ENG-1958 — Page 75

PUBLIC FINANCE AND TAXATION

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April to 31st March. Revenue and Expenditure since 1st April 1954 have been as follows:

Revenue $ mill.

Expenditure

Surplus

$ mill.

$ mill.

1954-5 ...

434.4

373.3

61.1

1955-6 ...

454.7

402.5

52.2

1956-7 ...

509.7

469.5

40.2

1957-8 ...

584.2

532.7

51.5

Deficit

554.1

648.1

94.0

1958-9 (estimate)

=

It is especially noteworthy that these surplus balances have been accumulated despite the fact that all capital expenditure, other than a small amount which was met by an increase in public debt (see below), was met from revenue. For example, in the years 1956-7 and 1957-8 the contribution to capital expenditure from recurrent revenue collected in those years was $103 million and $102 million respectively.

The principal reason for these results, which are on the face of them so favourable, is that the exceptionally rapid increase in population during these years generated internal economic activity which substantially raised the yield of taxation without an increase in the rates of taxation; whereas there was an inevitable time-lag before the Government could develop the public and social services necessary to meet the requirements of the increased population. Since 1950-1, when the last significant increase in tax rates was made, revenue has increased from $291.7 million to $584.2 million in 1957-8. The rate of increase in revenue has been affected by variations in such factors as the economic situation and capital inflows, but the upward trend is unbroken. On the other hand, refugees form a large part of the increased population and it seems certain that the growth of the national income has not kept pace with the growth of population. As the development of public and social services has accelerated, the margin between recurrent revenue and expenditure has tended to narrow: for example, the proportion of the latter to the former was 50% in 1952-3 but had risen to 70% by 1957-8. There is even now a fair margin between them, but the Colony still faces a formidable programme of expansion of public and social services and a vast public works programme to meet the needs of the present population.

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