THE BRITISH BUDGET

Otago Daily Times, Issue 21365, 19 June 1931, Page 12

THE BRITISH BUDGET

2d A GALLON ON PETROL RAID ON THE DOLLAR FUND CHANCELLOR ACCUSED OF JUGGLERY. (From Our Own Correspondent.) LONDON, May 1. Returning to the House of Commons after eight weeks of illness, Mr Snowden, the Chancellor of the Exchequer, was received on Monday with loud cheers from every party. The House was crowded to hear the Budget speech. The Peers’ Gallery was closer-packed than usual, for the Lords had ■ heard the rumour of a Land Tax. In spite of his illness, the Chancelloi looked well. His voice was strong and distinct, but he artificially shortened his speech by missing out the elaborate review of the revenue and expenditure in the past year and having it printed on a paper that was circulated. Passing to the current year, Mr Snowden drew up as follows the prospective balance sheet on the basis of existing taxation, excluding self-balancing services, but including £52,000,000 for the Sinking Funds: — Ordinary expenditure .. . - £803,500,000 Ordinary revenue /66,000,000 Deficit £37,500,000 This figure, he sardonically observed, would be disappointing to the Jeremiahs, especially as it included £12,000,000 extra payable under the Derating Acts and unmet by the Suspensory Fund, and £8,000,000 more than was spent last year on the dole. He again hoped that the Economy Committee would make the figure of expenditure unduly pessimistic, and proceeded to explain why the figure of revenue was not unduly optimistic. RECIPTS FOR THE YEAR. Income tax, which was levied in respect of the depressed year 1930-31, would yield £8,000,000 less, in spite of the full .operation of the 4s 6d_ rate. Surtax, which would not be levied on the same depressed period, would yield oy< r £4,000,000 more, • and death duties, helped by the full operation of the increased rates imposed last year.'vould yield £90,000,000, or nearly £7,500,000 more. Stamps would yield £3,350.000 more on the assumption of a revival ot Stock Exchange activity. Direct taxation would therefore yield in all over £6,000,000 more. Indirect taxation (Customs and excise) would yield about £7,400,000 less. Other receipts—such as the Post Office profit and receipts from loans —would yield about £3,400,000 more, bu"t he could bring in only £4,000;000 (or £12,000,000 less) from the Rating Relief Suspense Account, so that over the whole field of revenue he would lose just under :10,000,000 as compared with last year. Put in brief compass, the following are the outstanding points in the Budget:— Standard rate of income tax to remain unchanged. , , , , u n People who come under schedules B, u, and E to pay three-quarters of the year' B tax on January 1 next, and the other quarter on July 1. . , , Petrol tax to be increased to-day from 4d to 6d a gallon. Tax on light motor cycles .of 150 c.c. or lees to be reduced from 30s to 15s a year. ’ ■ . , A tax of Id in the £ to be imposed on capital land values. Income tax collection to be vested in future in the Commissioners of Inland Revenue. ' , . . The Dollar Securities Fund to be raised to the tune of £20,000,000. CHANCELLOR’S SPEECH.

Mr Snowden spoke faster than usual, and with fewer inflections of voice, ihe general tone of his argument was even, and almost amiable. He let himself go somewhat in his attack on a general revenue tariff, and he almost shouted his declaration that he would never be a party to such a policy. _ There was a dramatic moment when, after speaking for three-quarters of an hour, he paused, took a drink of water, and began: “And now I turn to the mam feature of this year’s Budget.” This was the long section of the taxation of land values which ended his speech. All through this section his tone became warmer as he proceeded, and he sat down on a peroration of one sentence which declared that these taxes would make this year famous in history as one further stage to. the emancipation of the people from the tyranny and injustice ot private land monopoly.” Atfer all the preliminary excitement and the imaginative forecasts of its contents, the Budget speech was regarded by members of the House of Commons as something of an anti-climax. The. predominant feeling was that the Chancellor of the Exchequer, even at the risk of offending the Left Wing members of the Labour Party, had produced a Budget which would enable the Government to expect the continuation of the support of the Liberal Party for many more months unless an unexpected crisis developed. The main proposals in the Budget—-the raid on the Exchange Account, the decision to proceed with a land values scheme, and the increase of 2d in the petrol duty —caused no surprise. In fact, the' only point which had not been expected was the decision to collect three-quarters of the income tax next January and a quarter in July in order to bring more money into the current financial year. A DOUBTFUL PROCEDURE.

Possibly the first feeling in the city will be one of relief that there is to.be no immediate increase in direct taxation other than the extra strain imposed next January by taxpayers having to pay three-fourths instead of one-half the tax due in that month. “ There will probably not be much disposition to over-criticise the addition to the petrol tax,” says the city_ editor of the Morning Post, “ the one imposition, by the way, which appeared to occasion the Chancellor some pain; but the seiz_ ing of as much as the equivalent of £20,000,000 of the Dollar Securities Fun 1 at a moment when our power to cancel indebtedness abroad by exports of goods is crippled is a daubtful procedure and not likely to be appreciated in the London money market. _ “ Nor will the city be impressed by Mr Snowden’s defence of Cobdenite principles. A year ago. when presenting his Budget, he prophesied great improvement in the position a year hence. In no way abashed by the fact that as regards industry and unemployment the_year has been the worst on record, the Chancellor of the Exchequer yesterday delivered a eulogy on the advantages of Frectrade which is scarcely likely to be echoed by the hundreds of thousands of unemployed. even when allowance is made fdr the consoling influence of the ‘ dole. ’ NOT A CHEERFUL BUDGET. According to the Daily Mail, it is not a cheerful Budget. In a period of unexampled depression the Chancellor has increased the taxpayer’s burden. He has mortgaged the future and robbed the last of the henroosts. ’ , ~. _ . The disquieting feature of this Budget is that it holds, out no hope of reduced taxation or relief for those who are groaning under burdens which have no parallel elsewhere in the world. Mr Snowden professed to hope great things from the Economy Committee recently appointed, but we have had promises of this kind from every Chancellor for years and years. DOUBTFUL OPTIMISM.

The Budget introduced by Mr Snowden (says the Morning Post) certainly confounded prophecy both as to the amount of the gap to be covered and the manner of covering it. The gap of £37.500.000 is smaller than anyone had anticipated, but a closer inspection of the reason removes most of the grounds for satisfaction which this apparently favourable circumstance might have created. For it has been reduced to its present dimensions mainly by an optimism in the inland revenue estimates which is only likely to be realised in the unexpected event of a substantial upward turn in the trade cycle during the fiscal year. The buoyancy of the income tax and surtax revenues in the year just ended was due to the fact that they largely accrued out of profits earned before the onset of the " economic blizzard.” for which factor undue allowance would seem to have been made in the new Estimates. NO TAX ON THE “TOILING MILLIONS.” Mr Snowden has indeed “ outraged his financial principles ” by retorting to jugglery and by not immediately providing for the restoration to the sinking fund of the £23,000,000 of which it was deprived by his deficit. But he has sedulously adhered to the

major and more pernicious part of hia principles. Not only has he not sacn* ficed one iota of his ultra-Cobdemsm, but he has carefully seen to it that not a penny piece of new taxation should fall upon the shoulders of the “ toiling millions,” the extravagant expenditure on whose social services la the very cause of the deficit which he has to meet. For his one increased duty he has deliberately selected oil, which is of prime importance to industry, in preference to some poor man’s ” luxury, such as tobacco. And when it was a case of finding a , “ e ?I roost to rob he made sure that it should be a direct taxpayer’s hen-roost. SENSIBLE PIECE OF WORK. Apart from the land tax proposals Isays the Daily Telegraph), which are to be judged on quite a separate footing, Mr Snowden’s third Budget _ is, within the limitations imposed on him by his Freetrade principles, an eminently sensible piece of work. It is a recognition of the hard facts, and the bitter necessities of the financial and industrial situation. It is an often recognition of the truth of what has been dinned into his ears by scores of deputations, speeches, and articles trom every quarter—-viz., that his first and paramount duty was to let the taxpayer off as lightly as he could, and to -impose a bare minimum of new taxation, however he might contrive to square his accounts. • And this Mr Snowden has done. FINANCIAL WIZARDRY. The Times considers that the taxpayer is at best in the position of the patient who has escaped for the moment, the more painful attentions of the dentist, only to leave the real business of the operation to the next visit. Mr Snowden attempted to justify the now familiar devices of financial wizardy which he himself criticised so righteously when Mr Churchill used .them in 1927, on the grounds that this is an exceptional year. It was better in his view for industry and trade to avoid

large increases of taxation, and to resort to a makeshift in the hope that during the next 12 months the revival of prosperity- would be sufficient to regain equilibrium in 1932. Is it notpossible that he reflected also that by 1932 neither he nor his party may be responsible for the Budget. So melancholy a departure from his previous orthodoxy might perhaps have received some show of justification if Mr Snowden had really found himself in a similar position to that of Mr Churchill, who at all events was forced to make up a sudden deficit caused by a single specific non-recurrent event.in the shape of the general strike. But his case is fundamentally different. His deficit is due in the main to an increase in current expenditure which shows no signs of abating; nor is there any. solid reason whatever for supposing that any such marked recovery as he anticipates is likely to take place during the next 12 months. However, deplorable _ any increase in taxation may be, there is at least one- thing more deplorable still, and that is increased expenditure uncovered by current revenue. The proposal for the taxation of land values need not -perhaps be taken too seriously at this stage. It is-an attempt to commit the House of,-Com-mons beforehand to a scheme which has already been tried and abandoned as a complete failure, and it may well bethat, long before it can be revived the responsibility for the conduct of the nation’s finances will have passed into other hands. Moreover, the House of Commons will have the opportunity of discussing this project; in detail when the proposals are fully.revealed. -

BRIEF POSTPONEMENT. •' V. The estimates of expenditure for the coming year have reached a grand total of £889,948,000, and, to judge from the supplementary estimates , issued; during the past year, flje actual expenditure, op the third Labour Budget may well -ex~. cced £9oo,ooo,ooo—which is ; over £100,000,000 more than the Budget, in 1924, notwithstanding the enormous fell in prices which hag taken place during the interval. With such a burden upOn its shoulders, what hope has industry of a recovery, and what prospect has the taxpayer of relief? He has, it is true, escaped a further fleecing this year, but all that Mr Snowden , has given him with this respite is a brief postponement of the struggle with a real'financial The/; Budget will give, a sense of‘relief ..(says the Financial Times-)'.'. 'But that to the discerning will be transitory. Judged by, all the acceptable canons, Mr, Snowden’s plans are bad. Having seen his previous effort- go widely wrong, largely -because, the weight sought to be, imposed upon the direct taxpayer proved . greater than could be borne, the Chancellor refuse* to face the logic of the facts. The absence of any downward adjustment of demands to the real condition of the ordinary revenue makes this a spendthrift’s Budget. The tax; on land. values will not affect the current year, so that discussion of iL is not imperative at this juncture, even though Mr Snowden brands.his proposal as the feature of the Budget, and a first-class political fight may ensue. 1