Where the Money Goes

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

Where the Money Goes

DISPOSAL OF STATE SURPLUSES REFORM GOVERNMENT’S POLICY (THE SUN’S Parliamentary Reporter.) WELLINGTON, Tuesday. The Minister of Finance deals in his Budget with sundry statements made in the Press from time to time, that surpluses should not be used for public works and debt-reduction purposes, but should be applied to the relief of taxation. ILTR. STEWART claims that the application of the surpluses of good years to public works and debt-reduc-tion purposes has the effect of keeping down the debt charges, and at times obviates the necessity of increasing taxation. In regard to transfers to the Public Works Fund, the grand total of which

to date amounts to £14,300,000, the fact is that if the surpluses of good years had not been applied to this purpose the annual interest burden to be carried by the taxpayer in bad as well as good years would have been about £700,000 heavier than it is at present. Similarly, if further surplus revenues had not been applied to debtreduction, this burden would have been further increased by about £250,000, making nearly £1,000,000 in all. Even so it must not be forgotten that direct taxation has been mate-

rially reduced since 1920, the total annual value of reductions and remissions being estimated at £3,400,000. The policy of using surpluses foi debt-reduction is approved by eminent financial authorities. and is adopted by the British Government whose taxpayers have a much heaviei burden to carry than the people of this Dominion. Finally, it has already been explained that last year’s surplus wa: much greater than was anticipated ant largely fortuitous, and to reduce taxa tion on that account -would be tanta mount to budgeting for a deficit. I is axiomatic in public finance tha each year’s transactions must stan< alone, and a surplus in one year ha no bearing on the results of the nexl unless such surplus comes from a per manent increase in revenue. There is no doubt that our hig! credit in London, of which our las loan is solid proof, is in a large mea sure due to our constantly recurrin, surpluses and the appropriation o such moneys, to debt-reduction an capital expenditure, the effect c which, as shown above, relieves th general taxpayer probably much mor than reductions in rates of taxation. Tariff Revision The effects of he revision of the tari and adjustment of the income-tax sche dule are problematical, and wi not be known until the end of tb year.- The general indications are th£ the Dominion is gradually freeing it self from temporary difficulties an steadily working toward more favour able conditions.