BUDGET SURPLUS

Grey River Argus, 17 April 1947, Page 5

BUDGET SURPLUS

£270 MILLION SOUGHT IN BRITAIN

TAXES UP BY £53 MILLION

CONCESSIONS ON SMALL INCOMES

SMOKERS TO CARRY U.S. LOAN BABY

LONDON; April 15. Dr. Dalton, Chancellor of the Exchequer, presented the Budget in the House of Commons this afternoon. He said that buoyant revenue in 1946-7 brought the deficit for that period to £157,000,000 less than expected. The recoil to a balanced Budget had been even quicker than expected. The deficit in 1946-7 had been £569,000,000. He said it was expected to balance next Budget, but without large-scale tax reductions. Tax reductions would cost £84,000,000 this year and £96,000,000 in a full year. The tax increases would bring in £106,000,000 this year and £149,000,000 in a full year. He counted on a balance of £2'2,000,000 on this year and £53,000,000 in a full year, thus raising the prospective surplus this year from £248,000,000 to £270,000,000. He said “Our anticipated Budget surplus is a clear sign of oui’ internal financial strength, which all the world should note but the surplus cannot be regarded as available for wholesale tax reductions.” The aim should be a balanced Budget over a series of years. There was an immediate danger of inflation going beyond bounds and breaking through the various controls now established. The Government intended resolutely to adhere to the “cheap money” policy which since 1945 had saved the taxpayer about £40,000,000 a year on direct Government borrowing. Lower Income Tax Cuts Income taxpayers would get modest relief on earned income. The relief would be increased from oneeighth to one-sixth, by lifting the maximum relief on which no taxation was paid from £l5O to £250. A married man with two children would pay nothing until his earnings were more than £7 a week., He would pay the full standard rate after he earned £9/18/- a week. The change in the pay packets would operate from July 7 and would be retrospective to April 6. The dependent relative allowance would be maintained at £5O, but it would not disappear until the relative’s income reached £l2O a year. The child allowance would be increased from £5O to £6O, which was the pre-war figure. These two adjustments would cost £62,000,000 in a full year and would altogether relieve 750,000 taxpayers from paying income tax. They would noticeably reduce the tax on one million others. A single man would pay no tax until his earnings reached £2/12/- a week. He would not pay the full standard rate until his earnings exceeded £5/10/- a week. Subsidies to Increase to £475 Millions The cost-of-living subsidy would be £425,000,000, which would be £50,000,000 more than previously. Dr. Dalton said: “This is a most formidable total which has grown rapidly. We must now consider whether we can face a further increase in the total cost• of these subsidies.”

The Ministry of Food estimate was £50,000,000 more than last year’s expenditure, owing to cost-of-living subsidies, which would total £425,000,000, including £392,000,000 for subsidies on food prices, which would be £44,000,000 more than last year. The subsidies on utility clothing and footwear prices would total £33,000,000, against £19,000,000. Commenting on these subsidies, Dr. Dalton said: “We might seem to be towed along independent of our own decisions by rises in prices all over the world and also hitched to the out-of-date and generally discredited cost-of-living index. The policy of subsidising the old index paid good dividends, but we must review it afresh. A new index will be brought into operation and I shall keep the old index steady and stable until it passes out of use in a few months.’’ Smokers Plucked Again Dr. Dalton said the customs duty on imported tobacco would be increased by 50 per cent, thus raising the price of a packet of 20 cigarettes, which are now 2s 4d, to 3s 4d. Pipe tobacco would cost about Is 2d more per ounce. He said: “We are drawing improvidently on dollars to satisfy the insatiable demand for tobacco smoking, which is more than we can afford. I have set my target at a one-quarter reduction of the total national consumption of tobacco. Nothing else would be much good. I regard this economy as a minimum of patriotic duty.” He regarded the saving of dollars as more important than an increase in revenue. Anyone with a grudge against him for this deliberately heavy increase‘’might knock off smoking altogether. He estimated that on the basis of a 25 per cent, reduction of tobacco consumption he would get £77,000,000 more revenue in a full year and £75,000.000 more this year and save 30,000,000 dollars this year. Crimes of “shame” from two Labour members greeted Dr. Dalton’s announcement. No Tax on Betting Dr. Dalton said ho had carefully considered a tax on betting and had decided it would not produce substantial revenue. He had therefore decided to look for revenue from well-tried taxes. Increased Taxes

Stamp duties relating to stocks and shares and, with the exception of those relating to small transactions and those relating to transfers of real property would be doubled to two per cent. Legacy and succession duties, would

be doubled, the tax on distributed profits increased to 124 per cent, and the tax on domestic heating, cooking and other gas and electric appliances increased to 66 2-3, per cent, of the wholesale value. Duties Removed “Duties would be removed from fuel oil and gar, oil. The purchase tax would be reduced on linoleums and similar floor coverings and some sports requisites. Excise duty on artificial silk would be revealed from May 1, which would cost £2,2'50,000 in a full year. The purchase tax could not be much further reduced, but silk stockings would be added to the range of taxfree utility clothing. The total customs excise tax reductions would cost £9,000,000 in a full year and £8,000,000 this year. The total cost of the income and other tax reductions would fie £96,000,000 in a full year and £80,000,000 this year. Cuts in Expenditure The estimate for 1947/8 expediture at £3,181,000,000 was £729,000,000 less than the actual expenditure in 1946/7. Defence expenditure was estimated at £899,000,000 (£754,000,000 less) and a further substantial reduction was expected in 1948-9. The proposed defence expenditure, including the Ministry of Supply’s military spending, represented a reduction of 46 per cent, on last year’s expenditure. The Government would spend £40,000,000 less for the hire of ships, £6,000,000 less for _civil defence and £89,000,000 less for U.N.R.R.A. Increases in Expenditure Expenditure totalling £3,910,000,000 was £23,000,000 more than estimated. Defence expenditure was £14,000,0b0 less than anticipated but the civil expenditure was £27,000,000 more. Social services at £441,000,000 totalled £117,000,000 more than in the previous year. Education would cost £29,000,000 more than in 1946-7. The universities would cost £12,000,000, which was more than five times the pre-war figure. The Government wanted the universities within 10 years to double their pre-war number of students. The extra outlay would cover the cost of raising the school-leaving age —a reform long promised and too long withheld. Dr. Dalton said that the increase for housing and national health services, preliminary ' expenses, would be £25,000,000, for pensions £23,000,000, and for family allowances £4,000,000. He had been told that there wefe 2'00,000 more eligible babies than the actuaries allowed for.

Dr. Dalton said that more money would be provided for housing, health services, family allowances and land development. Those responsible for land development were being “produced” because development was going too slowly. The estimated expenditure of the civil and revenue departments at £1,726,000,000 was £47,000,000 more than last year’s. Revenue Estimates The revenue on the existing basis of taxation would be: Customs and excise, £1,300,000,000; inland revenue, £1,676,000,000, including £1,150,000,000 from income tax. The total revenue would be £3,429,000,000, giving a prospective surplus of £248,000,000. Revenue from all sources in 1946-7 had been £3,341,000,000 —£180,000,000 more than expected. Expenditure had been £3,910,000,000—£23,000,000 more than estimated. Dr. Dalton said that some supplementary votes were less pleasing to him, including £39,000,000 for Germany (in addition to the original estimate of £80,000,000), £90,000,000 extra for Greece and £50,000,000 for food.

“We spent more than we expected in Greece,” said Dr. Dalton. “All over the world prices have gone on rising and we had to provide a supplementary sum of £50,000,000 for food.” Revenue from indirect taxation had been £1,184,000,000, approximately equal to what he had expected. Inland revenue produced £1,777,000,000. which was £91,000,000 more than the estimate. Of this surplus, income tax accounted for £45,000,000, excess profits tax for £33,000,000, stamp duties for £9,000,000 and death duties for £8,000,000. More Borrowing Government borrowing this year would be for replacement of maturing debts or for new capital development. He expected s to borrow £50,000.000 for the National Coal Board, £200.000,000 for housing loans, and £90,000,000 for temporary houses. There would be large financial operations for the compensation of owners in industries and services being taken into public ownership. Referring to the cheap money policy, Dr. Dalton said he expected to have public opinion increasingly behind him when it was realised that on the continuance of the maximum rate of 2i per cent, depended all hope of serious tax reliefs- in the future. “There is no other way in which the Budget can be balanced,” he declared. Oversea Trade Outlook He feared that the 1947 overseas deficit would be a good deal higher than the £400.000,000 in 1946 unless vigorous action were taken to reduce it. The hard currency deficit was likely to increase owing to the rise in prices, particularly in the dollar countries.