light of past expenditure, and in view of the balances on past loans still remaining, but with the increasing rate of expenditure it is necessary to keep on the safo side. With so much money in 'the country, and so ardent a desire on the part ofveveryone to assist ill the 'war, a call for a portion at least of this money from the people of the Dominion would be readily responded to. Tho absorption of some of the surplus moneyof the country in this way would bo, for other reasons, a very good thing. What I mean is that with' a surplus of unemployed capital there is always danger, and, this outlet being provided, that danger would bo to a largo extent averted.

"As to the 45 per cent, taxation on war profits, no exception, I think, can be taken to this, seeing that it applies to everyone concerned. It is not a tax on- the primary products solely, but on all profits made in any way whatsoevor through wur conditions, "I hope that,' broadly speaking, the proposals as outlined by the Minister of Finance will be passed by Parliament. When we have the details before us, suggestions to meet special cases, suoh as those who have already -given liberally to patriotic funds, may call for consideration.

A Call for Municipal Economy. Tho Mayor of Wellington (Mr. J. P. Luke), when asked for an opinion on the' Budget, said that it was a call from the Government to the people for a sacrifice. 'The Dominion's supreme effort," he said, "must be to aid in winning the war, and all matters must be subordinto that'determination. In any'war, changed conditions must ensue, and in the matter of civic expansion a halt must ba. called. To enable the Government to obtain its war money wo must delay., the carrying out of anything but essential work. None of us contemplated that the Old Country would nave been called upon to finance so lavishly as she liaj done, and' will still have to do, the money requirements of her Allies. We in the Dominions, have drawn so largely on the finance of tho United Kingdom, that I feel that in a second-' ary sense our part in the war is to minimise the encroachments on her money resources. "The raising of a large portion of the money in New Zealand for war purposes must be given effect to, and those in the control- of municipal- undertakings must realise that they have an opportunity now of helping, by keeping down expenditure to the discharge of ordinary services, arid so limit the advances to local bodies. I am-sure the people will support the Government in their financial proposals."

PUBLIC OPINION

THE BUDGET AND THE "BATTLER." . (To the Editor.) i n ?,i r 'n'' i '.! iere :ar6 man y features of the 1916 Budget reflecting,- credit upon the Minister of Finance, but 1 am surprised that he heaves a sign of regret that those wliose uicomcs .dq not'exceed .£3OO per annum are escaping the payment of a contribution towards the cost of the war He says:

"I direct attention to the minimum ■upou .which income tax is charged in this Dominion. So far as I can ascerram, the amount at which we- start to levy inoome tax is the highest in the world—by that I mean we exclude from the payment - of any tax all those who receive wagos 'or salaries not exceeding ■ fS3OO per annum. Nothing is proposed in the direction of increasing the income tax revenue by reducing the minimum income tax is leviable, but it will .become a question tor serious consideration if the war continues beyond the end of next year whether this should not be done."

lhe Right Hon. -Sir Joseph Ward evidently overlooked the fact that since the outbreak of war the 1 class of people indicated have had a "hard row to hoe" in making "both ends meet," and that m most cases any surplus from earnings has been donated to patriotic funds. With an 1 increase of overUO per cent, in the oost of living, the wage-earners have no margin for additional taxation, and to add to the burden would spell poverty for many people. We are thankful that' on this occasion the Minister of Finance has not saddled us with an increase in postage, telegraph charges, bank cheques, and items of the kind calculated to divert attention from taxation on war profits and other sources of substantial .wealth —the possessors of which are, not'onlv able, but in most cases willing, to shoulder the burden. The Budget of 1916 is certainly a more statesmanlike document than the one of the previous year, and Sir Joseph could wolf have left his remarks as to the "small fry" hidden in the recesses of his mind, because so long as tho whole of the war profits for 1914-15 and 55 per cent, of the 1915-16 total remain untouched, other .than by the land and income tax, and- the country has largo sources of wealth to draw upon, so long'will tho necessity to impose direct taxation on the man battling for his existence, with no margin for a "rainy" day remain in ateyanco. This point of view will, I believe, find acceptance among all classes of the community — 1 'am, etc., A. C. HOLMS. Featherston, June 17, 1916. PRESS OPINIONS Dealing with tho Government's taxation proposals, as outlined in the Budget, tile "Otago Daily. Times'' says:--"The Government now proposes to tax war profits ,to a degree that is expected to provide two millions of revenue in the current year. This result it will secure by taking, as a war tax, 45 per cent, of the excess profits earned from business, or directly from primary production. The excess will be calculated by talcing the average profits realised for each of the three years previous to the war, and comparing this average with the returns made since the war commenced. As v to the eqnitableness of tho proposal the ' general community will have no doubt. The proportion of war profits which the Government proposes to take is considerably less than that taken in similar circumstances in the Old Country, and less than that proposed to be taken in Australia. In addition to the two millions which it expects to derive from the taxation of war profits the Government hopes to secure another ,£750,000 by means of an additional income tax. A special tax of 5 per cent, is to be levied upon all incomes in excess of tho amount already exempt by statute, exclusive of those that will bo subject to the war profits tax." "Last year the total revenue derived from income tax amounted to .£1,392,119, representing an increase of • >£851,801 on the return for the previous year. A spec, ial tax of 5 per cent, will be viewed as a fairly heavy additional imposition to place upon ordinary private incomes,, but, while a critical examination of this and the other taxation proposals must 1)0 deferred, it is sufficient to observe that tho times are exceptional, and it cannot be disputed that' they call for a sacrifice in the way nf war contribution from every member of the community in proportion to his means. Therefore, tlio public may bo expeeted to respond cheerfully to any fresh call that is reasonably made upon its resources. There is one point, however, in this relation upon which the Budget touched tentatively, but in regard to which the Government might well have

definitely acted. Incomes under ' ,£3OO a year still have exemption from direct taxation. It is obsorved in the Budget that if tho war continues it will become a question for serious considcra-* tion whether the minimum upou which income tax is leviable should not bo reduced. There seoms to us to be no sufii- I oient reason why the Government, when it proposes to make a special and extraordinary levy on the income-tax payer, should not at once have decided upon a recluct'on of tho minimum; - The Civil Servants' War Bonus. Under tho heading "Robbing Peter to Pay Paul" the Cnristchurch "Press" says "In ono respect the Budget,' which has many good points, is a great disappointment to those, who like ourselves liola that wheoi the existence of tho country is at stake everyone should make some sacrifice, and there should be no shirkers, either military 'or financial. We cordially approve vhe proposed tax of 15 per cent, on war profits, and also. the extra income tax of one shilling in the pound which, on the higher incomes, will bring up the total income tax to 3s. Bd. in the pound. These are both heavy imposts, but they are not so heavy as tho taxation- whiclj is being borne by corresponding classes in England. Tliej' would be borne with the utmost cheerfulness if the Government had not been at some pains to introduce an amount of unfairness into the Budget which is .bound to raise a feeling of soreness which would not have arisen had the principle, of equality of sacrifice been observed. No additional taxation whatever is levied on persons with incomes up to .£3OO a year. More than this, the rest of the community are to bo tuxed in order to provide "war bonuses" to all State employees—Civil Servants, Tailway servants, school, teach-' ers, and others—whose salaries do not exceed ,£315 per annum. This will necessitate a payment of ,£4oo,ooo—or more than half of the amount estimated to bo raised by the special 'war income tax'' of Is. in the pound. We say this is. grossly unfair to the struggling professional men, tradesmen, and persons with fixed incomes exceeding the limit of exemptions, but still not large enoguh to raise the. recipients above-the struggling ■: classes. They are feeling the increase in the oost of living as much as anybody. Part of that increase is due to the war bonuses granted to manual workers by the Arbitration Court.- Why should a New Zealand Civil Servant earning ~£3OO a year and with assured position' until he retires on a pension, not only escape all war taxation, but actually Teceiv-e a 'war to be wrung out of less fortunate members of the community who may be earning but still moderate incomes for the time being, but whose living depends upon the maintenance of their health, a£d who have to make their own provision for their families and their own old age? There _ is only one explanation- of this injustice, and that is that the Government are afraid for the votes of tho State employees and the unions of organised workers. -A' National Government, formed for the prosecution of tho war ought to be above tho vote-catch-ing weaknesses ' of the ordinary , politician. . . . There is another anomaly. A New Zealand member of Parliament having no income but his honorarium pays no war tax. A London managing , clerk or professional man earning the same amount pays in income taxe alone .<£2o- a year. Surely our legislators must feel that this is .an inequality which ought not to continue." Benefits of Publicity. Referring to the Government's loan proposals tho same paper says:— "In congratulating the Government upon recognising the wisdom of obtaining war funds within the Dominion, wo may take the opportunity of suggesting that, the denomination of the bonds should bo so fixed as to render them available to the small investor and also that, the ocourrence of this opportunity, to aid the Motherland by relieving her, to the extent of our-ability, of the huge financial burden which she is. carrying should be made as widely known as possible. The benefits of publicity, commonly ignored by Governments, have been brought so . strongly under the notice of the Imperial Government during the present war, and have boen so serviceably employed that Sir Joseph Ward should have no hesitation in following the example of Mr. Lloyd George and Mr. M'Kenna in utilising them.. The Budget does not make very clear what' the Government proposes with regard to expenditure on public works during the coming year. It is not easy to reooncile tho statement that the ■ expenditure on pnblio works is to be reduced with the' announcement that the House will be asked/ as a procautionary measure, -to grant authority to raise .£500,000 from tho Post Office funds, and it is still less easy to recon, cile it with the proposal to raise a sum of ,£2,000,000 for internal expenditure, apart from provision for borrowing w£ooo,ono to provide land for discharged soldiers."

For. Security'.and. Liberty. \ On the Budget, the Auckland "Herald" says:

".The national balance-sheet of the Dominion for 1915-lb' sliows a surplus which must be considered in co-ordination with the increase of loan indebtedness arising trmn necessary -war expenditure. Nominally war expenditure is "unproductive, but it is the money-price wo aro paying for security and libertv, without Which we should be tho prey of German aggression, despoiled of all that makc3 life .worth living to free-born men and women. It must be regarded as an insurance against war risks, the nature of which we see in Belgium, in Serbia) in ™ ? nd, and in the occupied departments of 1 ranee. Bearing this in mind, wo can view with steadfast confidence the financial situation as set forth by tho Minister of Finance."

• • • • After reviewing the money raised for war purposes, the "Herald" continues-. "The greater part of the war loans has been found in the past by the Imperial Government, though a considerable sum has been found by the Post Office Savings llauk. It is proposed in, the future to offer war bonds to the New Zealand public, while tho Imperial Government will still be relied upon to provido tho balance of the money required. Many citizens will doubtless respond willingly to the appeal of the Minister of Finance, but whether we owe the war debt hero orin 'London interest and sinking fund re main as constant annual charges. There is every rc-ason to feel confidence in the financial situation as shown by the Financial Statement, but no reason to forget that private thrift and national economy are absolutely necessary if.we are to be generous to those who figlit our battles, .and if the country is to carry without great difficulty the increasing load. As to the latter, we would again remind Government, Parliament, and people that unproductive land contributes nothing to national wealth or national war, while productive land is the fountain-head of money as ox men." . Is It an Extra? "We are glad (sa3-s the Timaru "Herald") to note that the proposal of a local war loan has been adopted by the Government, though it has not been adopted by that name. The Finance Minister announces that he will ask the House to "provide for a system of war bonds to be issued in jSTow Zealand, with a currency of twenty-five years, bearing interest at 41 per cent, free of income tax. This will enable those desirous of helping war finance to do so. This rather suggests making the war loan an extra, rather than an. integral portion of tho Government's financial scheme, but we are told that, while it would at present be impossible to continue tho war expenditure without assistance from tho Homeland, endeavours will be made to relieve the Imperial Government to tho fullest, possible extent. As of that endeavour the. local loan should, have an important place." The Sinews of War. On the subject of the Government's proposal to issue war bonds, the "Lyttolton Times" says:— "We rejoice to find this opportunity presented, feeling sure that tho responso \>ill bo very considerable. Much depends, however, unon the methods of the Department of Fuianco in setting Ihs proposition before the people, and in this important work it is to be hoped that the Minister and his staff will show imagination and enthusiasm. Tho policy would, in our opinion, ho certain of a larger success if some optional terms of currency were provided. Our point is that practically the whole of the com-

munity might bo brought into the Boleme with good results to the Treasury and n salutary influence upon the lives and character of the people. Small investors can hardly bo expected to advance money for a quarter of a century, whereas thousands of men. and women in moderate circumstances could easily bo induced to economise for the purpose of buying, say, five-year ivar bonds. Just now, however, we are not disposed to be too critioal, as Sir Joseph Ward, in announcing this system of local borrowing, has stated that it will bo his endeavour 'to continue to relieve the Imperial Government to the fullest possible extent.' In that worthy determination he may safely count upon the solid support of the community. The Minister also speaks, not too definitely, of a couple of millions to be provided 'from sources within the Dominion' for the carrying 011 of 'works and other services.'"