The Dominion WEDNESDAY, APRIL 27, 1921. THE BRITISH BUDGET

Dominion, Volume 14, Issue 181, 27 April 1921, Page 4

The Dominion WEDNESDAY, APRIL 27, 1921. THE BRITISH BUDGET

Public opinion in the United Kingdom may or may not endorse the assertion of the London 1 imes that Mil. Austen Chamberlain s final Budget is “a- blunder of the first magnitude/’ It is plain, however, that with the trade prosperity of a year ago replaced by severe depression, nothing short of absolute necessity can justify the Bullish Government in maintaining expenditure, and the taxation required to meet it, at the high level now proposed. Although in its totals oi revenue nnd expenditure the cuirent Budget shows an appreciable reduction on the figures of a year ago, the actual position is that the overburdened taxpayer is given no relief. The Excess Profits Duty is to be suspended as from March 31 last, but, as a leading commercial authority observed not long ago, its suspension has been delayed until the earning of excess profits in nearly, if not all, trades has practically ceased. This fact and others must lie borne in mind in comparing the estimates of revenue and expenditure for tlio current year with the figures of last year. The actual revenue and expenditure in 1920-21 ancUthc estimates for this year are shown in the following tabic: — 1920-21. 1921-22

(Actual). (Estimated). Ji Ji Revenue : 1,125,984,000 1,057,150,000 Expenditure .. 1,195,330,000 974,023,000

Surplus ... 230,654,000 83,127,000 The return from Excess Profits Duty for 1920-21 was £220,000,000. Mu. Chamberlain 1 estimates that during the current year arrears of Excess Profits Duty will be received to the amount of £120,000,000. This reduction of 100 millions is accounted for less by a measure of taxation relief than by the drying up of one of the sources from which revenue was drawn. Then, again, the revenue of 1920-21 included a sum of about 300 millions derived from the sale- of assets acquired for the purposes of the war. On the expenditure side there were “liabilities left over from the war” to the extent of some 200 millions. Making allowance for these factors, it appears that apart from the remission of taxation on excess profits that arc no longer being earned, the taxpayer is burdened'. as heavily as ever. At the same time, the ratio of expenditure to revenue is .higher than ever, although the estimated amount to be made available this year for the reduction of debt is only about a third of the amount provided for that purpose last year. If such a Budget is to be defended, it evidently must be on the ground that it lepresents the best adjustment possible in a time of extraordinary burdens and difficulties. The retiring Chancellor’s estimate of revenue suggests an expectation that the removal of the Excess Profits Duty will be largely counterbalanced by- increased returns from income taxation and in other .directions. As trade and industrial affairs are at present shaping in the United Kingdom, this expectation may prove to be optimistic. Indeed, Mr. Chamberlain observes that his estimates of revenue and expenditure will both be affected (of course, adversely) by the coal strike. At the moment the effect of trade depression In cutting down revenue is apparent chiefly in the case of the Excess Profits Duty. A year ago Mr. Chamberlain estimated that on March 31, 1921, he would have 400 millions of Excess Profits Duty arrears to collect. This estimate is now cut down to 120 millions. The heavy reduction is made possible by the fact that in the ’case of traders other than shipowners the duty is payable on profits earned over the whole period during which it was in force. Thnt is to say, where excess profits were paade and taxed in one year or

years, and losses were sustained in later years, these losses are set against the earlier profits, and on occasion the taxpayers are entitled to a refund of some part of the duty they have paid. The circumstances responsible for such a heavy reduction in the anticipated yield from the Excess Profits Duty are not unlikely to entail a falling off in the returns from income tax and other sources during the current financial year. It will be much easier for critics to find fault with the arrangements proposed in the Budget than to suggest a remedy. Mr. Asquith has spoken in general terms of the reduction of expenditure, and no doubt there is sound justification for his suggestion that the Government should set up an Estimates Committee “with some real power to check expenditure.” To a great extent, however, the present high level of expenditure in the United Kingdom is an inevitable outcome of the war. The leading facts of the position were stated by Mr. Chamberlain in February last, in a reply to critics who accused the Government of extravagance: — Our Budget before the war (he observed) was 201 millions. The expense to-day of the services which before the war we could carry out for 200 millions was, roughly speaking, two and a half times as great. Pre-war services on a pre-war scale would thus require some 500 millions. Next, there was an additional charge of interest on debt to add of 320 millions. Then war pensions cost 123 millions Without allowing for any addition for the services rendered or the ‘help expected, and without allowing for the redemption of debt we hod a figure of nearly 950 millions.

But for the extent to which the economic recovery of the United Kingdom is being retarded by the present coal strike, it is likely that the estimate of expenditure for the current year could have Iken kept down to 950 millions, and that some initial steps could have been taken towards cutting down the expenditure of 5,00 millions on services that cost 200 millions before the war. It is obvious, however,' that so long as disastrous upheavals like the coal strike continue, the United Kingdom -will be terribly handicapped not only in adjusting its national finances, but in re-establishing trade, industry, and general prosperity on anything like a normal basis. The Budget discloses national affairs in a state which calls urgently for remedy, and can only be remedied by a great rebuilding effort. Apart altogether from what it is doing in its immediate effects to extend unemployment and occasion 'hardship and suffering, the coal strike is reversing I*ie whole process of economic and fiiianaiaj recovery. It is intensifying industrial depression and crippling the national effort. One of its effects will be a serious reduction in lhe returns from income and other taxation during the current year. The miners arc at once wrecking the foundations of British industry and indefinitely postponing the period at which it can be given some relief from the almost crushing burden of taxation it is now called upon to bear. TheV are thus doing even more to destroy future welfare and prosperity in the United Kingdom th«n to inflict present hardship and suffering.