FINANCIAL STATEMENT

Taranaki Daily News, 2 August 1917, Page 6

FINANCIAL STATEMENT

SURPLUS OF SIX AND A HALF MILLIONS HEAVY INCREASES IN LAND AND INCOME TAXES SOME NEW IMPOSTS EXCESS PROFITS TAX DROPPED A TWENTY-FOUR MILLION WAR LOAN * n COMPULSORY CONTRIBUTION POSSIBLE

Wellington, Last Night.

amounted to £4,975,24'!, made up of land tax £713,115, income tax £4,2(12,12(j, showing an increase on the previous year of £2,534,709. (Land Tax)

To-night, to a full House, the Treasurer (.Sir Joseph Ward) delivered the lJudgct.

The main features are as follows:

The land tax receipts compared with those of 1015-10 show a decrease of £335,238, which is accounted for by the abolition of the tax on mortgages. (Income Tax 1 ). The income tax receipts compared with those of 1915-10 show an increase of £2,870,007. 'POST AND TELEGRAPH DEPARTMENT.

The revenue anil expenditure for the }ear 1916-17 as compared with the previous linancial year, are as follow: REVENUE FOR THE YEAR. |1917 1910 £ £ Customs 3,849,075 3,366,171 Stamp and death du- ' ' ties 1,699.035 1,470,307 Postal and telegraph I,SI 5,558 1.080,917 tax 713.118 1,048,35(1 Income tax 4,262,126 1,392,110 n «'r duty 187,953 157,892 Registration and fees 108,044 106.263 Marine 43,742 40.228 Miscellaneous .... 518,003 424,505 Territorial 215,787 219,314 National endowment revenue 85,971 92,655 Other receipts .... 32,200 12,073 18,367,547 14,510,137 1917 1910 £ £ . (Permanent Appropriations). | rivil f'Wt 27,473 20,280 'lnterest and Sinking ft»«l 4,014,792 3,190,798 Under special Acts 988,301 574,000 Subsidies local auth-

Tlie amount of revenue collected Staring the year was £1,815,558. It includes the war tax of %d on each article of postal matter excepting newspapers, and the 2d war tax on telegrams. Notwithstanding the fact that over £1.415,00(1 war loan certificates were sold by the Post (Mice, the savings bank business reached an unprecedented total, the deposits being £15,570.408, and the withdrawals £12,057,420. The balance standing to the credit of the Post Office savings bank depositors reached the very considerable total of £25,G03,209, an increase of £3,430.844.

The money-order und postal-note business was normal, the total issues for the year amounting to £4,209,341, and tlxe payments to £3,945,525. STAMP DEPARTMENT, This year the amount collected was '■£1,099,035, as against £1.470,307 last year, an increase of £228,728. The revenue from the totalisator, due to the increased duties under the Finance Act and the additional investments by the public during the year, shows a marked increase—viz., from £179,547 in 1915-10 to £251,438 in 1910-17. LAND REVENUE. The gross revenue received from Crown and endowment lands during the year amounted to £1,241,300. STATE ADVANCES OFFICE,

orities 130,716 133,072 Territorial revenue . 52,033 52,184 Endowments 165,237 173,692 Old age pensions .. 453,085 4 50,842 Widows'pensions .. 37,918 36,265 Military pensions .. 45,634 48,278 War pensions 180,166. 13,744 6,095,355 4,693,155 (Annual Appropriations)— Legislative Dept. .. 34.930 34,480 Dept. of Finance .. 100,722 90,004 Post and Telegraph l>pt 1,368,490 1,294,712 Working Railways ]>Pt 2,871,977 2,954,006 Public buildings, roads, etc 94.939 100,780 Native Dept 2-1,191 24,877 justice IVpt 459.914 452,227 Mines Dept 28,27 8 25,552 Dept. of Internal Affairs 474.965 408,058 Defence Dept 438,650 432.22?' Customs, Marine, &c 169,805 161,225 Dept. of Labor ... 32,725 31,676 Dept. of Lands and Survey 192,992 235,322 Dept of Agriculture, etc., 210,897 191,774 Kducaiion Dept. ... 1,406,264 1,329,166 Services not provided for 41,601 30,866

Total amounts of advances paid over from the commencement of the scheme to 31st March, 1917:

Advances to settlers 17,2-10,300 Advances to workers 3,347,39.5 Advances to local bodies ... 2,841,140 23,428,833 MIXING. The value of the minerals exposed for the year 1010 was .£1,720,050, which is less than the value exported during t.lift previous year by £37,"1,771. Owing to stoppage the accumulations for the year 1014 were exported during the year 191.5, consequently the exports for 1915 were unduly inflated.

The output of coal for the year 1010 Was 2,257,135 tons, an increase of 48,511 tons above that of the previous year. RESULT OF THE YEAR'S OPERATIONS. £ Consolidated FundBrought forward on Ist April, 1910 . 2,100,077 Receipts during year 18,307,547 Expenditure during year appropriations 14,058,770 Balance on 31st March, 1017 0,474,854 This credit balance is large, and was intended by me to be so. The Dominion's financial war requirements are enormous, but not more than the country can stand. Thero is a considerable shrinkage imtlie revenue this year, unit It is imperative that the Consolidated Fund should be in such a position that it can make up any 'Joss of revenue, and also, if necessary, contribute a portioh of the means required for carrying 011 the war. WAR LOAN.

7,9G3,415 7,709,052 Totals 14,058,770 12,403,107 PUBLIC WORKS FUND. > £ Balance brought forward on April 1. l!)l(i 1,203,102 Receipts (loan money) 507,345 1,500,477 Expenditure (under appropriation) 1,278,022 Balance at March 31, 1917 .. 521,525 LOAN'S FALLING DUE. Tlie loans falling due during 1 lie seven year* ending with the year 1024 are as follow: £ IMS 3,3(13.351', *IOISJ 1.K15.121 1010 1.705,50S 1920 3.707,045 1021 10,105,457 1022 0,171,790 L>23 701.050 1924 2,124,300 "Advances from Imperial Government for war purposes. Treasury bills renewable. TREASURY.

In view of the very large expenditure which is being incurred, it will be necessary to take steps to raise within the Dominion at an early elate a fresh loan for war purposes, and the House will be asked to grant authority to enable an amount of £24,000 to be borrowed. The whole of this sum will no t be borrowed at once. I propose to put a loan for .£12,000,000 on the market, with as little delay as possible. I hope it will not be jmcy-ssary to raise n second loan of more thanT £10,000.000, but authority for a margin of an additional £2,000/10(1 is desirable. The rale of interest will be 4'/, per cent., and will be free of incometax. I will submit a proposal under which a portion of this loan will be made available for payment of deatli duties. It will be specially earmarked for that purpose. COMPULSORY CONTRIBUTION.

Dnrinrr the year just ended loan and financial operations of an unprecedented ch.iraeter were undertaken. Over £51.00(1,OHO of tin' Dominion War Loan o' €10,000,000 was raised in New Zealand, at a ret cost of jicr eent. only, wliicli is con-iderahlv helow (lie cost of raising loan? on tlie I.ondon market. The avi'ia'.'L- rn-.t c,f raisin:: the last three loans in London prior to the war was V/., ]ier c , n!,, and tin l vei.ieost of raising the two loans in New Zealand during li:e war was three-eighths of one pound per eent. IMPORTS. Year Value Tons I'.iM c>i.s',(i.oflr, I!MS .C 21.725,5."4 1,370.0,>7 191<i £26,339,283 1,299,944 IMPORTS AND EXPORTS Imports Exports. £ £. 1915-16 22,017437 33,781,711 1916-17 22,102,706 . 30,638,460 LAND TAX AND INCOME T'at

In the event of the voluntary contributions falling short erf the amount required, 1 will ask the House for authority to introduce a system of compulsory contribution, under which persons who have not done their part in helping to provide the necessary finance for carrying on the war, and for providing adequate paym&nt to soldiers and their de- - .■ i M 'v. • •

a] heavy 1 fixation, which I will fully explain mliimi di-aVijirr wit), taxation. I will able the House lo make Hie authoritv applicable to those who neglected to take up their part not onlv of the last war loan, hut of any future war loan. This compulsory fiy.-;eni will not, be enforced asainst those whose incomes are under £7OO per annum. Those whose earnings are below that amount must bo trusted to contribute voluntarily. This may be regarded as a somewhat drastic measure, but 1 regret to say it is necessary, as there are many persons of means, and also companies, who subscribed very little, and in. some cases nothing a( all. io the last loan. I would earnestly impress upon the country (he fact (hat our part in the war cannot be carried on without the necessnrv ways and means, and all win possess means ami do not realise what is their clear duty 'must be compelled to make the same sacrifice as those who do recognise their duty.

in late so as to make jt 90 per cent. it \\ould not provide the amount required I therefore must ask the House to authorise such a change of taxation as will make it certain that larger sums shall be contributed by those who have not paid their just share under the profits tax. Tho_ adjustment I propose will not only provide the amount of revenue I require, but it will ensure that every one shall i contribute in proportion to his means. In place of the excess profits tax 1 will ask the House for authority to obtain the additional revenue from a progressive land and income tax l . Anv system of~taxation should be capable of such expansion as will meet all legitimate requirements of the State, 'and what I propose will, I feel sure, meet this requirement.

PROGRESSIVE LAND TAX. From this source we must collect a larger revenue than we did during the pr.st year. The land tax collected last year was £7I.'!,US, out of a total revenue from land and income tax of £4,-075.2-14, roughly one-seventh. I propose that instead of the present ordinary and graduated land taxes to levy one progressive land iax, the tax to he charged on the unimproved value without deduction of mortgages but allowing exemption as at present of £SOO on the taxable balances up to £ISOO. In order to prevent hardship upon taxpayers whose binds are, of comparatively low value, and which are subject to iw-Igage, I will ast- the House to approve an exemption of £IOOO in all cases where, the unimproved value does not exceed £300(1. This coemption will then diminish by £1 for every £2 in the unimproved value above £SOOO. This exemption to taxpayers whose land is mortgaged will represent a concession of revenue to the. small landowner amounting to about £IOO,OOO.

INVESTMENT TN IMPERIAL WAR LOAN. I have mentioned (hat the ordinary revenue reserve invested in London ■amounted to ,£3,1)17.731. but there are moneys belonging to other funds also invested there.

I arranged for (he realisation of £5,000.000 of Dominion funds which were invested in London on short-dated securities and invested the amount in the Imperial war loan. This investment also possesses the great advantage of providing an additional £5,000,000 of gilt-edged securities for use from time to time in London for financing the Dominion should audi at any time be necessary.

The ordinary revenue reserve to above contributed £2,073,000 towards this £">,000,000.

I may mention that there are still some other moneys invested in Treasury bills, or on deposit in London. All these investments can, of course, be realised as occasion requires, but as the whole of the investments with the exception of the ordinary revenue reserve represent portions of certain funds which are not at present being used in the Dominion the moneys when realised must necessarily be used for tlie purposes of the respective funds from which they were drawn. At 31st May the total amount invested in London was £7,048,000. SOLDIERS' DEPENDENTS.

It has been determined to make provision for jranting additional allowances to dependents of soldiers, and the House will be asked to amend the war pensions legislation this session. The necessary expenditure, the amount of which I am not. in a position to state at present, will be provided for in the supplementary estimates.

OLD AGE, MILITARY, WIDOWS' AND MINERS' PENSIONS.

Some relief on account of the extra cost of living should bo given to oldage and military pensions, widows and miners, and to enable this to be done I propose to provide £120,000. This will give to old age and military pensioners, widows, and miners suffering from pneumoconiosis some substantial assistance.

WAR BONUS TO CIVIL SERVANTS. A war bonus to make provision upon lines similar to that of last year will be authorised, and 'Parliament will be asked to vote a sum of £400,000 for the purpose this year. EXTRAVAGANT LIVING. The National Efficiency Board has put forward proposals with the view of placing a restriction during the war on the importation of certain articles which may be considered luxuries, and by this means checking the extravagancies of some of the people of New Zealand. The Customs estimate a reduction of revenue of £230,000 if these proposals are carried out.

While I entirely sympathise with the objects which the, Efficiency Board seeks to attain, 1 repot to say that after making full enquiries in the way that I am not able to give effect to the Board's recommendation.

MOTOft CAES The amount of duty collected 011 motor cam imported last year was £148,345. This is an amount of revenue, that cannot at present be dispensed with. It is not my province as Minister of Finance to place such a duty 011 any article which brines in revenue as to prevent importation or bring about a decrease of revenue to anv material extent, because the very difficult task would then be imposed upon me of obtaining' an equal amount of revenue from some other source.

Nearly 00 per cent, of the motor cars imported since the war commenced were for utility purposes, and can in no sense be classed as pleasure cars. The average price paid per ear imported into New Zealand was £l5O. Motors for business purposes have come to stay here, as is the case all over the world. The time has "passed for accepting u general condemnation of their importa. tion 011 the grounds that they are, for pleasure, and are, therefore, not indispensable. We want the revenue. The duty at present is 20 per cent., with a preference of 10 per cent, to Great Britain and any part of the Empire that reciprocated with lis. AMUSEMENT TAN.

I propose to levy a duty on admissions to places of amusement similar to that imposed, in Great Britain by the Finance (New Duties) Act. 1010. This duty will commence at Id, where the price of admission, exclusive of duty, does not exceed (id., proceeding in graduations until it reaches a duty of Is on admissions of 12s Od, with an additional Is for every 10s over 12s Od in the price of admission. The amount of revenue that I estimate will be obtained from this source is £BO,OOO, and will be devoted to paying the war bonus to ohl-age and military pensioners, and widows, and to millers suffering from pneumoconiosis. EXCESS PROFITS TAX.

With reference to the excess profits duty, it will be remembered that lasl year I aM;ed the House, in response to a generally-ex-pressed wish, to levy specal taxation on the Jxtra profits that had accrued to taxpayers owing to the war. On investigation it was found here, as -it had been found in England, and was afterwards found in Canada. France, and the United States, that the difficulties of ascertaining exactly the actual profits resulting from the war were almost insuperable. The machinery required for tin' purpose was too elaborate to enable the revenue to he collected when it was required. The method adopted here was substantially on the lines of the English excess profits tax, but as the amount fealiScu uid not reach niy estimate, I propose this year to readjust this form of taxation. I may say that if the prof-

The method of dealing with what is termed the mortgagee tax presents one of the most difficult questions in our taxation scheme. Tt, is, however, certain that the system which we have to depend upon for the collection of requisite land tax revenue must be made effective, otherwise there will be a large loss of revenue, and this loss would assuredly take place under Ihe law. as it at present stands. It is, therefore, necessary to amend it. The rate I propose will be ft progressive one which can be rai=ivl or lowered by percentage additions or deductions to meet the requirements of the time. The lowest schedule rate will be Id in the £ on the first :CIUOO of taxable balance increased by 1-32,0004 for each £1 of the increase over £IOOO until it reaches 7d, which rale will be reached at £102,000. This gives a fairer graduation than the present system, the rate of which is broken and is higher on the lower balances and diminishes on the higher balances to the schedule rates, I propose to make an all-round addition of 50 per cent. The minimum rate will then be l'/ : d, ami the maximum lO'/.d. T hope to obtain from land tax £1,200,000.

■PROGRESSIVE INCOME TAX. I propose, to retain the principle o! the present, graduated income tax, although with a different graduation without any percentage addition. The extra war revenue resuircd will be raised by special income tav. With regard to the ordinary income tax, tin 1 present, graduated rate suffers from the same defect as the graduated rate for I. :id ta.x. It is a broken rate, and the increase is severe on the lower incomes. I therefore propose to amend the rate, startin<r at the present amount of fid in the pound up to £4OO, and then increasing by 1-'200(1 for each pound of increase over £4OO up to 3s, which rato is reached at £O4OO.

11l the method of assessment I propose to make an amendment by abolishing the present exemption of ii per cent on (he capital value of (lie land used in producing (he income, with the deduction therefrom of the amount of interest paid on any lilort2st.ee »f Midi land, and to substitute an exemption of 5 per cent, on the unimproved value of the land used for producing the income—i.e.. 5 per cent, on (lie amount 011 which land tax will be paid. This in actual practice will work out more favorably than tin. prcsent exemption in the cases of taxpayers whose lands are encumbered. The exemption will be allowed in full 011 assessable incomes up to £6OO only, and will (hen decrease by £1 for every pound of increase in the assessable income over £(100, so as to disappear at CilOO. The amount of revenue which T estimate will bo obtained from income tax under these proposals is £1.000.01111. SPECIAL WAR TAX.

For the purposes of a special war tax I propose to retain the tax at present assessed under section 5 of the Finance' Act of last year 011 all assessable intonie in cx'crss of £30!), but; it will be graduated in the same way as -the progressive income tax, and will have an allround addition of 50 per cent, to schedule rates. The minimum rate charged for income will be Is 3d, and the maximum 7s fid. This I estimate v.-"! yl--!d £3,000,006,

CUSTOMS. The Custom-, revenue' for the past financial year is most difficult to estimate. The difficulties of transport, risks of loss, high freights, and restrictions upon the exportation of many classes of goods trom Great -Britain make it impossible !:<> measure with i'ny degree of accuracy the volume of Inula which 'will l'pach Kew Zealand if the war continues, The estimate for thu year 1010-17 was £3,300,000. This would have been a good average revenue for any year from 1010 onwards, but owing to the great •appreciation of values of goods subject to ad valorem duties, and to the successful import fade generally, the revenue realised was £3,849,'075, showing an excess over estimate of £5-10,075. This is the greatest Customs revenue ever collected and if it is added to the excise beer revenue of £187.953 it brings the total to over £4,090,000 for the lirst tiem in the history of the Dominion. BEER DUTY. The bear duty collected during the year was £li/7,0.j3, as against £157.892, 'or £30,001 more than was collected for the previous year : that increase hi about £7.000 less'than I expected to obtain, which is due to anti-shouting regulations, increasing shortage of adult male population through enlistment, and duet ion in the gravity of the beei> brewed. The number of gallons of beer brewed during the calendar year 1910 was 1.2-17,725, as against 11.149,170 gallons the previous yew. ADDITIONAL CUSTOMS AND EXCISE DUTIES. f The House will be a&ked to agree to an increase in the Customs and Excise duties on tea, beer, spirits, champagne, cigars, cigarettes, silks., satins, velvets, plushes, and imitation silks. The additional revenue which in ordinary wines would be realised - by the proposed increase is estimated at £3t- O(X> but and

the consequent uncertainty attending nil importations at the present time, it would be unsafe for me fo relr on obtaining more thfm from thla BOlli'CO. . SUMMARY. To summarise, the amount of tax that [ estimate will be received under these proposals is as follows: ,-c Land-tax l/.'.i0.C00 Ordinary income-tax .... J.iiai'mio Special wgr-'tax 2,olX)j{ioJ,

.€3.830 008'. The rates will he— Min. Max. s. d. s. ' d. Land-lax 0 1 \ 0.,10.} Ordinary income- tax 0 li 3;; (),. Special war-tax .... 0 1) ,4 B The proposed taxps, taKpn ".vilrlv'Onsl.om.s duties. Mate i,n<l «tie«i'»sion"'<llitie3, and oilier taxes, will give us a system which combines as nearly as possible ability to psy, equality of saorilice, and universality of taxation; it avoids a!) Unnecessary complexities, i* sulUeicntly simple to be. readily understood by all taxpayers, and is comparatively inexpensive \ in collection.

ESTIMATES G? HEVESPE FOR 1917.18. £ Customs 2,989.000 Railways 4,200.000 .Stamp aurl (loath duties 1,400.000 Postal and telegraph 1,725,00(1 Lam! and income tax 5,850,000 Beer duty 2-25 000 Resistvafion and other fees lftiywi) Awiispir.ent-tuji g0,0.M .Marine 'M,OOO Miscellaneous 450,00(1 Territorial revenue 175.00(1 Endowment revenue S3, Bit!) Other receipts 10,000 17,252,M0 The foregoing estimate is 1,084,7-17 below the recipts of last year. ESTIMATED SUKKLOS 1>X)11 THE CURRENT YEAR. I estimate that there will be a surplus for the year 1017-1# of £1,200,098.