The Auckland Star: WITH WHICH ARE INCORPORATED The Evening News, Morning News The Echo and The Sun. FRIDAY, APRIL 28, 1933. BUDGET POLICIES.

Auckland Star, Volume LXIV, Issue 98, 28 April 1933, Page 6

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

FRIDAY, APRIL 28, 1933. BUDGET POLICIES.

For the cause that lacks assistance, For the wrong that needs retistanc*, For the future in the distance, Ami the good that ins can do.

New light is thrown on Britain's Budget policy by the statement of Sir Herbert Samuel in tho Commons debate. In approving of the Chancellor's refusal to scale down income tax the Liberal Leader told the House that any large tax concessions at present would prejudice the delicate war debt negotiations with the United Stages. Little has been said of these discussions, and the reticence observed is in significant contrast with the heated controversy prior to last December's payment. Five months ago every effort was being made to convince America that insistence upon payment would upset the exchanges and hamper trade, thus aggravating the troubles on both side of the Atlantic and delaying economic recovery. America remained unconvinced, and remains so to-day. Except to the most enlightened American observers, the picture of a Britain with Budget almost balanced does not suggest a nation needing urgent relief from her obligations, at the expense of a creditor who is struggling with a colossal deficit; and the suggestion of prosperity would bo heightened by remission of taxation. So it would bo a tactical blunder, according to Sir Herbert Samuel, to make such remissions now. One may wonder whether it does not occur to Sir Herbert that the very making of this point in public is itself a blunder. Yet it has been urged strongly upon the Government that there should be immediate relief. Mr. Keynes, who is one of the leading advocates of change in Budget policy, has argued that the present method in the long run defeats itself because it balances this year's Budget only by unbalancing the next, and leaves the taxpayer weakened to such an extent by heavy imposts that he will not be able to continue payments on the present scale. The alternative, .argues Mr. Keynes, is to cover all capital expenditure by borrowing, and to reduce taxation. This would produce a double benefit. In the first place, it would leave more in the pockets of the people to be spent in other directions, and in the next step it would give employment for capital now lying idle in tho banks. Borrowing rates to-day in Britain are unusually low, and this makes it possible for the Government to borrow at small cost. Further, the expenditure of capital in this way would open up new avenues of employment, would case the burden on the unemployment funds, and would give a stimulus to industry. The new programme has won the support of a large body of economists at Home, over thirty of whom recently wrote to "The Times" backing this idea. Mr. Chamberlain, with one eye on America, judging by what Sir Herbert Samuel says, may have been unable to consider it freejy on its merits. He felt impelled to follow the methods of orthodox finance, balancing the Budget on the basis of funds within sight and nursing Britain's financial reputation overseas. He may, however, feel freer when the World Economic Conference is over. '