Liquid Balances To Avoid Borrowing

Sun (Auckland), Volume 1, Issue 113, 3 August 1927, Page 1

Liquid Balances To Avoid Borrowing

It Is often assumed that a large balance at the beginning of a year constitutes a case for reducing taxation, but this balance has been decreasing steadily since 1920, and the balance carried forward on April 1, 1927, £ 3,681,466, after the further depletions which will take place this year for unemployment and other purposes, will leave available only the normal amount required to finance the year s transactions without borrowing on the security of Treasury bills. In view of the fact that the large bulk of the revenue comes in during the last months of the year it was at one time necessary to borrow in anticipation of revenue at an increased cost to the taxpayer. The existence of a liquid balance, so long as it can be maintained, avoids such charges and is undoubtedly more satisfactory finance. When any of this cash is not required in the ordinary revenue account it can always be profitably employed in temporarily financing loan ' accounts, which postpones borrowing ■ and effects a further saving-

Among other items the following increases may be noted: Postal and telegraph receipts, £148,823; interest on railways capital liability, £130,122; and departmental receipts, £ 57,491. Budget Points Here are the main points of the budget: ! Revenue £24,943,107 Expenditure 24,355,96«> 1 Surplus Total Expenditure increased 785,882 Land and Income Tax exceeded 8,000,000 Revenue down .. 131,302 P. and T. Receipts increased . 148,823 1 War and Ord. Debt Charges ; annually 10,594,655 - Public Works ex 6,667,967 ' Gross Public Debt 245,850,889 \ New Loans Last Year 9,627,351 * Debt Reduction during year 2,631,970 •' Debt-Redemption Fund .. 27,169,385 ' State Advances during year 6,185,970 l No reduction in taxation. Income-tax graduation to be charged. . Appropriation of £150,000 for unemployment. Tax-free bonds reduced £3.157,570 ■ Total Tax-free Bonds Now 37,726,590 i State Fire Insurance Profit 51,237 j State Accident Insurance, Profit 14,332 Public Trust Profits 32,650 Public Works Appropriation proposed this year 500,000 War Debt Reduced since 1922 5,280,362 Tyre-tax to Main Highways 142,475 Caution for Current Year The Minister notes the difficulties of j arriving at a close estimate of revenue in the present circumstances, and explains that imports are falling off. which means less customs revenue, while various adverse factors make it probable that land and income-tax receipts may also be affected. Estimated revenue for the current year is as follows, last year’s being shown for purposes of .comparison: 1927-28. 1926-27. Estimates. Actual. Customs £7,775,000 £8,252,575 Beer Duty .. .. 610,000 621,813 Stamp & death duties 3,403,100 3,379,016 Post & Telegraph 3,254,000 3,226,558 Land tax . . . . 1,205,000 1,229,067 Income Tax . . . . 3,425,000 3,422,216 st Interest on public n moneys 640,000 601,220 Interest on rail- >£ way capital . . 2,180,000 2,043,433 ~ Interest on Public Debt fund . . 870,000 863,942 i- Other receipts .. 1,314,800 1,303,267 Totals .. .. £24,676,900 £24,943.107 Estimates of this year’s expenditure d have been drastically supervised by an expert committee of departmental n heads. ■e The Minister anticipates an ordinp ary expenditure of £ 24,258,549, being - a decrease of £97,416 compared with [- last year’s expenditure; but he had to d make provision for other items such ;- as unemployment and further naval expenditure for the Singapore base.

Of the total revenue received last year £16,904,687 was derived from taxation, and the remaining balance ol £8,038.420 from interest receipts, sundry revenues and recoveries from different State activities. Of the proceeds of taxation 4S per cent, came from direct taxation (land and incomf tax and stamp duties) and the remain- , ing 52 per cent, from Customs and lt beer duties. The receipts from direct taxation g show relatively little variation, there n being an increase of £19,148 in stami n and death duties, £53,700 in incometax, and a decrease of £37,592 in land,f tax. Under indirect taxation we find - a decrease in both headings—viz., CusJtoms, £131,302; beer duty, £7,745.

these being estimated to total about £240,000. The estimated surplus is set down as £178,351. “This balance,” says the Minister, “leaves * very little to work upon, and a strict watch will require to be kept on all 'fresh claims for expenditure if we are to keep our finances on a satisfactory basis.”