The Auckland Star: WITH WHICH ARE INCORPORATED The Evening News, Morning News and The Echo. THURSDAY, APRIL 21, 1904 THE BRITISH BUDGET.

Auckland Star, Volume XXXV, Issue 95, 21 April 1904, Page 4

The Auckland Star: WITH WHICH ARE INCORPORATED The Evening News, Morning News and The Echo.

THURSDAY, APRIL 21, 1904 THE BRITISH BUDGET.

Tor the cause that lacks assistance, For the wrong that needs resistance, For the future tit the distance. And the good that toe can d;

It has been generally understood for \ some past that Mr. Austen Chamberlain's task of drafting his first p Budget would be by no means easy. s Early in the financial year it had become evident that Mr. Eitchie's estimates „ a were altogether too optimistic; and p there has been considera* le speculation j< as to how the new Chancellor of the Ex- p chequer could meet the impending de- p ficit. By generously cutting down the a income tax from 1/3 to lid Mr. Ritchie p reduced his revenue at a stroke by £8,- B 500,000; and the remission of the much- h debated corn duty meant a loss of at p least £2,000,000. But the estimated sur- Cl plus of nearly £10,000,000 would have t covered all this, if only Mr. Ritchie's v expectations had been realised. As it g has turned out, the reaction from the > artificial industrial activity of the war r , period has now set in; and according to ]i Mr. Austen Chamberlain foreign eompe- t'. tition has grown keener, while wages c have been reduced, employment has been s scarcer, and trade generally has fallen p off. While the resources of the nation n ■were thus contracting, it -was found that f the original estimate for the army was n too small by £2,700,000, the supplemen- n tary estimates for the navy reached t over £ 1,260,000, and arious half-for- g gotten items, such as the China Expeditionary Force, swelled the appropriations not contemplated by Mr. Ritchie to a somewhat portentous figure. In the *• end, the revenue was £2,729,000 below b the estimates; and the supplementary g estimates have brought up the total deficit to £5,415,000. It was to face this a deficit, with a falling revenue, and in- J dustrial depression looming in the near future, that Mr. Austen Chamberlain t had to frame his Budget, and even his l> political opponents admit that he has displayed both courage and ability in his t> first attempt to deal with the complicat- . ed problems of national finance. j. The most important fact about the Bi iget is that it is an honest effort to ? meet the debit balance out of revenue without adding to the country's finan- p cial burdens. As soon as this became s known, consols rose at once—a sure sign that the new Budget has im- 7 proved rather than injured the national .. credit. As to the means at his disposal j. for wiping out the estimated deficit, the rr Chancellor of the Exchequer had not ti much choice. The income tax, the wine. *' beer, and spirit duties, and the sugar tax ,j ( are already above the normal peace level; and the corn duty, which would t< have brought in at least £2,000,000, had ir already been vetoed by Mr. Balfour. It ' is easy to understand the ironical satisfaction with which Mr. Austen Chamber- S lain announced that the repeal of the t( corn tax, while proving more costly than ?. was anticipated, had not conferred the (.] expected benefit upon the consumer— — one more proof, if proof be needed, that si the assumptions of Free Traders as to ° the incidence of a corn tax and its effect [J upon the price of foods are misleading, n However, setting the corn tax a aside, only the income tax and indirect " taxes on luxuries were left for Mr- ~ Austen Chamberlain to manipulate. The p income tax is always a subject of heated © controversy, and there is a large class of electors in England who seem to believe that the income tax was invented only to be steadily reduced by each sue- p cessive Chancellor of the Exchequer. Af- *' ter the war closed, it was natural that ° some reduction should be attempted; jj but Mr. Ritchie's remission of fourpence, g while it conciliated the middle classes, a was a costly experiment. Th£ tax now a stands at 1/, which certainly compares very unfavourably with the level of Bd, i< at which it stood from 1895 to 1899. A i< shilling income tax in time of peace goes n very close to the danger limit; for the p falling off in the returns for last year showed plainly that the recuperative a powera of the country were seriously h strained by this heavy and prolonged , drain upon its resources. The revenue has lost its elasticity, and it is not like- c ly to recover during tho period of de- t" pression which the Chancellor of the Exchequer sees lowering immediately ahead. As for the other taxes, it is difficult to predict their probable result, d Tobacco in various forms already pays w over £10,500,000 to the revenue; while a tea, which is a luxury only in name, pays nearly £6,000,000. A rise of 2d ° in the tea duty may be a serious burden t to the middle and lower classes, with I whom tea is practically a nlcessary of i, life. Last year a motion to reduce the » tea duty from 6d to 4d was easily de- t feated; but now it has been raised to Bd. s< Probably the extra tax can be depended *■ upon to raise £2,000,000, as Mr. A. W Chamberlain expects; but the increase . in the income tax and the tea duty are ominous signs that the country has alt most reached the extreme point at which s revenue can hope to balance expendi- *' ture. I The financial position of Eng- n land as disclosed by the Budget can thus hardly be regarded ! 3 as reassuring. The Chancellor of the Exchequer appears to consider that the ( ing of commercial prosperity is i responsible his deficit. *Jut ' i=i more +- said for the view Sir Alicuue. Hicks-Beach that t the great danger to be feared by the t country is not sn it« lailincr !•▼- t

enue as its increasing expenditure. Within the last ten years the normal Government expenditure has increased with alarming speed. In 1894 it stood at £91,600,000; by 1899 it was £108,000,-----000; for 1903 it was about £130,000,000; and for this coming year it is estimated at over £142,000,000. This constant growth of public expenditure represents a very serious danger to the financial vitality of the country. In 1901 the then Chancellor of the Exchequer warned Parliament that if expenditure had been kept within due bounds, "no fresh taxation need have been imposed to meet war expenses, beyond reverting to what was in force in 1895." In the years 1900-02, about £34,000,000 of increased taxation was levied nominally for war purposes. But Sir M. Hicks-Beach has shown that the whole of this huge sum was really absorbed by the rise in permanent expenditure on peace purposes. While this reckless extravagance goes on it is hopeless to expect any radical improvement in the country's financial position- Unfortunately the estimates are usually criticised from the standpoint of party politics; and though Sir H. Campbell -Bannerman and Mr. Ritchie have honestly admitted that they approve of the new Budget, Mr. Haldane's comments are a sufficient indication of the exclusively partisan attitude taken up on such questions by many distinguished politicians. The debate on tn< Navy Estimates revealed the same nar-row-minded prejudice in favour of merely captious criticism, which is worse than useless when great national interests are at stake. It is possible that some good might be done by the proposed appointment j)f an Estimates Committee for the control of public expenditure; but every year it is becoming more urgently necessary to prevent the national expenses from mounting up at the appalling rate recorded in the Budgets of the last decade.