Wairarapa Times-Age FRIDAY, MAY 1, 1942. FINANCING THE WAR EFFORT.

Wairarapa Times-Age, 1 May 1942, Page 2

Wairarapa Times-Age FRIDAY, MAY 1, 1942. FINANCING THE WAR EFFORT.

TX a number of ways financial, history was made in the House of Representatives last evening. The Prime Minister (Mr Fraser) broke away sharply from precedent both in. presenting an emergency financial statement at an abnormally early date and in the magnitude of his proposed figures of revenue and expenditure. All that is unusual in the course thus taken finds its adequate explanation, however, in the overshadowing gravity of the Avar crisis by which the Dominion is confronted.

Mere routine rules of procedure count and should count for little in times like these and it may be supposed that the Government will be commended unreservedly for taking action at the earliest possible moment to budget for a year of unparalleled Avar expenditure. A.ll of us should be able to agree that the financial effort the Dominion is called upon to make is the greatest of which it is capable, and that we should be prepared to bear cheerfully Avhatever burdens and sacrifices are entailed.

There is of’ course* no (|iiestion oi discussing .in detail, at short notice, proposals like those submitted by Mr Fraser last evening. It may be seen at a glance, however, that with an estimated war expenditure of £133,000,000 to be met this year —much more than double what was spent under the same head last year—drastic measures are inevitable and that some of these measures must be rough-hewn. In existing circumstances financial methods are permissible which in normal times would be ojien to very serious criticism indeed. As the Leader of the Opposition. (Mr Holland) >. observed last evening, there is no question that the country must meet its Avar obligations in equipping its lighting forces to the highest possible standard and. in other respects and the only question, that will call for consideration is whether the best and most equitable methods of meeting these obligations are being adopted.

Much interest—some of it rather painful interest —naturally will centre in the new taxation proposed. The principal .items are an increase in income supertax from 15 per cent to 33 .1-3 per cent, an addition of (id in the pound to the national security tax, the doubling of the sales tax on. some commodities (making in these instances a total impost of 20 per cent), additional duties on beer, Avine and spirits—the amended duty on beer involving the interesting experiment of an attempt to secure a. reduction in the alcoholic content of that beverage, and increases in tobacco duties (fivepenee per ounce on tobacco and 2d per packet of ten cigarettes).

None of these imposts will in themselves be popular and fault could be found with some of them in analytical criticism. No one is likely to hold, however, that the total amount of war taxation to be raised in the Dominion this year is more than it ought to be. With some £3,000,000 derived from revenue surpluses, the total sum to be drawn from revenue sources—about £4l,ooo,ooo—will amount to well under one-third of the war expenditure for the vear.

As regards internal financial adjustments, there have been some reductions in ordinary annual expenditure and in developmental expenditure, and more reductions under the second of these heads are promised. Additional payments are to be made also to pensioners, civil servants and the dependants of soldiers to offset the Latest increase in award wages made by the Arbitration Court. In themselves these payments may be regarded as helping to remove anomalies and injustices; The total policy of increasing monetary payments needs to be considered, however, in light of facts mentioned by the Prime Minister last evening—briefly that in a period in which the available volume of consumers’ goods and services has fallen by 30 per cent,, while some incomes have been reduced, there has been an increase of over ton per cent in the spending power of the community as a whole. War saving on a great scale becomes in these circumstances one very necessary means of helping to avert inflation.