BRITISH BUDGET CHEERED BY LABOUR

Bay of Plenty Times, Volume LXV, Issue 12307, 22 April 1937, Page 3

BRITISH BUDGET CHEERED BY LABOUR

“BRILLIANT SOCIALISM” TOTAL EXPENDITURE FOR YEAR £862,848,000 NEW TAX ON COMPANY PROFITS .London, April 20. The Australian Associated Press political corespondent says that, with characteristic orthodoxy, Mr Neville Chamberlain, Chancellor of the Exchequer, began surveying the revenue and expenditure when presenting the Budget statement before an unexpectant and unexcited House, but his speech had only three-quarters concluded when the House, excepting the Labour members, were so stunned that the Government Benches could not utter a cheer.

The general verdict was that, excluding meat duties, Mr Chamberlain’s Budget was “brilliant Socialism,’’ which Labour members vociferously confirmed by repeated cheers. Several of them afterwards said their own party could not have introduced a better Budget. The national defence contribution tax was a well-kept secret. Conservatives unhesitatingly express the opinion that their Prime Ministerelect has imposed a drastic tax on industry, the repercussions of which will lie widespread. They consider the measure marks a substantial advance towards redistribution of capital. Government supporters were alarmed and the Socialists jubilant over Mr Chamberlain’s declaration; “I believe I have created a flexible instrument easily adjustable to changing conditions.’’ Government members fear that if Labour comes to power it will use this as a precedent for a capital levy. The Budget was presented in the House of Commons to-day by the Chancellor of the Exchequer, Mr Neville Chamberlain. Mr Cl r.mberlain said the actual Budget deficit was £5,597,000. But for excess defence expenditure of £B,600,000 he would have ended the year with a formal surplus of nearly £2,250,000 after providing over £13,000,000 for redemption of debt. Income tax fell short of expectations by £1,750,000, which was significant in view of the argument that he could have had the money needed without fresh taxation if he had been more optimistic. The total realisable revenue was £797,289,000, an increase of £44,369,000. Customs and excise exceeded the estimate, and stamp duties yielded a record figure, but surtax was disappointing, showing a drop of £3,000,000.

The Post office was expanding remarkably. He considered these results were extremely satisfactory and an indication of expanding trade and an increase in the national purchasing power. Among the notable increases were spirits, beer, tobacco and oil. The low cost of Treasury issues saved £20.000.000. He proposed to keep the old figure of £224,000,000 as fixed debt charge and intended, as a precaution, to take power to borrow for a statutory sinking fund. The total expenditure for the coming year, excluding self-balancing items, was £862,848,000. It is expected that the Coronation will increase Customs and excise by over £12,000,000, compared with last year. The estimated revenue for the coming year was £847,950,000, leaving a prospective deficit of £14,898,000. He expected an income tax increase of £18,000,000. and surtax £4,500,000, and intended to propose two measures to defeat avoidance of taxation, one dealing with one-man companies, which would be made retrospective for surtax for the year 193530, and the other would deal with “bond washing,’’ whereby securities sold at a price covering accrued dividend would be bought back ex-divi-dend at a lower price. Income tax would be increased 3d. License duty on male servants would be abolished. New legislation necessary in connection with the Ottawa agreement would include reducing preferential .duties on silk stockings from the Empire. The duty on imported hops would be continued for four years. Income tax allowances would not be changed as a succession of new taxes would only cause a maximum of disturbance. He aimed at expanding the source of revenue. The increase of 3d in the income tax would yield £15,000,000 in a full year, and £13,000,000 in the current year.

He announced a tax on business whose profits exceed £2OOO a year. r fhis could be described as a national defence contribution. The standard of calculating the new tax will be the profits, or capital employed. Where the profit standard is adopted it will be on profits for the years 1933-34-35, the charge being on the amount of increase in profits. Thus, on profits to 6 per cent the charge will be nil; between 6 and 10, one fifth of the gross; between 10 and 15, a quarter; above 15, onethird. Losses since 1933 will be offset against profit. Where capital is the standard adopted, the tax will be on profit in the case of a company in excess of G per cent, and individual firms 8 per cent. - The Chancellor expected profits to continue to increase for some time, and anticipated that the tax would yield £2,000,000 this year, and between £20,000,000 and £25,000,000 next year. The Chancellor said he felt no apprehension at any possible failure in revenue. It would be admitted that the Government had played a large part in trade revival. He estimated that the increased income tax, the profits tax and the abolition of “share washing” would produce a total of £15,150,000, resulting in an estimated surplus of £252,000. The profits tax would end with the completion of the rearmament programme. Labour members loudly cheered the announcement of this tax. Mr Chamberlain concluded by stating that he had increased the taxation method, which he trusted would check speculation or foolish activity that destroy or imperil the present upward trend of national welfare. Rugby, April 20 In the House of Commons, the floor and galleries of which were packed, Mr Neville Chamberlain opened his sixth and what is assumed to be his last Budget before-as-suming office as Prime Minister. Normal public interest had been brought to a high pitch by the great increases in expenditure associated with the defence programme, and the expectation of inevitable additional taxation. The Chancellor of the Exchequer prefaced his review of the past year and his explanation of his proposals, which lasted just over 60 minutes, by recalling that the national finances must, for several years, be dominated by the over-shadowing feature of vast defence expenditure. He announced an increase of income tax to a rate of 5s in the £, but no increase in indirect taxation. The total revenue from income tax surtax and death duties together fell short by £5,750,000 of his expectations, but on the other hand stamp duties yielded £2,000,000 more than was estimated, at the record figure of £29,140,000. Reflecting activity in the Stock

Exchange, Customs and excise gave £ 3,250,000 more than was estimated due, in part, to new duties on beef and veal imposed at the end of December. He reminded the House of the balance which the Government had already indicated it desired to see preserved between borrowing and raising by taxation the large additional sums required in the years ahead for defence expenditure, and therefore of the longer view than usual which he, as Chancellor, had had to take in his Budget to obviate repeated changes in taxation. Mr Chamberlain also described his search for a device capable of growth but which would not hear unfairly on various classes upon whom the burden of his other increases last year and this had fallen, and said that it had seemed not unreasonable to him that growth in business profits should be made the occasion of some special and temporary contribution towards the cost of national defence. Huge Expenditure The main items in the Budget are: £ Total expenditure in the coming year . . 862,848,000 Total estimated rev... 847,950.000 Realisable revenue . . 797,289.000 Realisable revenue increase . . • 44,369,000 Income tax increase of , 3d expected to yield 15,000,000 Estimated surplus . . 252,000 Low cost of Treasury issues saved . . 20,000,000 Coronation Customs & Excise expected to yield . . . . 12,000,000 Income tax last year , fell short by . . 1,750,000 New tax on business profits in excess of £2OOO as national defence contribution, to end on completion of armament programme, expected to yield next year between £20,000,000 and £25,000,000. Profit Tax Rugby, April 20 Mr Chamberlain said that the national defence contribution would be payable, in respect of the growth of profits, by all persons engaged in industry, trade or business of any kind, but not professions, whose profits in any year exceeded £2OOO. In reference to the Exchange Equalisation Account, the Chancellor said its operations must still be wrapped in mystery, but he gave the assurance that it still showed a profit. In concluding, Mr Chamberlain addressed himself to the question of the country’s ability to carry the vast burden which the pressure of rearmament imposed. He expressed confidence in the continued expansion of revenue corresponding with an orderly and regular advance of general prosperity. A great world disturbance would disappoint that expectation, but the British Government would continue to use its power and influence to avoid such a disaster. He claimed that his proposals were well designed to exercise a steadying effect in the present phase of recovery. He had avoided on the one hand a large increase in taxation, which would have been necessitated bv attempting to defray,. without borrowing, the full cost of rearmament, and which would have checked and perhaps even reversed economic revival.