PETROL TAX THE FEATURE

Evening Post, Volume CV, Issue 97, 26 April 1928, Page 7

PETROL TAX THE FEATURE

FUND IN RELIEF OF RATES MR. CHURCHILL'S INGENUITY The feature of the British Budget for 1928, introduced by the Chancellor of the Exchequer, Mr. Winston Churchill, in the House of Commons on Tuesday, ,is the imposition of a petrol tax of 4d a gallon with the object of creating a fund to relieve rates pressing on industry and agriculture. The Chancellor also proposes to establish a fixed debt charge designed without increase in taxation to wipe out the internal and external debt in fifty years. No material reduction in taxation was announced.

British Official.Wireless. BUGBY, 24th April. The Chancellor of the Exchequer, Mr. Winston Churchill, made his. Budget statement in tho House of Commons this afternoon. Ho said that the Budget of last year had succeeded in spite of adverse circumstances. One blow •was the £5,000,000 failure in the revenue from beer. There would have been a deficit for the third year run-, ning, but for. the continuance of the economy campaign. Ten and a half millions had been saved by Government Departments. Encouraged by tho success of last year, he proposed to repeat the process and to save money wherever possible in administration. They had done well during tho year, in the repayment of tho National Debt. Tho new sinking fund had been raised above tho early level of fifty million sterling to the unprecedented figure of ' sixty-five millions. In addition, the Budget had borne tho payment of more than £15,000,000 for accrued interest upon saving certificates. The nominal dead weight of dobt on Ist April, 1928, •was £7,527,000,000. Ho had found £28,000,000 more for tho redemption of debt than Mr. Snowden, the Labour Chancellor of tho Exchequer, had done in 1024. The position for dealing with tut'jro conversions had been greatly improved by what had been accomplished in tho past. NATIONAL DEBT PROBLEM. Dealing with the general treatment of the problem of tho National Debt, Mr. Churchill said that ho proposed to return to tho policy instituted in Disraeli's Government by Sir Stafford Northcote in .1875 and to establish a fixed debt charge. He proposed to put the figure at £355,000,000 yearly. A payment of £355,000,000 a year would extinguish external and internal debt, including our debt to tho United States, without any addition to present taxation, in a period of GO years. Tho amalgamation of currency notes with the Bank of England noto issue would take place this year, and a Bill for this purpose Would bo introduced at tho earliest convenient dato. The total expenditure for 192S was estimated at £806,195,000. Tho expenditure on tho Consolidated Fund services was placed at £395,000,000, and tho total supply services at £407,----000,000. Tho total expenditure, compared with tho estimate of £833,390,- ---' 000 last year, showed that £838,585,000 tvas actually spent. , SUEVEY OF REVENUE. . Proceeding to estimate the revenue on the existing basis of taxation tho Chancellor of tho Exchequer said that Customs and excise revenue had moved forward by two or throo million yearly in accordance with tho growth of population, and tho general maintenance of consuming power. Ho saw a chance of recovery in tho revenuo from boor which emboldened him to repeat his estimate of last year. Tho rovenuo from spirits, on the other hand, must bo expected to resume its continuous descent. The increased duty upon tobacco had more than realised expectations. Taxes on silk and on imports under tho Industries Safeguarding Act showed, on the whole, an increase. Ho expected a yield of £3,250,000 this year from tho bptting tax against £2,700,000 last year. The yiold of the duties on tea and sugar in tho coming year might be expected to respond to the slow upward movement of consuming power. Mr. Churchill proposed a few minor changes in Customs and Excise duties. He proposed to raise tho oxciso duty on British wiuos instituted last year from Is to Is 6d per gallon, yielding £65,000 this year, and £70,000 in a full year. As from 28th April he proposed to'levy a Customs duty of 6d on mechanical lighters and an excise, duty of a like amount on home-mado lighters. This would yieia £40,000 this year, but its object was to preserve tho efficiency of the far more important match duty from which we got several millions yearly by curtailing tlicuso of mechanical lighters. Ho also proposed a very small, adjustment in Customs duty bii cinema films in order to place British Empire films on the same footing as those produced abroad by British companies. • This was estimated to yield about £.350,000. Tho committee appointed under tho Safeguarding of Industries procedure had recommended a Customs duty on buttons.' Therefore, buttons used for fastening or decorating apparel would be subject to a duty of 33 1-3 per cent. ad valorem from 28th April, but that would not mean that the .buttons already on imported garments would bo chargeable. Tho duty was estimated to yield £100,000 this year and £200,000 in a full year. With variations tho total Customs revenuo would come to £133,500,000 and tho total excise revenue would co'mo to £139,000,000. Ho estimated that tho incomo tax which would remain at tho existing standard rate df four shillings in tho pound would yield £235,000,000. Ho estimated the gross revenue on tho existing basis of taxation, with tho aforementioned minor changes, at £812,497,000, making a prospective surplus of .£6,302,000. BURDEN OF LOCAL TAXATION. Tho Chancellor then entered upon what he described as tho most controversial part of his task. Ho said that an unsatisfactory picture was presented by heavy basic industries in which unemployment taxation or "rates" entered directly into tho cost of production and affected the competing power of these industries at homo and abroad. According to the latest ascertainments every one of the colliery districts showed a net loss on working, and yet the coal industry was being required to pay several millions yearly in Government taxation. Frequently, depressed industries left heavily-taxed' areas and thus threw an increased burden of taxation on the industries remaining. Some relief of production from local taxation was urgently needed. Ho had therefore .proposed to the Prime Minister that as a concluding financial effort hi this Parliament he should try to form a mass manoouvro fund of between twenty and thirty millions yearly for a great operation upon local government taxation. Tho Government had completed its plans. Legislation required for this purpose must inevitably become tho most important measure of its kind. He had to.frnd.a.substan.tial amount of new rev-

enue to carry out the policy. He did not suppose anyone would have much doubt where he nught to turn for it. During the nineteenth centnry the industrial power of this country rested on a basis of coal, but the twentieth century had been 'becoming increasingly dependent upon imported liquid fuel, scarcely any of which was found inside the British Empire. Tho Government had therefore decided to impose a new duty of 4d per gallon on Certain kinds of imported oil. Tho new tax would be confined to lighter hydrocarbon oils, including petrol, but excluding heavy oils and lubricating oil. The tax would' be imposed as from to-morrow. It was estimated to yield £14,000,000 this year and £17,500,000 in 1929. In order to balance the extra fiscal burden which the tax on kerosene might throw upon the consumer, Mr. Churchill proposed to reduce the existing duties on sugar. Tho duty on all imported sugar would be reduced by an amount equivalent to -Jd in the pound in the retail price. By this means it was possible also to afford relief, to British refiners, who had long complained that while Empire sugar production had been assisted by preference and while the home grown beet industry had been helped, British refiners hadbeen left to engage without assistance in the struggle against competitors, domestic and foreign. The reduction of tho duty was designed to encourage tho importation of raw sugar which would undergo refining in this country rather than tho importation of white sugar refined abroad. : ESTIMATED RELIEF. The new policy of local rating reform based on wider areas and lower rates, to become operative next year, is recognised by tho Press as the outstanding feature of the Budget. The Chancellor of tho Exchequer declared that the scheme, which involves now legislation to bo initiated during tho present session, will have tho effect of remitting three-quarters of the rate payments on buildings used for production by manufacture, will lower freight charges' for agriculture, and heavy industries by reducing the rate burdens on railways, canals, and docks, and will relievo of all rate the chargos on farm lands and buildings, the farmer continuing to pay only on his residence. Tho estimated rating relief to railways will amount to £4,000,000. It will bo concentrated on heavy traffic, upon which freight will bo roduced 8 per cent. Although details of the proposals will, doubtless, provoke much controversy, particularly regarding tho lino to be drawn between productive and non-productive activities, this ambitious project should have the effect of stimulating industries, and particularly those which have suffered most sevorcly through trade- depression. Of tho other-features of the Budget most discussion centres round tlio new tax of 4d per gallon on petrol. Motorists had advocated that an increased petrol tax should be accompanied by a reduction in the present horse-power tax on motor-cars, but the Budget provides that such reduction be allowed only in tho case of goods vehicles, taxi-cabs, and other public vehicles. Evon with tho new tax tho price of petrol will still bo 2d less than in 1914, when the prico was Is 7d por gallon. Other tax charges at prosent arouse littlo comment. A valuable concession to incomo tax-paying parents is made by raising the allowances for children. Tho £35 allowance for tho first child and £27 for each other child will in future bo increased to £00 and £50 respectively. In the realm of national finance the Chancellor's most interesting announcement was his proposal to ostablish v fixed, dobt charge. This is to bo a payment of £355,000,000 yearly, which, if steadily maintained, and, oven if tho rate of interest doos not fall lower than 4i per cont., will extinguish tho cntiro debt, internal and extornal, without any addition to existing taxation in exactly fifty years. Tho amalgamation of Treasury currency notes with tho Bank of England note issue i.s to tako place in tho curirmt year. Tho reserves held by tho Treasury* against tho possibility of cur rency depreciation amount to £13,200,----000. This item, with £800,000 from tho year's revenue, the Chancellor is devoting to strengthening tho sinking fund, which is to bo carried to last year's record figure of £05,000,000. When tho Stock Exchango opened today the effect of tho Budgot was quickly apparent. Its iniluonco was mainly stimulating and thero was a general advance in rails, while iron and steel shares wero stronger and moro active than for some time past. Sugar shares wero good. Motor shares woro practically unaffected, and showed no movement. Gilt-edged securities aro unchanged.