THE BUDGET SURPLUS

Taranaki Central Press, Volume IV, Issue 403, 9 April 1937, Page 7

THE BUDGET SURPLUS

DUE TO SALES TAX. REVENUE “Ironic Situation.” The parting announcement by the Prime Minister, that a surplus' ol £lOO,OOO in the national accounts ap peared to be assured for the financial year just ended, has been received by the country with gratification (says a statement by the Associated Chambers of Commerce of New Zealand) particularly in view of the fact that a surplus of only £13,000 r.vas anticipated by the Minister of Finance when the Budget was brought down last year. The detailed figures showing how this was accomplished will be of con siderable in: erest when they are made available to the public in die course. The-chi f means by which this surplus was achieved was, of course, high taxation, which in turn was aided very materially indeed by the favourable pric is that have been received by the primary producers, the value of merchandise reports in the calendar year 1936 at least (in terms of New Zealand currency) hav Ing been the highest yet recorded, while remarkable high vi lues have ruled during Ihe wo si-selling sea son. These fac.ors have enabled a high taxation programme to be carried out for the year. Estimate Exceeded. Collected returns from the various por s of entry for Cii.ltoms purposes show that the sales lax is the key to the Budget surplus. The Ministei of Finance eittiina-ed last year that for the financial year ended last month the sal s tax would produce £2,900,000. Actually, tile yield from the tax was £3,040,915, v iiich is l £140,985 in excess of the estimate, hence the Budget sutplu.. of £lOO,OOO It is a somewhat ironic situation that the sales tax, which the Govern ment is under pleige to abolish, should be the >ne which has made a National surplus possible. In the passage of time since Is introduction, the sales tax las grown to be a most prolific source of revenue. It has produced the following revenues: £ 1932 J-33 (less than two m/onths) 38,253 1933- 1,847,333 1934 - 2.170,503 1935.36 2,465,602 1936 37 3,040,985 The sales tax was introduc'd l (in February, 1933) at a time ‘When additional revenue was needed to meet national commitment, s.” As compared wii h thal year (1932-33) Consolidated Fund l net revenues (exclusive of sales tax and unemployment taxes) increased by £1.179,498 in 1935-36, while the official estimate of similar revenue;; for the year 1936-37 just concluded, was for £5,636,000 more thin in 1932 3,J. Yet the sales tax still remains. Sales Tax Per Family. The average family of tour persons paid £7/14/3 in sales taxes in. 193637. That is on the sum collected by the Customs; actually, the people paid: more than the yield to ths 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 manufacturer is, in the main, met some time before i:. is reimbursed by collection from the customer, financing costs are involved, and these, together with the extra, labour involved in the compilation of /.he necessary analyses and returns by business concerns, are in large measure passed' on t ? the consumer. There seems to be no move to remove the sales 1 tax. Ou present revenues, to reduce it by one per cent, would mean the sacrifice by the Government of £600,000. Tile trouble is that Government expenditure is increased just as 1 faslt as old and new taxes bring - in fresh revenues—faster, in fact, because greatly increased spending was pr>vided for in last year's Budget in an legation of the increased revenues to come, creating new national comHutments. Total Government expenditure in 1935-33 was £28,594,255 (from revenue and loan monies) while for the year ended last moult], it was brought up (on estimate) to £41,610,711— an increase of 45 per cent. p The fate of the taxpayer, and of rade, industry and commerce, seems ° be an endless 1 dipping deeper into their pockets for interminably multiP ring national commitments, which have today reached most disturbing proportions. . b