BRITAIN’S RECORD EXPENDITURE

Dominion, Volume 34, Issue 116, 10 February 1941, Page 7

BRITAIN’S RECORD EXPENDITURE

Chancellor’s Problem INCOME TAX MAY BE 10/- IN POUND

(British Official Wireless.)

RUGBY.’, February 7.

The vote of credit which the Chancellor of the Exchequer, Sir Kingsley Wood, secured in the House of Commons yesterday brings Parliament’s authorization for this year to the biggest expenditure in British history. The total grants for this financial year, amounting to £3,300,000,000, are greatlv in excess of the peak years of the last war —£2,432,000,000 in 1917 and £2.500.000,000 proposed in 1918.

The next financial year will, however, see a much bigger outflow, for Britain is now spending on war purposes at a rate of £3,800,000,000 a year. If civil expenditure remains at its present level it may be assumed that in his next Budget iSir Kingsley Wood will be confronted with a prospective total expenditure for the year of nearly £4,500,000,000. How much of this stupendous total will be met out of revenue will not be disclosed fill the Budget is opened. “The Times” notes that money is now coming in extremely well and that the present weekly subscription loans total about £526,000,000. Many Resources. "The Times” adds: “There are, after all, many resources to be tapped both b.v taxation and by borrowing. Mr. i’etliick-Lawrenee yesterday estimated that the national income had risen by since the outbreak of the war and that the nominal value of what was left after taxation and borrowing had altered little though, of course, the total is differently distributed. l.t is clear, indeed, that the State must get back as much as it can of new income created by expenditure within our own borders and that the limit of what can be gqt back has not been reached.”

After discussing the dangers of inflation and approving Sir Kingsley ■Wood’s assertion of both the determination and the power of the Government to check it, “The Times” remarks confidently that money problems are not going_t<> put any brake on production for war.

The “Manchester Guardian” regrets the absence of any indication in Sir Kingsley Wood's speech of intention to take extraordinary measures to secure a still further increase in saving and concludes: “The case for some pretty comprehensive scheme of compulsory saving or its equivalent remains as strong as when Mr. Maynard Keynes first advocated it nearly fifteen months ago.” It is generally expected that tiie income tax will lie raised to 10/- in -the pound. Tiie Government may test Labour’s reaction to compulsory savings ami also a S|H>cial tax on wartime excess income of wage earners. Tiie Oxford economist, Mr. Kalecki, lias suggested flint civilian weekly expenditure in shops should be compulsorily restricted to 25/- for an adult and 15/- for a child. Mr. Kalecki estimates that tins would reduce expenditure by at least £500,000,000 a year and suggests that the savings accumulating from tiie scheme should be partly collected by taxation through increased income tax.