Wairarapa Times-Age FRIDAY, JUNE 28, 1940. “WE MUST GIVE ALL.”

Wairarapa Times-Age, 28 June 1940, Page 4

Wairarapa Times-Age FRIDAY, JUNE 28, 1940. “WE MUST GIVE ALL.”

TN the Budget presented to the House of Representatives as evening by the Minister of Finance (Mr Nash) unexamplec demands are made upon the taxpayers of the Dominion. weß'lit of the taxes proposed —taxes which include a net < additional impost of Is in the pound on all incomes the grease of the sales tax from five per cent to ten per cent a J IC ] ‘ increases in income taxation and m death and gift duties make themselves felt, and felt heavily, in every household n the land, but in the supreme emergency by which we aie co fronted the imposition even of burdens that otherwise won be intolerable may be not only justified, but no doubt must be regarded as inevitable under a policy of sound financial a - ministration. It is entirely right that a free people should draw unsparingly ppon their material, as well as then huma resources in preserving and defending their freedom.

Acceptance of the heavy call it makes on national resources for the prosecution of the war does not mean of necessity that every detail of the Budget will or should command approval. Some of the methods by which additional revenue is to be raised—notably the increased company taxation and the doubling of the sales tax—are obviously open to criticism, it is true that in a time like the present it may be very necessary to distinguish between what is desirable and what is practicable, but there are details of the Budget, with regard both to forms and methods of taxation and to continued heavy expenditure out of revenue in other than war categories, and from borrowing on public works of various kinds, which are not obviously capable of being justified and demand at all events a closer analysis and examination than can be attempted "on a hasty first reading.

In other leading features, however, the Budget to a considerable extent is on right lines. The Finance Minister observes that “the Government’s policy for financing the national effort on the war front and the “home front” may be concise y slated as to tax to the economic limit for war purposes and to borrow for essential productive works and for any balance of war requirements.” An effort is to be made, not only to u , ? to the limit in meeting from current revenue that part of the national war costs which arises within the Dominion, but to pay as we go some part of our oversea war costs by establishing for that purpose a surplus of exports over imports. As Mr Nash observes, we can only do this by reducing our imports and consuming less goods. Additional internal taxation, oi internal borrowing, of course would be necessary to make any export surplus available for meeting oversea war costs.

Of the new taxes to be imposed, that which will make itself most widely felt is the national security tax of Is in the pound on all income, calculated on the same basis as for social security. This tax will be paid by every wage-earner, as well as by those who receive any other kind of income, and is, of course, entirely separate and distinct from the social security tax of equal amount which will continue to be paid. In the conditions now existing, the national security tax, which is estimated to yield £6,000,000 for the remainder of the current financial year and therefore some £8,000,000 in a full year, probably is the fairest as well as the most effective method that can be adopted of raising the revenue needed for the prosecution of the war.

As a direct impost, the national security tax cannot be passed on and will not enter into production costs or operate to raise prices, unless, indeed, it becomes the basis of a demand for increased money wages. The tax will provide a large body 'of revenue that could not well be raised in any other way- H is accompanied by increases in income taxation which will fall with great severity on all whose incomes are above a very moderate amount and will approach total confiscation in the case of large incomes. This is made apparent not only in the forecast of proposals to transfer to the State the whole of any excess profit made during the war period, but in the provision that is being made to ensure that the total effect of income tax at the “unearned” rate, social security charge and national security tax shall not be more than 17s 6cl in the case of any one pound of income.

In dealing with income tax, the Budget raises to 2s 6d in the pound the starting rate which was raised from Is 8d to 2s in September last, provides for step increases of 3d in the rate on each succeeding £lOO of taxable income, and then increases the tax by 15 per cent. Company taxation also is increased heavily and the effect evidently must, be in some measure to handicap production and trade. Death and gift duties also are raised substantially.

Whether or not it must be regarded as inevitable, the doubling of the sales tax, which is to be raised to the high figure of ten per cent, is one of the most regrettable ol: the adjustments provided for in the Budget. In spite of the measure of exemption provided, the sales tax is most inequitable in its incidence and presses unfairly on people of limited means. The lax at the same lime is a direct and definite penalty on those branches of trade, many of them highly useful and necessary, to which it applies.

While it embodies details that ought Io be subject to reconsideration, the Budget in its main effect, as providing for the sacrifices that are essential in order that the war effort of the Dominion may be a charge as far as possible on current production, must be accepted in a spirit of philosophy. Il is impossible to do anything else than agree with the Finance Minister that: “In the meantime work and service are the test, and (ill the present struggle ends will remain the test. We must give all.”