BUDGET BALANCING

Sun (Auckland), Volume III, Issue 800, 22 October 1929, Page 10

BUDGET BALANCING

PRIME MINISTER OUTLINFS POSITION TAXATION NECESSARY Press Association WELLINGTON, Monday The Trime Minister. Sir t ’ Ward, stated today that in Jose Ph tho fact that then', still appeals ° f bo some misapprehension ana , tu some misrepresentation is , ateo position. It had been stated H* additional taxation was bein'- the merely for the purpose of huge surplus amounting to a “"a 8 a ”i3ome have alleged, but all will GJ 10n ' nise.” said the Prime Minister imposing taxation is not a mw' thing to do. No Government al take such action unless it was nice!* sary to ensure the balancing of ,h national accounts. If New Zeals m to mainting its good reputo tWs I* essential and if additional revenue necessary and that is undoubtedly our position at present. I have no ouhnr but to do my duty. As I statia - n the Budget, the estimates of the ev" penditure for the current year were most carefuly overhauled before col sidenng the question of taxation wim a view to reducing them to the mini mum consistent with maintenance nr tho present services. 1

NEW SERVICES HELD BACK “As a matter of fact, the new vices contemplated by this Govern' ment when it took office were held baßon account of tho financial position ana the Budget estimates were based most wholly on services already sun plied by the State. Further, it w»7 quito apparent that having once re ceived these services the people gen' orally did not want to lose them Thu,' allowing for normal and inevitable in' creases ill expenditure, the programme was practically fixed by our S cessors in office.

’ The net expenditure last firancial year was £24,177,000.and to the esti mates this year there had to be added £702.000 to meet increased charges for interest and debt repayment, together with the automatic increases for vari ous charges and subsidies fixed bv permanent appropriations, none of which were capable of administrative reduction. The increase in the annual votes on the main estimates was keDt down to the modest figure of £3IOOO and these amounts, together with’the usual allowances for supplementary estimates and contingencies, set down at £262,000, made up the Budget expenditure total of £25,172,000. an increase of £995,000, over last years expenditure.

ADDITIONAL REVENUE WANTED To balance the Budget under these circumstances £25,172,000 of revenue is required. Lust financial year the revenue amounted to £23 600 000 so it will be seen that £1,572,000 addi-’ tional revenue has to be obtained this year, although the comparative increase in expenditure is only £995,000. The difference of £577,000 is due to the fact that last year there was a deficiency of this amount. A careful review of the revenue prospects showed clearly that I could not rely on the normal expansion of existing taxation to produce the £1,572,000 additional revenue. Items of revenue, apart from taxation, were overhauled with a view to seeing that all the legitimate recoveries were brought to account, but even so the estimated revenue was found to be short by about £700,000 and the Government had perforce to bring down proposals for additional taxation, and for the reasons given in the Budget it was decided to obtain *“ li3^ roni the land tax and the primage. “To meet the position since I delivered the Budget some modifications have been made in the land tax proposals and some of the savings counted upon will not operate at present. Very little in the way of a surplus was anticipated from the original proposals, which were designed to do no more than make sure there was no repetition of last year’s results. Any margin has been absorbed in the concessions since granted, and the finances will now have to be tightly held to make ends meet. “POLITICAL PROPAGANDA”

“Xeedless to say, the statement made from time to time that I am budgeting for £1,000,000 surplus is nothing more than political propaganda designed to mislead the people, and the figures I have given should satisfy all reasonable people of the fallacious character of these extraordinary statements. The accounts for the half-year are not yet ready for publication, but the indications are that the Budget estimates will be sustained. As our largest and most uncertain item of revenue. I have been carefully watching the position of the customs.

“I have recently,” said Sir Joseph, “had the Budget Estimates reviewed by the departments concerned, and their report is to the effect that while the probable volume of imports for the remainder of the year is still somewhat uncertain it appears likely the* the additional primage duty the Budget Estimate of £8,400,000 will be reached and may be exceeded by about £50,000. It appears that the composition of our imports is changing, and there is a distinct tendency for a decline in the importation of some of our largest revenue producers. notably spirits and tobacco. In the former case decreased consumption is the cause, while the decreased import of tobacco is the result of local industry. CHANGES IN IMPORTS

“On the other hand, the importation of other classes of goods, mostly dutyfree items such as manures and raw materials, appears to be increasing, but these will not help the revenue. The importation of motor-vehicles has been heavy during the past f eW months, but experience shows that there is a considerable seasonal element in this trade, imports being high in the first six months to meet the coming summer sales. It is fairly certain that the state of international finance and the increased bank rate in England will .react on our imports. Altogether, the position is very complex. “But I am satisfied, after a most careful review of all the factors, that there is no justification for the statements frequently made that the Customs will produce considerably more revenue than was allowed for in the Budget. The yield from land tax income tax can be estimated with mare certainty, and all subsequent investigations affirm the position outlined in the Budget—that the additional revenue to be obtained from the land tax and primage proposals 13 absolutely necessary to enable the accounts for the year to be balanced-*