MINISTERIAL EXPLANATION

Evening Star, Issue 23382, 27 September 1939, Page 4

MINISTERIAL EXPLANATION

SUM TAXES WILL YIELD The estimated war expenditure for the remaining portion of the financial year ending March 31, 1940, was £9,750,000, stated the Minister of Finance, but ho made it clear later in his speech that this estimate refers only to expenditure within New Zealand, and that if our forces had to be sent overseas. there would be need for further provision. Under the resolutions which were being submitted it was proposed to raise the following additional sums:— Increase in the beer duty from the present rate of Is 9d a gallon to 2s a gallon. An additional 25 per cent, to be added to the duty on tobacco, cigars, and cigarettes. A charge of 75 per cent, of the difference between the price of gold on August 24 and the price on the day it is exported; which meant, explained the Minister, that an appreciation in price, to the extent of 75 per cent., would be applied to the prosecution of the war, while 25 per cent, would remain with the producers of the gold. Roughly speaking, the sterling price of gold on August 24 was 148 s an ounce. It was now about ISOs, but tbo figure named in the Bill was £9 5s Bd, New Zealand currency. Assuming that gold reached a price higher than this, then three-quarters of the difference between the realisation price and £9 os 8d would go to the war expenses account and one-quarter to the persons who recovered the gold. . Replying to a question, the Minister stated that the present export duty on gold of 12s 6d an ounce would stand, for this represented a sum paid in respect of former appreciation in price. The increase of 15 per cent, in the duty on wines and spirits would be approximately equivalent to the increased beer duty. Then there would also bo an increase in duty on tobacco, cigars, and cigarettes of 25 per cent. “ In effect,” continued Mr Nash, “ the increase will mean 3d per 2oz tin of tobacco and a penny for each packet of 10 cigarettes. “ It is also proposed to increase the income tax by 15 per cent, on the present rate, and to increase death duties by 33 1-3 per cent.” INCOME TAX APPLIES TO PRESENT YEAR. “ Yes, the income tax increase applies to the present year,” remarked the Minister in reply to an Opposition question, “ because we want the money this year. The-proceeds. of all these extra duties will be paid into the War Expenses Account, into which all funds for the prosecution of the war will go, and out of which all payments will come. In addition there will be paid into this account the unexpended portion of .the sum of £3,200,000 already voted for the Army, Air Force, and Navy. Then the unexpended portion of the Works Votes associated with Defence will bo paid into this account. These two sums plus the extra death duties, income tax, and Customs duties, also one penny for every letter posted subsequently to October 1, which the Postmaster-General will be required to pay into this account. “ But in addition to that.” continued the Minister,” there will be other increases associated with Post Office services which will be required to make the normal accounts of tbo Post Office balance. The Id surcharge is a special charge on all letters and letter-cards.” ESTIMATED REVENUE. Mr Forbee®

Tho Minister: On present estimates the death duties will increase this year by £175,000. The reason for the smallness of this sum is that deatli duties are not payable until six months after death. The income tax increase of 15 per cent, will produce £1,440,000; the postal surcharge will realise in six months £250,000; the 3d additional beer duty £100,000; the increased tobacco duty £273,000; the gold duty £110,000; and tho wines and spirits £60,000. This makes a total of £2,408,000 over and above existing taxation. 'i “ For the full year death duties are expected to realise £700,000, income tax £1,440(000, postage £500,000, beer duty £200,000, tobacco duty £548,000, gold duty £220,000, wine and spirits duty £120,000; a total for a full year of £3,726,000. SOME LOAN MONEY ESSENTIAL. “ Coming back tp the current financial year,” continued Mr Nash, “ we want £9,750,000. Tho House has already voted £3,320,000; the taxation before the House will provide £2,400,000, which leaves a balance of £4,142,000, which will have to he provided. It is proposed under certain circumstances to see if we can raise some money by loan, and to prevent misunderstanding I can say that if it is necessary all the money required in this way for the prosecution of the war can be obtained from the Reserve Bank. There will be a Reserve Bank Bill. Mr Dickie (National, Patca): That is the worst tax of the lot. ■Mr Nash: It would be foolish to say we cannot go on with the war because we have not the money. Wo have tho use of all the resources we have to provide credit to provide tho things we need for the war, and to pay our men. Mr Coates (National, Kaipara); How much will be taken that way? The Minister: We have not provided a figure. It will he according to the exigencies and circumstances. IF MEN GO OVERSEAS. “ There is another provision in the Bill that, in respect of money required for war purposes overseas, we have power to borrow from the United Kingdom Government without the usual security any sum required overseas if any of our men have to go overseas, or for any equipment in connection with the prosecution of the war.”

“ But the items totalling £9.750,000 refer to expenditure in New Zealand only. We have made no estimate of what it will cost if circumstances are such that some of our men have to go overseas. These items cover payment for equipment here, camp buildings, the payment of the men, and in addition for the setting up of five air training grounds and equipping them as fast as we can, so as to give tho maximum assistance to our people overseas.”

MIGHT BE £20,000,000 NEXT YEAR. The Minister added that the cost to New Zealand next year, if_ circumstances as at present continued in Europe, would he between £20,000,000 and £30,000,000. After that nobody know what the cost would bo. “ Whatever the cost, we will have to go right on to the end,” he added. Mr Holland (National, Christchurch North) : Any economies in respect of unemployment relief? Mr Nash said that the War Expenses Bill would make provision for the automatic transfer of savings from the Estimates to the War Expenses Account. The main objective of the Government wss to use all (he resources of New Zealand for the conduct of the war. Mr Holland: Will we still bo paying £1 10s a week for chipping weeds? The Minister said that work would still have to be found for men. Jt w&a hoped that 4t would be productive.

used to that end. It was in the production of commodities that New Zealand would) make its major contribution to tho Old Country. Mr Doidge (National, Tauranga) : Will we spend the whole £70,000,000 we have budgeted for? Tho Minister: We will spend all that is necessary. What is not necessary will be transferred to tho War Expenses Account.

He explained that the allocation of expenditure for the remainder of the current year comprised £5,000,000 for the Army, £3.500,000 for the Air Force, and £1,250,000 for the Navy.