The Press THURSDAY, JULY 21, 1938. Holes in the Budget

Press, Volume LXXIV, Issue 22459, 21 July 1938, Page 10

The Press THURSDAY, JULY 21, 1938. Holes in the Budget

What many taxpayers will immediately look for in the Budget, introduced last night by the Hon. W. Nash, is not there. It contains no provision for the Government's social security measure. Moreover, there is no reference in the Financial Statement to the impending cost of these proposals. It follows, of course, that the present tax-year is to contribute nothing towards them; nor is this surprising. But a Minister for Finance may reasonably be expected to use the Financial Statement as a means of illuminating not merely the immediate present but the near future, especially when it is a future which present plans will powerfully affect. Mr Nash's financial arrangements for 1938-39 cannot be completely considered without reference to a scheme which his Government hopes and intends to launch in 1939-40; and his failure even to mention that a Budget of £-36,000,000 this year gives the measure of a Budget of, say, £45,000,000 next year is not to be excused on the principle of " Sufficient " unto the day." A wise and candid administrator of a nation's finances will both take and afford long views. It seems to have been Mr Nash's aim to shorten and restrict his own view and the views of his hearers. Connected with his reticence over the finances of social security is his reticence on the subject of taxation. More than once Mr Nash congratulates himself and the Government on the buoyancy of revenue. Once he mentions that the Government's increased expenditure has been "made " possible almost entirely as the result of the " expansion of the public revenues arising from " the increased prosperity of the Dominion," which may be construed as an admission that, if taxpayers can meet the demands upon them now, there may be a time when such demands will be impossible to meet. But nowhere does the Minister refer, even casually, to the weight of present exactions, to the problem of the weight that " social security " will add, to the possibility of relief in any direction at all, or even to the promised inquiry into the incidence of taxation, with a view to reform of the tax system. The cool assumption throughout the Financial- Statement is that high taxation is sane taxation, that higher taxation still may be faced without misgivings, and that there is no need to consider what will happen when " the expansion of the public revenues" is checked. This cool assumption is dangerous. It may be contrasted with Mr Savage's statements, three years ago, that taxation was already overdone and must not be increased and with his distinct promise to abolish the sales tax. Mr Nash's reticence extends to his tax estimates also. He estimates customs revenue £759,000 below last year's figure, certainly, but estimates sales tax lower by only £99,000. If Mr Nash were communicative, he would explain a confidence that seems not to be shared by the Economics Intelligence Service of the League of Nations. No tax reacts more quickly to changes of financial temperature than sales tax; but Mr Nash reduces the estimate only by a narrow margin to correspond with a slackening of importation. In his income tax estimate, also, this confidence appears. At £9,500,000 Mr Nash is budgeting for a yield considerably above last year's, even though that included £640,000 of arrears. The estimate may be correctly based on returns. It may not be so correctly assumed that by March next the collection of this huge sum will be made without difficulty. If Mr Nash had explained the grounds for his. confidence, while leaving himself a margin for safety, he might have seemed more prudent. But if the estimates are uncertain quantities and it can only be said that Mr Nash's optimism is unsupported and seems unwarrantable, there is no such uncertainty about the enormous and unreasonable confidence with which he opens public works estimates of £21,000,000, upon which we have something to say in another article, or upon the enormous silence which is his contribution to the economics of population and .immigration. Twice over the Minister had in his hand threads that led to this question; but he dropped them. He showed that the Government's housing programme is " seriously delayed " by shortage of skilled artisans and even of material. He declared that the country's development of manufacturing industrialism calls for an enlarged population. But he declined on both occasions to move on to any consideration of a policy to meet such needs and of the means of financing it. "Much is still to be done," said Mr Nash, "and the remaining problems will be faced " with the same resolute determination as has "characterised the Government's action up to "the present." The determination is less apparent than a certain degree of obstinacy, a certain degree of blindness, a certain degree of timidity, and a childish faith in the beauty and sufficiency of a system that raises an enormous revenue and spends it. An excellent illustration of this is to be found in unemployment finance. The Minister explains unemployment away to what his colleague, the Minister for Employment, calls "normal"; yet, with his problem disposed of, he goes on to add up the total in the Employment -Promotion Fund for the current year: £1,158,890 carried forward, from the current year's revenue—"£6,s3s,B9o available for 1938-39." Why this very large sum should be available at all, after his account of the conquest of unemployment, is one of the questions which the Minister for Finance leaves without comment and without answer. The Financial Statement is a deplorably incomplete document. It is full of obvious holes; but the one that gapes widest is the one that is to swallow up £37,092,000 of tax revenue—without social security.