CANADIAN BUDGET

Wairarapa Times-Age, 1 July 1942, Page 4

CANADIAN BUDGET

NEW & HEAVY SACRIFICES REQUIRED CALL ON TAXPAYERS. REFUND AFTER THE WAR. ’OTTAWA. June 23. The Hon J. L. Ilsley, Minister of Finance, tonight presented the Canadian fourth wartime budget. From every Canadian taxpayer it called for new and heavy sacrifice. "All equipment and materials that we can possibly spare,” the Minister urged, “must be used in this bitter conflict for victory. The savings we make now will be available after the war. We then can replenish our wardrobes, build our houses, and take more leisure knowing that not only will we be increasing the comfort and vitality of our families but we will be providing work and pay for thousands of people who will come out of the armed services and war industries to earn their livelihoods once more in civilian industry. By all means let us have a new world after the war. It will not come from speeches and laws. We must work and save for it and for victory now.”

The immediate budgetary problem was to meet an estimated gap for the present fiscal year of 2,228,000,000 dollars on the basis of present taxation, as between estimated total revenues of 1.672,000,000 dollars and expenditures of 3,900,000,000 dollars. Mr Ilsley proposed higher income taxes, an increase in the Excess Profits tax from 75 to 100 per cent with 20 per cent refundable after the war, increased excise duties on alcoholics, tobaccos, soft drinks, playing cards, transportation, pullman berths, long distance telephone calls, telegraphs and cables, and furs. He struck at luxury goods with a new 25 per- cent tax. Dance halls, night clubs and cabarets have to face a new 20 per cent on all charges paid where any two of the following features are combined: Dancing by patrons, sale of alcoholic beverages, or entertainment by paid performers. The additional duty on imports of whisky, brandy, rum, gin and all other spirituous liquors is increased from 3 dollars to 5 dollars a proof gallon. The additional duty on imported wines of all kinds, except sparkling wines containing not more than 40 per cent proof spirit, is increased from 32L cents a gallon to 42i cents a gallon. The additional duty on imports of champagne and all other sparkling wines is increased from 1.25 dollars to 1.75 dollars a gallon. The additional duty on imported ale, beer and porter stout is increased from 9 to 30 cents a gallon. The actual increase under the present budget is 9 cents a gallon. The former duty of 12 cents a gallon addressed under the Excise Act is now transferred to the customs tariff.

Apart from changes in rates the budget introduces new features in income tax. The National Defence Tax will be combined with the ordinary income tax and designated as ordinary income tax with the 5 per cent rate increased to 7 per cent. The rate will be 8 per cent .for single persons receiving an income between 1,800 dollars and 3,000 dollars a year; 9 per cent where the income of single persons is above 3,000 dollars. Gradulated income tax also is substantially increased. Normal tax and a large percentage of graduated tax will be deducted at the source on salaries and wages commencing in September. Persons not having their tax deducted at the source will be required to pay on a quarterly instalment basis. The age limit for dependent children will be reduced from 21 to 18 years unless they arc attending school or the university. A substantial portion of the new taxes payable will be refunded after the war with 2 per cent interest. This refundable portion is termed “minimum savings requirement.”

How the new taxes work out may be illustrated. A married man without children with an income of 2,000 dollars a year now pays a tax of 175 dollars. Under the rates proposed he is liable for a total amount of 431 dollars of which 231 dollars is tax and 200 dollars is refundable after the war. A married .man without children earning 4,000 dollars a year now pays 675 1 dollars tax. Under the new rates he is liable for tax of 964 dollars with an additional minimum savings requirement of 400 dollars. Mr Ilsley estimated the increased revenue resulting from the budget proposals at 378,000,000 dollars which, added to the 1,671,000,000 dollars estimated revenue from existing taxes gives a total estimated revenue of 2,049,000.000 dollars. With estimated expenditures of £3,900,000,000 dollars this leaves a budgetary deficit of 1,850,000,000 dollars which will have to be covered by borrowing. “On these estimates,” Mr Ilsley observed, “we shall have paid something more than 52 per cent of cur expenditures out of revenue.” “Events of the last few days,” he concluded, “must surely have had a sobering effect. This i,s no time for airy over-confidence. Events in China, the Ukraine, the Crimea and Libya do not these convince us that the war may not be won this year; may not be won for many years? It was not recklessly that Germany and Japan brought the United States into the war as they did. What foolish statements we have made. Not long ago how often was it said' that Hitler was a madman irrationally running headlong to destruction; that Japan was committing hara klri? Alas, there seems to have been nothing irrational, nothing intentionally suicidal about the plans of our enemies. These aggressor nations prodded the United States into the war because they were convinced that they could nevertheless win in 1942, Do Canadians realise how critical the situation is at this moment in Russia, China and the Middle East; and how critical it may # be elsewhere before long. I believe that now they do; that their individual desires for gain, ease and advantage are submerged in the nation’s will to win. In this belief I present this budget to the Canadian people. ;