REMARKABLE FIGURES.

Manawatu Standard, Volume LX, Issue 124, 24 April 1940, Page 9

REMARKABLE FIGURES.

SAVING ESSENTIAL. CHANCELLOR'S WARNING. (British Offininl Wirntnss.i Received April 24, 11.23 a.m. RUGBY, April 23. Summing up the Budget, which lie presented to the House of Commons in a speech of over two hours, Sir John Simon said it was essential that saving and lending or savings should increase in response to the mounting expenditure of modern war, and concluded : "Provided the zeal and persistence of our people in supporting Government loans equal their fortitude and resolution in paying Government taxes, we have nothing to fear. Our financial front will hold as firmly as does every other front in the fight for victory." I The Chancellor had detailed how he proposed to raise from revenue £1.234,000.000—a larger figure than had ever been raised by taxation in a single year in the history of British finance and £155,000,000 more than last year. Dealing with the increases in direct taxation, he said these involved a standard rate of income tax of 7s Cd and reductions in allowances which would have the effect of increasing the effective rate right through the scale of income levels and rising with surtax to a maximum of 17s in the £. The Chancellor commented: "Nothing on this scale has ever been approached before in war or peace. "With the surtax, the maximum rate in the last war was only 10s Gd." His additional proposal was to charge a surtax on incomes of over £I3OO instead of £2OOO. PURPOSE OF NEW pAX. Sir John Simon explained that the form of purchase lax had only been decided after careful study. ]n addition to food and drink, to which it would not apply ,it would also not apply to articles already ssbject to heavy duty, such as tobacco and petrol, nor generally to such set-vices as gas, electricity, and water. Before introducing the machinery of the tax he hoped to have consultations with trade organisations. i

Further explaining the new tax, the Chancellor said it was of the greatest possible importance to restrict internal spending at this time. Ttic tax would assist in securing that.: result without interfering with the (government’s plans for maintaining alt adequate supply of things like fejid. It would nut no sort of obstacle m the way of "export trade, but would result: in limiting tlie consumption of goods at home.

“Tt is the deliberate intentijm of such a tax to do so.” said Sir John. “We have to face boldly fhe necessity for transforming our lining economy for the purpose of winning the war. This cannot be done without drastic and definite action^.” In a digression, Sir John Sfimon referred to Mr J. M. Keynes’s, plan for deferred payments, which hi had examined with the utmost care, but he had found many objections, aimong which was the danger of discouraging voluntary saving, further to encoltirage

which he announced that the Government. was prepared to introduce legislation the general effect of which would he - to withdraw from the future calculation of the means of applicants for unemployment assistance new amounts lent to ihe nation during the war up to a total of £37s.

This brought the Chancellor to a general exposition of the Government's financial and economic policy as a whole.

“IVhat we have to do,” Sir John said, “is to foster and improve conditions l>v which the How oi voluiitaiy contributions to the Government may l>o stimulated and inflation avoided. Whatever may help to restrict the misuse of spending power is of vital importance. The Government’s effort in the economic sphere has been directed to secure these objects. There is a series. of steps taken .or converging to this end. We aim at maintaining a level of economy in prices and Hi the flow of commodities required for consumption. “First, we have strict control of imports. By tlie imports licensing system we reduce imports which are not essential. It is estimated that by the operation of tills part of tlie imports system we have reduced the less essential imports. which in 1938 were valued at £125 000 600, to a figure in the first year of the wai or £50.000 000. The system of control of non-essential imports has been extended to many raw materials for the purpose primarily of enabling control by the Ministry of Supply to secure their employment to the greatest, advantage. This system of controlling and directing imports now applies to 75 per cent, of the value of the whole of our imports.” COMPANY DIVIDENDS.

3 lie Chancellor explained the system of priority allocations of imports so that tho lirst essentials were given to the war effort. The second priorities met the claims of the export trade, and the residue was available at appropriate prices iur general consumption.

They were finding £60,000,000 a year in subsidies lor cheapening food prices, said Sir John Simon. By the system of costing and contract procedure the Government was endeavouring to secure a rate of profit that was reasonable, but the taking of an excess of profits was part of its economic policy'.

“J have one further announcement to make,” said Sir John. “There is another contribution to this end which I have in mind which will necessitate legislation. It is complementary to the whole economic policy I have outlined. The excess profits duty is at a heavy rate, but it leaves a certain pioportion of increased profits in the hands of the trader. That is essential, but I think these increased profits, where they occur, arc valuable in proportion as they' remain in the business concerned. They will bo very useful if they are available to sustain and repair industry in the difficult period after the war. They are far less valuable if they are used in the hands of shareholders.

“I propose, accordingly, fo provide for the limitation of dividends paid by public companies, which shall not distribute a greater dividend on ordinary shares than was distributed in any one of its three pre-war periods.”

Sir John Simon also announced that it was his intention to prohibit the issue of bonus shares.

Dealing with war expenditure, he said he was going to estimate that what would be needed in this financial year for war purposes onlv would be £200,000,000. RESOLUTIONS APPROVED.

The Leader of the Opposition (Mr C. R. Attlee) approved the taxes on beer, spirits, tobacco, and matches. He said the postal tax was a doubtful proposition.

For the Liberals Sir Archibald Sinclair said the task was to raise the country’s production to the highest pitch. “The French are making a vastly greater effort than that asked from Britain to-day,” ho said.

The Budget resolutions were approved.