BUDGET SURPLUS

Hawke's Bay Herald-Tribune, Issue 73, 13 April 1937, Page 15

BUDGET SURPLUS

Oue To Saies Tax Revenue 'iRONIC SITUATION" The parting announcement by th Prime Minister that a surplus oi £100,000 in the fiational accoUllts appeared to be assiired for the financia. year just ended, has been received bj the country with gratification (says s statement by the Associated Chambeh of Commerce of New Zealand) particularly in vieW of the fact that a surplus of only £13,000 was anticipated by th« Minister of Finance when the Budget was brought down last year. The detailed figures showing how this was accomplished vfrill be of cohsiderable interest when they are made available to the public in dtle course. The chief means by which this surplus wae achieved was, of course, hlgh t&xation, wliich in turn was aided vety materially indeed by the favourable prices that have been received by the primary producers, the value of merchandise exports in the calendar year 1936 at least (in terms of New Zealand currency) having been the highest yet recorded, while remarkably highi values have ruled during the wool-seiling seaBon. These faotors have enabled a high-taxation programme to be carried out for the year. Estimate Exoeeded Collected returns from the varioua ports of entry for Customs purposes show that the saies tax is the key to the Budget surplus. The Minister of finance estimated last year that, for the financial year ended last month, the saies tax would produce £2,900,000. Actually, the yield from the tax was £3,040,985, which is £140,985 in excess of the estimate, hence the Budget surplus of £100,000. It is a somewhat ironic situation that the saies tax, which the Goverriment is ubder pledge to abolish, should be

tife one wnicn nas made a hational surplus possible. In the passa'ge of time since its introduction, the saies tax has groWn to be a most prolific ' source of reveinue. It has produeed the following revenues : — £ 1932-33 (less than two months) 38,253 1933-34 1,847,333 1934-35 2,170,603 1935-36 2,462,602 1936-37 3,040,985 The saies tax was introduced (in Febrtiary, 1933) at a time "when additional revenue was needed to meet national commitments." As compared with that year (1932^33) Consolidated Fund net revenues (exclusive of saies tai and unemployment tases) increased by £1,179,498 in 1935-36, while th© Official estimate of similai; revenues for tlie year 1936-37 just concluded, was for £5,636,000 more than in 1932-33. Yet the saies tax still remains. Saies Tax per Family

The averago family of four peraons paid £7 14/3 in saies taxes in 1936-37. i'liat iB on the sum collected by the Customs ; actually, the people paid more than the yield to the Government, because the increase in the cost of goods subject to the tax was greater than the five per cent tax. As payment of the tax by the wholesaler or manutacturet is, in the main, met some time before it is reimbursed by collection from the customer, financing costs are involved, and these, together with the extra labour involved in the compilation of the necessary analyses and returns by business concerns, are in large measure passed on to the consumer. " There seems to be no move to remov© the saies tax. On present revenues, to reduce it by oue per cent. would mean the sacrifice by the Government of £600,000. The trouble is that Government expenditure is increased just as fast as old aud new taxes bring in fresh revenues — faster, in fact, because greaily increased spending was provided for the last year's Budget in anticipation of the increased revenues to come, creating new national commitments. Total Government expenditure in 1932-33 was £28,594,255 (from revenue and loan monies) while for the year ended last month it was brought up (on estimate) to £41,610,711 — an increase of 45 pfer cent. ' The fate of the taxpayers, and of trade, industry and commerce, seems to be an endless dipping deeper into their pockets for interminafely multiplying national commitments which have to-day reached most disturbing proportions.