THE OTAGO DAILY TIMES WEDNESDAY, MAY 19, 1908. THE BRITISH BUDGET.

Otago Daily Times, Issue 14212, 13 May 1908, Page 4

THE OTAGO DAILY TIMES WEDNESDAY, MAY 19, 1908. THE BRITISH BUDGET.

When immediately after the dissolution of the Imperial Parliament in June, 1892, Mr Asquith issued his address to the electors of the Eastern division of Fife lie denounced the government of the United Kingdom hy a Toryism which persisted "in an unsound and deceptive finance which has wastefuliy distributed imaginary surpluses created partly by borrowing and partly by encroaching upon the fund set aside for' the repayment of tho National Debt." In the light of this statement of political faith made sixteen years since, it is interesting to examine the third Budget which Mr Asquith has just presented to tho House of Commons; more especially, since, owing to the accession of Mr Lloyd-Goorge to the Chancellorship of tho Exchequer, it represents Mr Asquith's final attempt to balance the affairs of the Empire, Quito apart from the proposals for oldage pensions, which we have already discussed at longth, tho British Budget for 1908-9 contains several points of more than evanescent interest, reflecting as it does the financial conditions under which the people of Great Britain live and move and have their being. In the light both of tradition and of experience it is safe to assume that, while Conservative Budgets are prepared with both eyes on the military and naval exports, a Liberal Chancellor of the Exchequer turns his gaze towards the social philanthropist. Hence, whilst Conservatism is credited with increasing the expenditure of the nation, it falls to the lot of tho Liberals to promote schemes for retrenchment and economy. Tho Liberal Government came into power on the strength of pledges solemnly given to remove from the shoulders of tho taxpayer the burdens imposed by the South African war. Indeed, at tho hustings tho cause of tho suffering of tho masses and tho existeuco of an army of unemployed was roundly laid at the door of the heavy taxation which it was alleged the

profligate financial policy of an extravagant Unionist Government had rendered necessary. There was accordingly some disappointment when Mr Asquith in his first Budget adopted the estimates of his predecessors in office, but which comprised remissions of taxation such as the repeal of the coal duty, a reduction of the tea duty of Id per lb, and modifications of the tobacco duty—in ali amounting to nearly four millions. Last year's Budget was even morp disappointing, for although it provided for a reduction in the income tax on earned incomes of less than £2000 from Is to 9d (which was estimated to produce £1,250,000), there was an increase in the death duties estimated to produce £1,200,000. So that of the twenty-four millions of additional taxation brought about by the war policy of the Unionist Government, and which the Liberal Government stands practically pledged to reduce, less than four millions have up to the present been romitted. And so far as can be learned from the somewhat meagre particulars to hand by cable, Mr Asquith proposes to remit only one-half of the war duty placed upon sugar, by this means relieving the taxpayer to the extent of £3,400,000. Tims the political situation will be distinctly affected by the disapproval of that section of the Liberal party which is loudly clamouring that the expenditure of the country should be placed upon a peace footing rather than continue on the existing basis.

lb is when the realised surplus of the past year is compared with tho estimates that we gather some inkling of tho exact financial situation. In April last year Mr Asquith estimated the revenue at £144,190,000 and the expenditure at £140,757,000, leaving an estimated surplus of £3,433,000. The sum of £1,500,000 was therefore placed to the credit of the new sinking fund and earmarked for old-age pensions, and £200,000 set aside for educational grants. The estimated shrinkage in the income tax (already referred to) accounted for a loss of £2,000,000, thus' leaving an estimated deficit of £267,000. It was proposed that this should be met by an increase in the death duties estimated to bring in £600,000. The figures finally adopted were: Revenue £142,790,000 and expenditure £142,457,000, leaving a balance of £333,000 for contingencies. Mr Asquith has announced that the realised revenue for the past year was £150,538,000, or an increase above the estimate of £13,838,000, and as the realised surplus is set down_at £4,776,000 it is safe to assume that the year's expenditure has proportionately increased. This is further borne out in the fact that for the current year tho national expenditure is estimated at £152,869,000, with a revenue of £157,770,000. When reviewing the probable effect of the differential treatment of fcho income tax last year, Mr Asquith estimated that the loss to revenue during the year would be £1,250,000, in addition to which it was anticipated that owing to the altered machinery there might be a deferred collection amounting to £750,000, or a total shrinkage -in revenue of £2,000,000. Against this he set the fact that the income tax, in its new form, would return an additional £900,000. But as events have proved the actual yield for the past twelve months is £1,180,000 above the. estimate, while tho differentiating scheme, which gives a relief of 3d in the pound on the earned portion of incomes not exceeding £2000 from all sources, is 6aid to be working smoothly, besides imparting an equality to the permanent tax. One of the points to which Mr Asquith gives prominence in his Budget is the gradual reduction which under the present Government is taking place in the National Debt. Last year the gross liabilities of the State in regard to this debt amounted to tho enormous sum of £774,164,704, despite a permanent reduction made during the year of £13,714,000. This year another reduction has been effected of £15,039,0uU, and Mr Asquith is sanguine that by the end of 1908 the nation's huge liability in this respect will be brought down to' the figure of ten years ago. This reduction, of course, carries with it a decrease in the interest charges; but this, it is significant to note, has been effected by means of taxation. It is surely a sort of robbing Peter to pay Paul to reduce the nation's liabilities by keeping up the standard of taxation. This anomaly would seem to have appealed to the Prime Minister, for he hazarded the remark that tho time was now ripe to slacken the rate of taxation in order to give relief to the taxpayer. The fact that the whole of the realised surplus, in addition to the sinking fund already earmarked for the purpose, or approximately £7,000,000 (sinking fund £1,500,000, deferred income tax collection £750,000, and realised surplus £4,770,000) has been appropriated to provide the cost of the old-age pensions clearly shows that Mr Asquith has some idea of the magnitude of the task his Government has taken in hand in launching his pension scheme. And this accounts for the criticism of The Times, which paper characterises Mr Asquith's policy as reckless and improvident, the Daily Telegraph and other Unionist papers following in a similar strain. In fact, the only note of approval from the Opposition benches has come from Mr Chaplin, and this is explicable in the prominent part played by that member in the old-age pension scheme framed in 1899 and to which Mr Asquith's proposals bear a strong relationship. There can be little doubt that if Mr Asquith's Government is to retain office it will have a difficult course to steer between the Scylla of sound finance on the right-hand side and the inappeasable Charybdis of the Labour party's demands on the left. For the Labour party's programme of universal old-age pensions involves an expenditure at tho outset of £20,000,000, and in support of the reasonableness of this demaud they point to the fact that during the ten years ending 1906 a sum of £220,000,000 was added to the total wealth of the United Kingdom assessed for income tax. It will therefore tax all the future ingenuity of Mr LloydGeorge, strong man and popular though he bo, to on the one hand finance the old-age pension scheme and at the same time reduce taxation and diminish the National Debt.