TAX EASEMENTS

Gisborne Herald, Volume LXXII, Issue 21853, 25 October 1945, Page 5

TAX EASEMENTS

LIMITED_JIXTENT PRICE CONTROLS VITAL CHECK TO INFLATION (10 a.m.) LONDON, Oct. 24. The Chancellor of the Exchequer, Dr. Hugh Dalton, explaining the implications of the Budget, in a broadcast, said: “If the present price controls broke down, we should be in a very bad way. There would be too much money for too few goods. The prices of these goods would rise and the value of your wages and savings would fall. To combat this, you must continue to save and we must go carefully in deciding how far we can reduce taxation, thereby letting loose that purchasing power.” Dr. Dalton added that to keep the cost of living steady, the Exchequer would have to continue paying food subsidies amounting to at least £300,000,000 yearly. Excess Trofits Tax Discussing the excess profits tax in the Budget speech, Dr. Dalton said the tax was perfect for a short war. It became less and less satisfactory as the war period lengthened and as we entered the post-war period. As the rate of standard profit leceded, The tax became less equitable as between different businesses. “It falls, in particular, with increasing and unjust severity as the years go by upon businesses with a low. standard tax for income tax purposes,” he said, “once the standard profit is earned, encourages extravagance, wasteful outlay and even downright dishonesty. It would be the Treasury and not the owners of business who would take the money if these expenditures were not incurred. The tax in these conditions works against incentive considerations and apply particularly to the excess profit tax at 100 per cent., but they apply in some marked degree to this type of tax at even lower rates.” Retention in Meantime He had carefully considered whether he could not repeal the tax and substitute a new tax on profits. He had particularly considered whether it would not be better to substitute for the excess profits tax a flat rate of tax on all profits, whether or not they exceeded the profit in some standard year. Such a tax had considerable at* tractions- but it was open to objections, one of which was that if such a tax was levied at a rate sufficiently high to bring in nearly as much revenue as the excess profits tax, it would fall more heavily on businesses that were not now subject to the ex* cess profits tax and which could not, for that reason, be exempted from the new tax. It, therefore had been de* cided to retain the excess profits tax for the present. The Times, in a leader, says there will, at the moment, be little disposition to quarrel with the Chancellor’s circumstances to increase the progressive scale of taxation rathe? than diminish it. The Daily Telegraph says that Dr. Dalton’s Budget is generally accepted as a workmanlike effort to deal with the present situation. The Daily Mail, in a leader, says that under the circumstances, nothing more could be expected.