DOMINION FINANCE

Gisborne Herald, Volume LXVI, Issue 20053, 27 September 1939, Page 4

DOMINION FINANCE

ALL RESOURCES “GO RIGHT TO THE END” CREDITS FOR THE WAR MINI ST HU’S E XPL ANATI ON ■CM, 000,000 NEXT YEAR (ILriiiutiriiUiry Ucportcr.) WELLINGTON, this day. How New Zealand will finance its war effort was explained to the House of Representatives by the Hon. W. Nash, Minister of Finance, when the Customs Resolutions and War Expenses Bill was introduced.

The estimated expenditure on war for the remainder of the financial year is £9,750,000. This includes the completion of five new air-training centres,

It is intended to raise by additional taxation operative this year the sum of £2,400.000. These increases comprise:—

A 15 per cent increase on income tax which has been assessed for this year.

Increases in duties on beer, wines, spirits, tobacco, cigars and cigarettes. A postage surcharge of Id per letter. Increased death and gift duties and the taking of 75 per cent of any appreciation in the price of gold over that quoted on August 25 last. New taxes, plus appropriations from current revenue totalling £3,320,000, still leave £4,142,000 to be provided for, and the Minister of Finance explained that he is obtaining authority to borrow up to £10,000,000. This will be done through the Reserve Bank, but in reply to Opposition questions he declined to state what was the amount which was to be raised in this way. Borrowing Power (Power is also taken to borrow from the Imperial Government money which may be expended overseas if New Zealand soldiers are sent out ol New Zealand.

It is estimated that the war expenditure for the remaining portion of the financial year ending March 31, 1940, was £9,750,000, stated the Minister of Finance, but he made it clear later in his speech that this estimate refers only to expenditure within New Zealand, and that if forces had to be sent overseas there would need to be further provision. Under the resolutions which were being submitted it was proposed to raise the following additional sums:—

Increase in beer duty from the present rate of Is 9d per gallon to 2s per gallon.

An additional 25 per cent to be added to the duty on tobacco, cigars and cigarettes. Levy on Gold

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. This meant, explained the Minister, that appreciation in the 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 gold. Roughly speaking, the sterling price of gold on August 24 was 148 s per fine ounce. It was now about 180 s, but the figure named in the bill was £9 5s 8d in New Zealand currency. Assuming that gold reached a price higher than this, then three-quarters of the difference between the realisation price and £9 5s 8d would go to the war expenses account and one-quarter to 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 the sum paid in respect of the former appreciation in the price. 'An increase of 15 per cent in the duty on wines and spirits would toe approximately equivalent to the increased beer duty. Then there would also be the 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 Id for each packet of 10 cigarettes. Income Tax This Year It is also proposed to increase the income tax by 15 per cent on the present rale and to increase death duties by 33 1-3 per cent. “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, and then the unexpended portion of the works voles associated with defence will be paid into this account.''’ These two sums, plus extra death duties, income tax and customs duties, and also Id for every letter posted subsequent to October 1 will be paid into this account, but in addition to that, continued the Minister, there would be other increases associated 'with the Post Office services, which would be required to make the normal ‘accounts of the Post Office balance. Tire Id surcharge would be a special charge on all letters and letter-cards.

The Rt. Hon. G. W. Forbes tNat., Hurunui): What is the estimated revenue?

The Minister: On the present estimates deatli duties will increase this year by £175,000. The reason for {lie smallness of this sunn is that the death duties are not payable until six months after the death. In income tax the 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 £IOO,OOO, the increased tobacco duty £273,000, the gold duty £IIO,OOO and the duty on wines and spirits £OO,OOO. This makes a total or £2,408,000 over and above the existing taxation. 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 £540,000, gold duty £220,000 and wine and spirits duty £120,000, a total for the full year of £3,720,000. Balance to be Found “Coming back to the current finan-

cial year,” continued Mr. Nash, “we want £9,750,000. The 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 be 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 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. H. G. Dickie (Nat., Patea): 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. We have the use of all the resources, we have to provide credit to provide the things we need for the war and to pay our men. The Rt. Hon. J. G. Coates (Nat., Kaipara): How much will be taken that way?

“We have not provided a figure,” the Minister replied. “It will be according to the exigencies and circumstances. Fund For Overseas Force

"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 ine 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 men and in addition, for setting up of five air training grounds, equipping them as fast as we can so as to give the maximum of assistance to our people overseas.”

The Minister added that the cost to New Zealand next year, if circumstances as at present continued in Europe, would be between £20,000,000 and £30,000,000. After that nobody knew what the cost would be. “Right on to The End”

“Whatever the cost, we will have to go right on to the end,” he added. Mr. S. G. Holland (Nat., Christchurch North): Any economies in respect of unemployment relief?

Mr. Nash said that the war Expenses Bill would make provision for an automatic transfer of savings from the estimates to the War Expenses Account. The main objective of the Government was to use all the resources of New Zealand for the conduct of the war.

Mr. Holland: Will we still be paying £4 10s a week for chipping weeds?

The Minister said that work would still have to be found for men. It was hoped that would be productive. All the country’s endeavours must be used to that end. It was in the production of commodities that New Zealand would make its major contribution to the Old Country.

Mr. F. W. Doidge (Nat., Tauranga): Will we spend the whole £70,000,000 we have budgeted for? The Minister: We will spend all that is necessary. What is not necessary will be transferred to the war expenses account. lie 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.