WAR FINANCE

Wairarapa Times-Age, 28 February 1940, Page 5

WAR FINANCE

NEED FOR REDUCTIONS IN EXPENDITURE. STILL HIGHER TAXATION INEVITABLE. (By Telegraph—Press Association.) WELLINGTON, This Day. The first means of providing finance for defence purposes should be economy in other Government expenditure, said Mr W. R._ Brown, president of the New Zealuand Society of Accountants, at the annual convention of the society in Wellington yesterday. Already the Government had indicated that it proposed reducing expenditure on less essential public works. In present conditions that was a step in the right direction and the action would be heartily endorsed by all members of the community who had the interests of the Dominion at heart.

In spite of the present heavy burden of direct taxation by way of income tax and social security tax. with which up to the present New Zealand had been loaded, it was inevitable that because of the advent of war still higher taxation would be imposed during the next few years, said Mr Brown. Everyone realised that finance for defence must be provided. but the question arose how much further could taxation be pushed without impairing the income from which it was drawn, and so reducing future taxable capacity. As the latest economic bulletin of the Canterbury Chamber of Commerce pointed out. for the present year the total budget taxation was estimated at £32.606.660. or almost exactly the same as the tax revenue of 1938-39. Yet two million and a half pounds of additional taxation had to be imposed in the year 1939 budget to bring the total up to the previous year’s figure. That indicated that the yield of taxation was already falling.

It was very doubtful, too. .whether the expenditure outlined in the 1939-40 Budget from the Consolidated Fund, the social security fund, and the public works fund, could have been covered from revenue and from borrowing of real savings, even had peace been maintained. Now that the Dominion was at war. and emergency needs must be met, the cause for drastic reduction in the expenditure estimated for the present year was urgent and pressing.