£80,000.000 IN TAX REDUCTIONS

Press, Volume LXXXIII, Issue 25161, 17 April 1947, Page 7

£80,000.000 IN TAX REDUCTIONS

The Government intended resolutely to adhere to the “cheap money” policy, which, since 1945. had saved the tax- ■ payer about £40,000,000 a yea.' on I direct Government borrowing alone, | and still more substantial benefits : were expected in tutuie. Income taxpayers would get modest i relief on earned income. The relief ' would be increased from one-eighth , to one-sixth, lifting the maximum relief on which no taxation was paid j from £l5O to £250. The duty would also be removed from fuel oil and gas oil, and the purchase tax would be reduced on linoleums and similar floor coverings, and some sports requisites. Excise duty on artificial silk would be repealed from May 1, which cost £2,250,000 in a full year. The purchase tax could not be much further reduced. The best silk stockings would be added to the range of tax-free utility clothing. Total Customs and excise tax reductions would cost £9,000,000 in a full year, and £8,000.000 this year. The total cost of income and other tax reductions would be £96.000,000 in a full year, and £80.000,000 this year. Revenue, on the existing basis of taxation, would be: Customs and excise, £1,300,000,000, inland revenue, £1,676.000,000, including £1,150,000,000 from income tax. The total revenue would be £3,429,000,000, giving a prospective surplus of £248,000,000. Dr. Dalton said he had carefully considered a tax on betting, and had decided that it would not produce substantial revenue. He had, therefore. decided to look for revenue from well-tried taxes. The dependant relative allowance would be maintained

at £5O, but it would not disappear until the relatives’ income reached £l2O a year. The child allowance would be increased from £5O to £6O, the pre-war figure. These two adjustments would cost £62,000,000 in a full year, and would altogether relieve 750.000 taxpayers from paying income tax. They would noticeably reduce the tax on 1.000,000 others. The Chancellor said that the effect of the income tax concessions on a single man would be that he would pay no tax until his earnings reached £2 12s a week, and he would not pay the full standard rate until his earnings exceeded £5 10s a week. A married man with two children would pay nothing until his earnings were more than £7 a week. He would pay the full standard rate after he earned. £9 18s a wek. The changes in the pay packets would operate from July 7 and would be retrospective to April 6. The estimates for 1947-48 were: Expenditure. £3,181,000.000. which was £729,000,000 less than the actual expenditure in 1946-47; defence expenditure, £899,000,000 (£754.000,000 less), and a further substantial reduction was expected in 1948-49. Education would cost £29,000,000 more than in 1946-47. Universities would cost £12,000,000. which was more than five times the pre-war figure. The Government wanted the universities within 10 years to double their pre-war number of students. The cost-of-living subsidy would be £425,000.000. which would be £50,000,000 more than previously. Dr. Dalton said: “This is a most formidable total, which has grown very rapidly. We must now consider whether we can face further increases in the total cqst of these subsidies.”