“BURDEN ON BUSINESS”

Press, Volume LXXXVII, Issue 26394, 12 April 1951, Page 7

“BURDEN ON BUSINESS”

Closing Inflation Gap

Rec. 10.30 p.m.) LONDON, April 11. The upshot of the Budget, according to Reuter's financial correspondent, is that the business and upper and middle classes will carry most of the burden of closing Britain's inflationary gap. The Budget aimed to release goods for export and defence by taxing these sections of the community and so reducing their consumption and investment.

“The burden on business Is severe,” the correspondent says, "Total taxation on dividends rises from 62 per cept. to 74 per cent. The stoppage of the present 40 per cent, initial depredation allowance on new plant and machinery will deprive business of £ 170,000,000 for new capital equipment and will mean that engineering goods that business will not be able to finance will go to swell supplies for exports and defence.

"A motor car, which now costs £991, will from to-day be priced at £1122 because of the doubled purchase tax.

'"Hie Chancellor is little concerned with the Budget surplus which] he estimated will slump from £720,000,900 in 1950-51 to only £39,000,000 in the present Budget year. His main concern is to take away the amount of income in excess of available goods. If this extra money chases goods which are not there, it either pushes up prices in an inflationary spiral or else takes goods away from exports and defence. He estimated this inflationary gap at £169,000,000 by imposing £129,000,000 m more taxes and also expects the higfier tax dividends will make comBantes8 antes gave an extra £30,000,000 at >e expense of their dividends. The tax changes will yield next year £250,000,000 more than this year, so in one sense the Chancellor not only closed the inflation gap for this year, but has also gone some way toward covering next year's further inOOOfiM represents i stoppages of initial allowances which wii] reduce companies' savings by the same amount." No Praise There is hardly one kind word for the-Budget from companies and organisations hit by the increases in taxation. The National Union of Manulacturers said that from the British manufacturers’ point of view it was a Budget of discouragement. The Federation of British Industries thought the increases in the profits tax and income tax meant tne resources of industry would be depleted at the very time when rising price levels called for increased working capital. The British Rpad Federation thought the extra petrol tax would result in another rise in living costs—only 16 per cent, of motor fuel consumption is used for pleasure purposes. The remaining 84 per cent, is devoted to commercial, industrial and business purposes. An official of the London Transport Authority estimated that the extra tax would add £630,000 annually to the organisation’s fuel billThe Society of Motor Traders and Manufacturers said it was astounding that so soon after the 66 2-3 per cent, tax on higher priced cars was removed it should be imposed on all cars. While the immediate effect will be on the Home market, the doubling of the tax will adversely affect the export market, particularly for the more expensive ears, which must have an adequate Home outlet If their cost overseas is not to be prohibitive, Brewers regretted that the Chancellor had nof reduced the beer duty. Beer consumption has fallen in five years and will probably continue to fall unless we have an exceptionally long, hot summer."

Even those who benefited under the Budget could not find a kind word for Mr Gaitskell. The National Federation of Old Age Pensioners said: “It is not enough. We are very disappointed, We were after £3 a person and will not be satisfied with anything lew-

Cinema owners thought the Budget a b?g blow, especially to the small exhibitor, "We already pay 38 per cent, of our admission receipts in tax against 8 per cent paid by stage theatre?. Racecourses, speedways, and greyhound tracks thought the new tex would be a death blow to eome smaller ventures. As a last unkind word, the Income Taxpayers’ Association said: "This is a Budget without a redeeming feature. On no section can there be favourable comment.”