Wairarapa Times-Age TUESDAY, JULY 19, 1938. OUR ASCENDING BUDGET.

Wairarapa Times-Age, 19 July 1938, Page 3

Wairarapa Times-Age TUESDAY, JULY 19, 1938. OUR ASCENDING BUDGET.

jPOMORROW evening the Minister of Finance (the Hon W. Nash) is to present the third Budget of the present Labour Government and it promises to be in some respects a very remarkable document indeed. The leading features of the situation are that the Government is about to launch out into heavy additional expenditure, notably on the social security scheme, at a time when State expenditure and taxation have already been raised; by rapid increases, to heights for which there is no precedent in our national history. Bearing in mind that there.has been only a trifling increase in the population of the Dominion during the last three years, the figures of increase in taxation and expenditure during the same period are staggering rather than impressive. Following are the details of taxation for the years from 1935-36 onward:— Year. Taxation other than Employment Total taxation. Employment tax. taxation. £ £ ' £ 1935- 21,556,415 3,920,026 25,476,372 1936- 26,940,845 4,224,965 31,164,302 1937- 31,662,506 5,105,019 36,767,525 In two years there has been an increase in taxation, other than employment taxation, of over ten millions, or nearly 50 per cent. With employment taxation taken into account, the people of the Dominion paid upwards of eleven millions more last year than they did in 1935-36. The revenue from all sources other than employment tax last year was £36,059,443, and the whole of that gigantic revenue was spent with the exception of a surplus of £BlO,OOO. The immediate prospect raised is that of some further heavy additions to taxation. In the first place, under the social security proposals, a tax of Is in the pound on all wages and other income is to replace the present employment tax of 8d in the pound. On the basis of last year’s results, the extra fourpence will mean an additional impost of upwards of £2,500,000. This in itself will bring the annual taxation total to close on £40,000,000. A considerable amount of additional revenue apparently will also have to be found per medium of other taxes, however, to place the social security scheme on its feet. The actual amount to be raised in this way will depend upon the form in which the scheme is passed into law. Setting aside all detail questions of the merits of this or that item of expenditure, it may reasonably be asked whether taxation and expenditure on. the present and immediately prospective scale can possibly be justified, taking account of the financial and economic circumstances of the Dominion. We may all agree that a liberal expansion of social services is in itself highly desirable, but it is no real favour to those who derive benefits from this expansion, or to anyone else, to establish these benefits on an unstable and uncertain financial foundation. Can anyone seriously believe that an annual expenditure of nearly forty millions a year, with taxation to correspond, and the immediate prospect of still greater expenditure and still heavier taxation, represent a sound and stable state of affairs in New Zealand? It is for the Minister of Finance to show if he can that the belief very generally entertained that the position is very far from being either safe or stable is unwarranted. The grounds on which this belief is based are in plain sight and are sufficiently impressive. In 1936-37, we had in this country, according to the estimate of the Government Statistician, an aggregate of private incomes of 150 millions. This large total of incomes was made possible by material production in the same year attaining a value of over 136 millions. As recently as five years ago, however, in 1932-33, the value of the Dominion’s material production was down, to under 84 millions. Who can possibly say that within the next year or two the value of the Dominion’s annual material production, and the figure of its aggregate private incomes may not again recede towards the figures of.five years ago? The principal explanation of the recession shown in 1932-33 and in adjacent years was a tremendous drop in the prices received for export produce—prices over which we are as far as ever from being able to exercise any control. It has been pointed out that in the effort made to balance the Budget in 1932-33, almost the last penny of taxation was wrung from the country. The amount raised in these conditions was under £20,000,000. Now,that we are raising expenditure to a level at which taxation producing forty millions per annum or more will be needed to square the accounts, what will happen to our State finances, and what, incidentally, to our liberalised social services, if we return to anything like the conditions of oversea trade that ruled in 1932-33 and neighbouring years ?