Evening star., 1933-01-17

appears preferable to a great variety OF
discriminatory sales taxes, which are
just as much consumption taxes as a
manufacturers excise tax. 1t would be
levied at a low rate and imposed on
such a broad base as not to be truly
burdensome to any class of taxpayers.
1t is not a novel form of taxation, but
one which has given satisfaction in
Canada, where conditions are not
fundamentally different from ours, and
In Australia. The objections to 1t are
theoretical rather than practical. 1t Is
the most promising source of new reve-
nue. that We can turn to at this time
to assure the safeguarding OF the pub
lie credit. But, as far as I am con-
cerned, I would be glad to consider with
an open mind any other forms of tax
alton that might be suggested to bring
our budget into balance.
That the budget should be balanced
is not open to dispute. No matter how
good its credit, no government can
afford to go on living beyond its means
year after year. 1t Is demoralizing
Such a practice runs counter to the
fundamental principles that should
govern the management of the public
business. 1t is dangerous for public
servants to acquire the habit of spend
ing more than is currently available,
for it Is habit easily acquired, and
once acquired, not easily gotten rid Of
short Of disaster.
Reserve Is Exhausted.
But June 80, next, we will have
closed three successive fiscal years with
very large deficits. We will have more
than exhausted the reserve which we
set up in the days of plenty through
the retirement of public debt from
surplus funds No one can claim that
we have been hasty In imposing new
taxes in a period of depression. In
fact, during the course of the cam
paign the Treasury was severely criti-
cised for not resorting to additional
taxes at the very beginning Of the de-
preston. do not agree with that
criticism. But I do think the time
now come to effect the necessary econ
on1ieS and to make available the nee
essary revenues to put the Govern
ment's finances in order and the Gov
ernment credit on an unassailable basis
I believ that such a step would have
a most wholesome effect on our national
economy, and that the retirement OF the
Federal Government from the money
market as a constant seeker for new
funds would have stimulating effect
on the capital market, to which we
must look for the initial impulse toward
recovery.
The example Of the Federal Govern
ment cutting expenses and living with
in its income would set 6 standard for
governmental units all over this coun-
try struggling with the inevitable conse-
quences Of a decade of excessive bor-
rowing and extravagant expenditures.
From the standpoint of the Treasury,
balanced budget should permit large
saving in interest charges, not only
through the prevention of further
increase in the public debt, but because
it would enable the refunding on favor
able terms of bonds bearing high
rate of interest, and which by October
1888, will be callable in an amount not
far from $7000,000000 A lower
interest charge on such large volume
of Government securities would affect
longtime interest rates. Lower rates
and increased bond prices would stims-
late the capital market and create one
of the conditions essential to business
recovery. The goal is so definitely
possible OF attainment and the results
will be so beneficial in many directions
that one cannot help but be impatient
at the difficulties and delays and even
more impatient at the uncertainty.
Sinking Fund Disregarded.
May I add one more word I have
been discussing a budget balanced in
the sense that current revenues will be
adequate TO cover current expenditures.
Even so, the budget would not be bal
anced in the strict sense of the word,
since no provision would have been
made for the S440, ,0C0,0 due the sink
ing fund. This is unsatisfactory, but
must be tolerated under present condi-
tions. 1t would be intolerable, how
ever, II on top of our failure to meet
our sinking fund requirements we
should resort to such bookkeeping de-
vice as withdrawing certain items of
expenditure from the ordinary budget
and setting them up in the form of a
special budget to be covered by bor-
rowings. Such program has been dis
cussed 1t has been suggested that pub
lie building expenditures, for instance.
should be paid for not from current
revenue, but by borrowing, on the
theory that they constitute more or less
permanent improvements that can be
amortized over a period of years. It is
said that business corporations capital