Waterworks AccountsTM There is only one other point to which I want to refer in the estimates as printed. The change in the system of calculating the Colony's ordinary
• Defence Contribution has necessitated a change, essentially of a bookkeep- ing nature, in the accounts of the waterworks undertaking. Briefly in- stead of charging against the water- works a 20 per cent. of its gross revenue less debt charges as under the old routine that charge has been deleted and, to compensate, the part of the general rates credited in the accounts to the waterworks under- taking has been reduced from 2 per cent. to 1 per cent. The net effect
waterworks on the
finances is a difference of only a thousand or so dollars.
I turn now to the effects on the estimates as printed of the new war and the new financial proposals out- lined by Your Excellency.
"Let me take the war budget first. To it will be credited the whole pro- ceeds of income tax. Those proceeds will be used, first, to meet the costs of collection of income tax; secondly, to pay for the expenditure on local defence now appearing in Heads 6A, 6B and 6C, that is, the Volunteer Defence Corps, the Naval Volunteer Force and the Air Raid Precautions Department, thirdly to meet the additional expenses in vari-
necessitated by new ous directions
time services created to meet war necessities, e.g. maintenance of Ger- services, man internees, censorship etc.
war
Special Contribution
"The whole balance of the proceeds will be made available as a special contribution to His Majesty's Government, to be spent as they think fit, locally or at home. This will be entirely addition of $6,000,000 per annum which will continue to be a charge on the ordinary budget.
on
"The new expenditure on the Income Tax Department and special war expenditure will of course be duly authorized by this Council and estimates for those purposes will be submitted as soon as they can be prepared.
"Members will naturally want to know how this is expected to work out in figures. We are proposing a standard rate of Income Tax of 10%, with a possible surtax on very high incomes. I will explain later more of the detail, but the yield at 10% was put by the Taxation Committee; at about $10,000,000 per annum. I
no at present give
reliable estimate of the costs of administra- ! tion but they are likely to be only a small percentage. The local defence and war expenses are not likely to aggregate more than $2,000,000, per annum and the balance payable to His Majesty's Government should be of the order of $7,000,000 or $8,-| 000,000.
can
May Be Wrong
"I do beg, however, that nobody will hold these figures against me if they turn out wrong. There are no statistics whatever of total incomes in the Colony and we are compelled to do a lot of guesswork at this stage. Turning to the ordinary budget, we must reckon with increases in expenditure in many services not directly connected with the war. All supplies, for instance, are likely to
2
our
cost more; unfortunately as we are so dependent on imports we can do very little to prevent prices rising. Revenue on the other hand, is likely to suffer by the reduction in swollen population which has recently begun and which is so wel- come on general grounds, and by the reduction of luxury expenditure which Your Excellency has urged and to which payment of income tax will itself contribute. Accordingly, even if there had been no intention to make any special contribution to His Majesty's Government I should have proposed some increases of taxation in order to provide ourselves with some margin of reserve. That mar- gin is secured by the proposals Your Excellency has described, the effect of which is as follows.
"On the expenditure side the or- dinary budget will be relieved of the costs of the Volunteer forces and Air Raid Precautions, estimated in the printed volume at about $1,800,000
for 1940/41. On the revenue side the ordinary budget will benefit by re- ceipts from other new taxation re- ferred to by Your Excellency, prin- additional cipally the imposition of duties on petrol, and liquor.
"These proposals are not put for- ward mainly with a view to increas- ing the revenue but for purposes connected with foreign exchange policy which I will explain more fully in a few minutes. The addi- tional taxes are designed deliberately to check consumption and cannot be expected to produce a proportional amount of revenue.
"The revenue will also benefit à little by steps which have been taken or are in contemplation to implement certain minor recommendations of the Taxation Committee.
"School fees are being increased as from the 1st January, fees for main- tenances in hospitals are being re- vised, especially for Government servants, and discussions are in train with the object of securing the pay- ment of royalties by certain public utility companies as recommended by the Committee.
"In all the additional revenue, mainly of course from the petrol and liquor duties, should be not less than $1,000,000 per annum.
The revised ordinary budget should therefore show a nominal surplus of some $2,000,000, but since it is not proposed to make any specific amend- ments to allow for declines in other items of revenue and increases in costs of supplies etc. that nominal surplus will be rather a reserve than a true expectation of excess of re-
venue.
Income Tax Details
"I promised a few minutes ago to give some further details of the In- come Tax proposals; but the figures I shall quote must be taken
às pro- visional only. Although Government is convinced of the necessity of such measure in principle, there is no in- tention to thrust upon the Council a scheme cut and dried in all its details, and all the personal and other al- lowances will be open to full discus- sion in this Council or in any special committee which may be set up to consider the details. Honourable members and the public will, how- ever, wish to have some idea of what is in Government's mind on those points.
"The standard rate of 10% will be charged on all company profits, pay- ments of interest, etc. and on all in- come in respect of which the recipient has made no claim to personal and family allowances; but the man who makes such a claim will pay at 10 only on the balance of his income after deducting his allowance and after paying at half rate, 5%, on the first part of his taxable income
48
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