PAYING FOR WAR

New Zealand Herald, Volume 79, Issue 24250, 16 April 1942, Page 8

PAYING FOR WAR

£5,286,000,000 ESTIMATE BRITAIN'S NEW BUDGET TAXATION CHANGES IMPOSTS ON LUXURIES By Telegraph—Press Association—Copyright LONDON, April 14 ■The Chancellor of the Exchequer, Sir Kingsley Wood, in his Budget statement in the House of Commons, said the revenue for the past year exceeded his expectations. In the international sphere of British financial affairs the most striking fact to look back upon was the full 12 months of lend-lease assistance. The scale of these deliveries was already a vital factor in the war effort. "Up to February of this year the assistance given in-this way. to all countries was not far short of £650,000,000, of which the greater part was given to Britain. The figures to Britain alone, up to March 31, were likely to reach £600,000,000, and the rate of £100,000,000 a month had now been reached. Preserving Price Structure From the domestic viewpoint, said the Chancellor, while the supply of goods was much curtailed and there was need to conserve shipping, money incomes of the community as a whole were much increased. Neither saving nor taxation nor limitations of supply .would solve economic wartime problems if the price structure were allowed to get seriously out of gear. Price levels of the main staple foods had actually been reduced. The food index last April was 23 per cent above the level at the outbreak of war. Now it was only IS per cent above. The cost of living index had risen only 20 per cent above the pre-war level—l per cent above last year's figure. This considerable success in price stabilisation had cost the Exchequer £125,000,000 in the past year, but the figure would be higher in 1942 owing to the increased farm wages and the rising tendency in overseas markets. Excess of Revenue National expenditure—apart from the votes of credit—estimated at / £707,000,000,. had been £691,000,000. Yote of credit estimates at £3,800,000,000 had reached £4,085,000,000. The excess of revenue ;Was due mainly to an excess of £60,000,000 over the estimate of national defence contributions and excess profits tax, the total excess in ,direct taxation being £76,000,000. The purchase tax, estimated at £70,000,000, produced £98,000,000. The total revenue for 1941-42 was £2,074,000,000, which was £288,000,000 Qver the estimate, against a total expenditure of £4,776,000,000. Gross per- ' sonal savings were £640,000,000 in 1940 and £909,000,000 in 1941. The Chancellor said he felt that considerable encouragement could be derived from »these figures. Dealing with the income tax of wage earners, he said there had been complaints about the methods of collection. Before the war about 1,000.000 wage earners paid about £2,500,000. In 1940-41 about 2,500,000 wage earners paid about £30,000,000, while in 194142 wage earners numbering 5,500.000 paid £125,000,000, of which £60,000,000 was treated as post-war credits.

Estimated Revenues A new form of income tax was about to be introduced which would be simpler and would be of great help to the wage earner in making the necessary adjustments. Regarding married ; women in employment, the personal allowance of £45 would be raised to £BO during the period of the war. The Chancellor estimated the total expenditure in the coming year at £5,286,000)000, and increase of £510,000,000 over actual expenditure ' last year. He also estimated the yield from the existing income tax at £915,000,000, surtax £78,000,000, death duties- £90,000,000, excess profits tax and national defence contributions £420,000,000, the total revenue for ' 1942-43 being estimated at £2,244,000,000. Utility clothing and boots and shoes would be exempted from the purchase tax, with a consequent loss of revenue of £10,000,000, rising to £20,000,000 when in full operation. The Chancellor said the last series of imposts and the widening of the area of taxation had been too recent to contemplate further exactions at the moment, so be must turn to articles in common use which lent themselves to bis purpose without infringing on wartime necessities of life. Liquor and Tobacco Tbe price of beer, the consumption of wbich was increasing, would be increased 2d a .pint, with an addition to the revenue of £42,000.000 in the com- ' ing year and £48,000,000 in a full year. Whisky would be taxed a further 4s 8d a bottle. Further duties would be placed on foreign and Empire wines. An increase in the tobacco duty would raise the price 6Jd and 7£d an ounce, making an extra 3d on the ordinary packet of cigarettes. Cigar 'prices would increase correspondingly. Double duty would be charged on every form of entertainment except the lowest-priced seats, said the Chancellor. Nearly 90 per cent of the existing revenue from entertainment duty came from attendance at the cinema. The duty was estimated to yield £14,000,000 in a full year and £12,000,000 in the present year. Non-essential (Joods Finally, the Chancellor proposed to deal more severely than at present with expenditure on luxuries and non-essen-tial goods, doubling the existing tax. As an illustration of the goods to which this increase would apply, he. quoted silk frocks, silk or brocade fabrics, fur coats, ornaments such as vases, china figures, and cut-glass, hair-waving and hair-drying appliances, electric shavers, trunks and bags if made of leather and bide, musical instruments and gramophone records —not wireless sets—clocks and watches if made of platinum, gold or silver or gold plate, jewellery and imitation jewellery, toilet articles such ,as flapjacks and vanity cases, perfumery and cosmetics. The Chancellor concluded: "I can claim, with some confidence, that my proposals will enable us to continue to , maintain our financial stability and social security throughout the coming year. The increases in taxation which I propose are indeed essential for the prosecution of the war. I am convinced that it is in that spirit that they will -be accepted and willingly home, and I commend them to the House as yet '' another vital contribution to victory for the United Nations."

/ STEMMING INFLATION (Eecd. 5.5 p.m.) LONDON, April 14 "We must pay as we go in order to stem inflation,"'said the Chancellor of the Exchequer, Sir Kingsley Wood, in a broadcast. "I have deliberately refrained from taxing the necessities of life. On the contrary, I have sought an increased contribution from outright luxuries and goods for which there is a heavy civilian'demand, but wlucli it will not hurt us to curtail. The taxed items have not been picked from the hat. but in conformity with a definite plan."-