The Northern Advocate Daily “NORTHLAND FIRST” Registered for transmission through the post as a Newspaper FRIDAY, APRIL 26, 1940. Britain's War Budget

Northern Advocate, 26 April 1940, Page 4

The Northern Advocate Daily “NORTHLAND FIRST” Registered for transmission through the post as a Newspaper FRIDAY, APRIL 26, 1940. Britain's War Budget

THE mind of the average person will be overwhelmed by the figures quoted by the Chancellor of the Exchequer when presenting Britain’s wartime Budget. The figures may be truly described as astronomical, and, as such, dismissed by the ordinary individual unversed in finance and incapable of analysing the . proposals. The figures, however, cannot but leave the indelible impression that Britain, having put her hand to the plough, does not intend to turn back. More than that, they produce weighty evidence that, finance being a fundamental requirement in the successful prosecution of a war, the Allies have good cause for assurance as to the outcome of the great struggle upon which they have entered. Britain is able, to face unparalleled commitments with a sure faith that they can be met without imperilling the economic structure of the nation. France can do likewise. It is in‘this respect that Britain and France are able to set out with confidence against an enemy whose financial position is suspect; and, indeed, perilously shaky. The Chancellor of the Exchequer, Sir John Simon, told the House of Commons that war expenditure by the Government during the first seven months of the present financial year was £905,000,000, or at the rate of £1,500,000,000 a year. This terrific expenditure was increasing, however, and it was estimated that it would amount to the incredible total of £2,000,000,000 during the current year, bringing the Budget requirements up to £2,667,000,000. To meet this expenditure, the Chancellor said it was proposed to raise £1,234,000,000 from revenue, this being the largest sum ever raised by taxation in the history of British finance. Sir John Simon then went on to show that, heavily though the war might hit the people of Britain, they would be able to carry the load, which would be greater by £185,000,000 than that rnrripd last vear.

The experience of last year was of a character to justify the Chancellor’s confidence, for the increases in revenue during that year were of an astonishing character, the estimate of £99,500,000 having been exceeded by £54,000,000. An outstanding feature of the revenue was the fact that income tax was the highest ever collected in a single year, amounting to £390,000,000, while Customs and excise yielded £400,000,000, which was £97,500,000 above the estimate. The Chancellor intends to exploit still further these sources of revenue, for he announced that proposed tax increases were estimated to produce the following yields over the full year: Changes in income tax, £61,750,000; spirits and beer duty, £70,000,000; tobacco duty, £23,000,000; and postage, telegram, telephone rates, etc., £21,800,000.

New Zealanders will be particularly interested in another source of revenue which the Chancellor proposes to tap. That is a “purchase tax,” which, with slight variation, is the equivalent of the sales tax that has caused so much discussion in the Dominion. The rate of this tax has not been fixed, so far, but, as the Chancellor expects it to bring in a substantial sum, the rate will no doubt also be substantial. The purchase tax is not to apply to food or drink, whether for human or animal consumption, but it will no doiibt apply especially to everything which is imported into, or which might be exported from, the country. The intention of the British Government, as foreshadowed in various statements of policy, is to restrict purchases as much as possible in Britain in order to release materials for use in manufactures for sale abroad. By raising the prices of articles other than food or drink, buying will undoubtedly be curtailed. This is in line with the appeal made a few days ago that people should think well before they make a purchase, and if, after consideration, they feel that they can do without the article desired, they should refrain from getting it. Money saved in this way, it is hoped, will be loaned or given to the Government to finance Britain’s war effort.

The British Government has imposed strict control of imports, and, in addition to aiming at the regulation of prices, it is providing £60,000,000 a year in subsidies to keep down the price of foodstuffs. A strong hand is being placed upon profiteering. The Government, while imposing a heavy excess profits tax, evidently does not believe in killing the goose that lays the golden egg, for it intends to leave a certain proportion of increased profits in the traders’ hands, holding that these will be useful to sustain and repair industry in the difficult period after the war. To ensure that the increased profits shall not be dissipated, a public company is to be forbidden to distribute a greater dividend on ordinary shares than was distributed in any one of its three pre-war periods. It is also proposed to prohibit bonus‘shares. It is a pity this line of policy was not followed during the World War, but it is good to know that the experience gained during those four years of crisis is being utilised in the conduct of the present war and in the field of economics. It is quite evident that the British Government is taking a businesslike grip of the colossal problems by which it is confronted, and there is distinct comfort in the Chancellor’s declaration that “our financial front will hold as firmly as does every other front in the fight for victory.” The call which is being made upon the taxpayers of Britain is indeed tremendous, but it is noteworthy that, so far from criticism of the Chancellor’s proposals being heard, there is a general expression of opinion that he should have gone further. That, Sir John Simon no doubt argues, is a defect which can be remedied if the need arises.