THE BRITISH BUDGET.

New Zealand Herald, Volume LVII, Issue 17450, 21 April 1920, Page 6

THE BRITISH BUDGET.

It is symptomatic of the financial position of Britain that seventeen months after the conclusion of hostilities the Chancellor of the Exchequer should be increasing, and not reducing, taxation. Everyone will regret the necessity for laying further burdens on the taxpayer, but there is no way of escape, if the nation is to respond to Mr. Chamberlain's appeal for heroic finance. On the existing basis of taxation there would have been a paper surplus for the current year, but it would have been a small one, and might, under pressure of new expenditure, have disappeared altogether. It must be borne in mind that all estimates at the present time are more or less conjectural. This was illustrated last year, when the Chancellor was compelled in October to abandon completely the forecast he had submitted in April, and prepare the nation for a very material increase in the deficit. Under the circumstances Mr. Chamberlain has adopted the only prudent policy in deciding upon increases in taxation which will not only leave him with a safe working margin, but prepare the way for the re-establishment of Britain's financial position. The most unfortunate result of the new taxation will be its tendency to hamper industry at a time when greater pro-duction-is more than ever required. This will be particularly manifested in the increase of the excess profits duty. The incidence of this tax has been very severely criticised, and Mr. Chamberlain himself acquiesced in the contention that it was a deterrent on business under peace conditions. He reduced the duty from 80 to 40 per cent, last year, but this year it goes up to 60 per cent. The Chancellor's final argument doubtless is that he must have more revenue, and the excess profits duty represents the surest and easiest way of obtaining the money. The tax is, however, a fetter upon bold trading, and cannot be regarded as a permanent imposition. As soon as possible the Chancellor must revert to his original intention of removing it altogether. Of the other changes in taxation little need be said. The corporation tax is another experiment made under the spur of necessity. Alcoholic liquors and cigars are fair game for any Treasurer, and Mr. Chamberlain has contrived with one shot to swell his revenue and emi phasise the principle of Imperial preference. The increase in postal and telegraphic rates is a considerable tax on the commercial community, but appears to be necessary to put the Post Office on a financial basis. The income tax proposals, though of secondary importance from the revenue point of view, are in some respects the most interesting of the Budget, They follow the recommendations of the Income Tax Commission. The double tax is abolished to the extent that the Dominion tax is deducted from the British tax, subject to the relief not exceeding half the British tax. The recommendation of the commission was that any further concession necessary to give the taxpayer relief amounting altogether to the lower of the two taxes should be given by the Dominion concerned. This would involve reciprocal legislation, but the injustice of the double tax has long been acknowledged and no administrative difficulties should be permitted to stand in the way of this reform. The changes in the schedule of the income-tax are all to the good. Accompanying an upward movement in the higher rates is an important concession to family men of small means. The old exemption was £130, with a further abatement of £50 for a wife where the income does not exceed £800. The new exemption is £150, with the exemption for a wife raised to £100, so that the married man does not now pay on the first £250. By comparison with New Zealand rates and conditions this is a liberal concession, more especially as £40 is allowed for the first child and £25 for each other child. It is significant that the British Treasury should have made this acknowledgment of the claims or the family man at a time when it is asking the general body of taxpayers to assume unprecedented burdens with a view to the reduction of the national debt. The example is a good one and is to be recommended to whomever may be in charge of the next New Zealand Budget.