HIGHER TAXATION

New Zealand Herald, Volume LXXIII, Issue 22401, 23 April 1936, Page 11

HIGHER TAXATION

INCOMES AND TEA MEETING COST OF DEFENCE HOUSE STUNNED BY NEWS By Telegraph—Press Association—Copyright LONDON. April 21 The crowds of people who assembled at Downing Street to-day to have a glimpse of Ministers on their way to the House of Commons on the occasion of the presentation of the Budget were smaller than usual. The House, however, was so crowded that members could not secure seats on the floor of the House and were obliged to go to the side galleries. . The Chancellor of the Exchequer rose at 3.33 p.m. He said the most remarkable fact in the past year was the surplus of nearly £3,000,000. He proceeded to give details of the revenue, drawing the conclusion that there was a general increase in tho country's wealth and expansion of activity. Sacrifices Necessary for Safety Mr. Chamberlain predicted that unless there was some agreement in disarmament tho cost of defenco would rise swiftly in tho next few years. It was inequitable that the whole of that cost should fall on revenue. Part of it could properly be met from loans in future years. At present it was necessary to increase the standard rate of income tax by 3d in the £l. and to take £5,500,000 from the Road Fund. The tea duty would be raised 2d per lb, and the estimated income would thus be £798,381,000, allowing a surplus of £484,000. The Chancellor estimated that the increased income tax would produce £12,000,000. The tea duty, applying both to Empire and foreign imports, would yield £3,500,000. It was a bitter disappointment to ask for new sacrifices, but safety was more important than comfort. The House was stunned into silence at the grim tidings. Estimated Extra Revenue Mr. Chamberlain said he would not be justified in making increased provision in such abnormal times for redemption, and the debt service would remain at £224,000,000. The Chancellor announced that he expected substantial increased revenue. He estimated that income tax would yield £248,000,000, which was £10,000,000 more than last year. Beer duty should show an increase of £1,900,000, tobacco over £3,000,000. Mr. Chamberlain foreshadowed changes in the law to prevent tax evasion, especially in regard to those living in Britain and transferring their property to persons abroad in such a way as to retain control of property income. Legislation would also deal with surtax evasion. Help :tor Special Areas

The incomes of infants and unmarried children derived from parents through educational trusts and other ways 'will be reckoned as parents' incomes, saving £2,500,000. A surtax of £1 per barrel would be imposed on beer from non-fc<mpire countries. The protective duties of the key industries would be continued for 10 years. In order to help special areas a company would be formed with a nominal capital of £1,000,000 to finance small businesses in such districts. The company would be experimental and limited to 10 years. " NATIONAL PROSPERITY GROWTH UNDER REVIEW MAIN PILLARS OF POLICY (Received April 22, 5.5 p.m.) British Wirelesu RUGBY, April 21 Reviewing the growth of national prosperity since he had opened his first Budget in 1932, the Chancellor claimed the indispensable foundation had been a policy of which the two main pillars were the tariff and cheap money. The tariff bad converted an adverse balance of trade of £104,000,000 a year into a favourable balance of £37,000,000 and was making a valuable contribution to the revenue. The benefits of cheap money were being progressively reaped, as was shown by the building boom, the growth in exports and the activity in the retail trade. EVASION OF TAXES METHODS DESCRIBED I INTENTION TO CHECKMATE LONDON. April 21 The dominant note in the Budget was what might have been but for the international clouds. It was apparent from earlier references to the necessity for sacrifice that something unpleasant was coming, but the raising of the income tax and the tea duty surprised the House. Mr. Chamberlain wanly confessed to his disappointment that rearmament had torpedoed! the hope of celebrating his fifth successive Budget by a substantial remission of taxation. The liveliest part of the Chancellor's speech consisted of his references to legislation aimed belatedly at overcoming tax evasion. Ho dropped his air of icy detachment in the enjoyable prospect of stamping out legal but costly evasions and delighted the House when he read a circular from a tax consultant explaining methods of evasion and offering a cheque of half-a-guinea to each client who passed on another. Mr. Chamberlain also read a circular which " confidentially " offered to demonstrate other methods of evasion in return for taking out an insurance policy with a certain company. He cynically remarked that not all who settled educational trust money upon their children did so for the purposo of evading taxation. Somo scrupled to employ those methods because they did not know them.

The Chancellor's only reference to the Dominions was the claim that the Government's cheap money policy had passed on benefits to them.