BRITAIN’S BUDGET

Greymouth Evening Star, 27 April 1938, Page 7

BRITAIN’S BUDGET

INCOME TAX INCREASED CHANCELLOR’S REVIEW [BRITISH OFFICIAL WIRELESS.] RUGBY, April 26. An increase of the standard rate of income tax by sixpence to 5/6 in the £, and the announcement of purchases of wheat, whale oil, and sugar, already made by the Government, to ensure stocks during the early months of an emergency, were the two chief points of interest in the Budget statement by Sii’ J. Simon in a crowded Commons. The Chancellor, who spoke for an hour and thirty-five minutes, also announced the increase of the petrol tax by a penny to ninepence per gallon, and of the duty on tea by 2d per lb. Sir J. Simon prefaced his proposals to increase' taxation by putting before the House the arguments ■ for and against filling by borrowing, the gap of thirty million sterling which remained between revenue' and expenditure. After he had estimated the yield in the coming year of existing taxes at. £914,400,000, he pointed out the prospective deficit was due to rearmament, the originally estimated cost of which at 1500 million was going to be substantially exceeded. Though it had been decided from the beginning that rearmament should not be financed entirely from taxation, and borrowing up to four hundred million over five years had been authorised, there were three things to be borne in mind, in forming a proper judgment at the present moment.

The first was that in the defence estimates, for the current year, they had already provided for taking seven hundred million from outside sources. Therefore, the gap to be filled was really 120 million, of which it had already been decided 1 that ninety million should not be got by additional taxation.

econdly, the Government had announced, and were already in the course of carrying out, the acceleration of the rearmament programme. The whole country realised the necessity of, and approved that decision, but it meant substantial .supplementary estimates later in the year, not included in the total of expendture for which he was budgeting. He intended those supplementary estimates should be met out of loan money under the Defence Loans Act. The third consideration was the most serious and important of allThey had to look beyond the present year. The peak of the defence expenditure would not be reached until next year, perhaps even the year after. Moreover, the huge outlay on war material also involved higher annual maintenance. AGAINST BORROWING.

After observing that nothing would contribute so much to the ultimate reduction of the burden as increased’ international goodwill and reduction in armaments which would follow from it, and which was the aim of the foreign policy -the Government were pursuing, and of which the AngloItalian agreement was a striking instance, the Chancellor said he had come to the conclusion he would not be doing his duty if he followed the easier course by borrowing. “We must take some proportion of the increased expenditure on our shoulders by increasing taxation now. By so doing we shall reduce our difficulties hereafter, and we shall show -the world the country does not quail when it faces the burden of expenditure-” Describing the out-turn of the last financial year, the Chancellor said the revenue amounted to £872,580,000, an increase over the Budget estimate of nearly 9J million, and an increase of nearly forty-eight million over the financial year 1936-37-

In a further interesting comparison, he said the total of £872,500,000 of revenue receipts in a single year was five times greater than the corresponding figure, of a quarter of a century ago. In general, last year’s figures bore witness to the improvement in trade and industry, though it would not be right to regard them as proving the year was one of progressive and continued improvement throughout. It would appear that the first six months were more prosperous than the second, although the latter were still good. On the whole, customs and excise revenue had more than justified _the optimistic view taken by Mr Chamberlain a year ago. Inland revenue yielded £471,346,000—£3,750,000 more than the estimate, which was the net result of the remarkable surplus on the yield of income tax, or nearly ten million, offset by short falls of five million on stamp duties, one million on surtax, and £,500,000 on the National Defence contribution.

In the course of his review of the estimated, expenditure, the Chancellor surprised the House by a statement on the subject of food shortage against emergency. He said' the Government had decided early this year that at the right moment they would buy sufficient supplies of wheat, whale oil and sugar to ensure that stocks in the country should be maintained at a level sufficient for the civil population during the early months of These purchases had now been made. Absolute secrecy was essential to prevent prices being raised, on the knowledge that the Government was coming into the market, and for that reason the Government took the course of acting without first applying for statutory authority, in confidence that the Commons would understand their reasons, and in due course enable them to obtain the necessary powers by legislation, which would shortly be introduced. The Chancellor’s estimate for the Consolidated Fund services was £242,100,000, an increase of about £6,600,000 over last year, of which £6,000,000 was in respect of interest and management of the National Debt. The total of supply estimates was £692,298,000 and for purchases of reserve stocks, which he had already disclosed, and other purposes, the Chancellor allowed £10,000,000 for, supplementary estimates. Excluding, therefore, £90,000,000 for supplementary estimates. Excluding, therefore, £90,000,000 already appropriated from borrowed money for defence, the total estimated expenditure to be met was £944,398,000—£81,500,500 mord than last year’s budget estimate,

LABOUR LEADER’S CRITICISM. (Received April 27, 2 p.m.) LONDON, April 26. Mr Attlee attacked the Budget as a mark of the Government’s reckless finance. The Budget was unbalanced and he forecast a series' of unbalanced budgets. Meanwhile, the balance of trade was heavily increasing against Britain, who would suffer further as the result of purchases of aircraft from America, all of which Sir J. Simon disregarded. Moreover, we were entering on a world armament race involving every sign of trade recession, and further unbalancing the budget, which was giving an advantage to the privileged classes. Sir A. Sinclair (Liberal) said the speech indicated a grave financial and extremely critical economic situation. The question was how the downward trend of the last six months was to be prevented from developing into a slump. “I am not satisfied l with the machinery controlling the vast expenditure on armaments' and; I hope the Government will consent to an inquiry into it.” The Commons agreed to the tea and oil resolutions, and the remainder were adjourned. SCENES IN THE COMMONS (Rec. April 27, 1 p.m.) LONDON, April 26. The first member of the Commons claimed his seat at dawn. Members packed the floor, the moment the House was opened. Members of the diplomatics, corps, visitors from the Dominions, and distinguished people thronged the galleries for the annual budgetary scene, but the usual political excitement was somewhat lacking, because the succession of recent tense debates on the international situation rendered to-day’s occasion somewhat as an anti-climax. WARNING TO DICTATORS (Rec. April 27, 1 p.m.) LONDON, April 26. Opinion in the lobbies was that, while the Budget would be unpopular throughout the country, nevertheless it was an inevitable sequel to the international situation, illustrating Mr. Chamberlain’s determination, regardless whether reactions were unfavourable politically, to put defence above everything. Moreover, the Budget is interpreted as a proclamation to foreign countries, that Britain is prepared to spend every available penny on rearmament, and it is regarded as a direct message to dictators, that the entire country is ready to share the burdens.

Sir J. Simon’s warning that the peak year of defence expenditure may not be before 1940, and his continued emphasis on the ever-mounting cost of maintenance, was considered by many as preparing the community to shoulder even greater burdens, before the programme is fulfilled.

CITY’S RECEPTION.

(Recd. April 27, 11-30 a m.) LONDON, April 26. The Budget is welcomed in the City, though the increase in the incometax is an unpleasant surprise, inasmuch as it does not involve the dislocation of finance and industry, like its predecessor. The extent of the damage caused by the national defence contribution fiasco is revealed jn Sir J. Simon’s own statement, that the yield from stamp duties is “extremely disappointing-,” being £5,000,000 below last year. The pedestrian '.character of the new budget shows that the Government has learnt its lesson. PURCHASES OF WHEAT. (Received April 27, 2.30 p.m.) LONDON, April 26. “The Telegraph’s” agricultural correspondent says: The Government has purchased five million quarters' of wheat, and has given guarantees of five million sterling to the millers’ importers concerned, as protection against losses. It seems certain that the Dominions, the United States and some European countries co-operated with Britain in keeping the wheat market quiet until Britain stored adequate supplies. Steps were also taken to hold British-grown wheat in stack next autumn, enabling a. widely distributed reserve, while Dominion and foreign grain isi used. The market believes that Britain bought over four hundred thousand tons of sugar at a cost of over two millions, including Australian.