SURPLUS AND TAXATION

Hokitika Guardian, 26 August 1927, Page 1

SURPLUS AND TAXATION

( '{EDIT AND CONTENTMENT. yUy TAXPAYER.) Long before the submission oi his Budget to the Housed Representatives the Minister of Finance was urged by his own political friends to apply the surplus he had realised for the year 1925-27 io a reduction of taxation. His own figures showed that during the year the revenue had exceeded the expenditure by £587,142 and it seemed to bis friends that even this comparatively small balance would justify the Minister in giving effect to the "reduction of taxation ” policy to which the Government had committed itself at the general election. Representations to this effect were made to the -Minister from all parts of the Dominion and his attention was called to the fact that while he was hesitating about a reduction d taxation, and even hinting at an increase, lie was taking from the Consolidated Fund for other purposes money which should have gone to swelling of the surplus. The available reports ol the Minister's reply in the “ budget debate ” throw little fight upon this particular line of criticism, but there appears to b - no doubt that Air Downie Stewart di<] employ a sum of £588,867 taken from the Consolidated Fund to the amortization of the public debt, and so reduced his surplus from £1,176,009 to £587,1-12. Had the surplus been left iit the larger sum the demand for a reduction of taxation, of course, would Imvo been irresistible. It is difficult for a mere layman to follow the intricate' figures of an expert Alinister of Finance, hut there is a paragraph in the Budget which suggests, at least, that Air Stewart was not anxious to disclose the magnitude of His surplus funds. |

" As a set-off against the new loans raised.” it runs, “debt to the amount of £2,621,970 was redeemed during the year. It is sometimes asked what is the use of redeeming debt while we are borrowing more, but the reply is that in so far as the reduction of war debt is concerned the result is the substitution of productive for dead-weight debt, which is a very real gain. A. large public debt can only lie repaid by steady effort over a long period, in which our national Revenue Account and taxation are gradually adjusted to carry the charges. There is no immediate prospect of a cessation of borrowing. and it would he imprudent finance, damaging to our credit in London, and therefore prejudieal to future borrowing. if debt repayment were not a constant feature of our national policy.*

All this is very plausible, and perhaps financially sound, hut it is open to the retort that the taxpayers themselves should have some voice in the purposes to which their surplus payments are applied. It is altogether admirable that the .Minister should he jealous for the credit of the Dominion in London, and elsewhere, hilt it is doubtful if ibis credit is going to he enhanced by imposing greater burdens upon the taxpayers than it is necessary for them to hear. The financial stability of a country depends as much upon the contentment and prosperity or its own people as it does upon the goodwill and confidence of its creditors.