BRITISH BUDGET

Otago Witness, Issue 3239, 12 April 1916, Page 29

BRITISH BUDGET

LARGE INCREASED TAXATION

ESTIMATED EXPENDITURE NOT

REACHED

DOMINIONS' PUBLIC SPIRITEDNESS

LONDON, April 4

In the House of Commons Mr M'Kenna introduced the Budget. The Chancellor eaid that the shortage of tonnage had had a considerable effect upon the revenue, as also had the prohibition of certain imports. He assumed that the war would last through the whole of the present financial year. The actual expenditure last year was £1,559,000,000, or £31,000,000 less than the estimate. The actual net issues to the allies amounted to £264,000,000, and to -the dominions to £52,000,000.

In the latter case the amount was £1,600,000 less than was estimated —a result due to the public spirit of the oversea Governments, wherefore they owed them their thanks.—(Cheers.)

Making allowances for certain facts, the total financial assistance to the allies was £313,000,000.

In pursuance of the scheme to purchase American securities, they had bought a considerable amount out of funds, and by their resale had built up a large reserve to meet their future needs. The purchase money included last year's expenditure, and the proceeds would constitute an asset in America with which to begin the current vear.

The total revenue for the year was £336.767,000, an increase of £31,753,000 above the estimate. The expenditure was £1,559,000,000. The deficit would be met to the extent of £600,000,000 by a war loan in June, to the extent of £154.000,000 by the sale of Exchequer bonds, and to the amount of £50,000.000 by an Anglo-French-American loan. The balance would be met by the sale of Treasury bills. NEED FOR ECONOMY.

Mr M'Kenna stated that our total war indebtedness is £2,140,000,000, of which £368,000,CG0 had been advanced to our allies and the dominions. Relief would come to us in the future in regard to these items, but we were responsible now, and had to bear the whole dead-weight.

The additions ir.ade to our taxation fully assured the national creditors that their capital and interest were secure. There would be an inevitable increase in the expenditure for the coming year. The war services accounted for £1,120.0C0,0C0, and there would be an additional £30,000,000 for miscellaneous expenditure, bringing up the war expenditure to over £3.000,000 a day. The advances to our allies and the dominions could be placed at £450,000.000. Consolidated services, including interest, made a debit of £137,000,000, which, with other services, brought up the total to £1.825,000. or almost exactly

£5.000,000 daily. The Chancellor said he would be disappointed if serious economies were not effected during the year, and this large total reduced. He thanked his Majesty the K ; n<r for his kingly gift to the war (JGIOVOOV nod on Mr A width's return he would dnride how it should he snent. THE YEAR'S ESTIMATES.

Mr M'Kemia estimated the revenue for the year at £509,000,000, whereof the permanent taxation would, be ahout £423,000,000 leaving a deficit of £1,323,000,000. In addition, he would also have to meet a new charge for interest and sinking fund, which he calculated at £79,000,000. Regarding the new taxes, the object would he to get revenue to meet our obligations, to pay as large a proportion of the war cost as possible, and to distribute fairly the burden of taxation. Therefore he proposed to impose taxes to bring in £509,000,000. There would be a small increase in the income tax on small incomes, rising to a maximum of 5s in the pound. Earned incomes up to £SOO would pay 2s 3d in the pound, and incomes between £SOO and £IOOO would pay 2s 6d, and this tax would rise in successive stages to 5s in the pound.

The new scale of unearned incomes -will commence at 3s in the pound on incomes not exceeding £3OO, rising by sixpenny stacres to 5s in the pound on income? exceeding £2OOO. It is estimated tn.it these increases -will produce £43 500,000. Tine super tax would remain unchanged. Dealing with the double income tax, this side would have to be dealt with in the promised reconstruction of the income tax laws. For the present, where the overseas dominions tax is not less than Is 6d in the pound, Britain would not impose any fresh burden. A Voice: " What does that mean?" Mr M'Kenna: "It means that whatever they now suffer they must continue to suffer, but they will not suffer more." The additional tax, he continued, would not apply to the naval and military forces.

The new Customs and excise taxes are estimated to bring in £21,800,000.

The Government would tax amusement tickets, including football and horse racing, rising from to Is per ticket, according to the cost of the seat, up to 12s 6d, with an additional Is on seats above that amount. This was estimated to realise £5,000,000.

They would also impose a tax on rail-

way tickets, which it was estimated would yield £3,000.000. An additional per lb duty on sugar is expected to yield £7,000,000. The duty on cocoa, coffee, and chicory will be increased to 6d per lb, producing £2,000,000. On matches a duty of 3s 6d Customs or 3s 4£d excise on every 10,000 matches. On mineral waters, 4d per gallon, yielding £2,000,000.

It is proposed to double the present duty on motor cars up to 18-horse power, and treble it for higher-powered cars. On motor cycles not exceeding .4-horse power, a duty of £2 2s; on higherpowered cycles, three-quarters of the duty on motor cars. Motor car duties are expected to realise £BOO,OOO. The excess profit tax will be increased to 60 per cent. Summing up the situation, Mr M'Kenna said he calculated by March, 1917, they would require to meet, in an ordinary year, £388,9!T) 000. Our permanent revenue was £423.000,000, leaving a, surplus, after another year of war, of £85,000,000: "When peace came, we would have a margin for remission of taxation. Civic courage was as important as military courage. We ought to justify the claim that we would not be found wanting in these great virtues. EXCESS PROFITS TAX. A White Paper reveals that the excess profits tax yielded only £1,400,000, as against an estimated yield of £6,000,000. The total taxation for the year 1915-16 yielded £290,088,000, which was £24,414,003 over the Treasury estimate. During the year £160,428,000 was repaid to the Bank of England, and Exchequer bonds to the value of £16,395.000 were redeemed. The Estimates for the current year foreshadow civil service "reductions amounting to £3,424.000. In the House of Commons Mr M'Kenna explained the reason why the yield from the excess profits tax was so small. Tt was due, he snid, to the delay in passing the Finance Bill. BRITISH CREDIT, Speaking in the House of Commons, Mr M'Kenna said: " The manner in which British credit had withstood the immense claims made upon it is truly wonderful to those who are un= familiar with our financial methods and resources. Examination shows that we have not bcrrowed a pound without providing new taxation to cover the interest upon it and provide a liberal sinking fund." ALL THE BTEMS PASSED.

During the Budget debate Mr William O'Brien protested against Ireland's inclusion in the Budget. She could not bear the burdens of indefensible taxation.

Mr Barnes said he thought the new duties would press severely upon the poorer classes, especially the tax upon railway tickets. April 5. The House of Commons has passed resolutions authorising the collection of duties upon all the items mentioned in Mr M'Kenna's proposals. PROFITS ON SALE OP STEAMERS. LONDON. Aoril 5.

PROFITS ON SALE OP STEAMERS LONDON, April 5.

General approval has been expressed of Mr M'Kenna's announcement that the excess profits tax will be extended to sales of profit-producing assets, thus securing to the Exchequer a share of the profit of the sales of steamships, some of which cost £30,000 and are now selling at £200,000.

BUDGET CRITICISMS,

LONDON, April 5.

Tariff reform newspapers express regret that the Government is neglecting an opportunity for imposing a protective tariff with preference to the dominions and the Allies.

The newspapers, commenting upon the Budget, dwell upon the significance of raising £300,000 million yearly extra taxation. The chief criticism is directed against the railway tickets. It is pointed out that short journeys are not taxed, and only fares over ninepence for a single journey, which pay Id, and then Id for every extra shilling. Many, however, consider that the tax is a serious mistake, as there is little joy riding nowadays, and most of the travelling is a necessity, like rent.

The kinemas play an important part in the assessment tax. At least 10,000,000 people visit the picture palaces weekly. The penny matinees for children in the working class districts are taxed to the extent of 50 per cent. It is expected that the Government will issue a stamp which the public will purchase with the tickets.

"ECONOMY BY COMPULSION."

LONDON, April 5.

The Times, in a leading article, says : "The colossal Budget figures are in one respect satisfactory; the estimate is not higher than was expected. In the opinion of the Government we seem to have reached the limit of the scale. We have considerable doubt as to the justification for raising the income tax, but little objection can be urged to the Customs and excise levies and the tax upon amusements. We think the railway ticket tax is a serious mistake, and is the weakest feature of the Budget. It is a timid avoidance of the larger problem of further import duties."

The Daily Mail, in a leading article, says : " The Budget is best summed up as ' economy by compulsion.' Mr

-u Kenna's measures are heroic, but the public will respond cheerfully. The nation expects the Government's July Budget to impose an import tariff, to prevent the Germans from retaining a hold upon the market." The Evening News says : " The tariff question must be dealt with in the next Budget in July. . After the Paris Trade Conference, the nation will demand a tariff to keep the German trade octopus out of Britain, as we know the overseas dominions and our allies will keep it out. It is not a question of tariff reform, but involves the protection of our children's children from the evils we now suffer." The Daily News says : " Tariff Reformers' dissatisfaction with the Budget, coupled with the compulsion issue, may result in the most difficult situation with which we have had to deal."

The Daily Telegraph says : "The Budget is a financial mistake at the expense of the direct taxpayer. The Government had not the moral courage to distribute taxation by Customs duties, fearing a split upon a preferential tariff."

THE TARIFF DEBATE. LONDON, April 5

In the Budget debate, most of the speakers condemned the railway ticket tax. The debate was mainly on freetrade or tariff reform lines.

Sir George Reid regretted that Mr M'Kenna's speech did not contain an assurance of the removal of the double income tax. If the dominions had not borne the expense of their own troops the base of his observations would have been gone. It seemed as hard to get justice out of the Treasury as one's garments out of the teeth of a British bulldog. He hoped that when the Empire problems were considered all theorists and fiscal maniacs would be excluded.