EVENING POST THURSDAY,FEBRUARY4,1937 THE PUBLIC DAY

Evening Post, Volume CXXIII, Issue 29, 4 February 1937, Page 12

EVENING POST THURSDAY,FEBRUARY4,I937 THE PUBLIC DAY

The Minister of Finance (Mr. Nash) budgeted for a £5,000,000 increase in revenue this year. The Public Accounts for the nine months to December 31 show that receipts so far are £2,508,000 above the receipts for the first three quarters of 1935-36. Taken on a proportionate basis this would seem,to show that the Budget estimate may not be realised; but the final quarter is always a heavy revenue period, including as it does income tax payments, and there is still every possibility of the Government's expectation of a £5,000,000 rise being fulfilled. The main revenue items are well up. Customs was estimated to. yield £939,000 more than last year and for the nine months the increase is £1,165,000. Sales tax was put down for an increase of £437,000 and so far there has been a gain of £424,000. For the three months yet to be taken into account, therefore, Customs can be below last year's yield from the March quarter and yet reach the estimate for the year, and sales tax needs to maintain only the present rate of advance.

The only item which, on a comparison of figures, is now below the estimate, is land tax. The Minister budgeted for £1,300,000 compared with £458,873 actually received last year. So far £987,000 has been received. This is 76 per cent, of the estimate, whereas in the nine months of last year 94 per cent, of the estimate had been received. The extra amount may yet come in, but it would not be surprising if producers and businesses are experiencing some difficulty in paying the higher rate (to yield almost a trebled revenue from this source) that the Government imposed. A trebled revenue, because of the reintroduction oi steep graduation of the tax, means much more than a trebled tax to some landholders. While those in the jlower grades pay little more, if anything, those at the top of the scale have to meet a much heavier demand. And not all of them are able to do. so, for many large landholdings in the cities are occupied by businesses which are just emerging from a lean period. They have had no relief from the double handicap of exchange and sales tax and now they are faced with demands for heavier land tax. , There may be a similar difficulty in some quarters in finding the increased income tax that has to be paid this month. The income tax yield, to be sure, is not trebled. The estimate is for a yield of £6,000,000, compared with £4,581,328 last year. But the increase is not evenly distributed. Individual taxpayers in the group above £500 have received demands proportionately heavier than those below or above them. Reports of tax demands 100 per cent, and more above those of last year are common. Even if the actual tax is still not great it represents an added burden on the taxpayer. In many cases, however, the tax will be actually burdensome and difficult to meet. This applies particularly to the companies who are liable. Previous Governments, bearing in mind the emphatic statements, of experienced investigators that the graduated company tax was hampering business, endeavoured to ease it, and when the depression made it necessary to levy higher income tax companies were not made subject to the full increase. The Labour Government has reverted to the bad old system and some of the companies that had hopes of improving their position find this year that income tax means another setback. Again, they have struggled against exchange and sales tax without relief, and the only "adjustment" of taxation that has come their way has been an increase. Two arguments may be advanced in defence of the Government's demand for £5,000,000 more than the public paid last year. First, it may be said that not all of the additional taxation was imposed by the present Government, and, second, that the Government's expenditure from revenue, as well as from loan or new credit issues, helps to spread prosperity. The first argument is untenable when the actual facts are considered. The Coalilion Government, faced with a diminishing return from taxation, had to raise the rales and impose new taxes in order to obtain revenue. It imposed new Customs duties and sales lax. Bnl when the

yield from these taxes rose there should have been a reduction in the rates. The Coalition Government aimed to obtain between £6,000,000 and £7,000,000 from Customs duties and under £2,000,000 from sales tax. The present Government is now taking £9,000,000 from Customs and almost £3,000,000 from sales tax. The only excuse is that the Coalition Government set a bad example in not making a start in lowering the rates. But a bad example docs not justify a worse practice. Least of all does it justify an "adjustment" which maintains the existing taxes now yielding an abundant revenue and adds new imposts on land and income. The plea that Government expenditure is promoting prosperity is open to the gravest doubts. It means that the Government spends more wisely and productively than would the people from "whom it exacts the money. This is highly questionable, especially where the tax is taken from companies striving to establish productive and employmentmaking enterprises. The argument means also that all the Government expenditure, from loan, revenue, or credit issue, will be reproductive. This, even on the admission of the Minister of Finance, is far from the fact. Some of the expenditure in fact is more likely to create liabilities than assets. Not mere spending, but wise spending promotes prosperity. But wise or unwise the public must pay for it, and pay more and more as the costs of loans and credit issues (which are not really costless) are brought to account.