The Waikato Times. WEDNESDAY. SEPTEMBER 27, 1939 NEW ZEALAND'S “WAR BUDGET ”

Waikato Times, Volume 125, Issue 20920, 27 September 1939, Page 6

The Waikato Times. WEDNESDAY. SEPTEMBER 27, 1939 NEW ZEALAND'S “WAR BUDGET ”

New Zealand's reaction to the “war budget” announced in the House of Representatives last night will at first be relief that no greater call has been necessary. For the remaining six months of the present financial year the cost is estimated at £9.750,000. Of that sum it is proposed to raise in the six months period by additional taxation the sum of £2,408,000. The extra taxes are three pence a gallon on beer (£100,000), 15 per cent, on wine and spirits (£60,000), 25 per cent, on tobacco, cigarettes and cigars (£273,000), 15 per cent, on income tax (£1,440,000), 33 1-3 per cent, on death duties (£175,000), gold duty tax (£110,000) and a penny increase on postage (£250,000). Unexpected balances in the Defence, Public Works and other funds will be employed as far as possible, and for further revenue required power has been taken to borrow from the Reserve Bank. On the whole it may be said that the Minister of Finance has exercised considerable skill in arriving at the new taxes. The tax most likely to cause criticism is that imposed on incomes; the other levies are mostly indirect or less severe in their application. Income tax payers who are already aware of or are expecting much increased demands to be payable in February will find a further addition of 15 per cent, a heavy burden. It is last year’s income that will be subjected to the new tax, for, as Mr Nash said, the revenue is required this year. Increased levies on liquor and tobacco were generally expected, and in view of the country’s dire need there is not likely to be widespread objection to the other taxes. They are mostly collectable in small amounts, and generally those who cannot afford to pay will not find it necessary to do so. The spirit with which the additional taxes are paid, however, will depend to a large extent upon the vigour with which the Government approaches the task of effecting economies wherever possible and diverting expenditure from non-essential works to productive industries or definite war work. All the revenue derived from the new taxation, together with the unexpended balances of the Public Works and other funds, is to be paid into the War Expenses Account, from which all costs in connection with the prosecution of the war will be paid. In the first six months, however, it seems that no amount of economy in other directions will result in any reduction in taxation but rather in the amount of money it will be necessary to borrow. In addition to the power to borrow from the Reserve Bank to assist revenues for expenditure within the Dominion (all the new taxation is for that purpose), the Government has taken power to borrow up to £10,000,000 in Britain to meet war costs that may be incurred overseas.

In a general review of the new taxation, one outstanding aspect is the paucity of new fields for taxation, for the reason that before the calamity of war overtook the Empire, New Zealand had pledged its revenues seemingly almost to the limit for peace time purposes. The onset of this emergency has proved in an impressive manner the unwisdom of leaving so dangerously narrow a margin for special needs such as the present. Mr Nash told Parliament that he expected the cost of the war to New Zealand in the next full year would be from £20,000,000 to £30,000,000. That is a heavy task to face, but there can be no turning back now. New Zealand will face the ordeal unflinchingly and will pursue it to the end in the same spirit that has been displayed in Britain and throughout tne Empire.