SOME CONCESSIONS

New Zealand Herald, Volume LXXV, Issue 23023, 28 April 1938, Page 13

SOME CONCESSIONS

THE LOWER INCOMES DETAILED REVENUE FIGURES SMALL SURPLUS ANTICIPATED PREVENTING TAX EVASION By Telegraph—Press Association—Copyright (deceived April 27, 5.5 p.m.) British Wireless RUGBY, April 20 Introducing in his Budget speech his proposals for increased taxation, the Chancellor of the Exchequer, Sir John Simon, said in his judgment the extra revenue should be met partly by direct and partly by indirect taxation, and the major contribution should come from direct taxation. However, the Chancellor accompanied the increase of the standard rate of income tax to os 6d in the pound by concessions to industry and to smaller incomes. The deduction from profits for wear and tear would be increased by 20 per cent, lie said. The concession would cover many important basic trades, giving a great deal of employment, and was aimed at avoiding any decrease in industrial development.

A concession to individual taxpayers, which the Chancellor estimated would offset the increase in the standard rate for about 2,000.000 of them with smaller incomes, would have the effect that there would be no increase of tax on earned income in the case of a single person earning up to £290 per annum or in the case of a married man with one child earning up to £460 per annum, or with two children up to £540 per annum. Increased Yields From the increase in income tax he expected £22,250,000 this year and £26,500,000 in a full year. The increase in the petrol tax and the tax on heavy oils would yield £5,350,000 in the current year. The higher duty on tea, which would maintain intact the existing margin of preference, he anticipated would give him £2,750,000, and £3,250,000 in a full year. The Chancellor estimated the revenue on the existing basis of taxation at £914,400,000, of which £336,000,000 was to come from customs and excise and £514,250,000 from inland revenue. The corresponding estimates for last year were £863,100,000, £333,000,000 and £467,650,000 respectively. Income tax, Sir John estimated, would yield £319,000,000, or £21,000,000 more than last year.

With thf additional taxation proposed the total estimated revenue came to £944,750,000, giving him a surplus of £352,000.

Conscientious Nation An important section of the Budget speech was devoted to the subject of tax avoidance, which Sir John Simon defined as the adoption of ingenious methods for reducing liability which, although jvithin the Jaw, none the less defeated its intention. He announced a number of proposals for dealing with various practices of this nature, adding that they were intended for the minority only. The great majority of taxpayers accepted the national burden without any effort to avoid it. As a nation they were entitled to take pride in their general and high standard of actual performance regarding taxation. The Chancellor stated that the net increase in the national debt last year was £257,750,000, nominal, of which £203,000,000 was covered by assets in the exchange equalisation account.

In connection with the increase in the petrol tax by Id a gallon, it may be noted that the last occasion the tax was increased was in September, 1931, when there was an increase of 2d a gallon, while earlier in the same year there had also been an increase of 2d, bringing the tax to 6d a gallon.

INEVITABLE SEQUEL INTERNATIONAL SITUATION BIG BURDEN OF DEFENCE WARNING TO DICTATORS LONDON, April 26 The first member of the House of Commons to claim his seat to-day arrived at dawn. Members packed the floor the moment the House opened. Members of the Diplomatic Corps, representatives of the Dominions and distinguished personages thronged the galleries for the annual Budget speech. The usual political excitement was somewhat lacking, however, because the succession of recent tense debates on the international situation rendered today's occasion somewhat of an anticlimax. Opinion in the lobbies was that while the Budget would be unpopular throughout the country, nevertheless it was the inevitable sequel to the international situation, illustrating Mr. Chamberlain's determination—regardless of whether reactions are unfavourable politically—to put defence above everything. Moreover, the Budget is interpreted as a proclamation to foreign countries that Britain is prepared to spend every available penny on rearmament, and is regarded as a direct message to dictators that the entire country is ready to share the burdens.

Sir John Simon's warning that the peak year of defence expenditure may not be before 1940, and his continued emphasis on the ever-mounting cost of maintenance, were considered by many as preparing the community to shoulder even greater burdens before the programme is fulfilled.

Although the increase in income-tax was an unpleasant surprise, the Budget was welcomed in the City, inasmuch as it will not involve a dislocation of finance and industry like its predecessor. The extent of the damage caused by the national defence contribution fiasco was revealed in Sir John Simon's own statement that the yield from stamp duties was "extremely disappointing," and £5,000,000 below last year. The pedestrian character of the new Budget shows that the Government has learnt a lesson.